EXHIBIT 99.(a)(1)
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of
the Commission Only (as
Permitted by Rule 14a-
6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Under Rule 14a-12
RENAISSANCE WORLDWIDE, INC.
(Name of Registrant as Specified In Its Charter)
Not Applicable.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i) and 0-11.
1) Title of each class of securities to which transaction applies: Renaissance
Worldwide, Inc. common stock, no par value per share.
2) Aggregate number of securities to which transaction applies: (i) 40,851,995
shares of common stock, which represents the number of shares outstanding as
of July 11, 2001 less shares that will be owned by Registry Holding Company,
Inc. and Redwood Acquisition Corp. upon completion of the merger and (ii)
outstanding options to purchase an aggregate of 600,000 shares of common
stock, all with a per share exercise price less than $1.65, and a per share
weighted average exercise price of $1.42, which will be cashed out in
connection with the merger.
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined): Pursuant to the Agreement and
Plan of Merger, dated as of June 21, 2001, by and among Renaissance
Worldwide, Inc., Registry Holding Company, Inc. and Redwood Acquisition
Corp., Redwood Acquisition will merge with and into Renaissance, and each
outstanding share of common stock of Renaissance, except for shares owned by
Registry Holding Company and Redwood Acquisition will be converted into the
right to receive $1.65 in cash. In addition, pursuant to the terms of the
merger agreement certain outstanding options to purchase common stock with a
per share exercise price less than $1.65 will be converted into the right to
receive, upon exercise, a cash payment equal to the product of (1) the number
of shares underlying such options and (2) the difference between $1.65 and
the per share exercise price of such options.
4) Proposed maximum aggregate value of transaction: $67,542,542 (*)
5) Total fee paid: $13,509
[X] Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
(*) Calculated based upon (i) a proposed per share cash payment of $1.65
for 40,851,995 outstanding shares of common stock (less shares that will be held
by Registry Holding Company and Redwood Acquisition upon completion of the
merger) and (ii) an aggregate cash payment of $136,750 to holders of outstanding
options to purchase an aggregate of 600,000 shares of common stock with a per
share exercise price less than $1.65 and a weighted average per share exercise
price of $1.42.
Preliminary Copy
Filed on August 28, 2001
RENAISSANCE WORLDWIDE, INC.
52 Second Avenue
WALTHAM, MASSACHUSETTS 02451
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER__, 2001
----------------
To the Stockholders of Renaissance Worldwide, Inc.:
We will hold a special meeting of stockholders of Renaissance Worldwide,
Inc., a Massachusetts corporation, on September __, 2001, at 10:00 a.m., local
time, at our headquarters, 52 Second Avenue, Waltham, MA 02451. At this special
meeting, we will ask you to consider and vote upon the following proposals as
further described in the accompanying proxy statement:
1. Approval of the agreement and plan of merger, dated as of June 21, 2001,
among Renaissance, Registry Holding Company, Inc. and Redwood Acquisition
Corp., and the merger of Redwood Acquisition with and into Renaissance,
with Renaissance as the surviving corporation and with each outstanding
share of Renaissance common stock, other than shares held at such time by
Registry Holding Company and Redwood Acquisition being converted into the
right to receive $1.65 in cash; and
2. Transaction of such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
August __, 2001 is the record date for the special meeting. Only
stockholders of record at the close of business on August __, 2001 are entitled
to notice of, and to vote at, the special meeting or at adjournments of the
meeting. A list of stockholders of record as of August __, 2001 will be
available for inspection at Renaissance's offices at 52 Second Avenue, Waltham,
Massachusetts 02451, at least ten days prior to the meeting.
G. Drew Conway, our chief executive officer and the chairman of our board
of directors, is currently the holder of approximately 22% of the outstanding
shares of the common stock of Renaissance. Prior to the merger, Mr. Conway will
contribute those shares to Registry Holding Company, a newly formed company
organized by Mr. Conway. Five trusts for Mr. Conway's children and a charitable
foundation that he controls will also contribute shares to Registry Holding
Company. Following the proposed merger of Redwood Acquisition, a subsidiary of
Registry Holding Company, with and into Renaissance, Renaissance will cease to
exist as a publicly held corporation and will be a privately held, wholly-owned
subsidiary of Registry Holding Company. As a result of the merger, each share of
common stock of Renaissance will be canceled and converted into the right to
receive $1.65 in cash, except shares held by Registry Holding Company, Redwood
Acquisition and holders who properly perfect their dissenters' rights. The
accompanying proxy statement contains detailed information about the merger and
the actions to be taken in connection with the merger. The terms of the merger
are more fully described in the merger agreement which is attached as Annex A to
the accompanying proxy statement.
If the stockholders approve the merger at the meeting and Renaissance
completes it, any Renaissance stockholder (1) who files with Renaissance before
the taking of the vote on the approval of such action, written objection to the
proposed action stating that such stockholder intends to demand payment for such
stockholder's shares if the action is taken, and (2) whose shares are not voted
in favor of such action has or may have the right to demand in writing from
Renaissance, within 20 days after the date of mailing to such stockholder of
notice in writing that the corporate action has become effective, payment for
such stockholder's shares and an appraisal of the value thereof. Renaissance and
any such stockholder shall in such cases have the rights and duties and shall
follow the procedure set forth in Sections 85 through 98, inclusive, of Chapter
156B of the General Laws of Massachusetts, which is attached as Annex C to the
accompanying proxy statement.
Both (i) Renaissance's special committee of directors unaffiliated
with Mr. Conway, Registry Holding Company or Redwood Acquisition and (ii)
Renaissance's board of directors have determined that the merger agreement and
the merger, are advisable and fair to, and in the best interests of, the holders
of shares of Renaissance common stock not affiliated with Mr. Conway. Both the
special committee and the board of directors have approved, and recommend that
you vote "FOR", the approval of the merger agreement and the merger.
We hope that all stockholders will be able to attend the special meeting in
person. In order to ensure that a quorum is present at the special meeting,
please date, sign and promptly return the enclosed proxy whether or not you
expect to attend the special meeting. A postage-prepaid envelope has been
enclosed for your convenience. If you attend the special meeting, your proxy
will, upon your written request, be returned to you and you may vote your shares
in person.
All stockholders are cordially invited to attend the special meeting.
By Order of the Special Committee
and the Board of Directors,
G. Drew Conway
Chief Executive Officer
Waltham, Massachusetts
August__, 2001
Whether or not you expect to attend the meeting, please complete, date and
sign the enclosed proxy card and promptly mail it in the enclosed envelope in
order to ensure representation of your shares at the meeting. No postage need be
affixed if the proxy card is mailed in the United States.
If a properly executed proxy card is submitted and no instructions are
given, the shares of common stock represented by that proxy will be voted "FOR"
approval of the agreement.
Please do not send your stock certificates to Renaissance at this time.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the merger, passed upon the merits or
fairness of the merger, or passed upon the adequacy or accuracy of the
disclosure in this notice or in the attached proxy statement. Any representation
to the contrary is a criminal offense.
This notice, the attached proxy statement and the accompanying proxy card
are first being mailed to stockholders on or about August __, 2001.
RENAISSANCE WORLDWIDE, INC.
52 Second Avenue
WALTHAM, MASSACHUSETTS 02451
----------------
PROXY STATEMENT FOR
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER__, 2001
----------------
This proxy statement and the accompanying proxy card are first being sent to
stockholders on or about August __, 2001.
Summary Term Sheet
The following summary briefly describes the material terms of the merger of
Renaissance with and into Redwood Acquisition Corp. While this summary
describes the material terms that you should consider when evaluating the
merger, the proxy statement contains a more detailed description of such terms.
We encourage you to read this proxy statement and the presentation materials we
have incorporated by reference before voting. We have included section
references to direct you to a more complete description of the topics described
in this summary.
. Redwood Acquisition Corp. and Registry Holding Company are newly formed
companies organized by G. Drew Conway, our chief executive officer and the
chairman of our board of directors, for the purpose of engaging in the
merger. Redwood Acquisition Corp. is a wholly-owned subsidiary of Registry
Holding Company. Please read "Summary - The Parties" beginning on page 1.
. If the merger is completed, you will receive $1.65 per share in cash for each
of your shares of Renaissance stock, unless you are a dissenting stockholder
and you perfect your appraisal rights, or unless you are affiliated with
Mr. Conway. Please read "Questions and Answers about the Special Meeting"
beginning on page iii, "Special Factors" beginning on page 11, "The Merger
Agreement" beginning on page 36 and "Dissenters' Rights" beginning on
page 45.
. As a result of the merger:
. Renaissance will be owned by Registry Holding Company;
. You will receive $1.65 in cash in exchange for each share of Renaissance
common stock and you will no longer have any interest in the future
earnings or growth of Renaissance;
. Renaissance's common stock will no longer be listed on the Nasdaq National
Market; and
. Renaissance will no longer be a public company.
Please read "Special Factors - Certain Effects of the Merger" beginning on
page 32.
. Because Mr. Conway, one of the three members of our board of directors, is
also the sole director and officer of Registry Holding Company, our board of
directors formed a special committee of disinterested directors to protect
your interests in evaluating and negotiating the merger agreement. The
special committee and the board of directors have each determined that the
merger agreement and the merger are advisable and fair to, and in the best
interests of, the stockholders of Renaissance not affiliated with Mr. Conway.
Please read "Special Factors - Position of Renaissance as to Fairness of the
Merger" beginning on page 19.
. The special committee received an opinion from Adams, Harkness & Hill, Inc.,
its financial advisor, that the merger consideration of $1.65 per share is
fair, from a financial point of view, to the stockholders of Renaissance not
affiliated with Mr. Conway. Please read "Special Factors - Position of
Renaissance as to Fairness of the Merger" beginning on page 19 and Special
Factors - Opinion of Financial Advisor" beginning on page 19.
i
. Mr. Conway and the boards of directors of Registry Holding Company and
Redwood Acquisition have each determined that the merger agreement and the
merger are advisable and fair to, and in the best interests of, the
stockholders of Renaissance not affiliated with Mr. Conway. In addition, six
entities affiliated with Mr. Conway that hold Renaissance common stock,
including five trusts for the benefit of Mr. Conway's children and a
charitable foundation organized by Mr. Conway, have each determined that the
merger agreement and the merger are advisable and fair to, and in the best
interests of, the stockholders of Renaissance not affiliated with Mr. Conway.
Please read "Special Factors - Position of the MBO Group as to Fairness of
the Merger" beginning on page 30.
. For the merger to occur, holders of at least 75% of the shares of Renaissance
common stock must approve the merger agreement. Mr. Conway, who holds
approximately 22% of the outstanding shares of Renaissance common stock, has
agreed to vote to approve the merger agreement. In addition, five trusts for
the benefit of Mr. Conway's children and a charitable foundation organized by
Mr. Conway, which collectively hold approximately 1% of the outstanding
shares of Renaissance common stock, have indicated their intent to vote in
favor of approval of the merger agreement. Therefore, at the special meeting,
in addition to the vote of Mr. Conway, the trusts and the charitable
foundation, the vote of Renaissance stockholders holding approximately 52% of
the outstanding common stock will be required to approve the merger agreement
and the merger, which means that approximately two-thirds of the stockholders
that are not affiliated with Mr. Conway must approve the merger agreement.
Please read "Renaissance Worldwide, Inc. Special Meeting - Vote Required to
Approve the Merger" beginning on page 8.
. You have one vote for each share of common stock that you owned at the close
of business on August __, 2001.
You may choose one of two ways to cast your vote:
. by completing the accompanying proxy card and returning it in the enclosed
envelope; or
. by appearing and voting in person at the special meeting of stockholders to
be held on September __, 2001.
If your shares are held in "street name," which means that your shares are
held in the name of a bank, broker or other financial institution instead of
in your own name, you must either direct the financial institution how to
vote your shares or obtain a proxy from the financial institution to vote at
the special meeting.
You may change your vote by following any of three procedures. For a
stockholder "of record," meaning one whose shares are registered in his, her
or its name, to revoke a proxy:
. send another signed proxy card with a later date to the address
indicated on the proxy card; or
. send a letter revoking your proxy to our clerk at our principal address;
or
. attend the special meeting and vote in person.
A "beneficial holder" whose shares are registered in another name (for
example in "street name") must follow the procedures required by the holder
of record, which is usually a brokerage firm or bank, to revoke a proxy. You
should contact the holder of record directly for more information on these
procedures.
If you do not provide your broker with instructions on how to vote your
"street name" shares, your broker will not be able to vote them on the
merger. This will have the effect of voting against the merger. You should
therefore instruct your broker how to vote your shares, following the
directions provided by your broker. Similarly, abstentions will not be voted
for the merger and will therefore have the effect of voting against the
merger.
Please read "Questions and Answers about the Merger and the Special Meeting",
beginning on page iii and "Renaissance Worldwide, Inc. Special Meeting"
beginning on page 8.
. Mr. Conway intends to finance the merger through:
. the rollover of his 11,716,070 shares of Renaissance stock;
. use of cash currently held by Renaissance, which was approximately $57.6
million as of June 30, 2001;
. cash to be provided under a revolving credit facility to be established by
a syndicate of banks led by J.P. Morgan Business Credit Corp. acting
through the Chase Manhattan Bank.
Please read "Special Factors - Amount and Source of Funds and Financing of
the Merger" beginning on page 32.
. The merger is subject to Mr. Conway's receipt of financing, for which he has
received a commitment that is subject to, among other customary conditions,
Renaissance achieving earnings before interest, taxes, depreciation and
amortization of not less than $1 for the two-month period ending August 31,
2001. Please read "The Merger Agreement - Principal Conditions to the
Completion of the Merger Agreement" beginning on page 39.
. For United States federal income tax purposes, you will generally be treated
as if you sold your common stock for the cash received in the merger. You will
recognize taxable gain or loss equal to the difference between the amount of
cash received and your adjusted tax basis in the Renaissance common stock
exchanged. Please read "Material Federal Income Tax Consequences" beginning on
page 33.
ii
RENAISSANCE WORLDWIDE, INC.
52 Second Avenue
WALTHAM, MASSACHUSETTS 02451
----------------
PROXY STATEMENT FOR
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER __, 2001
----------------
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING
Q: What am I being asked to vote upon?
A: You are being asked to vote to approve the agreement and plan of merger
among Renaissance Worldwide, Inc., Registry Holding Company, Inc. and
Redwood Acquisition Corp., and the merger of Redwood Acquisition with and
into Renaissance, with Renaissance to be the surviving corporation.
Registry Holding Company is a newly formed company organized by G. Drew
Conway, our chief executive officer and the chairman of our board of
directors. Redwood Acquisition is a newly formed company and a wholly-owned
subsidiary of Registry Holding.
Q: Who is merging with whom?
A: Redwood Acquisition will merge with and into Renaissance. Renaissance will
survive the merger as a wholly-owned private company subsidiary of Registry
Holding Company.
Q: What will I receive in the merger?
A: Upon completion of the merger, each outstanding share of Renaissance
common stock will be converted into the right to receive $1.65 in cash,
without interest, except for shares owned by Registry Holding Company,
Redwood Acquisition and stockholders who are entitled to and have exercised
dissenters' rights.
Q: How many votes do I have?
A: You have one vote for each share of common stock that you owned at the
close of business on August __, 2001.
Q: What vote is required to approve the merger?
A: For the merger to occur, holders of at least 75% of the shares of
Renaissance common stock must approve the merger agreement. Mr. Conway, who
holds approximately 22% of the outstanding shares of Renaissance common
stock, has agreed to vote to approve the merger agreement. In addition,
five trusts for the benefit of Mr. Conway's children and a charitable
foundation organized by Mr. Conway, which collectively hold approximately
1% of the outstanding shares of Renaissance common stock, have indicated
their intent to vote in favor of approval of the merger agreement.
Therefore, at the special meeting, in addition to the vote of Mr. Conway,
the trusts and the charitable foundation, the vote of Renaissance
stockholders holding approximately 52% of the outstanding common stock will
be required to approve the merger agreement and the merger.
Q: Why are the special committee and the board of directors recommending that
I vote in favor of the merger?
iii
A: Our board of directors and a special committee of Renaissance directors who
are not affiliated with Mr. Conway evaluated the fairness and advisability
of the merger agreement and the merger. Both the special committee and the
board of directors, by unanimous vote, approved the merger agreement and
the merger. The special committee and the board of directors considered
numerous factors in making those determinations, including alternatives to
the merger that we previously pursued. A more complete description of the
reasons for the merger can be found beginning on page 15 of the proxy
statement.
Q: Why was the special committee formed?
A: Because Mr. Conway, one of the three members of our board of directors, is
also the sole director and officer of Registry Holding Company, the board
of directors formed the special committee of disinterested directors to
protect your interests in evaluating and negotiating the merger agreement.
The members of the special committee are Robert P. Badavas and Paul C.
O'Brien. These directors are not affiliated in any way with Mr. Conway,
and will not be affiliated with Mr. Conway at the time of, or immediately
after, the merger.
Q: What was the opinion of Renaissance's financial advisor?
A: Each of the special committee and the board of directors considered the
opinion of Renaissance's financial advisor, Adams, Harkness & Hill, Inc.,
which was hired to represent the special committee and to advise the
special committee and the board of directors on the merger. Adams, Harkness
& Hill presented a written opinion to the effect that the merger
consideration is fair, from a financial point of view, to the holders of
our common stock not affiliated with Mr. Conway.
Q: How do I vote?
A: You may choose one of two ways to cast your vote:
. by completing the accompanying proxy card and returning it in the
enclosed envelope; or
. by appearing and voting in person at the special meeting.
If your shares are held in "street name," which means that your shares are held
in the name of a bank, broker or other financial institution instead of in your
own name, you must either direct the financial institution how to vote your
shares or obtain a proxy from the financial institution to vote at the special
meeting.
Q: May I change my vote?
A: Yes. You may change your vote by following any of three procedures. For a
stockholder "of record," meaning one whose shares are registered in his,
her or its name, to revoke a proxy:
. send another signed proxy card with a later date to the address
indicated on the proxy card; or
. send a letter revoking your proxy to our clerk at our principal
address; or
. attend the special meeting and vote in person.
A "beneficial holder" whose shares are registered in another name (for example
in "street name") must follow the procedures required by the holder of record,
which is usually a brokerage firm or bank, to revoke a proxy. You should
contact the holder of record directly for more information on these procedures.
Q: How do I vote in person?
A: If you plan to attend the special meeting and wish to vote in person, we
will give you a ballot when you arrive. If your shares are held in "street
name," you must bring an account statement or letter from the brokerage
firm or bank showing that you were the beneficial owner of the shares on
August __, 2001 in order to be admitted to the
iv
meeting. If you want to vote shares that are not in your name at the
special meeting, you must obtain a "legal proxy" from the holder of record
and present it at the special meeting.
Q: Are Renaissance stockholders entitled to dissenters' or appraisal rights?
A: Yes. Renaissance stockholders have the opportunity to assert dissenters'
rights relating to the merger. If you want to claim these rights, you must
comply with the special requirements of Massachusetts law, which are
included as Annex C of the proxy statement. These requirements are
summarized in the section of the proxy statement called "Dissenters'
Rights."
Q: Is there a deadline for closing the merger?
A: There is no deadline, although the merger agreement may be terminated, in
general, by any party if the merger does not close on or before
December 31, 2001.
Q: How do I exchange my stock certificates for cash?
A: If the merger is completed, you will receive written instructions for
exchanging your Renaissance stock certificates for cash. You should not
surrender your Renaissance stock certificates prior to receiving those
instructions. Please do not send your stock certificates at this time.
Q: Whom should I call if I have any questions?
A: If you have any questions about the special meeting, about your ownership
of our common stock, or about the merger, please contact:
Mr. Joseph P. Fargnoli
Chief Financial Officer
Renaissance Worldwide, Inc.
52 Second Avenue
Waltham, Massachusetts 02451
(781) 290-3000
v
SUMMARY.......................................................................................................... 1
Date, Time and Place of the Special Meeting.................................................................... 1
Purpose of the Special Meeting................................................................................. 1
The Parties.................................................................................................... 1
The Merger Agreement .......................................................................................... 2
Going Private Transaction ..................................................................................... 2
Special Committee's Recommendation to Stockholders ............................................................ 2
Board of Directors' Recommendation to Stockholders ............................................................ 3
Renaissance's Purpose and Reasons for the Merger .............................................................. 3
Position of Renaissance as to Fairness of the Merger........................................................... 3
The MBO Group's Purpose and Reasons for the Merger ............................................................ 3
Position of the MBO Group as to Fairness of the Merger ........................................................ 4
Opinion of Financial Advisor .................................................................................. 5
What Stockholders Will Receive ................................................................................ 5
How Will Options be Treated ................................................................................... 5
Stockholder Vote Required to Approve the Merger ............................................................... 5
Stock Ownership of Management, Directors and Other Affiliates ................................................. 5
Tax Consequences .............................................................................................. 6
Conditions to the Merger ...................................................................................... 6
Dissenters' Rights ............................................................................................ 6
Forward Looking Statements..................................................................................... 6
RENAISSANCE WORLDWIDE, INC. SPECIAL MEETING...................................................................... 8
Where and When The Special Meeting Will Be Held................................................................ 8
What Will Be Voted Upon........................................................................................ 8
Only Renaissance Holders of Record Are Entitled to Vote........................................................ 8
Quorum......................................................................................................... 8
Vote Required to Approve the Merger............................................................................ 8
Voting Your Shares by Proxy.................................................................................... 9
Revoking Your Proxy............................................................................................ 9
Voting Shares Held In "Street Name" by Proxy and Abstaining.................................................... 9
Voting In Person............................................................................................... 9
Dissenting Holders............................................................................................. 9
Costs of Soliciting These Proxies.............................................................................. 10
Exchanging Stock Certificates.................................................................................. 10
Effective Time................................................................................................. 10
SPECIAL FACTORS.................................................................................................. 11
Background of the Merger....................................................................................... 11
Renaissance's Purpose and Reasons for the Merger............................................................... 15
Position of Renaissance as to Fairness of the Merger........................................................... 19
Opinion of Financial Advisor................................................................................... 19
Certain Financial Projections Prepared by Renaissance's Management............................................. 28
The MBO Group's Purpose and Reasons for the Merger............................................................. 29
Position of the MBO Group as to Fairness of the Merger......................................................... 30
Identity and Background of the MBO Group, Registry Holding Company and Redwood Acquisition..................... 31
Directors and Executive Officers of Registry Holding Company and Redwood Acquisition........................... 31
Amount and Source of Funds and Financing of the Merger......................................................... 32
Certain Effects of the Merger.................................................................................. 32
Plans for Renaissance After the Merger......................................................................... 33
Conduct of the Business of Renaissance if the Merger Is Not Completed.......................................... 33
Material Federal Income Tax Consequences....................................................................... 33
Regulatory Matters............................................................................................. 34
INTERESTS OF CERTAIN PERSONS IN THE MERGER....................................................................... 35
THE MERGER AGREEMENT............................................................................................. 36
Merger Consideration........................................................................................... 36
Option Awards.................................................................................................. 36
The Surviving Corporation...................................................................................... 36
vi
Representations and Warranties................................................................................... 36
Principal Covenants.............................................................................................. 37
Principal Conditions to the Completion of the Merger Agreement................................................... 39
Termination...................................................................................................... 40
Break-Up Fee..................................................................................................... 41
Accounting Treatment............................................................................................. 41
Support Agreement and Guarantee.................................................................................. 41
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.................................................................... 42
COMPARATIVE PER SHARE, MARKET PRICE AND DIVIDEND INFORMATION....................................................... 43
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS.......................................................................... 44
Who Are Our Directors?........................................................................................... 44
Who Are Our Executive Officers?.................................................................................. 45
Employment Agreement............................................................................................. 45
DISSENTERS' RIGHTS................................................................................................. 45
BUSINESS COMBINATIONS WITH INTERESTED PARTIES...................................................................... 47
State Anti-Takeover Laws......................................................................................... 47
Preemptive Rights................................................................................................ 47
EXPENSES........................................................................................................... 47
WHERE YOU CAN FIND MORE INFORMATION................................................................................ 48
INFORMATION ABOUT STOCKHOLDER PROPOSALS............................................................................ 49
Annexes
Annex A Agreement and Plan of Merger dated June 21, 2001
Annex B Opinion of Adams, Harkness & Hill dated June 21, 2001
Annex C Sections 85 through 98 of Chapter 156B of the General Laws of The Commonwealth of Massachusetts
vii
SUMMARY
This summary highlights selected information from this proxy statement. This
summary may not contain all of the information that is important to you. To
understand the merger fully and to obtain a more complete description of the
legal terms of the merger agreement and the merger, you should carefully read
this entire document, including the Annexes and the documents to which we refer
you. See "Where You Can Find More Information" for more details.
Date, Time and Place of the Special Meeting
The special meeting of stockholders of Renaissance will be held on September
___, 2001, at 10:00 a.m., local time, at Renaissance's headquarters, 52 Second
Avenue, Waltham, MA 02451.
Purpose of the Special Meeting
At the special meeting, the stockholders of Renaissance will consider and vote
on a proposal to approve the merger agreement, a copy of which is attached to
this proxy statement as Annex A, and the merger of Redwood Acquisition with and
into Renaissance.
The Parties
Renaissance Worldwide, Inc.
---------------------------
Principal Executive Offices:
Renaissance Worldwide, Inc.
52 Second Avenue
Waltham, Massachusetts 02451
Telephone: (781) 290-3000
Renaissance Worldwide, Inc., a publicly held Massachusetts corporation,
provides business and information technology consulting services primarily
to Fortune 1000 companies and government agencies. Renaissance has two
operating companies: Renaissance Worldwide IT Consulting Services, Inc.
("ITCS") and GovConnect, Inc., ("GovConnect"). ITCS provides services
designed to assist clients in the design, implementation and/or support of
information technology applications. GovConnect provides solutions for the
public sector, primarily in the areas of strategy, systems, integration and
electronics solutions.
Registry Holding Company, Inc.
------------------------------
Principal Executive Offices:
c/o G. Drew Conway
Renaissance Worldwide, Inc.
52 Second Avenue
Waltham, MA 02451
Telephone: (781) 290-3000
Registry Holding Company, Inc., a Delaware corporation, is a privately held
company formed by G. Drew Conway, Renaissance's chief executive officer and
the chairman of Renaissance's board of directors, for the purpose of
engaging in the merger. Registry Holding Company has engaged in no
business activities unrelated to the merger. Mr. Conway has agreed to
transfer no fewer than 11,716,070 shares of Renaissance common stock to
Registry Holding Company before the completion of the merger. In addition,
five trusts for the benefit of Mr. Conway's children are expected to
transfer to Registry Holding Company approximately 75,550 shares of
Renaissance common stock, and a charitable foundation organized by Mr.
Conway is expected to transfer to Registry Holding Company approximately
214,000 shares of Renaissance common stock.
-1-
Redwood Acquisition Corp.
-------------------------
Principal Executive Offices
c/o G. Drew Conway
Renaissance Worldwide, Inc.
52 Second Avenue
Waltham, MA 02451
Telephone: (781) 290-3000
Redwood Acquisition Corp., a privately held Massachusetts corporation, is a
wholly-owned subsidiary of Registry Holding Company and has engaged in no
business activities unrelated to the merger.
Other Parties
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G. Drew Conway
Business Address:
Renaissance Worldwide, Inc.
52 Second Avenue
Waltham, MA 02451
Telephone: (781) 290-3000
Mr. Conway is Renaissance's chief executive officer and the chairman of
Renaissance's board of directors. Mr. Conway is also the sole director and
officer of both Registry Holding Company and Redwood Acquisition.
Additional information regarding Mr. Conway may be found in the section
entitled "Directors and Executive Officers of Registry Holding Company and
Redwood Acquisition" beginning on page 31.
The Merger Agreement (See Page 36)
We have attached a copy of the merger agreement as Annex A to this proxy
statement. We encourage you to read the merger agreement carefully because it is
the legal document that governs the merger. Under the merger agreement, Redwood
Acquisition will merge with and into Renaissance, with Renaissance as the
surviving corporation. If the merger is completed, each share of Renaissance
common stock outstanding will be canceled and converted into the right to
receive $1.65 in cash, other than shares held by Registry Holding Company,
Redwood Acquisition and stockholders who are entitled to and have exercised
dissenters' rights. Outstanding options to purchase Renaissance's common stock
will either be terminated or converted, upon exercise, into the right to receive
a cash payment equal to the product of (1) the number of shares underlying the
options and (2) the amount by which $1.65 is greater than the per share exercise
price of the options. In general, each of the parties has the right to
terminate the merger agreement if the merger is not completed on or before
December 31, 2001.
Going Private Transaction (See Page 32)
The merger constitutes a "going private" transaction for Renaissance under the
federal securities laws. Following the merger, Renaissance common stock no
longer will be publicly traded or quoted on the Nasdaq National Market.
Renaissance will also no longer be required to file periodic and other reports
with the United States Securities and Exchange Commission and will formally
terminate its reporting obligations under the Securities Exchange Act of 1934.
As a result of the merger, the holders of our common stock at the time of the
merger, other than Registry Holding Company, Redwood Acquisition, and
stockholders who are entitled to and have exercised dissenters' rights, will be
entitled to receive the cash merger price and will no longer have any interest
in Renaissance, including its future earnings or growth.
Special Committee's Recommendation to Stockholders (See Page 15)
The special committee of Renaissance's board of directors believes that the
terms of the merger agreement and the merger are advisable and fair to, and in
the best interests of, the holders of common stock not affiliated with
Mr. Conway. The special committee unanimously approved the merger agreement and
recommends that you vote "FOR" the approval of the merger agreement and the
merger.
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Board of Directors' Recommendation to Stockholders (See Page 15)
Renaissance's board of directors believes that the terms of the merger
agreement and the merger are advisable and fair to, and in the best interests
of, the holders of common stock not affiliated with Mr. Conway. The board of
directors recommends that you vote "FOR" the approval of the merger agreement
and the merger.
Mr. Conway, the chairman of Renaissance's board of directors and Renaissance's
chief executive officer, has interests in the merger that are different from the
interests of Renaissance's stockholders generally. At the time of the merger,
Mr. Conway will own substantially all of the outstanding capital stock of
Registry Holding Company, the entity that will own Renaissance after the merger.
The balance of the outstanding capital stock of Registry Holding Company will be
owned by five trusts for the benefit of Mr. Conway's children and a charitable
foundation that Mr. Conway controls. See the table under "Security Ownership of
Certain Beneficial Owners and Managers" for more detailed information regarding
the ownership interests of Mr. Conway and our other directors in the capital
stock of Renaissance.
Pursuant to the terms of the merger agreement, and in accordance with each of
our stock plans, each outstanding option to purchase Renaissance's common stock
will either be terminated or converted into the right to receive, upon
exercise, a cash payment equal to the product of (1) the number of shares
underlying the option and (2) the amount by which $1.65 is greater than the per
share exercise price of the option. Mr. Badavas and Mr. O'Brien hold options
that will become fully exercisable 20 days before completion of the merger and
will be terminated immediately thereafter. At the time of the merger,
Mr. Badavas and Mr. O'Brien will receive the following cash payments for their
options, equal to the product of (1) the number of shares underlying their
respective options and (2) the amount by which $1.65 is greater than the per
share exercise price of their options:
. Robert P. Badavas will receive a cash payment equal to $42,125; and
. Paul C. O'Brien will receive a cash payment equal to $42,125.
See pages 35 through 36 for more information.
Mr. Badavas and Mr. O'Brien will each receive a fee of up to $50,000 for their
service on the special committee.
Renaissance's Purpose and Reasons for the Merger (See Page 15)
In reaching its conclusion to approve and recommend the merger agreement, the
special committee and the board of directors considered, among other factors,
the following:
. the results of operations, financial condition, business and future prospects
of Renaissance, including the decline of Renaissance's total revenues and the
increase in Renaissance's operating losses for the fiscal year ended
December 31, 2000 and the first quarter of 2001;
. the economic and market conditions affecting Renaissance and the information
technology consulting industry as a whole;
. the special committee and the board of directors, after review of the other
alternatives to the merger that were previously pursued, concluded that the
merger is the best alternative to bring value to the holders of common stock;
and
. The other factors described in more detail beginning on page 15.
Position of Renaissance as to Fairness of the Merger (See Page 19)
Both the special committee and the board of directors of Renaissance have
concluded that the merger agreement is advisable and fair to, and in the best
interests of, the holders of Renaissance common stock not affiliated with
Mr. Conway and recommend that Renaissance's stockholders approve the merger
agreement and the merger. The special committee and the board of directors each
based their beliefs on the following:
. the financial presentation of Adams, Harkness & Hill, Inc., the financial
advisor hired to represent the special committee and to advise the special
committee and the board of directors, including its opinion that the merger
consideration is fair, from a financial point of view, to the holders of
Renaissance common stock not affiliated with Mr. Conway;
. that based on the per share closing price as of June 20, 2001, the day before
the public announcement that the parties had signed a merger agreement, the
consideration to be paid to the holders of common stock in the merger
represented an approximate premium of 267% over the trading price of the
shares; and
. the other factors described in more detail beginning on page 19.
The MBO Group's Purpose and Reasons for the Merger (See Page 29)
Mr. Conway, together with five trusts for the benefit of Mr. Conway's children
and a charitable foundation organized by Mr. Conway, will, prior to the merger,
contribute approximately 12,000,000 shares of Renaissance common stock to
Registry Holding Company. We refer to these stockholders together with Registry
Holding Company and Redwood Acquisition as the "MBO Group." Each member of the
MBO Group has informed us that his or its purpose for the merger is to acquire
all of the shares of Renaissance that the MBO Group does not already own and to
continue the business and operations of Renaissance as a private company. In
determining to enter into the merger, each member of the MBO Group has informed
us that it considered the following factors:
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. the results of operations, financial condition, business and future prospects
of Renaissance, including the decline of Renaissance's total revenues and the
increase in Renaissance's operating losses for the fiscal year ended
December 31, 2000 and the first quarter of 2001, which does not take into
account any reduction in revenue due to the sale of the Business Strategy
Group or the Enterprise Solutions Group;
. management's forecasts for revenues and earnings described in "Certain
Financial Projections Prepared by Renaissance's Management" beginning on
page 28;
. the economic and market conditions affecting Renaissance, its customers and
the information technology consulting industry as a whole;
. the lack of equity research coverage for Renaissance's common stock and the
difficulty of attracting new investment interest in Renaissance, and the
resulting difficulty for stockholders of Renaissance, including the members
of the MBO Group holding common stock of Renaissance, to receive a fair price
when selling their shares in the market;
. the possible delisting of Renaissance's shares from the Nasdaq National
Market, and the resultant lack of liquidity in the event of a delisting;
. the lack of viable and immediate third-party interest in acquiring or
exploring other strategic transactions with Renaissance despite the extended
process conducted previously by SG Cowen, and more recently by Adams, Harkness
& Hill, and the lack of viable and immediate strategic alternatives to the
merger agreement, which reduced the prospects of obtaining value for the
stockholders of Renaissance, including the members of the MBO Group holding
stock in Renaissance;
. difficulties in pursuing long-term initiatives and business development
resulting from Renaissance's operating as a public company, and costs
associated with the operation of a public company; and
. the other factors described in more detail beginning on page 29.
Position of the MBO Group as to Fairness of the Merger (See Page 30)
Each member of the MBO Group believes that the merger and the consideration to
be paid in the merger to the holders of Renaissance's common stock, including
the holders of common stock who are not affiliated with Mr. Conway, is fair to
such holders. Each member of the MBO Group based its belief, among other
factors, on the following:
. after a thorough review with independent financial and legal advisors, the
board of directors and the special committee, which consisted entirely of
directors of Renaissance who are not affiliated with Mr. Conway, concluded
that the merger is advisable and fair to, and in the best interests of, the
holders, of Renaissance common stock who are not affiliated with Mr. Conway,
and recommended that Renaissance's stockholders approve the merger agreement
and the merger;
. the business, operations, financial condition, operating results and prospects
of Renaissance, including the decline of Renaissance's total revenues and the
historical increase in Renaissance's operating losses;
. the consideration to be paid to the holders of common stock in the merger
represents an approximate premium of 267% over the per share closing price as
of June 20, 2001, the day before the public announcement of the signing of the
merger agreement;
. the lack of current prospects for finding an alternative to the merger with
the MBO Group that would result in greater value to the holders of common
stock other than the MBO Group;
. their respective beliefs that, under present circumstances, Renaissance can be
operated more efficiently as a private company than as a public company, and
that the prospects for Renaissance as a public company are uncertain.
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. their respective beliefs that the ability of Renaissance to return to
substantial profitability and substantial revenue growth is uncertain and, in
any event, is expected to require an extended period; and
. the other factors described in more detail beginning on page 30.
Opinion of Financial Advisor (See Page 19)
In connection with the merger agreement, each of the special committee and the
board of directors considered the opinion of Renaissance's financial advisor,
Adams, Harkness & Hill, that the merger consideration is fair, from a financial
point of view, to the holders of Renaissance common stock not affiliated with
Mr. Conway. The full text of Adams, Harkness & Hill's written opinion is
attached to this proxy statement as Annex B. Adams, Harkness & Hill's opinion
does not constitute a recommendation to any stockholder with respect to any
matter relating to the proposed merger.
We encourage you to read the opinion carefully in its entirety for a
description of the assumptions made, matters considered and limitations on the
review undertaken by Adams, Harkness & Hill.
What Stockholders Will Receive (See Page 36).
Upon completion of the merger, all holders of our common stock, except for
Registry Holding Company, Redwood Acquisition and stockholders who are entitled
to and have exercised dissenters' rights, will be entitled to receive $1.65 per
share of common stock.
How Will Options be Treated (See Page 36)
Upon completion of the merger, outstanding options to purchase Renaissance's
common stock will either be terminated or converted into the right to receive,
upon vesting and exercise, a cash payment equal to the product of (1) the number
of shares underlying the options and (2) the amount by which $1.65 is greater
than the per share exercise price of the options.
Options issued under Renaissance's 1996 Stock Plan and 1998 Acquisition Stock
Option Plan will remain outstanding after the merger and be converted into the
right to receive, upon exercise, a cash payment equal to the product of (1) the
number of shares underlying the option and (2) the amount by which $1.65 is
greater than the per share exercise price of the option. These options will
continue to vest in accordance with their terms.
Options issued under the 1998 Directors Stock Plan and the 2001 Directors
Stock Plan will become fully exercisable 20 days before completion of the merger
and will be terminated immediately thereafter. At the time of the merger,
Renaissance will make cash payments to the directors holding options under such
plans with a per share exercise price less than $1.65 equal to (1) the number of
shares underlying the options and (2) the amount by which $1.65 is greater than
the per share exercise price of the options.
There are currently no options with a per share exercise price less than $1.65
outstanding under the Renaissance Solutions, Inc. 1995 Equity Incentive Plan,
the 1998 International Stock Plan, 1996 Eligible Directors Stock Plan or The
Hunter Group, Inc. Employee Non-Qualified Stock Option Plan. Any options
outstanding under such plans with a per share exercise price greater than or
equal to $1.65 will be terminated upon completion of the merger.
Stockholder Vote Required to Approve the Merger (See Page 8)
Under our articles of organization, approval of the merger agreement and the
merger requires the vote of the holders of at least 75% of the outstanding
shares of Renaissance's common stock on the record date. Mr. Conway holds
approximately 22% of our outstanding shares of common stock and has agreed to
vote in favor of approval of the merger agreement. In addition, five trusts
for the benefit of Mr. Conway's children and a charitable foundation organized
by Mr. Conway collectively hold approximately 1% of our outstanding shares of
common stock. These entities have indicated their intent to vote in favor of
approval of the merger.
Stock Ownership of Management, Directors and Other Affiliates (See Page 42)
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On August __, 2001, the record date for the special meeting, directors and
executive officers of Renaissance other than Mr. Conway beneficially owned less
than 1%, of Renaissance's outstanding common stock, excluding options to
purchase common stock.
All of our directors and executive officers who own common stock have
indicated that they intend to vote to approve the merger agreement and the
merger. The shares of common stock beneficially owned by our directors and
executive officers and their affiliates, and the shares owned by the trusts for
the benefit of Mr. Conway's children and a charitable foundation organized by
Mr. Conway, represent approximately 12,000,000 shares, excluding options to
purchase common stock, or approximately 23% of the outstanding shares of common
stock as of the record date. Therefore, at the special meeting, in addition to
the vote of all of our directors and executive officers and the entities
described above, the vote of Renaissance stockholders holding at least 52% of
the outstanding common stock on the record date will be required to approve the
merger agreement and the merger.
Tax Consequences (See Page 33)
Generally, for United States federal income tax purposes, stockholders will
be treated as if they sold their common stock for the cash received in the
merger. Each stockholder will recognize taxable gain or loss equal to the
difference between the amount of cash received and the stockholder's adjusted
tax basis in the Renaissance common stock exchanged. Stockholders are encouraged
to consult their own tax advisors regarding how the tax consequences of the
merger specifically affect them.
Conditions to the Merger (See Page 39)
Each of the MBO Group and us is required to complete the merger only if
specific conditions are satisfied or waived, including the following:
. approval of the merger agreement and the merger by the stockholders of
Renaissance;
. absence of any law or court order prohibiting the merger; and
. the representations and warranties made in the merger agreement are true and
correct on the effective date of the merger, subject to certain materiality
qualifications.
In addition, the MBO Group is required to complete the merger only if the
following additional conditions are satisfied or waived:
. absence of a material adverse change in the business, assets, financial
condition or results of operations of Renaissance; and
. closing of the financing commitment from J.P. Morgan Business Credit Corp.
acting through The Chase Manhattan Bank ("J.P. Morgan/Chase") as contemplated
by the lending commitment letter that it provided to Mr. Conway (which
commitment is subject to completion of the merger, to other customary closing
conditions and to Renaissance achieving earnings before interest, taxes,
depreciation and amortization of not less than negative $2,000,000 for the
fiscal quarter ended June 30, 2001 and not less than $1.00 for the two-month
period ending August 31, 2001).
Although neither we nor the MBO Group expects to waive any conditions to the
merger, we reserve the right to do so if we believe a waiver is in the best
interests of the stockholders. We will resolicit the approval of stockholders if
we believe that any such waiver constitutes a material change from the
information described in this proxy statement.
Dissenters' Rights (See Page 45)
Holders of Renaissance common stock who do not vote in favor of the merger
agreement and who follow specific statutory procedures have the right to a
judicial appraisal of the fair value of their common stock.
Forward Looking Statements
This proxy statement, including information included or incorporated by
reference in this document, contains forward-looking statements. These forward-
looking statements, which include the projections under the caption "Certain
Financial Projections Prepared by Renaissance's Management" and other statements
about Renaissance's financial condition, results of operations, plans,
objectives, future performance and business, involve risks and uncertainties.
All forward-looking statements included in this proxy statement are based upon
information available
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to Renaissance as of the date hereof. Renaissance assumes no obligation to
update any such forward-looking statements. Renaissance's actual results could
differ materially from those anticipated in the forward-looking statements for
many reasons, including the risks described in Reniassance's Annual Report on
Form 10-K and Quarterly Reports on form 10-Q.
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RENAISSANCE WORLDWIDE, INC. SPECIAL MEETING
This proxy statement is being furnished in connection with the solicitation
of proxies from the holders of our common stock by the special committee and by
our board of directors. The special committee and the board of directors is
soliciting your proxy with respect to the merger agreement and the merger of
Redwood Acquisition with and into Renaissance, and any other matters to be voted
upon at the special meeting and at any adjournment or adjournments of the
special meeting. We will begin mailing this proxy statement to holders of our
common stock on or about August __, 2001. You should read this proxy statement
carefully before voting your shares.
Where and When The Special Meeting Will Be Held
The special meeting of stockholders of Renaissance will be held on September
__, 2001, at 10:00 a.m., local time, at our headquarters, 52 Second Avenue,
Waltham, Massachusetts, 02451.
What Will Be Voted Upon
At the special meeting, you will be asked to consider and vote upon the
following items:
. to approve the merger agreement and the merger of Redwood Acquisition with and
into Renaissance; and
. such other business as may properly come before the special meeting or any
adjournment or adjournments of the special meeting.
Only Renaissance Holders of Record Are Entitled to Vote
August __, 2001 is the record date for the determination of stockholders who
are entitled to notice of, and to vote at, the special meeting of stockholders
or at any adjournment or adjournments. On the record date, there were issued and
outstanding 52,902,540 shares of common stock.
Quorum
A quorum of our stockholders is necessary to have a valid stockholders'
meeting. The required quorum for the transaction of business at the special
meeting is the presence, in person or by proxy, of the holders of shares
representing a majority of the shares of stock entitled to vote. Mr. Conway is
the holder of approximately 22% of our outstanding shares of common stock. In
addition, five trusts for the benefit of Mr. Conway's children and a charitable
foundation organized by Mr. Conway collectively hold approximately 1% of
Renaissance's outstanding common stock. Mr. Conway has agreed to vote to
approve the merger agreement and the merger and we have been informed that the
five trusts and the charitable foundation each intend to vote to approve the
merger agreement and the merger. Therefore, at the special meeting, in addition
to the presence of Mr. Conway and the entities described above, 27% of the
outstanding common stock on the record date will be sufficient to establish a
quorum.
Vote Required to Approve the Merger
For the merger to occur, the merger agreement must be approved by the
holders of at least 75% of the outstanding shares of common stock. As of the
record date, there were issued and outstanding 52,902,540 shares of our common
stock. Common stock entitles its holders of record to one vote for each share
owned. Mr. Conway is the holder of approximately 22% of our outstanding shares
of common stock. Mr. Conway has agreed to vote to approve the merger agreement
and the merger. In addition, five trusts for the benefit of Mr. Conway's
children and a charitable foundation organized by Mr. Conway collectively hold
approximately 1% of our outstanding shares of common stock, and these entities
have indicated their intent to vote to approve the merger agreement and the
merger. Other directors and executive officers collectively hold less than 1% of
our outstanding shares of common stock and they have all indicated their intent
to vote to approve the merger agreement and the merger. Therefore, at the
special meeting, in addition to the vote of Mr. Conway, the family trusts, the
charitable foundation and all of our other directors and executive officers, the
vote of Renaissance stockholders holding at least 52% of the outstanding
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common stock on August __, 2001 will be required to approve the merger agreement
and the merger, which means that approximtely two-thirds of the stockholders not
affiliated with Mr. Conway must approve the merger agreement and the merger.
Voting Your Shares by Proxy
When you return your proxy card, you are giving your "proxy" to the
individuals we have designated in the proxy to vote your shares as you direct at
the meeting. If you sign the proxy card but do not give voting instructions,
these individuals will vote your shares for each proposal as recommended by the
board of directors. Each proxy will confer discretionary authority to vote on
any matter presented at the meeting which Renaissance did not know of a
reasonable time before the mailing of this proxy statement. If any matter not
specifically listed in the notice of special meeting is presented at the special
meeting, they will vote your shares in accordance with their best judgment. At
the time we began printing this proxy statement, we knew of no matters that
needed to be acted on at the meeting other than those discussed in this proxy
statement.
Where a stockholder has specified a choice on his or her proxy with respect to
certain proposals or matters, that direction will be followed. If no direction
is given, all of the shares of common stock represented by the proxy will be
voted in favor of such proposal or matter.
Revoking Your Proxy
A proxy that is properly submitted to Renaissance may be revoked at any time
before it is exercised. For a stockholder "of record" meaning, one whose shares
are registered in his or her own name, to revoke a proxy, the stockholder may
either:
. send another signed proxy card with a later date to the address indicated on
the proxy card; or
. send a letter revoking the stockholder's proxy to our clerk at our principal
address; or
. attend the special meeting and vote in person.
A "beneficial holder" whose shares are registered in another name, for example
in "street name" must follow the procedures required by the holder of record,
which is usually a brokerage firm or bank, to revoke a proxy. You should contact
the holder of record directly for more information on these procedures.
Voting Shares Held in "Street Name" by Proxy and Abstaining
If you do not provide your broker with instructions on how to vote your
"street name" shares, your broker will not be able to vote them on the merger.
This will have the effect of voting against the merger. You should therefore
instruct your broker how to vote your shares, following the directions provided
by your broker. Similarly, abstentions will not be voted for the merger and will
therefore have the effect of voting against the merger.
Voting in Person
Stockholders that attend the special meeting and wish to vote in person will
be given a ballot at the meeting. If your shares are held in street name and you
want to attend the meeting, you must bring an account statement or letter from
the brokerage firm or bank showing that you were the beneficial owner of the
shares on August __, 2001. If you want to vote shares that are held in street
name or are otherwise not registered in your name, you will need to obtain a
"legal proxy" from the holder of record and present it at the special meeting.
Dissenting Holders
Massachusetts law entitles stockholders who do not vote in favor of a merger
to demand a judicial appraisal of the fair value of their shares. If you do not
vote in favor of the merger and if you follow the procedures set forth beginning
on page 45, you may be a dissenting holder. Failure to follow such procedures
precisely will result in a loss of dissenters' rights.
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Costs of Soliciting These Proxies
Renaissance will pay all of the costs of soliciting these proxies, consisting
mostly of printing and mailing costs. Although we are mailing these proxy
materials, our directors and employees may also solicit proxies in person or by
telephone, telecopier or other electronic means of communication. Renaissance
has retained a proxy solicitor to assist in the solicitation of proxies for
the special meeting at an estimated cost to Renaissance of approximately $15,000
- - $20,000 plus reimbursement of reasonable expenses. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of stock held in their names, and, as required by law, Renaissance will, at
their request, reimburse them for their out-of-pocket expenses in this regard.
Exchanging Stock Certificates
Holders of common stock should not send in their stock certificates with the
proxy cards. If the merger is completed, you will receive written instructions
for exchanging your stock certificates for cash.
Effective Time
The merger will be effective as soon as practicable following stockholder
approval of the merger agreement and the merger at the special meeting and
satisfaction or waiver of the terms and conditions set forth in the merger
agreement, and upon the filing of articles of merger with the Secretary of the
Commonwealth of the Commonwealth of Massachusetts. In general, each of the
parties has the right to terminate the merger agreement, if the merger is not
completed on or before December 31, 2001.
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SPECIAL FACTORS
Background of the Merger
In April 2000, Renaissance approached SG Cowen about the possibility of
assisting us in the sale of the entire company or in the sale of our two
principal operating units, the Information Technology Consulting Services Group,
which we refer to as ITCS, and the Enterprise Solutions Group, which we refer to
as Enterprise Solutions. SG Cowen had successfully represented Renaissance in
our most significant divestiture to that point: the sale of our Business
Strategy Group to Behrman Capital II, L.P. for approximately $67.9 million, a
transaction that closed in March 2000. We sold the Business Strategy Group, a
non-core business, after determining that this operating unit was not producing
the synergies we had hoped when we acquired it in 1997 and further determining
that it could be sold for a favorable price on the open market. Renaissance was
required by the terms of its credit facility to use the proceeds from the sale
to repay a $50 million term loan and $10 million of additional borrowings under
the credit facility. SG Cowen served as our exclusive financial advisor for the
transaction and received a fee of approximately $1 million. Mr. Conway has never
been affiliated with the purchaser of the Business Strategy Group.
Mr. Conway, after discussions with the board of directors, contacted SG
Cowen about retaining its services in connection with the sale of Renaissance in
either a single transaction, or a series of transactions, the purpose of which
would be to maximize stockholder value in the near term. On May 9, 2000, we
signed an engagement letter with SG Cowen pursuant to which SG Cowen was
entitled to receive a minimum fee of $3 million upon completion of a sale of
Renaissance, and separate fees upon the sale of each operating unit.
SG Cowen immediately commenced three parallel initiatives: the sale of the
company as a whole, the sale of ITCS and the sale of Enterprise Solutions. At
that time, ITCS contributed approximately 72% of our revenue, and Enterprise
Solutions contributed approximately 21% of our revenue. The remaining 7% of our
revenue was attributable to the GovConnect business unit. SG Cowen was not
directed to seek interested buyers for GovConnect as a separate operating
business.
During the period of May through August 2000, SG Cowen approached 29
potential buyers of the entire company. In response to those inquiries, 14
potential buyers requested copies of the confidential information memorandum
that had been prepared describing the company and our principal operating units.
After reviewing the confidential information memorandum, five potential buyers
attended management meetings. After these meetings, two parties submitted
indications of interest, subject to further due diligence, to purchase
Renaissance. The two potential buyers completed their due diligence during the
week of August 7, 2000. After completion of due diligence, neither party made an
offer.
During the period of May through August 2000, SG Cowen approached 26
potential buyers for Enterprise Solutions. After reviewing the confidential
information memorandum, four potential buyers attended meetings with management
of Enterprise Solutions. After these meetings, three parties submitted
indications of interest, subject to further due diligence, to purchase
Enterprise Solutions. After completion of due diligence, two potential buyers
submitted final bids in late August 2000. We entered into a stock purchase
agreement to sell Enterprise Solutions with Cedar Group Ltd. on September 18,
2000, and the transaction closed on October 20, 2000. Renaissance received
approximately $78.4 million in the transaction and used $33.8 million of the
proceeds to repay all outstanding obligations under its credit facility. The
lenders under that credit facility had threatened to terminate the facility if
it was not paid off by October 31, 2000, a factor that entered into
Renaissance's decision to complete the transaction. SG Cowen received a fee of
$1.25 million in connection with the sale of Enterprise Solutions. Mr. Conway
has never been affiliated with the Cedar Group.
Between May and September of 2000, SG Cowen approached a total of 45
potential buyers for ITCS. After reviewing the confidential information
memorandum, three potential buyers attended meetings with management of ITCS.
After these meeting, Renaissance received three indications of interest, subject
to further due diligence, to purchase ITCS, two of which were from parties that
had attended meetings with management of ITCS and one of which was from one of
the parties that had declined to make an offer for the entire company in August,
2000. One indication of interest was for $125 million, another was for a range
of $85 million to $100 million and the third, based on a formula, computed to a
range of approximately $49 million to $55 million and contemplated that
Renaissance would finance a portion of the transaction. Because the third
indication of interest was significantly below the other two, and required
financing from Renaissance, it was rejected. The indication of interest
for $125 million was significantly greater than the other two and, because it
exceeded Renaissance's market capitalization, appeared to have the potential to
represent a significant value to stockholders. However, it was subsequently
withdrawn in late November for reasons that were not communicated to
Renaissance.
In December 2000, after the party that had expressed the highest indication
of interest for ITCS terminated discussions with us, Renaissance instructed SG
Cowen to renew discussions with the two parties that had declined to make an
offer for the entire Company in August, 2000, one of which was the party that
had submitted the second highest indication of interest in ITCS, to ascertain
their interest in making an offer for either the entire Company or ITCS. After
conducting meetings with management and further due diligence, in January 2001,
both potential bidders informed us that they declined to bid on either the
company as a whole or ITCS. At that point, Renaissance decided to discontinue
the initiatives to sell ITCS or the company as a whole, due to the significant
distraction to the operations of the business caused by the sale process and the
declining morale of our employees. The sale of Enterprise Solutions in October
2000 had no bearing on Renaissance's decision to discontinue its selling
efforts. Renaissance is unable to determine whether the prior sales of the
Business Strategy Group and Enterprise Solutions had any material impact on the
market price of Renaissance's common stock.
On April 6, 2001, Mr. Conway sent a letter to our independent directors --
Messrs. O'Brien and Badavas -- seeking their thoughts on a potential management
buyout by Mr. Conway. Although Messrs. O'Brien and Badavas declined to offer
views on the advisability of a management buyout, they responded by indicating a
willingness to consider any offer to buy Renaissance that Mr. Conway wished to
submit to them. The special committee believed that, because of Mr. Conway's
familiarity with Renaissance, pursuing a potential transaction with him would
not cause the same level of distraction to the business or decline in morale of
Renaissance's workforce caused by the prior sale process, and might potentially
increase morale by demonstrating management's commitment to the business. The
sale of Enterprise Solutions in October 2000 had no bearing on the decisions of
Messrs. Badavas and O'Brien to consider any offer from Mr. Conway. On April 12,
2001, Mr. Conway submitted an expression of interest to purchase all of our
outstanding common stock for $1.20 per share. In response
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to that expression of interest, Messrs. O'Brien and Badavas consulted with
counsel and formed a special committee of the board of directors on April 12,
2001. Compensation for members of the special committee was established at a
maximum of $50,000 for each member, to be comprised of a retainer fee of $25,000
and an additional per diem fee of $2,000 for each meeting of the special
committee attended in person or by telephone or for each substantial expenditure
of time on special committee business.
The special committee retained Ropes & Gray as its legal counsel. The
special committee elected to hire its own independent financial advisor and
thereafter Mr. Conway requested that the special committee permit SG Cowen to
represent him in connection with his proposal. Under its then current
arrangement with Renaissance, SG Cowen would have been entitled to a minimum fee
of $3 million upon completion of a sale of Renaissance. In connection with the
termination of SG Cowen by Renaissance, and the engagement of SG Cowen by Mr.
Conway, SG Cowen agreed to reduce its fee to $1.75 million. We terminated our
engagement of SG Cowen as exclusive financial advisor to Renaissance and waived
any conflict of interest relating to its representation of Mr. Conway. The
parties recognized that SG Cowen's representation of Mr. Conway might create an
appearance of a conflict of interest because of its previous representation of
Renaissance, but we agreed to the waiver because SG Cowen was not privy to any
information of which Mr. Conway was not already aware, because SG Cowen's
efforts to sell the company as a whole had been completed before the proposal
for a management buyout had surfaced, and because we believed that our
stockholders would benefit from the fee reduction. On April 25, 2001, the
special committee engaged Adams, Harkness & Hill as its financial advisor with
respect to the proposed management buyout, and to survey other alternatives for
the disposition of Renaissance or its business units.
Over the next two weeks, Adams, Harkness & Hill became familiar with our
financial condition and results of operations and worked with management to
understand our current plans and forecasts. In addition, the special committee
instructed Renaissance's chief financial officer to contact the four parties who
had provided written expressions of interest during the prior year's sale
process to gauge whether there was any interest in a renewed bid in the context
of current market prices and to help assess the fairness of Mr. Conway's
proposed price. The chief financial officer contacted four parties and
instructed them to contact Adams, Harkness & Hill if they were indeed
interested. All four parties contacted Adams, Harkness & Hill. Adams, Harkness &
Hill spoke with the four parties and received preliminary indications from each
that they would be interested in considering a transaction. However, because of
the discussions described below that took place with two other potential
purchasers, and because all of these four parties had previously passed on the
opportunity to acquire Renaissance or ITCS, the special committee directed Adams
Harkness & Hill to keep communications open but not to pursue these four parties
aggressively. None of the four parties initiated any meaningful follow-up on
their initial contact with Adams Harkness & Hill.
On May 14, 2001, the special committee met and heard Adams, Harkness &
Hill's preliminary views on valuation and the fairness of Mr. Conway's initial
expression of interest. Adams, Harkness & Hill informed the special committee
that it believed the aggregate "break-up" value of the three principal
components of Renaissance's value -- ITCS, GovConnect and the cash on our
balance sheet -- was the appropriate method to value the business of
Renaissance. For ITCS, Adams Harkness & Hill considered the collection value of
the accounts receivable, assuming a sale of that business to a buyer that would
continue to provide services to the accounts. For GovConnect, Adams Harkness &
Hill advised the special committee that the business should be valued on a
multiple of revenues, using available public company comparables. The final
element -- cash -- was derived directly from the balance sheet. Using this
valuation analysis, Adams Harkness & Hill advised the special committee that it
believed Renaissance had a value that was in excess of Mr. Conway's initial
indication of interest. The special committee informed Mr. Conway that his
initial valuation was unacceptable and that, unless a higher offer was
forthcoming, it would have no interest in pursuing this transaction.
Mr. Conway requested a meeting with the special committee and, on May 21,
2001, the special committee met to hear Mr. Conway's revised proposal. The legal
representatives and financial advisors for each side were also present in person
or by teleconference. Prior to the meeting, Mr. Conway shared with the members
of the special committee his most recent forecasts for our operations. At the
meeting, Mr. Conway made a proposal to acquire all of our outstanding common
stock for a price of $1.25 per share. The two sides discussed the significant
disparity in the valuations that had been indicated in the review by their
financial advisors, in particular the break-up valuation of ITCS. Although both
sets of financial advisors considered other valuation methodologies, including
discounted cash flow analysis, liquidation value and peer-group analysis, they
were in general agreement on the appropriateness of valuing Renaissance based on
the break-up value of ITCS and GovConnect. The special committee informed Mr.
Conway that it was not prepared to accept his offer, given the disparity in
valuation between the offer made, as supported by Mr. Conway's financial
advisors, and the valuation attributed to Renaissance by Adams, Harkness & Hill.
The special committee instructed Adams, Harkness & Hill to make discreet
inquiries to interested parties to validate Adam Harkness & Hill's valuation and
to assess whether there were any alternative buyers. At a meeting of the
special committee conducted on May 24, 2001, Adams, Harkness & Hill reported
that it had received preliminary indications of interest from two potential
purchasers that it believed would be qualified and able to complete a
transaction. One of the potential purchasers expressed an interest in acquiring
ITCS for total consideration in the range of $25-35 million. The other
potential purchaser expressed an interest in acquiring the entire company at a
price of $1.50 per share. Adams, Harkness & Hill advised the special committee
that it believed both of the proposals were capable of being completed if the
potential purchasers could obtain financing in a timely manner.
Later in the day on May 24, the special committee and its advisors met
telephonically with Mr. Conway and his advisors. The special committee informed
Mr. Conway that it had received preliminary indications of interest in
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ITCS as well as the entire company that suggested that his $1.25 per share offer
did not reflect the value of the enterprise. The special committee stated that
it recognized that opening the company to a full-scale sale process involved a
certain amount of risk. Nonetheless, it felt compelled under the circumstances
to pursue alternative proposals because its financial advisor had advised the
special committee that the $1.25 offer was not fair to the Renaissance
stockholders. The special committee asked Mr. Conway whether he had funding for
his proposal, and he indicated that he had received an oral commitment for the
necessary funding. The special committee further inquired whether Mr. Conway was
prepared to increase his offer. Mr. Conway stated that he was prepared to offer
$1.42 per share for all of the outstanding common stock.
The special committee convened on Friday, May 25, 2001 to consider Mr.
Conway's improved offer. Also present at the meeting were the special
committee's financial and legal advisors. The special committee concluded that
Mr. Conway's offer of $1.42 per share was not sufficient for the special
committee to conclude the price was fair to Renaissance stockholders. It
considered the potential harm that could result from opening Renaissance up to
another full-scale sale process. It noted that billable consultant headcount
had been declining during the year and that there was a possibility that opening
the company up to a sale process could accelerate that process. Nonetheless, it
concluded that, given the level of Mr. Conway's offer, rejecting it would be the
most appropriate course of action to maximize value to Renaissance stockholders.
Later that same day, the special committee and its advisors met with Mr.
Conway and some of his advisors. The special committee told Mr. Conway that,
although it appreciated that he had increased his offer by almost 20% from the
initial indication of interest, it was not in a position to accept his offer.
The special committee revealed that it had instructed Adams, Harkness & Hill and
the two members of senior management that were not involved in Mr. Conway's
proposal to prepare for due diligence by other interested parties, including, to
the extent they had a continuing interest, the four parties with whom Adams,
Harkness & Hill had previously communicated, commencing Tuesday, May 29, 2001.
Recognizing the sensitivity of having other parties on our premises to conduct
due diligence, the special committee requested that Mr. Conway recuse himself
from the process and that two members of management without a potential conflict
of interest orchestrate the diligence efforts on behalf of Renaissance. Mr.
Conway stated that, in his capacity as chief executive officer, director and a
significant stockholder, he wanted to make sure the process was designed to
obtain maximum value for stockholders. However, he asked that the special
committee delay its commencement of alternative due diligence until noon on
Wednesday, May 30, 2001 to allow him to assess the possibility of further
raising his offer. The special committee agreed to his request, although it
asked its advisors and unconflicted management to be prepared for alternative
due diligence beginning at noon on Wednesday.
On May 30, 2001, the special committee received a revised expression of
interest from Mr. Conway at a price of $1.63 per share for all outstanding
shares of common stock. Mr. Conway indicated that he had obtained a financing
commitment for the transaction at that price level and was prepared to proceed
to negotiate definitive agreements for the acquisition. Mr. Conway provided a
copy of the financing commitment, on a confidential basis, for the special
committee's review. The financing commitment was from a lending source that was
not one of the bank syndicate members who were parties to Renaissance's 1999
credit facility.
The special committee met with its legal and financial advisors on May 31,
2001 to consider Mr. Conway's revised offer. It considered that, although the
piecemeal sale of the businesses could possibly lead to a higher gross price
than the $1.63 per share that Mr. Conway was offering, successfully completing
two transactions -- the sale of ITCS and the sale of GovConnect -- involved
additional elements of transactional and operating performance risk that made
Mr. Conway's offer to acquire the entire company more attractive. Selling the
two businesses separately also gave rise to severance and change-of-control
arrangements that would not be triggered if the company were sold as a whole.
The special committee was also mindful of the fact that every bidder that had
commenced due diligence on the company during the sale process begun by SG Cowen
had ultimately decided against submitting an offer. Adams, Harkness & Hill
suggested that it would be in a position to render an opinion that a price of
$1.63 per share was fair from a financial point of view to the stockholders of
Renaissance unaffiliated with Registry Holding. Accordingly, the special
committee concluded that it would commence negotiations with Mr. Conway with the
intent of reaching agreement on a definitive merger agreement.
On June 1, 2001, the special committee received an unsolicited proposal
from the potential purchaser that had one week earlier expressed an interest in
acquiring the ITCS business. This proposal stated that the potential purchaser
was interested in making an offer to purchase Renaissance in its entirety at a
cash purchase price of $1.75
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per share. The potential purchaser stated that it would require 10-14 days to
finalize its due diligence investigation.
The special committee conferred by telephone on June 2, 2001 to discuss
this most recent proposal. Adams, Harkness & Hill advised the special committee
that it believed a transaction at the indicated price level was reasonably
capable of being completed if the potential purchaser could obtain financing in
a timely manner. Counsel for the special committee reviewed the directors'
fiduciary obligations in considering which alternative would provide the greater
value for the stockholders. The special committee reviewed the financial
statements of the offeror and questioned Adams, Harkness & Hill about the
financial viability of the offer. Ultimately, the special committee concluded
that it was appropriate to pursue the offer to see whether the offeror could
reach a definitive offer accompanied by evidence of financing in a relatively
short period of time. The special committee also recognized that time was of the
essence due to the declining state of the business, and it also concluded that
interjecting more uncertainty in the workforce could be seriously detrimental to
the on-going health and stability of the business. It resolved to permit the
offeror to commence due diligence on Monday, June 4, 2001 and to require the
offeror to submit a bid accompanied by evidence of financing no later than 5
p.m. on Monday, June 11. The special committee instructed Adams, Harkness & Hill
to inform the bidder that it should be prepared to initiate due diligence on
Monday morning.
The special committee subsequently informed Mr. Conway of its decision. Mr.
Conway stated that given the attenuated process for obtaining acceptance of his
offer, he would withdraw his offer. Mindful of previous experience, the special
committee was concerned that the due diligence efforts might fail to produce an
offer, leaving Renaissance with no alternative but to restart the sale process,
which would continue to place significant demands on Renaissance and further
deplete its declining resources. The special committee communicated to Mr.
Conway concern about his contemplated withdrawal. Mr. Conway stated that he
would agree to leave his offer open until noon on Wednesday, June 13, 2001 if
the special committee agreed to permit due diligence to be conducted by, and
negotiate with, no party other than the current offeror, and to compensate Mr.
Conway for his expenses incurred to date. The special committee considered the
request and concluded that it was in the best interest of the Renaissance
stockholders to explore the alternative offer and thus agreed to the offer
extension provided that Mr. Conway would be reimbursed only for actual expenses
incurred up to a maximum of $200,000. Mr. Conway accepted this arrangement and
left his offer of $1.63 per share open until noon on June 13.
The third party offeror conducted due diligence at the company's
headquarters in Waltham and at the offices of counsel for the special committee
commencing on June 4.
On June 11, the special committee received a proposal from the offeror to
purchase all of the outstanding shares of Renaissance common stock in a tender
offer at $1.75 per share followed by a merger. The proposal included a letter of
intent from a financing source indicating that it would consider establishing a
lending relationship with the offeror, subject to further satisfactory due
diligence. The financing letter contemplated that a layer of junior capital of
up to $20 million would be required to complete the transaction but provided no
indication of who would provide such capital or when any commitment would be
obtained. Although the offeror had been asked to provide its comments on an
agreement of merger prepared by the special committee's counsel, the offeror
submitted an entirely new agreement that included more comprehensive
representations and warranties, and other terms that the special committee's
legal counsel advised would increase the risk of completing a transaction with
this offeror, including a lower standard for material adverse changes. The
offeror's draft also included a substantially higher transaction termination fee
than the special committee had discussed with Mr. Conway and his counsel, which
the special committee's legal counsel advised could deter other parties from
making an alternative offer after the merger agreement was signed.
The special committee met on June 12, 2001 to evaluate the proposal and to
compare it to Mr. Conway's offer. Before the special committee met, Mr. Conway
advised the special committee orally that he was prepared to increase his offer
to $1.65 per share. The special committee then proceeded to consider the
proposal from the third party offeror. The members noted the absence of a
funding commitment to complete the transaction. In addition, the requirement for
junior capital added an element of risk and uncertainty to the transaction that
was not present in Mr. Conway's offer. The special committee further noted that
the financing commitment of the third party offeror would have to be for a
greater amount than Mr. Conway's financing commitment because the third party
offeror would need to acquire the shares held by Mr. Conway and his affiliates,
representing approximately 23% of the outstanding common stock. Representatives
from the third party offeror requested an opportunity to meet with the special
committee. The special committee invited them into the meeting by telephone
conference. The representatives from the third party stated that they believed
they would be able to present a fully-financed offer if they were provided
additional time but were not specific about the amount of additional time that
would be required. The special committee took note of their comments and thanked
them for their offer.
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After extensive discussion about the merits of each proposal, the special
committee concluded that Mr. Conway's offer, although at a somewhat lower price,
represented the transaction that was most likely to be able to be concluded and
therefore presented the best value to Renaissance stockholders. The special
committee considered in particular that every other bidder that had completed
due diligence had failed to make an offer, and that buyers had been solicited by
investment bankers over a period that extended for more than a year. The special
committee also recognized that the process of selling Renaissance, or its
businesses, continued to divert Renaissance's resources and could cause material
harm to Renaissance if protracted. The absence of a financing commitment at the
agreed - upon deadline, without any indication of when one might be forthcoming,
presented a significant obstacle to the third-party proposal. The special
committee also noted that the third party offeror would have to raise
significantly more financing than is required in connection with Mr. Conway's
offer, and expressed its uncertainty as to the feasibility of obtaining
financing of that magnitude in light of Renaissance's asset base and operating
history. Moreover, Mr. Conway had informed the special committee that he was not
prepared to continue his offer through any further extensions. After
deliberation, the special committee instructed Adams, Harkness & Hill to inform
the third party offeror that its proposal had not been accepted.
The special committee informed Mr. Conway that it was prepared to negotiate
definitive documentation on his proposal, based principally on the form of
merger agreement previously provided by Renaissance. On June 13, 2001 the
special committee and Mr. Conway agreed that the break up fee in connection with
this transaction would be $2,000,000. The special committee and Mr. Conway
further agreed that, until June 22, 2001, the special committee would not
solicit any other offers from third parties or participate in any discussions
with, or furnish any information to, any third parties with respect to any offer
or potential offer. The special committee also agreed that Renaissance would
increase its reimbursement of the expenses incurred by Mr. Conway until June 22,
2001 from $200,000 to a maximum of $250,000. At various dates and times between
June 13 and June 20, counsel for the special committee and counsel for Mr.
Conway met to negotiate the definitive agreements for the transaction.
On June 21, 2001, the special committee convened to consider the final
documentation. Counsel to the special committee again reviewed the special
committee's fiduciary duties and reviewed with them the terms of the transaction
and the merger agreement. Adams, Harkness & Hill reviewed its valuation analyses
of Renaissance and its analysis of the fairness of the merger consideration,
from a financial point of view, to the stockholders of Renaissance not
affiliated with Registry Holding Company. Adams, Harkness & Hill rendered to
the special committee its opinion dated June 21, 2001 to the effect that, as of
such date and based on and subject to the matters described in its opinion, the
merger consideration was fair from a financial point of view to the holders of
Renaissance common stock unaffiliated with Registry Holding Company.
Thereafter, the special committee and the board of directors determined
that the merger agreement and the merger are advisable and fair to, and in the
best interests of, the holders of our common stock not affiliated with Mr.
Conway. The special committee also voted that the merger agreement and the
merger should be submitted to stockholders at a special meeting and to recommend
that the stockholders approve these matters when put before them for
consideration. The members of the special committee unanimously voted in favor
of such determinations and resolutions. In addition, the company's Board of
Directors unanimously voted in favor of such determinations and resolutions.
Accordingly, the special committee instructed the unconflicted members of
management to execute on behalf of Renaissance definitive agreements with Mr.
Conway. Definitive agreements were executed and the deal was publicly announced
on Thursday, June 21, 2001. Renaissance and Mr. Conway also executed a Support
Agreement and Guarantee, pursuant to which Mr. Conway agreed to vote his shares
of common stock in favor of the merger agreement and the merger and to guarantee
the performance by Registry Holding Company and Redwood Acquisition of their
respective obligations under the merger agreement. The members of the special
committee have not discussed with anyone the possibility of continuing a
business relationship with Renaissance or Mr. Conway after the merger is
completed.
On August 28, 2001 the special committee announced that it had received an
unsolicited proposal for the acquisition of Renaissance in a cash merger. The
special committee determined that the offer met the standards contained in the
merger agreement that justified the special committee pursuing the proposal
further. The special committee has permitted the offeror to commence due
diligence and expects to commence negotiations shortly. The offer is subject to
the completion of due diligence, the receipt of a financing commitment and the
negotiation of a definitive agreement. Until such time as there is a definitive
agreement with the offeror or the offer is withdrawn or rejected, the special
committee does not intend to disclose any of the specific terms of the offer.
You are cautioned that there is no assurance that this offer will result in an
alternative transaction.
Renaissance's Purpose and Reasons for the Merger
In the course of reaching their decisions to approve the merger agreement
and the merger, the special committee and the board of directors consulted with
Renaissance senior management, as well as Renaissance's outside legal counsel
and financial advisor, and considered a number of factors, both positive and
negative, including the following material factors:
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. Renaissance's total revenue for the fiscal year ended December 31, 2000
decreased by 23.5% from the previous year's levels. This decrease does not
take into account any reduction in revenue due to the sale of the Business
Strategy Group or the Enterprise Solutions Group. Renaissance sustained an
operating loss of approximately $33.9 million for the fiscal year ended
December 31, 2000, excluding extraordinary gain from disposal of certain of
Renaissance's business units. Renaissance incurred a net loss of $12.5 million
for the quarter ended March 31, 2001 and its total revenues decreased 21% as
compared to the previous year's comparable quarter;
. the economic and market conditions affecting Renaissance and the information
technology consulting industry as a whole, including the decline in demand for
information technology consulting services and the highly competitive nature
of the market for such services;
. the lack of equity research coverage for Renaissance's common stock, which
would serve to strengthen the market for Renaissance's common stock, the
difficulty of attracting new investment interest in Renaissance and the
resulting difficulty for stockholders of Renaissance to receive a fair price
when selling their shares in the market;
. the decline in trading prices for Renaissance's common stock from $7.94 per
share on January 3, 2000 and in trading prices for providers of business and
information technology consulting services in general, which the special
committee and the board considered as weighing in favor of the merger; that
from January 3, 2000 until the day before public announcement of the
transaction, the highest per share closing price of Renaissance's common stock
was $8.06 and the lowest closing price was $0.40; and that Renaissance's
common stock trading price has not closed at or above $1.65 since September
21, 2000, and taking into account the market condition of Renaissance it did
not appear likely that Renaissance's common stock would approach a higher
level of trading prices in the foreseeable future;
. the significant costs of remaining a public company, including the legal,
accounting and transfer agent fees and expenses and printing costs necessary
to satisfy the reporting obligations of the Exchange Act were becoming
increasingly draining on Renaissance's resources given the deterioration of
its financial performance;
. that Renaissance received a notice from the Nasdaq National Market ("Nasdaq")
dated April 27, 2001 notifying the company of its non compliance with the
Nasdaq listing requirements due to the failure of the company's common stock
to maintain a minimum bid price of $1.00 for 30 consecutive trading days. The
letter stated that Renaissance had until July 26, 2001 to regain compliance or
the common stock would be delisted. Renaissance received a similar notice
from Nasdaq on January 2, 2001 but regained compliance on January 30, 2001.
At the time the special committee made its decision to approve the merger
agreement and the merger, there was no assurance that Renaissance would
satisfy the listing requirements by July 26, 2001. Renaissance's stockholders
approved a reverse stock split that provided the board of directors with the
discretion to issue one share of common stock for not more than six, and less
than four outstanding shares of common stock at any time before December 31,
2001. Although the special committee and the board of directors believed the
implementation of the reverse stock split would increase the probability, in
the short term, that the common stock would trade above $1.00, there was no
assurance this would occur or that the company would continue to meet other
Nasdaq listing requirements. Renaissance regained compliance on July 10, 2001,
but there is no assurance that its common stock will continue to maintain a
minimum bid price of $1.00, especially if the merger is not completed;
. a delisting of Renaissance's common stock from Nasdaq would reduce the market
liquidity of the common stock and the ability of investors to trade the common
stock;
. that Renaissance conducted an extensive auction process between April, 2000
and January, 2001 with the assistance of SG Cowen, during which time:
. Renaissance explored various possible transactions, including the sale
of the entire company and the sale of ITCS, the operating company
which contributed approximately 72% of Renaissance's revenue at the
inception of the auction process;
. SG Cowen approached 29 potential acquirors of Renaissance and 45
potential acquirors of ITCS, including, in each instance, competitors
of Renaissance and equity sponsors of leveraged buyout funds;
. only two parties submitted indications of interest to acquire the
entire company, and after completing their due diligence in August,
2000, neither party made an offer. SG Cowen contacted both parties
again in December, 2000. They each conducted further due diligence but
neither party made an offer; and
. only three parties submitted indications of interest to acquire ITCS,
one of which was significantly less favorable than the others and was
therefore rejected. The second party withdrew its indication of
interest after conducting further diligence and the third party, who
was one of the two parties that had expressed an interest in acquiring
the entire Company, also withdrew its indication of interest in
purchasing ITCS;
. Mr. Conway's offer to purchase the entire company at a cash price of $1.65 per
share was accompanied by a commitment from a bank to provide debt financing
for the merger and was not conditioned on the completion of due diligence;
. that although another potential purchaser made an offer on June 11, 2001 to
purchase the entire company at a cash price of $1.75 per share, this
alternative offer was contingent upon obtaining a senior debt financing
commitment and a layer of junior capital from unspecified parties, included a
draft merger agreement with less favorable terms than the offer from Mr.
Conway and was contingent upon satisfactory completion of additional due
diligence;
-16-
. that Mr. Conway's offer, although at a somewhat lower price, represented a
transaction that was more likely to be able to be concluded because of the
debt commitment he had obtained. The special committee was concerned about
the ability of the other offeror to obtain the necessary financing, especially
because the other offeror would require a greater financing commitment than
Mr. Conway on account of having to purchase Mr. Conway's shares and the higher
share price, and would require a layer of junior capital from parties that had
not yet been identified. The special committee was also mindful of the fact
that no bidder that had commenced due diligence on the company during a period
extending for more than a year ultimately made an offer;
. that Mr. Conway stated that he would withdraw his offer if the special
committee failed to accept it by June 13, 2001 and, given the uncertainty
associated with the other offer, the special committee did not want to decline
Mr. Conway's offer and risk being left without an alternative transaction if
the other offeror was unable to obtain financing and complete the transaction.
. the fact that no other third party surfaced to date with an alternative
transaction proposal, despite the previous efforts of SG Cowen and the more
recent efforts of Adams, Harkness & Hill;
. the previous auction process had consumed significant resources and was
disruptive to employee relations and to the business as a whole, and the
special committee believed that recommencing an auction process would place
additional strain on Renaissance's business without any guarantee that a
suitable acquiror would come forward;
. becoming a private company would allow Renaissance to focus on long-term
strategic initiatives rather then the quarter-to-quarter results that Wall
Street demands;
. that the sale of the entire company was preferable to the piecemeal sale of
the company because a single sale involved less transactional and operating
performance risk and may yield greater proceeds on an after tax basis;
. that, based on the per share closing price as of June 20, 2001, the day before
the public announcement that the parties had signed a merger agreement, the
consideration to be paid to the holders of common stock in the merger
represented an approximate premium of 267% over the trading price of the
shares, which the special committee and the board considered as weighing
heavily in favor of the merger;
. the immediate availability of liquidity for the stockholders not affiliated
with Mr. Conway, particularly in light of the relatively low volume of trading
in the common stock;
-17-
. Renaissance's billable headcount of consultants declined by approximately 30%
between March 31, 2000 and March 31, 2001 and Renaissance continues to
experience a decline in head count; and
. that the consideration to be received by Renaissance's stockholders in the
merger consists entirely of cash, which the special committee and the board of
directors considered as weighing in favor of the merger.
The special committee considered the net book value of Renaissance only
indirectly in determining to approve the merger agreement and the merger. Cash
and accounts receivable were the two most significant assets at March 31, 2001
and represented almost 80% of the net book value on that date. Thus, the
"break-up" analysis, which gave weight to the accounts receivable and cash on
the balance sheet, took into account net book value. The special committee gave
no weight to the liquidation value of Renaissance in determining to approve the
merger agreement and the merger. It did not believe the accounts receivable at
ITCS would sustain their value in the event of a liquidation and there were no
assets with any significant liquidation value at GovConnect.
The special committee and the board also considered the following factors
adverse to the proposed merger, including:
. that many of the holders of common stock may lose significant portions of
their investment, which the special committee and the board considered as
weighing against the merger;
. that, following the merger, Renaissance stockholders will cease to participate
in any future earnings growth of Renaissance or benefit from any increase in
the value of the company, which the special committee and the board considered
as weighing against the merger; and
. the risk that the merger is not completed, including because of the exercise
of termination rights of Registry Holding Company under the merger agreement
and failure to satisfy certain closing conditions, which the special committee
and the board considered as weighing against the merger.
The special committee and the board were also aware of and considered the fact
that the interests of Registry Holding Company and Redwood Acquisition were
adverse to the interests of the public stockholders because the two groups are
on opposite sides of the proposed merger transaction, and that the interests of
Mr. Conway and his affiliates were different from the interests of the other
stockholders because Mr. Conway would continue to have an interest in
Renaissance's business through his ownership of a majority of the stock of
Registry Holding Company. The special committee and the board of directors did
not consider these facts as weighing in favor of or against the merger. See
"Interests of Certain Persons in the Merger."
The foregoing discussion addresses the material information and factors
considered by the special committee and the board of directors in their
consideration of the merger, including factors that support the merger as well
as those that may weigh against it. In view of the variety of factors considered
in reaching its determination, the special committee and the 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
recommendations. In addition, the individual members of the special committee
and the board of directors may have given different weight to different
factors.
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Other than in their capacity as members of the special committee or the
board of directors of Renaissance, no director or executive officer of
Renaissance has made a recommendation either in support of or opposed to the
transaction.
Renaissance's Position as to Fairness of the Merger
Both the special committee and the board of directors have concluded that the
merger agreement is advisable and fair to, and in the best interests of, the
holders of Renaissance common stock not affiliated with Mr. Conway and recommend
that Renaissance's stockholders approve the merger agreement and the merger.
The special committee and the board of directors based their beliefs on the
following:
. the financial presentation of Adams, Harkness & Hill, including its opinion,
delivered on June 21, 2001, that the merger consideration is fair, from a
financial point of view, to holders of common stock not affiliated with
Mr. Conway, and the special committee's and the board's adoption of the
conclusion and analyses of Adams, Harkness & Hill contained in its fairness
opinion;
. that, based on the per share closing price as of June 20, 2001, the day before
the public announcement that the parties had signed a merger agreement, the
consideration to be paid to the holders of common stock in the merger
represented an approximate premium of 267% over the trading price of the
shares;
. the decline in trading prices for Renaissance's common stock from $7.94 per
share on January 3, 2000 and in trading prices for providers of business and
information technology consulting services in general; that from January 3,
2000 until the day before public announcement of the transaction, the highest
per share closing price of Renaissance's common stock was $8.06 and the lowest
closing price was $0.40; and that Renaissance's common stock trading price has
not closed at or above $1.65 since September 21, 2000, and taking into account
the market condition of Renaissance it did not appear likely that
Renaissance's common stock would approach a higher level of trading prices in
the foreseeable future;
. that although another potential purchaser made an offer on June 11, 2001 to
purchase the entire company at a cash price of $1.75 per share, this
alternative offer was contingent upon obtaining a senior debt financing
commitment and a layer of junior capital from unspecified parties, included a
draft merger agreement with less favorable terms than the offer from
Mr. Conway and was contingent upon satisfactory completion of additional due
diligence;
. that Mr. Conway stated that he would withdraw his offer if the special
committee failed to accept it by June 13, 2001 and, given the uncertainty
associated with the other offer, the special committee did not want to decline
Mr. Conway's offer and risk being left without an alternative transaction if
the other offeror was unable to obtain financing and complete the
transaction;
. that Mr. Conway's offer, although at a somewhat lower price, represented a
transaction that was more likely to be able to be concluded because of the
debt commitment he had obtained. The special committee was concerned about the
ability of the other offeror to obtain the necessary financing, especially
because the other offeror would require a greater financing commitment than
Mr. Conway on account of having to purchase Mr. Conway's shares and the higher
share price, and would require a layer of junior capital from parties that had
not yet been identified. The special committee was also mindful of the fact
that no bidder that had commenced due diligence on the company during a period
extending for more than a year ultimately made an offer;
. the fact that no other third party surfaced to date with an alternative
transaction proposal, despite the previous efforts of SG Cowen and the more
recent efforts of Adams, Harkness & Hill;
. that the terms of the merger agreement were reasonable insofar as they would
not likely deter a third party from offering a proposal that is materially
more favorable;
. that the merger agreement permits Renaissance to provide information and
participate in negotiations with respect to unsolicited acquisition proposals
if the board of directors determines, in consultation with its outside counsel
and the special committee, that such action is necessary to act in a manner
consistent with the fiduciary duties of the board of directors, which, as a
whole, the special committee and the board considered as weighing in favor of
the fairness of the merger;
. that the merger agreement permits Renaissance to terminate the merger
agreement to accept a superior acquisition proposal;
. that the merger requires the approval of holders of at least 75% of
Renaissance common stock, which the special committee considered as weighing
in favor of the fairness of the merger because it meant that a transaction
with an affiliate of Mr. Conway could not be consummated without strong
stockholder support, including the support of at least two-thirds of the
stockholder's not affiliated with the MBO Group; and
. that holders of common stock may demand dissenters' rights under Sections 85
through 98, inclusive, of Chapter 156B of the General Laws of Massachusetts,
which the special committee and the board considered as weighing in favor of
the fairness of the merger.
Because the special committee is comprised of the members of the board of
directors not affiliated with Mr. Conway, and because the special committee
retained an independent financial advisor to assist it in assessing the fairness
of the transaction to stockholders not affiliated with Mr. Conway, the special
committee and the board of directors did not consider it necessary to retain an
outside party to negotiate on behalf of the unaffiliated stockholders.
Opinion of Financial Advisor
Adams, Harkness & Hill provided a fairness opinion to the special committee
on June 21, 2001, that, as of the date of such fairness opinion, the
consideration of $1.65 per share in cash payable pursuant to the merger
agreement was fair, from a financial point of view, to the stockholders of
Renaissance not affiliated with Mr. Conway. The full text of the fairness
opinion which sets forth assumptions made, matters considered and limitations on
the review undertaken in connection with the fairness opinion, is attached
hereto as Annex B and is incorporated herein by reference. The fairness opinion,
referred to herein, does not constitute a recommendation as to how any
stockholder should vote with respect to the Merger. Holders of shares of common
stock are urged to, and should, read the fairness opinion in its entirety.
The special committee retained Adams, Harkness & Hill to assist it in its
evaluation of the proposed merger. The special committee selected Adams,
Harkness & Hill because of its familiarity with the information technology
services industry generally and with Renaissance in particular. Pursuant to the
terms of Adams, Harkness & Hill's engagement letter with the special committee
dated April 25, 2001, Renaissance agreed to pay Adams, Harkness & Hill a
retainer fee of $50,000 and a fee of $300,000 upon the delivery by Adams,
Harkness & Hill of the fairness opinion (which fee was payable regardless of the
conclusions expressed therein). In addition, as compensation for additional
services provided in connection with soliciting alternative offers, and to
secure Adams, Harkness & Hill's services for consultation and advice during the
period from the signing of the merger agreement and through the completion of
the merger, the special committee agreed to pay Adams, Harkness & Hill an
additional amount of $150,000, payable upon the completion of the merger.
Renaissance also agreed to reimburse Adams, Harkness & Hill for all reasonable
fees and disbursements of its counsel and all of its reasonable travel and other
out-of-pocket expenses arising in connection with its engagement, and to
indemnify Adams, Harkness & Hill and its affiliates to the full extent permitted
by law against liabilities relating to or arising out of its engagement, except
for liabilities found to have resulted from the willful misconduct or gross
negligence of Adams, Harkness & Hill. Renaissance also agreed that, if the
Company engaged in an alternative transaction that did not involve Mr. Conway,
it would pay Adams, Harkness & Hill a fee equal to two percent of the aggregate
consideration.
Pursuant to the terms of the Adams, Harkness & Hill Engagement Letter,
Adams, Harkness & Hill was retained by the special committee to advise the
special committee and the board of directors and render an opinion as to the
fairness, from a financial point of view, to the stockholders of Renaissance not
affiliated with Mr. Conway, of the consideration to be received by such
stockholders in connection with the merger. Adams, Harkness & Hill is a
nationally recognized investment banking firm and is regularly engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, private placements and valuations for
corporate and other purposes.
At the meeting of the special committee on June 21, 2001, Adams, Harkness &
Hill rendered its fairness opinion, in writing, that, as of that date, based
upon and subject to the various considerations set forth in the fairness
opinion, the consideration to be paid pursuant to the merger agreement is fair,
from a financial point of view, to the holders of Renaissance common stock not
affiliated with Mr. Conway.
The full text of the fairness opinion dated June 21, 2001, which sets
forth, among other things, the assumptions made, procedures followed, matters
considered and limitations on the scope of the review undertaken by Adams,
Harkness & Hill in rendering its opinion, is attached as Annex B to this proxy
statement and is incorporated herein by reference. Stockholders are urged to,
and should, read the opinion carefully and in its entirety. The fairness opinion
is directed to the special committee and addresses only the fairness, from a
financial point of view, of the consideration to be received by the stockholders
of Renaissance not affiliated with Mr. Conway pursuant to the merger agreement
as of June 21, 2001, and does not address any other aspect of the merger or
constitute a recommendation to any holder of common stock as to how to vote at
the special meeting. The description of the fairness opinion set forth in this
proxy statement is only a summary and stockholders should refer to the full text
of the fairness opinion.
The following is a summary of the various sources of information and
valuation methodologies used by Adams, Harkness & Hill in arriving at its
fairness opinion. To assess the fairness of the transaction, Adams, Harkness &
Hill employed analyses based on the following:
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. public company peers' financial performance and relative valuations;
. relative valuation and transaction premiums associated with selected
precedent transactions;
. absolute and relative stock price performance;
. discounted cash flow analysis; and
. "break-up" analysis
In conducting its investigation and analysis and in arriving at its
Opinion, Adams, Harkness & Hill reviewed the information and took into account
the investment, financial and economic factors it deemed relevant and material
under the circumstances. The material actions undertaken by Adams, Harkness &
Hill in its capacity as financial advisor to the special committee were as
follows:
. reviewed publicly-available information, including but not limited to
Renaissance's recent filings with the SEC;
. reviewed internal financial information prepared by Renaissance's
management concerning the current status of the business and its historical
financial performance, including interim financial performance data not yet
disclosed to the public;
. reviewed internal financial information prepared by Renaissance's
management concerning the projected performance of Renaissance assuming the
merger is not completed (i.e., assuming the current public ownership and
capital structure);
. held discussions with members of Renaissance's senior management, including
Mr. Conway, Joseph P. Fargnoli, who at the time was the vice president,
corporate tax, David Sweetser, who at the time was the senior vice
president of administration for GovConnect and Edward Bradley, the vice
president of finance and administration for ITCS, concerning Renaissance's
historical and current financial condition and operating results, as well
as its future prospects (as reflected by the management projections);
. held discussions with Mr. Conway, concerning the merger and his intentions
and objectives regarding both Renaissance's future and the equity ownership
position in Renaissance controlled by Mr. Conway;
. held discussions with the special committee concerning the evaluation by
the board of directors of various means of enhancing stockholder value,
including the unsuccessful attempt to sell Renaissance, in whole or in
part, to a strategic or financial acquiror over the prior twelve month
period;
. compared the historical market prices and trading activity of Renaissance's
common stock with those of other publicly traded companies that Adams,
Harkness & Hill deemed relevant;
. compared the financial position and operating results of Renaissance with
those of other publicly traded companies that Adams, Harkness & Hill deemed
relevant;
. compared the proposed financial terms of the merger with the terms of other
change of control transactions that Adams, Harkness & Hill deemed relevant,
including certain transactions involving management stockholders;
. reviewed the terms of the debt financing proposal for the merger made to
the MBO Group by J.P. Morgan/Chase;
. reviewed the merger agreement in its draft form, dated as of June 20, 2001;
. reviewed relevant industry market research studies, investment research
reports for Renaissance's competitors, and key economic and market
indicators, including interest rates and general stock market performance;
. spoke to four parties who had provided written expressions of interest in
acquiring the entire company or ITCS during the earlier sale process, each
of whom contacted Adams, Harkness & Hill after being contacted by
Renaissance's chief financial officer;
-20-
. contacted, at the direction of the special committee, two strategic
acquirors identified by Adams, Harkness & Hill to solicit and qualify their
interest in a negotiated acquisition of Renaissance as a whole or in part
(See "Limited Solicitation of Potential Acquirors"); and
. reviewed the materials provided by the third party that expressed an
interest in acquiring Renaissance at a cash purchase price of $1.75,
including the proposal received by the special committee on June 1, 2001,
financial statements of the third party and the proposal received by the
special committee on June 11, 2001 that included a letter of intent from a
financing source.
Other than as set forth above, Adams, Harkness & Hill did not review any
additional information in preparing its fairness opinion that, independently,
was material to its analysis. The special committee did not place any
limitation, other than to limit the scope of the solicitation of potential
acquirors to the entities approved by the special committee, upon Adams,
Harkness & Hill with respect to the procedures followed or factors considered by
Adams, Harkness & Hill in rendering its fairness opinion. In rendering its
fairness opinion, Adams, Harkness & Hill assumed and relied upon the accuracy
and completeness of all of the financial and other information that was publicly
available or provided to Adams, Harkness & Hill by, or on behalf of,
Renaissance, and did not independently verify such information. Adams, Harkness
& Hill assumed, with the special committee's consent, that:
. all material assets and liabilities (contingent or otherwise, known or
unknown) of Renaissance are as set forth in its financial statements;
. obtaining any regulatory and other approvals and third party consents
required for consummation of the merger would not have a material effect on
the anticipated benefits of the merger; and
. the merger would be consummated in accordance with the terms set forth in
the merger agreement.
Adams, Harkness & Hill also assumed, with the special committee's consent,
that the management projections were reasonably prepared and based upon the best
available estimates and good faith judgments of Renaissance's management as to
the future performance of Renaissance.
In conducting its review, Adams, Harkness & Hill did not obtain an
independent evaluation or appraisal of any of the assets or liabilities
(contingent or otherwise) of Renaissance. Adams, Harkness & Hill's fairness
opinion did not predict or take into account any possible economic, monetary or
other changes which may occur, or information which may come available, after
the date of its written fairness opinion.
Public Company Peer Analysis
Renaissance is a provider of business and technology consulting services to
organizations in a broad range of industries. Renaissance is categorized into
two primary business segments, ITCS and GovConnect. ITCS provides services
designed to assist clients in the design, implementation and / or support of
information technology applications. GovConnect provides solutions to the public
sector, primarily in the areas of strategy, systems integration and electronic
solutions.
Adams, Harkness & Hill established a group of 16 publicly traded companies
in the technology services industry that it deemed comparable to Renaissance
based on their similar information technology consulting strategy, the markets
served, and their financial performance (collectively, the "Peer Group
Companies").
Adams, Harkness & Hill compared certain financial measures and metrics of
Renaissance with those of the Peer Group Companies. Such information included:
. Market Capitalization;
. Last Twelve Months Revenue;
. Enterprise Value;
. Ratio of Enterprise Value to Last Twelve Months Revenue;
. Sequential Quarterly Growth Rate;
. Year over Year Quarterly Growth Rate;
-21-
. Gross Margin; and
. Operating Margin.
All financial measures and metrics involving Peer Group Companies' common
stock prices per share are as of the close of trading on June 19, 2001. The Peer
Group Companies consist of the following public companies (in alphabetical
order):
Last Twelve
Company Market Months Enterprise Gross Operating
------- Capitalization (a) Revenue (b) Value (a) Margin (b) Margin (b)
------------------ ----------- --------- ---------- ----------
(in millions) (in millions) (in millions)
Alternative Resources Corporation $ 8.2 $ 249.0 $ 46.8 30.36% 1.98%
American Management Systems $ 989.5 $ 1,291.2 $1,033.6 46.60% 8.60%
Analysts International Corporation $ 110.5 $ 571.1 $ 141.6 18.42% 1.13%
Computer Horizons Corporation $ 93.6 $ 437.7 $ 96.8 30.84% -3.44%
Computer Task Group, Inc. $ 82.9 $ 332.4 $ 105.5 29.61% 0.72%
Cotelligent Group $ 13.8 $ 82.3 ($10.1) 31.77% -25.28%
Covansys $ 316.9 $ 422.4 $ 196.7 25.60% -8.90%
Hall, Kinion & Associates, Inc. $ 96.7 $ 295.8 $ 64.3 50.24% 4.30%
Kelly Services, Inc. $ 897.0 $ 4,494.0 $ 887.2 17.48% 2.83%
Manpower, Inc. $2,357.8 $12,483.5 $2,695.1 15.90% 2.50%
Metro Information Services, Inc. $ 68.1 $ 292.4 $ 148.2 29.43% 8.13%
Modis Professional Services, Inc. $ 609.5 $ 1,814.7 $ 542.1 29.04% 7.16%
Perot Systems Corporation $1,658.2 $ 1,126.0 $1,432.6 22.20% 2.10%
Spherion Corporation $ 534.1 $ 3,740.8 $1,087.4 33.46% 4.90%
Technisource, Inc. $ 16.0 $ 152.5 $ 14.2 26.19% 2.32%
Volt Information Sciences, Inc. $ 252.8 $ 2,227.0 $ 406.4 8.47% 3.88%
Mean $ 506.6 $ 1,875.8 $ 555.5 27.85% 0.81%
Renaissance Worldwide, Inc. $ 24.2 $ 412.8 ($17.6) 24.70% -6.00%
(a) Market Capitalization and Enterprise Value derived from share prices as of
the close of trading on June 19, 2001 and fully diluted shares outstanding
and debt figures taken from each companies most recently filed quarterly or
annual report.
(b) Last Twelve Months Revenue, Gross Margin and Operating Margin data obtained
from each Peer Group Company's most recent Form 10-Q or 10-K filed prior to
June 19, 2001.
Based on its expertise in valuation of publicly-traded companies and, in
particular, its research into the performance variables considered by investors
when assessing relative value among the Peer Group Companies, Adams, Harkness &
Hill concluded that publicly-traded companies in the information technology
consulting segment of the technology services industry are valued primarily on
the bases of historical and projected revenue growth, profitability, and overall
size, all of which are reflected in the individual company's ratio of Enterprise
Value to Last Twelve Months Revenue. Adams, Harkness & Hill employed an
Enterprise Value-based valuation in this analysis because this methodology
implies a total cost of acquisition taking into account a company's cash and
debt position. To determine Enterprise Value, Market Capitalization is
calculated as the product of a company's common stock price per share (Adams,
Harkness & Hill used the closing price on June 19, 2001, one day before the
receipt of the draft of the merger agreement, for all public company comparative
analyses) multiplied by the number of diluted shares outstanding. The Market
Capitalization is then adjusted for a company's debt and cash positions by
adding the debt balance and subtracting the cash balance to arrive at an
Enterprise Value.
The following equation illustrates the manner in which Enterprise Value has
been calculated:
Enterprise Value = ((market value of equity) + (debt)) - (cash, cash equivalents
and short-term investments)
In order of descending ratios of Enterprise Value to Last Twelve Months
Revenue, the Peer Group Companies ranked as follows:
Ratio of Enterprise Value to Last
Company Twelve Months Revenue (a), (b)
------- ------------------------------
Perot Systems Corporation 1.3x
American Management Systems 0.8x
Covansys 0.5x
-22-
Metro Information Services, Inc. 0.5x
Computer Task Group, Inc. 0.3x
Modis Professional Services, Inc. 0.3x
Spherion Corporation 0.3x
Alternative Resources Corporation 0.2x
Analysts International Corporation 0.2x
Computer Horizons Corporation 0.2x
Hall, Kinion & Associates 0.2x
Kelly Services, Inc. 0.2x
Manpower, Inc. 0.2x
Volt Information Sciences, Inc. 0.2x
Technisource, Inc. 0.1x
Cotelligent Group (0.1x)
Mean 0.3x
Renaissance Worldwide, Inc. (0.04x)
(a) Enterprise Value derived from share prices as of close of trading on June
19, 2001 and fully diluted shares outstanding and debt figures taken from
each companies most recently filed quarterly report.
(B) Last Twelve Months Revenue data obtained from each respective Peer Group
Company's most recent SEC filings.
Adams, Harkness & Hill noted Renaissance's ratio of Enterprise Value to
Last Twelve Months Revenue multiple was near the bottom of the Peer Group.
In alphabetical order, the Sequential Quarterly Growth Rate and the Year
over Year Quarterly Growth Rate of the Peer Group, are as follows:
Sequential Year over Year
Quarterly Quarterly
Company Growth Rate (a, b) Growth Rate (a, c)
------- ------------------ ------------------
Alternative Resources Corporation -5.40% -18.00%
American Management Systems -1.00% 3.80%
Analysts International Corporation 3.30% 9.00%
Computer Horizons Corporation -2.30% -6.80%
Computer Task Group, Inc. -1.11% -13.80%
Cotelligent Group -20.24% -41.30%
Covansys -2.00% 3.00%
Hall, Kinion & Associates, Inc. -22.10% -1.10%
Kelly Services, Inc. -5.00% 0.70%
Manpower, Inc. -3.00% 3.30%
Metro Information Services, Inc. 1.20% -2.00%
Modis Professional Services, Inc. -1.10% -2.80%
Perot Systems Corporation 2.78% 7.30%
Spherion Corporation -4.91% -10.81%
Technisource, Inc. -4.65% 30.10%
Volt Information Sciences, Inc. 1.87% -0.06%
Mean -3.98% -2.47%
Renaissance Worldwide, Inc. -0.10% -20.70%
(a) Calculated using information obtained from each Peer Group Company's SEC
filings.
(b) Sequential Quarterly Growth Rate reflects the increase / decrease in net
revenue for the most recently reported three-month period compared to the
three-month period preceding it.
(c) Year over Year Quarterly Growth Rate reflects the increase / decrease in
net revenue for the most recently reported three-month period compared to
the same period from a year earlier.
Adams, Harkness & Hill noted Renaissance's Sequential Quarterly Growth Rate
was slightly above the mean of the Peer Group and Renaissance's Year over Year
Quarterly Growth Rate was near the bottom of the Peer Group.
Precedent Transaction Analysis
Adams, Harkness & Hill assessed the transaction premiums and relative
valuations associated with selected precedent publicly disclosed acquisitions it
deemed relevant. Adams, Harkness & Hill reviewed 12 precedent
-23-
transactions related specifically to information technology services companies
and also reviewed 12 precedent transactions related specifically to management
buyouts involving total transaction values of less than $100 million. Each of
the 24 precedent transactions were announced after January 1, 2000, and all 24
transactions involved the acquisition of the equity shares of publicly-traded
companies for which share price data was available.
Premiums paid in precedent public company change of control transactions
typically imply the range of consideration acquirors are willing to pay above a
seller's stock price prior to or at the time of the announcement of the relevant
transaction. In order of descending premium paid based on the seller's stock
price at the time of announcement, the selected transactions used in Adams,
Harkness & Hill's analysis were:
Precedent Transaction Analysis - Information Technology Services Acquisitions
- -----------------------------------------------------------------------------
Announcement Transaction Premium at 10 Day 30 Day
Target Acquiror Date Value Announcement Premium Premium
------ -------- ---- ----- ------------ ------- -------
(in millions)
Metamor Worldwide PSINet 03/22/00 $ 1,900.0 148% 125% 121%
IMRglobal Corp. CGI Group, Inc. 02/21/01 $ 438.0 62% 56% 96%
Network Solutions, Inc. Verisign, Inc. 03/07/00 $21,101.4 62% 121% 126%
Command Systems, Inc. ICICI Infotech Inc. 01/26/01 $ 20.0 61% 150% 138%
Aris Corporation CIBER, Inc. 06/14/01 $ 31.4 48% 48% 51%
Mynd Computer Sciences 06/20/00 $ 644.0 46% 55% 56%
AppNet Systems, Inc. Commerce One, Inc. 06/20/00 $ 1,282.0 37% 85% 116%
Cambridge Technology Partners Novell 03/12/01 $ 266.0 36% 27% 7%
Proxicom, Inc. Dimension Data 05/11/01 $ 448.0 33% 160% 94%
Mainspring Communications IBM 04/19/01 $ 80.0 33% 101% 49%
C-bridge EXceleon Corp. 05/22/01 $ 60.0 20% 32% 44%
SPR Inc. Leapnet, Inc. 01/28/00 $ 48.5 9% 7% 5%
(a) All Transaction Value statistics are from Thomson Financial database, or
each Peer Group Company's most recent SEC filings prior to the respective
acquisition.
(b) All premia information is from Thomson Financial Database or calculated
through trading statistics and deal value on a price per share basis.
In order of descending premium paid based on the target's stock price one
trading day prior to announcement, the selected transactions used in Adams,
Harkness & Hill's analysis were:
Precedent Transaction Analysis - Management Buyouts
- ---------------------------------------------------
Announcement Transaction One Day One Week Four Week
Target Date Value Premium Premium Premium
------ ---- ----- ------- ------- -------
(in millions)
Centennial Healthcare Corp. 02/25/00 $65.6 87% 85% 83%
Solomon-Page Group Ltd. 03/31/00 $29.3 83% 83% 75%
BI Inc. 08/11/00 $67.4 78% 106% 65%
Gehl Co. 12/22/00 $96.7 67% 48% 56%
NextHealth Inc. 01/24/01 $80.1 46% 48% 86%
Black Hawk Gaming & Development Corp. 04/13/01 $47.7 35% 41% 31%
Acme Electric Corp. 04/26/00 $50.8 33% 33% 36%
General Bearing Corp. 07/14/00 $25.5 28% 30% 33%
NPC International Inc. 12/14/00 $93.6 11% 7% 32%
KLLM Transport Services Inc. 04/20/00 $33.8 5% 10% 18%
Impac Commercial Holdings Inc. 10/13/00 $60.4 2% 18% 20%
Pulaski Furniture Corp. 03/31/00 $65.3 0% 31% 55%
(a) All Transaction Value statistics are from Thomson Financial database, or
each Peer Group Company's most recent SEC filings prior to the respective
acquisition.
(b) All premia information is from Thomson Financial Database or calculated
through trading statistics and deal value on a price per share basis.
Based upon Adams, Harkness & Hill's analysis of premiums paid in selected
precedent transactions involving information technology services companies, the
average premiums paid to sellers' share prices along with the implied premium
offered by the merger consideration to Renaissance's share price for the 30 days
and 10 days prior to announcement and the day of announcement are listed below:
Premium at 10 Day 30 Day
Announcement Premium Premium
------------ ------- -------
Mean 50% 81% 75%
Renaissance Offer 275% 224% 175%
-24-
(a) All premia information is from Thomson Financial Database or calculated
through trading statistics and deal value on a price per share basis.
Adams, Harkness & Hill noted the premium data implied by the draft of the
merger agreement compared very favorably with the data implied by the
information technology services precedent transactions.
Based upon Adams, Harkness & Hill's analysis of premiums paid in selected
precedent transactions involving management buyouts, the average premiums paid
to the target's share prices along with the implied premium offered by the
merger consideration to Renaissance's share price for the month, week, and day
prior are listed below:
One Day One Week Four Week
Premium Premium Premium
------- ------- -------
Mean 40% 45% 49%
Renaissance Offer 267% 237% 313%
(a) All premia information is from Thomson Financial Database or calculated
through trading statistics and deal value on a price per share basis.
Adams, Harkness & Hill noted the premium data implied by the draft of the
merger agreement compared very favorably with the data implied by the management
buyout precedent transactions.
Stock Price Performance Analysis
Adams, Harkness & Hill examined the following common stock closing price
data for Renaissance:
. price performance from January 1, 2000 through June 19, 2001, compared to
the performance of the Nasdaq Composite;
. price performance from January 1, 2000 through June 19, 2001, compared to an
index of the Peer Group Companies; and
. price premium of the consideration of $1.65 per share, compared to: one day
prior, one week prior and one month prior to the announcement by the MBO
Group's offer to purchase all publicly held common stock announced on June
21, 2001.
Based on the above analyses, Adams, Harkness & Hill observed that, from
January 1, 2000 through June 19, 2001, Renaissance's per share price had
decreased 94%. During the same time period, the Nasdaq composite decreased 52%.
Adams, Harkness & Hill also observed that the value of the Peer Group Companies
similar to the ITCS business unit decreased by 44% during the same time period
and that the value of the Peer Group Companies similar to the GovConnect
business unit decreased by 36% during the same time period.
Discounted Cash Flow Analysis
Adams, Harkness & Hill performed a discounted cash flow analysis to
estimate the present value of the stand-alone unlevered (i.e., before interest
expense) after-tax cash flows of Renaissance. To perform this analysis, Adams,
Harkness & Hill used the following data sources and made the following
assumptions:
. management financial projections for ITCS and GovConnect as going concerns,
for the year ended December 31, 2001 through the year ended December 31,
2003, which were prepared by Messrs. Fargnoli, Sweetser and Bradley and were
based on Renaissance's forecast of revenue trends in light of the generally
weakening economy and market for information technology services.
. Adams, Harkness & Hill utilized the growth rate assumptions for the year
ended December 31, 2003 and applied the growth rate percentages to calculate
projections for the year ended December 31, 2004 and the year ended December
31, 2005.
. Renaissance's unlevered after-tax cash flows were calculated as the after-
tax operating earnings of Renaissance adjusted for the addition of non-cash
expenses and the deduction of uses of cash not reflected in the income
statement.
. Adams, Harkness & Hill calculated a weighted-average cost of capital ranging
from 12.0% to 14.0%.
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. terminal value based on Renaissance's earnings before interest, taxes,
depreciation and amortization ("EBITDA") for the year ended December 31,
2005 multiplied by EBITDA multiples ranging from 3.0 to 5.0. The EBITDA
multiple range was calculated by applying a discount to the mean EBITDA
multiple of recently completed information technology services acquisitions,
considering Renaissance's deteriorating performance, with respect to the
financial metrics compared by Adams, Harkness & Hill, relative to the peer
group.
Adams, Harkness & Hill combined (i) the calculated present value of
Renaissance's unlevered cash flows for the five years ending December 31, 2005,
with (ii) Renaissance's EBITDA terminal value, to arrive at a range of values
based on the above assumptions. These values were then adjusted by adding
Renaissance's current cash balance and subtracting its current funded debt
balance to arrive at implied equity values. Adams, Harkness & Hill divided the
computed equity values by the number of shares of common stock outstanding and
arrived at a range of implied per share values of $0.83 to $1.42, with a median
implied value of $1.12.
"Break-up" Analysis
Adams, Harkness & Hill performed a "break-up" analysis to estimate the
stand-alone enterprise value of ITCS and the stand-alone enterprise value of
GovConnect. To perform this analysis, Adams, Harkness & Hill used the following
assumptions:
. Adams, Harkness & Hill established a group of publicly traded companies that
it deemed comparable to GovConnect based on their similar information
technology consulting strategy, the public markets served, and their
financial performance. Adams, Harkness & Hill identified and evaluated
eight public companies as members of this group.
Ratio of Enterprise Value to Last
Company Twelve Months Revenue (a), (b)
------- -----------------------------
Maximus 1.5x
Perot Systems Corporation 1.3x
Tier Technologies 1.0x
National Information Consortium 0.9x
American Management Systems 0.8x
CACI International 0.8x
Systems & Computer Technology Corporation 0.6x
Covansys 0.5x
Mean 0.9x
(a) Enterprise Value derived from share prices as of close of trading on June
19, 2001 and fully diluted shares outstanding and debt figures taken from
each companies most recently filed quarterly report.
(b) Last Twelve Months Revenue data obtained from each Peer Group Company's
most recent SEC filings prior to June 19, 2001.
. Adams, Harkness & Hill utilized the mean ratio of Enterprise Value to Last
Twelve Months Revenue multiple of this peer group and applied it to
GovConnect's Last Twelve Months Revenue to calculate a range of stand-alone
enterprise values for GovConnect. Adams, Harkness & Hill then divided the
computed stand-alone enterprise value ranges by the number of shares of
common stock outstanding and arrived at a range of implied per share values
for GovConnect.
. Adams, Harkness & Hill established a group of publicly traded companies
that it deemed comparable to ITCS based on their similar information
technology consulting strategy, the public and private markets served, and
their financial performance. Adams, Harkness & Hill identified and
evaluated the following 13 public companies in this group.
Ratio of Enterprise Value to Last
Company Twelve Months Revenue (a), (b)
------- -----------------------------
Metro Information Services, Inc. 0.5x
Computer Task Group, Inc. 0.3x
Modis Professional Services, Inc. 0.3x
Spherion Corporation 0.3x
Alternative Resources Corporation 0.2x
Analysts International Corporation 0.2x
Computer Horizons Corporation 0.2x
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Hall, Kinion & Associates 0.2x
Kelly Services, Inc. 0.2x
Manpower, Inc. 0.2x
Volt Information Sciences, Inc. 0.2x
Technisource, Inc. 0.1x
Cotelligent Group (0.1x)
Mean 0.2
(a) Enterprise Value derived from share prices as of close of trading on June
19, 2001 and fully diluted shares outstanding and debt figures taken from
each companies most recently filed quarterly report.
(b) Last Twelve Months Revenue data obtained from each Peer Group Company's
most recent SEC filings prior to June 19, 2001.
. Adams, Harkness & Hill applied a discount to the mean ratio of Enterprise
Value to Last Twelve Months Revenue multiple of the ITCS peer group based on
Renaissance's poor operating performance, with respect to the financial
metrics compared by Adams, Harkness & Hill, relative to the peer group. The
discounted ratio of Enterprise Value to Last Twelve Months Revenue multiple
of the ITCS peer group was then applied to the business unit's Last Twelve
Months revenue to calculate a range of stand-alone enterprise values for
ITCS. Adams, Harkness & Hill then divided the computed stand-alone
enterprise value ranges by the number of shares of common stock outstanding
and arrived at a range of implied per share values for ITCS.
Adams, Harkness & Hill combined (i) the implied per share range for
GovConnect (ii) the implied per share range for ITCS and (iii) the $42 million
of cash on Renaissance's balance sheet as of March 31, 2001. Based on this
methodology, Adams, Harkness & Hill arrived at a range of implied per share
values of $1.47 to $1.95, with a median implied value of $1.71. In calculating
this range, Adams, Harkness & Hill did not take into account the economic costs
not reflected on ITCS's balance sheet that would be triggered upon a disposition
of ITCS, including change of control payments under operating leases and
employee severance obligations.
Limited Solicitation of Potential Acquirors
Adams, Harkness & Hill spoke to the four parties who had provided written
expressions of interest in acquiring the entire company or ITCS during the
earlier sale process. The special committee had previously directed
Renaissance's chief financial officer to contact those parties to inquire
whether they were interested in renewing their interest in pursuing a
transaction in the context of current market prices. The chief financial officer
instructed them to contact Adams, Harkness & Hill. Each of the four entities
expressed a preliminary indication that it would be interested in considering a
transaction. However, because of the discussions described below that took place
with two other potential purchasers, and because all of these four parties had
previously passed on the opportunity to acquire Renaissance or ITCS, the special
committee directed Adams Harkness & Hill to keep communications open but not to
pursue these four parties aggressively. None of the four parties initiated any
meaningful follow-up on their initial contact with Adams Harkness & Hill.
In addition, Adams, Harkness & Hill, at the direction of the special committee,
contacted two potential strategic acquirors that it identified to qualify their
interest in a negotiated acquisition of Renaissance. Initial contact with these
two potential acquirors was made without specifically revealing the identity of
Renaissance until a non-disclosure agreement was signed. Upon receipt by Adams,
Harkness & Hill of an executed non-disclosure agreement, a packet of publicly
disclosed materials was provided to each potential acquiror. Adams, Harkness &
Hill engaged in additional discussions with each of the parties to ascertain
their prospective interest in acquiring Renaissance and provided additional
materials. Each potential acquiror submitted an indication of interest, in one
instance for the entire company, in the other, for ITCS only. Adams, Harkness &
Hill noted that neither potential acquiror provided a full funding commitment.
Accordingly, these alternatives were deemed not feasible.
Adams, Harkness & Hill also communicated with the party that expressed an
interest in acquiring Renaissance at a cash price of $1.75. After the party
signed a non-disclosure agreement, Adams, Harkness & Hill provided the party
with the due diligence materials it requested and participated in discussions
conducted as part of the due diligence process. The special committee received
a proposal from the third party on June 11, 2001 that included a letter of
intent from a financing source. Adams, Harkness & Hill noted that the proposal
did not contain a funding commitment to complete the transaction and that the
letter of intent from the financing source contemplated that a layer of junior
capital would be required, but did not specify who would provide such capital or
when any commitment would be obtained. Accordingly, and because pursuing such
proposal further meant risking a withdrawal of Mr. Conway's offer, the
alternative was rejected.
Summary of Valuation Analysis
The foregoing summary does not purport to be a complete description of the
analyses performed by Adams, Harkness & Hill. The preparation of a fairness
opinion is a complex process. Adams, Harkness & Hill believes that its analyses
must be considered as a whole, and that selecting portions of such analysis
without considering all analyses and factors would create an incomplete view of
the processes underlying its fairness opinion. Adams, Harkness & Hill did not
attempt to assign specific weights to particular analyses. Any estimates
contained in Adams, Harkness & Hill's analyses are not necessarily indicative of
actual values, which may be significantly more or less favorable than as set
forth therein. Estimates of values of companies do not purport to be appraisals
or necessarily to
-27-
reflect the prices at which companies may actually be sold. Such estimates are
inherently subject to uncertainty. Adams, Harkness & Hill advised the special
committee and the board of directors that the valuation analyses conducted by it
in rendering its fairness opinion (specifically, the Peer Group analysis, the
precedent transactions analysis, the historical stock price performance
analysis, the discounted cash flow analysis and the "break-up" analysis)
constituted a "going concern" analysis of Renaissance. Taken together, the
information and analyses employed by Adams, Harkness & Hill lead to Adams,
Harkness & Hill's overall opinion that the consideration to be received by
stockholders at Renaissance not affiliated with Mr. Conway is fair, from a
financial point of view, to such holders.
Certain Financial Projections Prepared by Renaissance's Management
During the course of discussions among Renaissance, Mr. Conway and other
potential acquirors, Renaissance provided certain non-public business and
financial information about the company prepared by its management. Mr. Conway
shared this non-public business and financial information with J.P.
Morgan/Chase. This information included the following summary of projections
for the company for the years ended December 29, 2001, December 28, 2002 and
December 27, 2003:
Year Ending
December 29, December 28, December 27,
2001 2002 2003
(In thousands)
Selected Statement of Operations Data:
Revenue $334,086 $347,800 $382,500
Operating income (loss) (22,192) 100 4,500
Earnings before interest, taxes, depreciation and amortization (3,484)(a) 6,903 11,523
Selected Balance Sheet Data:
Cash $ 41,110 $ 38,555 $ 39,459
Accounts receivable 75,450 81,357 89,075
(a) excludes a non-recurring charge of $10.7 million recorded in the quarter
ended March 31, 2001. This charge is included in the operating loss for the year
ended December 29, 2001.
Renaissance does not as a matter of course make public any projections as
to future performance or earnings, and the projections set forth above are
included in this proxy statement only because this information was provided
confidentially to certain potential acquirors, including the MBO Group, and was
provided confidentially by Mr. Conway to the MBO Group's financing source. The
projections were not prepared with a view to public disclosure or compliance
with the published guidelines of the SEC or the guidelines established by the
American Institute of Certified Public Accountants regarding projections or
forecasts. The prospective financial information included in this proxy
statement has been prepared by, and is the responsibility of, the Company's
management. PricewaterhouseCoopers LLP has neither examined nor compiled the
above prospective financial information and, accordingly, PricewaterhouseCoopers
LLP does not express an opinion or any other form of assurance with respect
thereto. The PricewaterhouseCoopers LLP report incorporated by reference into
this proxy statement relates to the Company's historical financial information.
It does not extend to the prospective financial information and should not be
read to do so. Renaissance has advised the recipients of such projections that
its internal financial forecasts (upon which the projections provided were based
in part) are, in general, prepared solely for internal use and capital budgeting
and other management decisions and are subjective in many respects and thus
susceptible to interpretations and periodic revision based on actual experience
and business developments. The projections also reflect numerous assumptions
made by management of Renaissance, including assumptions with respect to the
market for Renaissance's products and services, general business, economic,
market and financial conditions and other matters, all of which are difficult to
predict, many of which are beyond Renaissance's control, and none of which was
subject to approval by any recipient thereof. Accordingly, there can be no
assurance that the assumptions made in preparing the projections will prove
accurate. It is expected that there will be differences between actual and
projected results, and actual results may be materially greater or less than
those contained in the projections. The inclusion of the projections herein
should not be regarded as an indication that any of Renaissance, the MBO Group,
J.P. Morgan/Chase and the other lenders that are part of the bank group, or
their respective affiliates or representatives considered or consider the
projections to be a reliable prediction of future events, and the projections
should not be relied upon as such. None of Renaissance, the MBO Group, J.P.
Morgan/Chase and the other lenders that are part of the bank group or any of
their respective affiliates or representatives has made or makes any
representation to any person regarding the ultimate performance of
-28-
Renaissance compared to the information contained in the projections, and none
of them intends to update or otherwise revise the projections to reflect
circumstances existing after the date when made or to reflect the occurrence of
future events even in the event that any or all of the assumptions underlying
the projections are shown to be in error.
The MBO Group's Purpose and Reasons for the Merger
The MBO Group holds in the aggregate approximately 12,000,000 shares of
Renaissance, representing approximately 23% of the total number of issued and
outstanding shares of Renaissance. Each member of the MBO Group has informed us
that his or its purpose for the merger is to acquire all of the shares of
Renaissance that the MBO Group does not already own and to continue the business
and operations of Renaissance as a private company. In determining to enter into
the merger, each member of the MBO Group has informed us that he or it
considered the following factors:
. the results of operations, financial condition, business and prospects of
Renaissance. Renaissance's total revenue for the fiscal year ended December
31, 2000 decreased by 23.5% from the previous year's levels. This decrease
does not take into account any reduction in revenue due to the sale of the
Business Strategy Group or the Enterprise Solutions Group. Renaissance
sustained an operating loss of approximately $33.9 million for the fiscal
year ended December 31, 2000, excluding extraordinary gain from disposal of
certain of Renaissance's business units. Renaissance incurred a net loss of
$12.5 million for the quarter ended March 31, 2001 and its total revenues
decreased 21% as compared to the previous year's comparable quarter;
. management's forecasts for revenues and earnings described in "Certain
Financial Projections Prepared by Renaissance's Management" beginning on page
28;
. the economic and market conditions affecting Renaissance, its customers and
the information technology consulting industry as a whole;
. the lack of equity research coverage for Renaissance's common stock and the
difficulty of attracting new investment interest in Renaissance, and the
resulting difficulty for stockholders of Renaissance, including the members
of the MBO Group holding common stock of Renaissance, to receive a fair price
when selling their shares in the market;
. the possible delisting of Renaissance's shares from Nasdaq, and the resultant
lack of liquidity in the event of a delisting;
. the significant and steady decline in trading prices for Renaissance's common
stock since the first quarter of 1998, ultimately resulting in Renaissance's
receipt of notices of non-compliance with the listing requirements of Nasdaq
in January, 2001 and in April, 2001; the decline in trading prices and
trading volume, together with the possibility of delisting of Renaissance's
shares from Nasdaq, has resulted in an increasing lack of liquidity for the
holders of Renaissance common stock, which reduces the prospects of obtaining
value for their equity investment in Renaissance through a sale of stock;
. the lack of viable and immediate third-party interest in acquiring or
exploring other strategic transactions with Renaissance despite the extended
process conducted previously by SG Cowen, and more recently by Adams,
Harkness & Hill and the lack of possible immediate strategic alternatives to
the merger agreement, which reduced the prospects of obtaining value for the
stockholders of Renaissance, including the members of the MBO Group;
. the potential long-term value of Renaissance as an established and recognized
provider of information technology consulting services and the uncertainties
that Renaissance will be able to realize that value as a public company;
. the potential benefits to Renaissance of operating as a privately-held
company, including the ability of Renaissance to react rapidly to
opportunities or changing conditions, and the ability to more effectively
screen information from competitors;
. difficulties in pursuing long-term initiatives and business development and
maintenance resulting from Renaissance's operating as a public company under
current circumstances, and costs associated with the operation of a public
company; and
-29-
. its belief that the piecemeal sale of Renaissance's operating units would not
maximize value of the MBO Group's equity investment in Renaissance, and would
not benefit shareholders of Renaissance unaffiliated with Mr. Conway.
Mr. Conway and each member of the MBO Group expressed the belief that greater
value could be obtained from a sale of Renaissance as a single unit than from
the sale of each of its business units separately, given Renaissance's
demonstrated inability to attract purchasers offering aggregate consideration
for ITCS and GovConnect within the range of Mr. Conway's proposal. Mr. Conway
and each member of the MBO Group is also of the opinion that Renaissance has
value as a going concern operating two complementary businesses that would
probably not be realized in a breakup or liquidation scenario. Mr. Conway and
each member of the MBO Group contrasted the sale of Renaissance's two core
businesses, GovConnect and ITCS, with the prior sale of various non-core
operating units, which Mr. Conway and each member of the MBO Group explained
were able to be sold at a favorable price in the marketplace, or which were
inconsistent with Renaissance's evolving core business strategy. In Mr. Conway's
estimation, and to the belief of each of the other members of the MBO Group, the
value per share that would be received by stockholders unaffiliated with Mr.
Conway upon the present sale of Renaissance as a whole would exceed the value
that would be received by stockholders upon the present sale of ITCS and
GovConnect separately.
Each member of the MBO Group holding shares of Renaissance common stock has
informed us that, because Renaissance common stock is in jeopardy of being de-
listed from NASDAQ, and because of the damage to Renaissance's reputation that
they believe would accompany such delisting, he or it believes that conducting
the merger currently is critical to preserving the value of their shares. Mr.
Conway also expressed the belief that the lengthy duration of the sale process
of Renaissance, which had begun more than a year ago, was continuing to take a
toll on the morale of Renaissance's employees, as evidenced by the recent loss
of several key division executives, and was a continuing and substantial drain
on the resources of Renaissance's management, therefore requiring imminent
action to preserve the vitality of Renaissance's business.
Each member of the MBO Group has informed us that, in their respective
judgement, preserving Renaissance as a public company would impair Renaissance's
ability to raise capital and would send a signal to clients and potential
clients, as well as employees and employee candidates, as to the instability of
Renaissance and the uncertainty of its future. However, each member of the MBO
Group is optimistic about the long-term prospects of Renaissance if converted to
a private company.
Position of the MBO Group as to Fairness of the Merger
Each member of the MBO Group believes that the merger and the consideration
to be paid in the merger to the holders of Renaissance's common stock, including
the holders of common stock who are unaffiliated with the MBO Group, is fair to
such holders. Each member of the MBO Group based his or its belief on the
following:
. after a thorough review with independent financial and legal advisors, the
Renaissance special committee, which consisted entirely of directors of
Renaissance who are not affiliated with the MBO Group, and the Renaissance
board of directors concluded that the merger is advisable and fair to, and in
the best interests of, the holders of Renaissance's common stock not
affiliated with Mr. Conway and recommended that Renaissance's stockholders
approve the merger agreement and the merger;
. the merger agreement was negotiated at arm's length with the Renaissance
special committee, which acted independently, with the assistance of
financial and legal advisors and on behalf of the holders of Renaissance's
common stock;
. the consideration to be paid to the holders of common stock in the merger
represents an approximate premium of 267% over the per share closing price as
of June 20, 2001, the day before the public announcement that Renaissance,
Registry Holding Company and Redwood Acquisition had signed the merger
agreement;
. Renaissance's trend of declining revenues and increased operating losses;
. the lack of prospects for finding an alternative to the merger with the MBO
Group that would result in greater value to the holders of common stock other
than the MBO Group;
. their respective beliefs that the ability of Renaissance to return to
substantial profitability and substantial revenue growth is uncertain and, in
any event, is expected to require an extended period;
. their respective beliefs that, under present circumstances, Renaissance can
be operated more efficiently as a private company than as a public company,
in part because it could focus on long-term structuring initiatives rather
than the quarter-to-quarter results that Wall Street demands and that the
prospects for Renaissance as a public company were uncertain; and
. that although another potential purchaser made an offer on June 11, 2001 to
purchase the entire company at a cash price of $1.75 per share, from
Mr. Conway's understanding is that such offer was contingent upon obtaining a
senior debt financing commitment and a layer of junior capital from parties
as yet unidentified and was contingent upon satisfactory completion of
additional due diligence.
The members of the MBO Group other than Mr. Conway each adopted
Mr. Conway's assessment as to the fairness of the merger with respect to
stockholders unaffiliated with Mr. Conway, based on Mr. Conway's position of
authority with respect to matters pertaining to Renaissance and its prospects.
Each member of the MBO Group believes that each of the above factors supports
his or its conclusion that the merger is fair to the holders of Renaissance's
common stock, including the holders of common stock who are not affiliated with
the MBO Group.
In connection with their determination of the fairness of the merger
agreement and the merger, each member of the MBO Group agreed with the
conclusions as to fairness which are discussed in the section entitled,
"Renaissance's Purpose and Reasons for the Merger" on page 15, as well as the
analyses underlying the conclusions of the Renaissance special committee and
board. Each member of the MBO Group has also reviewed the procedures followed by
the special committee and the board of directors of Renaissance in their
evaluations of the terms of the proposed merger, and determined them to be
reasonable grounds on which to decide that the merger was fair to the holders of
Renaissance's common stock. In view of the variety of factors considered in
reaching their respective determinations, the MBO Group did not quantify or
otherwise assign relative weights to the specific factors considered in reaching
their belief as to fairness. The MBO Group is not making any recommendation as
to how the holders of Renaissance's common stock
-30-
should vote on the merger agreement and the merger.
The stockholders unaffiliated with the MBO Group should be aware that Mr.
Conway, the sole Director of both Registry Holding Company and Redwood
Acquisition, is also the chairman of the board and chief executive officer of
Renaissance and has interests that are in addition to, or different from, the
interests of the holders of Renaissance's common stock. See "Interests of
Certain Persons in the Merger."
The merger will terminate all equity interests of the holders of
Renaissance's common stock other than the equity interests held by members of
the MBO Group. The merger consideration to be received by holders of
Renaissance's common stock was the result of arm's-length negotiation between
representatives of the MBO Group and the special committee of Renaissance's
board of directors and their respective advisors following the receipt of the
initial proposal from the MBO Group. However, because the members of the MBO
Group collectively own approximately 23% of the outstanding shares of common
stock of Renaissance, stockholders unaffiliated with Mr. Conway holding
approximately 52% of the outstanding shares of common stock will be required to
approve the merger agreement and the merger. This means that approximately two-
thirds of the shares held by all unaffiliated stockholders will be required to
approve the merger agreement and the merger.
The common stock of Renaissance is currently registered under the Exchange
Act and now trades on Nasdaq under the symbol "REGI." Upon consummation of the
merger, the common stock will be de-listed from Nasdaq and registration of the
common stock under the Exchange Act will be terminated. The merger of
Renaissance with Redwood Acquisition will allow the surviving entity to gain
certain efficiencies by eliminating the time devoted by its management and
certain other employees to complying with the reporting requirements of the
Exchange Act, and its directors, officers and beneficial owners of more than 10%
of the shares of common stock will be relieved of the reporting requirements and
restrictions on insider trading under Section 16 of the Exchange Act.
The MBO Group structured the transaction as a "one-step" merger because it
believed that that transaction structure would result in its acquisition of
Renaissance in a manner that is fair and equitable to Renaissance's
stockholders.
Approval of the merger requires the vote of at least 75% of the outstanding
shares of Renaissance common stock. Mr. Conway holds approximately 22% of the
outstanding shares of Renaissance common stock and has agreed to vote to approve
the merger. The other members of the MBO Group collectively hold approximately
1% of the outstanding shares of Renaissance common stock and have indicated
their intent to vote to approve the merger. Therefore, in addition to the votes
of the MBO group, approval of the merger requires the vote of at least
approximately 52% of the outstanding shares of Renaissance common stock, which
represents approximately two-thirds of the stockholders not affiliated with
Mr. Conway.
Identity and Background of the MBO Group, Registry Holding Company and Redwood
Acquisition
G. Drew Conway, age 44, founded Renaissance (formerly known as The
Registry, Inc.) in 1986 and has served as its chairman and chief executive
officer since that time. Mr. Conway also is also serving as the president,
treasurer, secretary and sole director of Registry Holding Company and as the
president, treasurer and clerk and sole director of Redwood Acquisition. Mr.
Conway individually owns 11,716,070 shares of the common stock of Renaissance,
representing approximately a 22% interest in the total number of shares of
common stock of Renaissance issued and outstanding as of August __, 2001.
Alexander G. Nauman Minors Trust was formed on August 12, 1996 pursuant to
the Alexander G. Nauman Minors Trust Agreement between Mr. Conway, as grantor,
and Mr. Conway's wife, as trustee. The Alexander G. Nauman Minors Trust owns
8,510 shares of the common stock of Renaissance. The address of the Alexander G.
Nauman Minors Trust is c/o G. Drew Conway, Renaissance Worldwide, Inc., 52
Second Avenue, Waltham, MA 02451.
Benjamin A. Nauman Minors Trust was formed on August 12, 1996 pursuant to
the Benjamin A. Nauman Minors Trust Agreement between Mr. Conway, as grantor,
and Mr. Conway's wife, as trustee. The Benjamin A. Nauman Minors Trust owns
8,510 shares of the common stock of Renaissance. The address of the Benjamin A.
Nauman Minors Trust is c/o G. Drew Conway, Renaissance Worldwide, Inc., 52
Second Avenue, Waltham, MA 02451.
George Andrew Conway Minors Trust was formed on August 12, 1996 pursuant to
the George Andrew Conway Minors Trust Agreement between Mr. Conway, as grantor,
and Mr. Conway's wife, as trustee. The George Andrew Conway Minors Trust owns
19,510 shares of the common stock of Renaissance. The address of the George
Andrew Conway Minors Trust is c/o G. Drew Conway, Renaissance Worldwide, Inc.,
52 Second Avenue, Waltham, MA 02451.
Carly Drew Conway Minors Trust was formed on August 12, 1996 pursuant to
the Carly Drew Conway Minors Trust Agreement between Mr. Conway, as grantor,
and Mr. Conway's wife, as trustee. The Carly Drew Conway Minors Trust owns
19,510 shares of the common stock of Renaissance. The address of the George
Carly Drew Conway Minors Trust is c/o G. Drew Conway, Renaissance Worldwide,
Inc., 52 Second Avenue, Waltham, MA 02451.
David Maxwell Conway Minors Trust was formed on August 12, 1996 pursuant to
the David Maxwell Conway Minors Trust Agreement between Mr. Conway, as grantor,
and Mr. Conway's wife, as trustee. The David Maxwell Conway Minors Trust owns
19,510 shares of the common stock of Renaissance. The address of the David
Maxwell Conway Minors Trust is c/o G. Drew Conway, Renaissance Worldwide, Inc.,
52 Second Avenue, Waltham, MA 02451.
The Conway Family Foundation, Inc. is a Massachusetts nonprofit corporation
that was incorporated on May 23, 1997. The Conway Family Foundation, Inc. is
also federally tax exempt pursuant to its status as an exclusively charitable
and educational organization described by Section 501(c)(3) of the Internal
Revenue Code. Mr. Conway and his wife were elected as members and trustees of
The Conway Family Foundation, Inc. Mr. Conway also serves as president of the
corporation, his wife serves as treasurer, Joseph P. Fargnoli serves as
assistant treasurer and Richard Bugley serves as clerk. The Conway Family
Foundation, Inc. owns 418,000 shares of the common stock of Renaissance. The
Conway Family Foundation, Inc. maintains its principal place of business at c/o
G. Drew Conway, Renaissance Worldwide, Inc., 52 Second Avenue, Waltham, MA
02451.
The MBO Group collectively owns approximately 12,000,000 shares of the
common stock of Renaissance, representing a 23% interest in the total number of
shares of common stock of Renaissance issued and outstanding as of August __,
2001.
Registry Holding Company, Inc. is a privately held Delaware corporation
organized in 2001 at the direction of Mr. Conway for the sole purpose of
engaging in the merger. Registry Holding Company currently has no stockholders
and Mr. Conway is its single director and holds all of its executive offices.
Registry Holding Company maintains its principal place of business located at
c/o G. Drew Conway, Renaissance Worldwide, Inc., 52 Second Avenue, Waltham, MA
02451. Prior to the merger, the MBO Group will contribute all of their shares of
Renaissance common stock to Registry Holding Company in exchange for shares of
the common stock of Registry Holding Company. At the time of the merger, Mr.
Conway will own substantially all of the issued and outstanding shares of
Registry Holding Company.
Redwood Acquisition is a privately held Massachusetts corporation and a
wholly-owned subsidiary of Registry Holding Company. Redwood Acquisition was
organized in 2001 at the direction of Mr. Conway for sole purpose of entering
into the merger with Renaissance. Its principal place of business is located at
c/o G. Drew Conway, Renaissance Worldwide, Inc., 52 Second Avenue, Waltham, MA
02451. Mr. Conway is the sole director of Redwood Acquisition Corp. and holds
all of its executive offices.
Directors and Executive Officers of Registry Holding Company and Redwood
Acquisition
-31-
G. Drew Conway, age 44, founded Renaissance (formerly known as The
Registry, Inc.) in 1986 and serves as the chairman of the board and chief
executive officer of Renaissance. Mr. Conway is also the president, treasurer,
secretary and sole director of Registry Holding Company and the president,
treasurer and clerk and sole director of Redwood Acquisition Corp. Mr. Conway's
address is: c/o Renaissance Worldwide, Inc., 52 Second Avenue, Waltham,
Massachusetts 02451. Mr. Conway is a U.S. citizen.
Amount and Source of Funds and Financing of the Merger
The MBO Group intends to finance the merger through (i) the rollover of
approximately 12,000,000 shares of Renaissance common stock held by Mr. Conway,
five trusts for the benefit of Mr. Conway's children and a charitable foundation
organized by Mr. Conway, (ii) use of cash currently held by Renaissance, and
(iii) cash to be provided under a revolving credit facility to be established by
J.P. Morgan/Chase as agent for a group of lenders. The MBO Group estimates that
the aggregate cash consideration required to complete the merger will be
approximately $71.6 million (assuming that no Renaissance stockholders exercise
and perfect their dissenters' rights), including approximately $67.5 million to
pay Renaissance's stockholders and certain option holders, other than members of
the MBO Group, and approximately $4.1 million to pay fees and expenses related
to the transaction. Neither J.P. Morgan nor Chase were parties to Renaissance's
1999 credit facility. J.P. Morgan and Chase have not yet determined the other
lenders that will participate in the credit facility.
The MBO Group has received and accepted a commitment letter to finance the
merger from J.P. Morgan/Chase through the establishment of a revolving credit
facility in the maximum principal amount of $40 million. The proceeds will
primarily be used to finance a portion of the merger and the related expenses,
to finance working capital needs, to support letters of credit and for general
corporate purposes. The MBO Group intends to borrow approximately $20,000,000
under the revolving credit facility to fund a portion of the total cash
consideration necessary to complete the merger. It is a condition precedent to
the closing of the merger that all conditions to the funding of the initial
loans under the revolving credit facility shall have been satisfied. The credit
facility will terminate three years after the closing of the loan. The initial
interest rate will be either the London Interbank Offered Rates (LIBOR) plus 250
basis points or the prime rate announced by J.P. Morgan/Chase plus 50 basis
points. The interest rate will be subject to quarterly adjustment after the
first anniversary of the closing of the credit facility. The commitment letter
also requires the quarterly payment of a commitment fee of 0.375% per annum of
the unused amount of the revolving credit commitment during the preceding
quarter. The credit facility will be secured by all of the property and assets
of Renaissance after the completion of the merger. The MBO Group has indicated
that it has no plans to pay off the loan other than in the ordinary course.
The closing of the merger is conditioned upon the closing of the financing
contemplated by the commitment letter and the closing of the financing is
conditioned upon the closing of the merger. The financing contemplated by the
Commitment Letter is subject to additional customary closing conditions and to
Renaissance achieving earnings before interest, taxes, depreciation and
amortization of not less than negative $2,000,000 for the fiscal quarter ended
June 30, 2001, which Renaissance achieved, and not less than $1.00 for the two-
month period ending August 31, 2001.
Certain Effects of the Merger
As a result of the merger, the separate corporate existence of Redwood
Acquisition will cease and Renaissance will continue as the surviving
corporation and wholly-owned subsidiary of Registry Holding Company. At the
effective time of the merger, all outstanding common stock of Renaissance, other
than dissenting shares and shares held by Registry Holding Company and Redwood
Acquisition, will be converted into the right to receive $1.65 in cash. The
merger agreement will also have the following effects:
. Effect on Holders of Renaissance's common stock. If the merger is completed,
holders of Renaissance's common stock (except for Registry Holding Company
and Redwood Acquisition and stockholders who are entitled to and who have
exercised dissenters' rights) will receive $1.65 cash per share of
Renaissance's common stock and, other than the MBO Group, will not have the
opportunity to participate in any future earnings, profits and growth of
Renaissance.
. Reporting Requirements. Renaissance is currently subject to reporting
requirements under the Exchange Act. If the merger is completed, the
registration of shares of Renaissance under the Exchange Act will be
terminated, no
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further reports will be filed and shares of Renaissance common stock will not
be eligible for listing or trading on any exchange.
. De-listing of the shares of Renaissance's common stock on Nasdaq. The shares
of Renaissance common stock are currently quoted on Nasdaq. If the merger is
completed, shares of Renaissance common stock will be de-listed and no longer
quoted on Nasdaq.
. Effect on Registry Holding Company. Upon completion of the merger,
Renaissance will continue to operate as a business and technology consulting
services company. The MBO Group currently owns approximately 23% of
Renaissance's outstanding common stock which will, before the consummation of
the merger, be contributed to Registry Holding Company, which will become the
owner thereof. As a result of the merger, and after cash payments to
Renaissance's stockholders under the merger agreement, payment in respect of
the exercise by any stockholder of dissenters' rights, and payment of
transaction costs, Registry Holding Company will own all of the business and
assets of Renaissance.
. Effect on Current Management. It is expected that current members of
Renaissance's management will continue in their present capacities following
the merger.
As a result of the merger, the MBO Group's equity in the net book value and
net losses of Renaissance will increase from 22.8% to 100%. After giving effect
to the merger, the equity of the MBO Group in the net book value of Renaissance
as of December 31, 2000 would have been $179,791 compared to $40,093 and its
equity in the net loss of Renaissance for the year ended December 31, 2000 would
have been $1,327,000 compared to $295,921.
For federal income tax purposes, the receipt of the merger consideration by
holders of common stock pursuant to the merger will be a taxable sale of the
holders' common stock. See "Material Federal Income Tax Consequences" on page
33.
Plans for Renaissance After the Merger
The MBO Group expects to continue to operate the business of Renaissance in
substantially the same form as it is currently operating. The MBO Group intends
to retain current employees of Renaissance to conduct Renaissance's business.
It is contemplated that after the merger Registry Holding Company will merge
with and into Renaissance, with Renaissance to be the surviving corporation.
Conduct of the Business of Renaissance if the Merger Is Not Completed
If the merger is not completed, we will likely continue our ongoing
operations and will likely continue to suffer net losses from these ongoing
operations. Due to our expected continued losses and the resulting gradual
depletion of our cash and cash equivalent assets without significant opportunity
for revenue growth, we will likely continue to explore possibilities for the
potential sale or merger of Renaissance. However, there can be no assurance that
any such opportunities will be made available to us, or if made available, will
be on terms acceptable or fair to Renaissance and our stockholders. We hope to
complete the merger by December 31, 2001, but we cannot assure you that we will
be able to do so. Moreover, both parties have the option to terminate the merger
agreement if the merger is not completed by December 31, 2001.
Material Federal Income Tax Consequences
The following discussion summarizes the material U.S. federal income tax
consequences of the merger. This discussion is based upon the provisions of the
Internal Revenue Code of 1986, as amended, which we refer to as the Code, the
regulations promulgated under the Code, Internal Revenue Service rulings, and
judicial and administrative rulings in effect as of the date of this proxy
statement, all of which are subject to change, possibly with retroactive effect.
Any such changes could affect the accuracy of the statements and conclusions set
forth herein. This discussion does not address all aspects of federal income
taxation that may be relevant to a holder of common stock in light of the
stockholder's particular circumstances, nor does it discuss the special
considerations applicable to those holders of common stock subject to special
rules, such as stockholders who are not citizens or residents of the United
States, stockholders whose functional currency is not the U.S. dollar,
stockholders who are financial institutions or broker-dealers, tax-exempt
organizations, insurance companies, dealers in securities, foreign corporations
or trusts, stockholders who acquired their common stock through the exercise of
options or similar derivative securities or stockholders who hold their common
stock as part of a straddle or conversion transaction. This discussion also does
not address the federal income tax consequences to holders of options to acquire
Renaissance common stock. This
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discussion assumes that holders of Renaissance common stock hold their shares as
capital assets within the meaning of the Code. No party to the merger will seek
a ruling from the Internal Revenue Service with respect to the federal income
tax consequences discussed herein and accordingly there can be no assurance that
the Internal Revenue Service will agree with the positions described in this
proxy statement.
We intend this discussion to provide only a general summary of the material
federal income tax consequences of the merger. We do not intend it to be a
complete analysis or description of all potential federal income tax
consequences of the merger. We also do not address foreign, state or local tax
consequences of the merger. Accordingly, we strongly urge you to consult your
own tax advisor to determine the U.S. federal, state, local or foreign income or
other tax consequences resulting from the merger, in light of your individual
circumstances.
The receipt of cash for shares of common stock pursuant to the merger will
be a taxable transaction for United States federal income tax purposes. A
stockholder who receives cash in exchange for shares pursuant to the merger will
generally recognize gain or loss for federal income tax purposes equal to the
difference, if any, between the amount of cash received and the stockholder's
adjusted tax basis for the shares surrendered for cash pursuant to the merger.
Generally, such gain or loss will be capital gain or loss. Gain or loss will be
determined separately for each block of shares (i.e., shares acquired at the
same cost in a single transaction) that are surrendered for cash pursuant to the
merger.
Capital gains recognized by non-corporate taxpayers from the sale of common
stock held more than one year will generally be subject to U.S. federal income
tax at a rate not to exceed 20%. Capital gains recognized by non-corporate
taxpayers from the sale of common stock held for one year or less will be
subject to tax at ordinary income tax rates. Capital gains recognized by a
corporate taxpayer will be subject to tax at the tax rates applicable to
corporations. In general, capital losses are deductible only against capital
gains and are not available to offset ordinary income. However, individual
taxpayers are allowed to offset a limited amount of net capital losses against
ordinary income, and unused losses may be carried forward to subsequent tax
years.
If a stockholder owns Registry Holding Company common stock either actually
or constructively under certain attribution rules of the Code immediately after
the merger, it is possible that such holder could be treated as receiving a
dividend taxable as ordinary income as a result of the merger. Because the
relevant attribution rules are complex, each stockholder who believes these
rules may apply should contact his or her own tax advisor.
The receipt of cash, if any, pursuant to the exercise by a holder of shares
of common stock of appraisal rights under the General Laws of Massachusetts,
will be a taxable transaction. We encourage any holder of shares of common stock
considering the exercise of any appraisal rights to consult a tax advisor to
determine the tax consequence of exercising such appraisal rights.
The shareholders, including Mr. Conway, that contribute their stock to
Registry Holding Company prior to the merger will not recognize gain or loss for
federal income tax purposes as a result of the contribution or the merger. The
Registry Holding Company stock received by those shareholders in exchange for
their Renaissance stock will have an aggregate basis equal, in the aggregate, to
the basis of the Renaissance stock exchanged therefor. Renaissance, Registry
Holding Company and Redwood Acquisition Corp. will not recognize any gain or
loss for federal income tax purposes as a result of the contribution or the
merger.
Certain non-corporate holders of shares of common stock will be subject to
backup withholding at a rate of 30.5% on cash payments received pursuant to the
merger unless the holder provides certain certifications required by the
Internal Revenue Service. Backup withholding will not apply to a holder of
shares of common stock who furnishes a taxpayer identification number, or TIN,
and certifies that he or she is not subject to backup withholding on the
substitute Form W-9 included in the transmittal letter or who provides a
certificate of foreign status on Form W-8, or who is otherwise exempt from
backup withholding.
Regulatory Matters
Under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended,
and the rules and regulations promulgated under it by the Federal Trade
Commission, the merger cannot be completed until notifications have been given
and certain information has been furnished to the Federal Trade Commission and
the Antitrust Division of the Department of Justice and specified waiting period
requirements have been satisfied. Renaissance and Registry Holding Company have
filed all required notification and report forms under the Hart-Scott-Rodino Act
and have received early termination of the applicable waiting period.
At any time before or after completion of the merger, the Antitrust
Division or the Federal Trade Commission or any state could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the completion of the merger, to rescind
the merger or to seek divestiture of particular
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assets. Private parties also may seek to take legal action under the antitrust
laws under certain circumstances. In addition, non United States governmental
and regulatory authorities may seek to take action under applicable antitrust
laws. If a challenge to the merger on antitrust grounds is made, Renaissance and
Registry Holding Company may not prevail and/or may not complete the merger.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendations of Renaissance's special committee and
board of directors with respect to the merger agreement and the merger, holders
of Renaissance common stock should be aware that certain directors and current
members of management of Renaissance, Registry Holding Company and Redwood
Acquisition have interests in the merger that are different from, or in addition
to, the interests of holders of Renaissance common stock generally. The names
and titles of the individuals who are directors of Renaissance and have these
interests are listed below. Renaissance's special committee and board of
directors were aware of these interests and considered them, among other
matters, in approving the merger.
Registry Holding Company Ownership Interests. Pursuant to the terms of the
merger agreement, if the proposed merger closes, each outstanding share of
Renaissance common stock, other than shares held by Registry Holding Company,
Redwood Acquisition and stockholders who are entitled to and have exercised
dissenters' rights, will be canceled and converted into the right to receive
$1.65 in cash. Mr. Conway holds of record 11,716,070 outstanding shares of
Renaissance common stock and has agreed to transfer those shares to Registry
Holding Company prior to the merger. In addition, five trusts for the benefit
of Mr. Conway's children collectively hold of record 96,475 outstanding shares
of Renaissance common stock and each intends to transfer those shares to
Registry Holding Company prior to the merger. A charitable foundation organized
by Mr. Conway holds 418,000 outstanding shares of Renaissance common stock
and intends to transfer approximately 214,000 of those shares to Registry
Holding Company prior to the merger. Registry Holding Company, in lieu of
receiving $1.65 per share for the shares of Renaissance common stock it holds at
the time of the merger, will receive, as the sole stockholder of Renaissance
following the proposed merger, all of the Renaissance business and assets
remaining after the cash payments to Renaissance's other stockholders and the
payment of various transaction fees. Pursuant to a voting agreement, Mr. Conway
is required to vote in favor of approval of the merger agreement and the merger
at the special meeting of Renaissance stockholders to be held with respect to
those matters. The five trusts and the charitable foundation intend to vote in
favor of approval of the merger agreement and the merger. Mr. Conway, the five
trusts (of whom Mr. Conway or his wife is a trustee), and the charitable
foundation may be deemed to beneficially own the shares of Renaissance common
stock that will be owned by Registry Holding Company at the time that the merger
is completed.
Promissory Note. In April 2000, Mr. Conway executed a promissory note in
favor of Renaissance, representing amounts owed to Renaissance in connection
with loans made during 2000 for tax purposes. Mr. Conway informed Renaissance
that, without the promissory note, he would have been required to sell some of
his shares of Renaissance common stock to enable him to pay his income taxes.
Renaissance believed that such a sale by Mr. Conway might have adversely
affected the market for Renaissance common stock. The principal amount of the
note, all of which is currently outstanding, is $1,860,000 and the interest rate
is 6%.
Deal Bonuses. Renaissance is a party to agreements with Joseph P. Fargnoli,
Renaissance's chief financial officer as of the record date, and David C.
Sweetser, the chief operating officer of GovConnect as of the record date,
pursuant to which Mr. Fargnoli and Mr. Sweetser will be entitled to receive deal
bonuses upon completion of the merger. Mr. Fargnoli is entitled to receive a
deal bonus of $50,000 upon completion of the merger and Mr. Sweetser will be
entitled to receive a deal bonus of $150,000 upon completion of the merger.
Participation of Management. The participation of Messrs. Fargnoli and
Sweetser in negotiations of Renaissance with potential acquirors other than
Mr. Conway was limited. Mr. Fargnoli responded to due diligence requests,
including questions relating to tax matters, from several potential buyers.
Mr. Sweetser attended presentations and assisted with due diligence requested by
potential buyers. Mr. Fargnoli assisted the MBO Group in the merger negotiations
with Renaissance, and in the preparation of definitive documentation with
respect to the revolving credit facility to be established by J.P. Morgan/Chase.
Stock Options. Robert P. Badavas and Paul C. O'Brien, members of
Renaissance's board of directors and the special committee each hold options to
purchase Renaissance common stock that will entitle them to receive the
following cash payments upon completion of the merger, equal to the product of
(1) the number of shares underlying the options and (2) the amount by which
$1.65 is greater than the per share exercise price of the options:
- ---------------------------------------------------------------------------------------------------------------
Weighted Average
Number of Options Exercise Price of
with a per share Options with a per Cash Payment upon
exercise price less share exercise price Merger Pursuant to
Name Title than $1.65 less than $1.65 Merger Agreement
- ---------------------------------------------------------------------------------------------------------------
Robert P. Badavas Director 125,000 $1.31 $42,125
- ---------------------------------------------------------------------------------------------------------------
Paul C. O'Brien Director 125,000 $1.31 $42,125
- ---------------------------------------------------------------------------------------------------------------
Indemnification of Directors and Officers. All rights to indemnification of
individuals who were directors and officers of Renaissance, as provided in
Renaissance's bylaws and corporate charter, with respect to acts and omissions
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occurring prior to the closing will survive the closing until the expiration of
the applicable statute of limitations with respect to any claims against such
directors or officers arising out of such acts or omissions. For a period of six
years following the closing of the merger, and subject to the terms and
conditions described in the merger agreement, Registry Holding Company will
maintain in effect a policy of directors' and officers' liability insurance
comparable to Renaissance's existing policy, for the benefit of the directors
and officers of Renaissance for acts and omissions occurring prior to the
closing. In addition, Renaissance has entered into individual indemnification
agreements with each of Messrs. Badavas and O'Brien providing indemnification to
the maximum extent permitted under Massachusetts law.
THE MERGER AGREEMENT
The following is a summary of the material terms of the merger agreement.
The following description may not contain all the information about it that is
important to you. We encourage you to read the merger agreement, which is
attached as Annex A and incorporated by reference.
The merger agreement provides that, after all of the conditions to the
merger agreement have been satisfied or waived, Redwood Acquisition will be
merged with and into Renaissance, after which Renaissance will be the surviving
corporation, as a privately held, wholly-owned subsidiary of Registry Holding
Company. The merger agreement will become effective at the time the applicable
articles of merger are filed with the Secretary of the Commonwealth of the
Commonwealth of Massachusetts, or at such other time as may be agreed upon by
the parties.
Merger Consideration
At the effective time of the merger agreement, each issued and outstanding
share of Renaissance common stock, other than shares owned by Registry Holding
Company or Redwood Acquisition, treasury shares owned by Renaissance itself or
by any subsidiary of Renaissance, and shares held by stockholders who are
entitled to demand and have properly exercised dissenters' appraisal rights,
will be converted into the right to receive $1.65 in cash, upon the surrender of
the certificate representing such share. No interest will be paid on the merger
consideration of $1.65.
Option Awards
If the merger is completed, outstanding options to purchase Renaissance
common stock will either be terminated or converted into the right to receive,
subject to vesting requirements, upon exercise of the stock option, a cash
payment equal to the product of (1) the number shares underlying the option and
(2) the amount by which $1.65 is greater than the per share exercise price of
the option.
The Surviving Corporation
Renaissance will be the surviving corporation in the merger. Following the
merger, Renaissance will no longer be a publicly traded company but will be a
privately held, wholly-owned subsidiary of Registry Holding Company.
Representations and Warranties
Renaissance, Registry Holding Company and Redwood Acquisition make a number
of reciprocal representations and warranties as to, among other things, due
incorporation and good standing, corporate authority to enter into the
contemplated transactions, filings with governmental entities and financial
advisors' fees. Representations and warranties made solely by Renaissance relate
to the following items: ownership of subsidiaries, capitalization of
Renaissance, inapplicability of state takeover statutes, filing of and
disclosure in required SEC filings (including financial statements' compliance
with generally accepted accounting principles), absence of undisclosed material
liabilities, absence of certain changes, filing of tax returns and payment of
taxes, employee benefit plans, pending or threatened litigation, compliance with
applicable laws, intellectual property and stock option and stock purchase
plans.
Many of these representations and warranties will not be considered
breached unless the breach of the representation or warranty has a material
adverse effect on Renaissance. For purposes of the merger agreement, a "material
adverse effect" is any change, effect, event, occurrence, state of facts or
development that is materially
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adverse to the business, assets, financial condition, or results of operations
of Renaissance and its subsidiaries, or that materially and adversely affects
the ability of Renaissance to perform its obligations under the merger agreement
and complete the merger, provided that none of the following factors will be
deemed in themselves, either alone or in combination, to constitute, a material
adverse effect and none of the following shall be considered in determining
whether there has been a material adverse effect:
. any change in the market price or trading volume of Renaissance common
stock;
. any adverse change, effect, event, occurrence, state of facts or development
to the extent attributable to the announcement or pendency of the merger
(including any cancellations or delays in customer orders, reductions in
sales, disruptions in supplier, distributor, partner or similar relationships
or loss of employees);
. any adverse change, effect, event, occurrence, state of facts or development
attributable to conditions affecting the industries in which Renaissance
participates, the U.S. economy as a whole or foreign economies in any
locations where Renaissance or any of its subsidiaries has material
operations or sales which does not have a disproportionate effect on
Renaissance and its subsidiaries;
. any adverse change, effect, event, occurrence, state of facts or development
arising from or relating to compliance with the terms of, or taking any
actions required by, the merger agreement; or
. any adverse change, effect, event, occurrence, state of facts or development
arising from any action taken by Registry Holding Company, Redwood
Acquisition or any of their respective directors, officers, employees, agents
or affiliates.
The representations and warranties in the merger agreement do not survive the
completion of the merger.
Principal Covenants
Conduct of Renaissance Business. Renaissance has agreed to conduct its
operations according to its regular and ordinary course of business, consistent
with past practice. Renaissance has agreed to use reasonable efforts to
preserve its business organization, relationships with employees, customer,
suppliers and others.
Subject to certain exceptions, Renaissance has agreed not to, without the
consent of Registry Holding Company (which consent may not be unreasonably
withheld or delayed):
. declare or pay any dividend;
. repurchase or issue shares of capital stock;
. split, combine or reclassify its capital stock;
. amend Renaissance's articles of organization or by-laws;
. acquire another business or company or make certain investments;
. sell, lease, license or otherwise dispose of or encumber any material assets
or property except in the ordinary course of business;
. adopt new compensation and benefit plans, or amend or modify any compensation
and benefit plan;
. change accounting methods, principles or practices;
. make capital expenditures in excess of $2,000,000 in the aggregate per
calendar quarter;
. incur indebtedness or make loans;
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. pay or discharge any claims, liabilities or obligations in excess of $250,000
individually or $2,000,000 in the aggregate other than in the ordinary course
of business;
. increase the compensation of any current or former director or executive
officer outside the ordinary course of business or materially modify the
terms of any employment agreement;
. enter into significant new commitments with respect to leases;
. enter into, terminate or breach in any material respect any contract filed
(or that would be required to be filed) in any Renaissance SEC filing;
. commence any litigation or arbitration other than in accordance with past
practice or settle any litigation or arbitration for money damages or other
relief in excess of $250,000 or relating to the merger or, in connection with
a settlement, agree to any restrictions on operations;
. elect or appoint new directors or officers for Renaissance or its
subsidiaries;
. take actions that would reasonably be expected to result in an inability to
satisfy the closing condition with respect to continued accuracy of
representations and warranties;
. liquidate, dissolve or effect a recapitalization or reorganization;
. settle any demand with respect to dissenting shares; or
. enter into an agreement to do any of the foregoing.
Acquisition Proposals. Renaissance may, in response to an unsolicited
superior proposal, and subject to the satisfaction of certain conditions,
furnish information to and participate in discussions with an individual or
entity making such acquisition proposal if the board of directors or special
committee determines in good faith, after consultation with its outside counsel,
that to do so is necessary to act in a manner consistent with its fiduciary
duties. Renaissance must notify Registry Holding Company within one business day
of any acquisition proposal in response to which Renaissance is providing or
intends to provide the proponent with access to nonpublic information concerning
Renaissance or is commencing or intends to commence negotiations. In the event
that Renaissance provides a proposing individual or entity with access to
information regarding Renaissance, such individual or entity must first execute
an appropriate confidentiality agreement.
The merger agreement defines "superior proposal" as an acquisition proposal
that the board of directors or special committee determines in good faith is
reasonably likely to be consummated, taking into account the identity of the
proponent and all legal, financial and regulatory aspects of the proposal, and
believes in good faith (after consultation with and based upon advice of its
outside financial advisor) would, if consummated, provide greater value to
Renaissance stockholders than the transactions contemplated by the merger
agreement.
The merger agreement defines "acquisition proposal" as an inquiry, proposal
or offer relating to any of the following:
. any direct or indirect acquisition or purchase of a business that constitutes
15% or more of the net revenues, net income or assets of Renaissance or any
of its subsidiaries or 15% or more of any class of equity securities of
Renaissance or any of its subsidiaries;
. any tender offer or exchange offer that would result in any person
beneficially owning 15% or more of any class of equity securities of
Renaissance or any of its subsidiaries; or
. any merger, consolidation, business combination, acquisition,
recapitalization, liquidation, dissolution or similar transactions involving
Renaissance or any subsidiary of Renaissance;
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in each case, other than the merger contemplated by the merger agreement.
Proxy Material. Renaissance and Registry Holding Company agree that no
information supplied by each to be included in this proxy statement or any other
filing with the SEC required to complete the merger, including any amendment to
the filings will, at the time of mailing to stockholders or the meeting of
stockholders contain any untrue statement of a material fact or omit to state
any material fact required, or necessary to make any statements therein not
misleading.
Filings; Other Actions; Notification. Renaissance and Registry Holding
Company have agreed to use commercially reasonable efforts to complete all
necessary actions under the merger agreement to effect the merger, including
obtaining all necessary waivers and consents to effect any necessary
registrations and filings.
Access to Information. Renaissance has agreed that it will give Registry
Holding Company reasonable access to the books and records and other information
concerning the business of Renaissance.
Publicity; Communications. Renaissance, Registry Holding Company and
Redwood Acquisition have agreed that they will not issue, without the approval
of the other parties, any press release or other public announcement with
respect to the merger agreement or the merger, except as and to the extent that
it is required by applicable law. Renaissance and Registry Holding Company have
agreed to consult with each other before issuing any press release or making any
public announcement with respect to the merger agreement and the merger.
Expenses. Renaissance is responsible for the costs and expenses, including
filing fees and printing and mailing costs, arising from the preparation, filing
and mailing of the proxy statement filed with the SEC in connection with the
merger. Whether or not the merger is consummated, all costs and expenses
incurred in connection with the merger agreement and the related transactions,
including the merger will be paid by the party incurring such expense, except
that Renaissance has agreed to reimburse Mr. Conway for expenses incurred
through June 22, 2001, not to exceed $250,000.
Indemnification; Directors' and Officers' Insurance. All rights to
indemnification of individuals who were directors and officers of Renaissance,
as provided in Renaissance's bylaws and corporate charter, with respect to acts
and omissions occurring prior to the closing will survive the closing until the
expiration of the applicable statute of limitations with respect to any claims
against such directors or officers arising out of such acts or omissions. For a
period of six years following the closing of the merger and subject to the terms
and conditions described in the merger agreement, Registry Holding Company will
maintain in effect a policy of directors' and officers' liability insurance
comparable to Renaissance's existing policy, for the benefit of the directors
and officers of Renaissance for acts and omissions occurring prior to the
closing, provided that Renaissance will not be obligated to pay annual premiums
in excess of 200% of current annual premium levels.
Principal Conditions to the Completion of the Merger Agreement
Closing Conditions. Each party's obligation to complete the merger is
subject to the satisfaction of the following conditions:
. the merger agreement and the merger shall have been approved by the
affirmative vote of the holders of not less than 75% of the outstanding
shares of common stock entitled to vote thereon in accordance with the
General Laws of Massachusetts and the corporate charter of Renaissance;
. absence of legal restraint or prohibition preventing the completion of the
merger;
. the expiration or early termination of the waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976;
. the representations and warranties of each party must be true and correct
in all material respects on the date of the closing; and
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. each party shall have performed in all material respects the obligations
required under the merger agreement to be performed by it prior to the date
of closing.
Registry Holding Company's obligation to complete the merger is also
subject to satisfaction of the following conditions:
. absence of any change in business, assets, financial condition or results
of operations of Renaissance or any of its subsidiaries which has had or is
reasonably likely to have a material adverse effect; and
. the financing described in and contemplated by the debt commitment letter
from J.P. Morgan/Chase or a substitute financing shall have been
consummated.
The debt commitment from J.P. Morgan/Chase is itself subject to a number of
conditions being satisfied, including:
. Renaissance achieving earnings before interest, taxes, depreciation
and amortization of not less than negative $2,000,000 for the fiscal
quarter ended June 30, 2001 and not less than $1 for the two month
period ended August 31, 2001;
. The completion of the merger; and
. Other customary conditions.
Termination
Termination. The merger agreement may be terminated and the merger may be
abandoned at any time prior to the effective time of the merger agreement:
. by mutual written consent of the parties;
. by either party if (1) the merger has not been completed on or before
December 31, 2001 by the parties or (2) the completion of the merger is
legally prohibited by final and non-appealable order or by law or (3) the
stockholders of Renaissance fail to approve the merger at the special
stockholder meeting convened to consider and vote upon the merger or (4)
J.P. Morgan/Chase indicate that they are not willing to consummate the
financing contemplated by the commitment letter and despite commercially
reasonable efforts of Registry Holding Company and Redwood Acquisition to
secure substitute financing, substitute financing is not obtained within 30
days;
. by Renaissance, if (1) the representations and warranties or covenants of
Registry Holding Company and Redwood Acquisition contained in the merger
agreement are not true and correct in all material respects and such
misrepresentation cannot be or has not been cured within 30 days of notice
of such breach (or such longer period as may be approved by Renaissance) or
(2) there has been a material breach by Registry Holding Company or Redwood
Acquisition of any covenant set forth in the merger agreement, and such
breach cannot be cured or has not been cured within 30 days of notice of
such breach (or such longer period as may be approved by Renaissance) or
(3) the board of directors or special committee elects to enter into a
definitive agreement with respect to a superior proposal; or
. by Registry Holding Company, if (1) the representations and warranties or
covenants of Renaissance contained in the merger agreement are not true and
correct in all material respects and such misrepresentation cannot be or
has not been cured within 30 days of notice of such breach (or such longer
period as may be approved by Registry Holding Company) or (2) there has
been a material breach by Renaissance of the non-solicitation / no-shop
covenant set forth in Section 5.02 of the merger agreement, and such breach
cannot be cured or has not been cured within 30 days of notice of such
breach (or such longer period as may be approved by Registry Holding
Company) or (3) there has been a material breach by Renaissance of any of
its other covenants set forth in the merger agreement, and such breach
cannot be cured or has not been cured within 30 days of notice of such
breach (or such longer period as may be approved by Registry Holding
Company) or (4) the board of directors or special committee withdraws or
modifies, or publicly resolves to withdraw or modify, in a manner adverse
to Registry Holding Company or Redwood Acquisition, its approval or
recommendation of the merger agreement or the merger or fails to recommend
to Renaissance stockholders that they approve the merger, or publicly
approves or
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recommends an alternative acquisition proposal, or (5) the board of
directors or special committee fails to reconfirm its recommendation of the
merger agreement or the merger or fails publicly to announce that it is not
recommending any alternative acquisition proposal, in each case, if
requested to do so by Registry Holding Company.
If the merger agreement is terminated and abandoned, the merger agreement
will be void and neither Renaissance nor Registry Holding Company will have any
liability other than obligations to pay any break-up fee, if applicable, as
described below, provided, however, no such termination will relieve any party
of any liability or damages resulting from any breach of representation,
warranty or covenant in the merger agreement prior to such termination.
Break-Up Fee.
Renaissance must pay Registry Holding Company a fee of $2,000,000 if the
merger agreement is terminated under any of the following conditions:
. either Renaissance or Registry Holding Company terminates the merger
agreement because the merger has not been completed by December 31, 2001
and (1) at the time of the termination, there is an alternative acquisition
proposal that has been publicly announced and has not been withdrawn and
(2) within six months of the termination Renaissance enters into a
definitive agreement with respect to any alternative acquisition proposal;
. either Renaissance or Registry Holding Company terminates the merger
agreement because the stockholders of Renaissance fail to approve the
merger at the special stockholder meeting convened to consider and vote
upon the merger and (1) at the time of the special meeting, there is an
alternative acquisition proposal that has been publicly announced and has
not been withdrawn and (2) within six months of the special meeting,
Renaissance enters into a definitive agreement with respect to any
alternative acquisition proposal;
. Registry Holding Company terminates the merger agreement because (1) the
representations and warranties or covenants of Renaissance contained in the
merger agreement are not true and correct in all material respects and such
misrepresentation cannot be or has not been cured within 30 days of notice
of such breach (or such longer period as may be approved by Registry
Holding Company), (2) there has been a material breach by Renaissance of
the non-solicitation / no-shop covenants set forth in Section 5.02 of the
merger agreement, and such breach cannot be cured or has not been cured
within 30 days of notice of such breach (or such longer period as may be
approved by Registry Holding Company) or (3) there has been a material
breach by Renaissance of any of its other covenants set forth in the merger
agreement, and such breach cannot be cured or has not been cured within 30
days of notice of such breach (or such longer period as may be approved by
Registry Holding Company), (4) the board of directors or special committee
withdraws or modifies, or publicly resolves to withdraw or modify, in a
manner adverse to Registry Holding Company or Redwood Acquisition, its
approval or recommendation of the merger agreement or the merger or fails
to recommend to Renaissance stockholders that they approve the merger, or
publicly approves or recommends an alternative acquisition proposal, or (5)
the board of directors or special committee fails to reconfirm its
recommendation of the merger agreement or the merger or fails publicly to
announce that it is not recommending any alternative acquisition proposal,
in each case, if requested to do so by Registry Holding Company; or
. Renaissance terminates the merger agreement because the board of directors
or special committee elects to cause Renaissance to enter into a definitive
agreement with respect to an unsolicited superior proposal;
Amendment; Waiver of Conditions. The merger agreement may be amended by
mutual written consent of the parties, and the conditions to each of the
parties' obligations to consummate the merger may be waived by such party.
Accounting Treatment
The merger will be accounted for under the purchase method of accounting
in accordance with generally accepted accounting principles, whereby the value
of the consideration paid in the merger will be allocated based upon the
estimated fair values of the assets acquired and liabilities assumed at the
effective date of the merger.
Support Agreement and Guarantee
As a condition to Renaissance executing the merger agreement, Renaissance
and Mr. Conway entered in a Support Agreement and Guarantee, dated as of June
21, 2001, pursuant to which Mr. Conway agreed to vote his shares in favor of the
merger and to guarantee the performance by Registry Holding Company and Redwood
Acquisition of their respective obligations under the merger agreement.
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information about the beneficial ownership
of Renaissance common stock as of June 30, 2001 by (i) each person who is known
to us to beneficially own more than 5% of our outstanding common stock, (ii) the
Chief Executive Officer and each of our four most highly paid executive officers
who were serving as executive officers at the end of the last fiscal year plus
no more than two former highly paid executive officers who were not serving as
executive officers at the end of the last fiscal year, (iii) each director of
Renaissance, and (iv) all current executive officers and directors as a group.
Except as otherwise indicated, each of the stockholders named below has sole
voting and investment power over the shares of common stock listed as
beneficially owned.
Shares Percentage of
Names of Directors, Named Executive Officers Beneficially Outstanding
and 5% Stockholders Owned (1) Shares
- ------------------------------------------------------ -------------- ---------------
G. Drew Conway (2) (3) 12,230,545 23.12%
Robert P. Badavas (4) 168,829 *
Paul C. O'Brien (4) 231,829 *
Joseph F. Pesce (5) 589,899 *
Christopher D. T. Guiffre (6) 212,681 *
Raye L. LaPlante (7) - *
Edward H. Longo, Jr. (8) 41,750 *
State of Wisconsin Investment Board (9) 5,820,000 11.00%
Mellon Financial Corporation (10) 3,364,240 6.36%
S Squared Technology Group (11) 3,062,000 5.79%
MFS Investment Management (12) 2,903,972 5.49%
Dimensional Fund Advisors Inc. (13) 2,758,500 5.21%
All directors and executive officers (five persons) (14) 12,653,592 23.92%
- --------
* Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the SEC
and includes voting or investment power with respect to the shares. Shares
of common stock subject to options currently exercisable or exercisable
within 60 days are deemed outstanding for determining the share ownership
and percentage of the person holding such options, but are not deemed
outstanding for determining the percentage of any other person.
(2) Mr. Conway's address is c/o Renaissance Worldwide, 52 Second Avenue,
Waltham, MA 02451.
(3) Includes 514,475 shares of common stock held by the Conway Family
Foundation and trusts for the benefit of Mr. Conway's five children, as to
which Mr. Conway disclaims beneficial ownership.
(4) Includes 158,829 shares of common stock issuable upon the exercise of
options currently exercisable or exercisable within 60 days, none of
which are currently in-the-money, but does not include 25,000 shares of
common stock issuable upon the exercise of options that that will become
exercisable on the earlier to occur of May 3, 2002 or a change of control
such as the change of control contemplated by the merger, all of which are
currently in-the-money.
(5) Includes 575,000 shares of common stock issuable upon the exercise of
options currently exercisable or exercisable within 60 days, none of
which are currently in-the-money. Mr. Guiffre's employment as an executive
officer terminated in July, 2001.
(6) Includes 195,500 shares of common stock issuable upon the exercise of
options currently exercisable or
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exercisable within 60 days, none of which are currently in-the-money. Mr.
Pesce's employment as an executive officer terminated in July, 2001.
(7) Based on information as of March 1, 2001 provided to Renaissance in
connection with its proxy statement for its annual meeting. Mr. LaPlante's
employment as an executive officer terminated in February, 2001.
(8) Based on information as of March 1, 2001 provided to Renaissance in
connection with its proxy statement for its annual meeting. Mr. Longo's
employment as an executive officer terminated in September, 2000.
(9) The information reported is based on a Schedule 13G, dated February 9,
2001, filed with the SEC by the State of Wisconsin Investment Board
("SWIB"). SWIB is a public pension fund, in which capacity it has sole
voting power and sole dispositive power with respect to 5,820,000 shares.
SWIB's address is P.O. Box 7842, Madison, WI 53707.
(10) The information reported is based on a Schedule 13G, dated January 22,
2001, filed with the SEC by Mellon Financial Corporation ("Mellon").
Mellon is a parent holding company, in which capacity it or its direct or
indirect subsidiaries have sole voting power with respect to 3,303,540
shares and sole dispositive power with respect to 3,364,240 shares.
Mellon's address is c/o Mellon Financial Corporation, One Mellon Center,
Pittsburgh, PA 15258.
(11) The information reported is based on a Schedule 13G, dated February 14,
2001, filed with the SEC by S Squared Technology Corp. ("S Squared"). S
Squared is a registered investment adviser, in which capacity it has sole
voting power and sole dispositive power with respect to 3,062,000 shares.
S Squared's address is 515 Madison Avenue, New York, NY 10022.
(12) The information reported is based on a Schedule 13G, dated February 12,
2001, filed with the SEC by Massachusetts Financial Services Company
("MFS"). MFS is a registered investment adviser, in which capacity it has
sole voting power with respect to 2,741,931 shares and sole dispositive
power with respect to 2,903,972 shares. MFS's address is 500 Boylston
Street, Boston, MA 02116.
(13) The information reported is based on a Schedule 13F, dated as of December
31, 2000, filed with the SEC by Dimensional Fund Advisors, Inc.
("Dimensional") and information provided to Renaissance by Dimensional.
Dimensional, an investment advisor registered under Section 203 of the
Investment Advisors Act of 1940, furnishes investment advice to four
investment companies registered under the Investment Company Act of 1940,
and serves as investment manager to certain other investment vehicles,
including commingled group trusts (These investment companies and
investment vehicles are the "Portfolios"). In its role as an investment
advisor and investment manager, Dimensional possessed both investment and
voting power over 2,758,500 shares as of December 31, 2000. The Portfolios
own all securities reported in this statement, and Dimensional disclaims
beneficial ownership of such securities.
(14) Includes 345,658 shares of common stock issuable upon the exercise of
options currently exercisable or exercisable within 60 days, none of
which are currently in-the-money, but does not include 50,000 shares
issuable upon the exercise of options that that will become exercisable on
the earlier to occur of May 3, 2002 or a change of control such as the
change of control contemplated by the merger, all of which are currently
in-the-money.
None of the directors or executive officers listed above was, during the
past five years, convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or was, during the past five years, a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining further violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
COMPARATIVE PER SHARE, MARKET PRICE AND DIVIDEND INFORMATION
Renaissance's common stock is listed on the Nasdaq National Market under
the symbol REGI. The table below sets forth, for the periods and dates
indicated, the range of high and low per share sales prices for Renaissance
common stock as reported by the Nasdaq National Market.
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High Low
---------- ----------
Fiscal 2001
First Quarter $1.44 $0.63
Second Quarter 1.45 0.25
Fiscal 2000
First Quarter $9.75 $4.50
Second Quarter 6.13 1.63
Third Quarter 2.31 1.28
Fourth Quarter 1.63 0.63
Fiscal 1999
First Quarter $8.38 $4.00
Second Quarter 8.19 4.75
Historically, we have not declared or paid cash dividends on our common
stock and do not plan to pay cash dividends to our stockholders in the
foreseeable future. Moreover, the merger agreement prohibits us from paying
dividends. We presently intend to retain any earnings to finance our business.
As of August __, 2001, there were [ ] stockholders of record of our common
stock. The number does not include stockholders who hold their stock in "street
name" or through broker or nominee accounts.
On June 20, 2001, the day before the public announcement that the parties
had signed the merger agreement, the closing price of Renaissance common stock
was $0.45. On August ___, 2001, the most recent practicable date prior to the
printing of this document, the closing price per share of Renaissance common
stock was $[ ]. You should obtain current market price quotations for
Renaissance common stock in connection with the voting of your common stock.
Renaissance had outstanding 52,902,540 shares of common stock as of August __,
2001.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
For each member of our board of directors and each person serving as an
executive officer of Renaissance, there follows information given by each
concerning his principal occupation and business experience for the past five
years. For directors, the information below also includes the names of other
publicly held companies of which such person serves as a director and such
person's age and length of service as a director of Renaissance. All of our
directors and executive officers are U.S. citizens.
Who Are Our Directors?
G. Drew Conway is Renaissance's founder and has served as its Chief
Executive Officer and Chairman of the Board since July 1999. From May 1986 to
July 1999, Mr. Conway served as our President, Chief Executive Officer and
Chairman of the Board. From 1983 until 1986, Mr. Conway was a founder and
principal of The Experts, a technical staffing company. Mr. Conway is 43 years
old.
Robert P. Badavas, a class I director, became a director of Renaissance in
May 1996. Mr. Badavas has been a Senior Corporate Advisor in the Office of the
Chairman of Aether Systems, Inc., a provider of wireless data products and
services to the Fortune 1000 and Government, since January 2001. Mr. Badavas was
President and Chief Executive Officer of Cerulean Technology, Inc., a provider
of mobile information systems applications, from December 1995 through December
2000. Aether Systems, Inc. acquired Cerulean Technology in September 2000. From
October 1986 through October 1995, Mr. Badavas was employed by Chipcom
Corporation, a manufacturer of intelligent network switching systems, where he
served in a variety of Senior Executive positions including, among others, as
Senior Vice President, Finance, Chief Financial Officer and Treasurer. Mr.
Badavas is 48 years old.
Paul C. O'Brien, a class II director, became a director of Renaissance in
April 1996. Mr. O'Brien is the President of The O'Brien Group, Inc., a
consulting firm in the areas of telecommunications and information technology
that he founded in January 1995. Before founding the O'Brien Group, Mr. O'Brien
was employed by NYNEX New England (now Verizon), a telecommunications company,
most recently as Chairman of the Board from 1993 to December 1994, and President
and Chief Executive Officer from 1988 to 1993. Mr. O'Brien is also a director of
MangoSoft, Inc.
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and CeNeS Pharmaceuticals, plc, and is non- executive Chairman of the Board of
Merlot Communications, Inc. Mr. O'Brien is 61 years old.
Who Are Our Executive Officers?
G. Drew Conway is the Renaissance's founder and has served as its Chief
Executive Officer and Chairman of the Board since July 1999. From May 1986 to
July 1999, Mr. Conway served as our President, Chief Executive Officer and
Chairman of the Board. From 1983 until 1986, Mr. Conway was a founder and
principal of The Experts, a technical staffing company. Mr. Conway is 44 years
old.
Joseph P. Fargnoli has served as our Chief Financial Officer, Treasurer and
Clerk since July 2001. From August, 1999 until July 2001, Mr. Fargnoli served
as Vice President, Corporate Tax. From 1996 through 1999 he served as Director
of Tax and Treasury. From January 1993 to May 1996, he was a senior manager in
the high technology practice of Pricewaterhouse Coopers LLP. Previously, Mr.
Fargnoli was employed by Ernst & Young LLP. Mr. Fargnoli is a certified public
accountant. Mr. Fargnoli is 46 years old.
David C. Sweetser has served as the Chief Operating Officer of GovConnect
since September 2000. From April 2000 to September 2000, Mr. Sweetser served as
Senior Vice President of Administration for GovConnect. From April 1997 to
April 2000, Mr. Sweetser was a Vice President of National Amusements, Inc., a
leader in the entertainment industry. Previously, Mr. Sweetser served as
President and Chief Executive Officer of Trademark Development, Inc., a real
estate development company. Mr. Sweetser is 46 years old.
Employment Agreement
In connection with our initial public offering in June 1996, Renaissance
entered into an employment agreement with Mr. Conway employing Mr. Conway as its
Chief Executive Officer. Mr. Conway's agreement had a term of four years and an
annual base salary of $400,000, $425,000, $475,000 and $525,000 in the first
through fourth years of the term, plus bonus compensation as determined by
Renaissance's Compensation Committee. Mr. Conway's agreement provided that if
Renaissance terminated Mr. Conway's employment without "cause" (as defined) or
if Mr. Conway terminated his employment for "good reason" (as defined), then
Renaissance would pay Mr. Conway severance equal to two years of base
compensation plus a portion of the bonus paid or payable with respect to the
immediately preceding full employment year based on days of service in the year
of termination. Mr. Conway's agreement contained non-competition and non-
solicitation covenants during the period of his employment and for a two-year
period thereafter. In addition, Mr. Conway's agreement provided that if his
employment was terminated at the end of the term of the agreement, then Mr.
Conway would have been entitled to severance equal to one year of base
compensation. Renaissance did not terminate Mr. Conway's employment and pay him
one year of severance at the end of the term of his employment agreement.
Accordingly, Mr. Conway continues to be employed at the rate of pay for the
fourth year of his employment agreement.
DISSENTERS' RIGHTS
Sections 85 through 98 of Chapter 156B of the Massachusetts General Laws,
which we call the Massachusetts appraisal statute, entitle any holder of
Renaissance stock, who files a written objection to the proposal to approve the
merger and merger agreement before the vote at the special meeting and does not
vote in favor of that proposal, to demand in writing that Renaissance pay that
holder, in cash, the fair value of such shares exclusive of any element of value
arising from the expectation or accomplishment of the merger. Renaissance
stockholders who follow the procedures set out in the Massachusetts appraisal
statute for any of their Renaissance shares will be entitled to have a court
appraise those shares and receive that fair value, together with interest, if
the merger closes.
The following is a summary of certain features of the Massachusetts
appraisal statute. It is qualified by reference to the full text of the statute,
a copy of which is attached as Annex C to this proxy statement.
A stockholder who intends to exercise appraisal rights must deliver to
Renaissance, before the vote of Renaissance stockholders on the merger and
merger agreement, a written objection to the merger and merger agreement,
stating that the stockholder intends to demand payment for shares held by the
stockholder if the merger closes. The written objection should be addressed to
Renaissance Worldwide, Inc., 52 Second Avenue, Waltham,
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Massachusetts 02451, Attention: Clerk. A vote against the merger proposal, not
coupled with a timely written objection, will not serve to perfect appraisal
rights. The written objection must be in addition to and separate from any proxy
or vote against the proposal.
Renaissance stockholders should execute any demand for appraisal in the
stockholder's name as it appears on the stockholders' stock certificates. If the
stockholder owns shares in a fiduciary capacity, such as a trustee, guardian or
custodian, the stockholder should execute the demand in that capacity. If more
than one person owns the shares (for example, a joint tenancy or tenancy in
common), all the joint owners should execute the demand.
A record holder, such as a broker who holds shares of Renaissance common
stock as a nominee for beneficial owners, must exercise appraisal rights on
behalf of those beneficial owners. Any person having a beneficial interest in
any Renaissance shares held of record in the name of another person (for
example, a broker or nominee) must act promptly to cause the record holder to
take the steps summarized here, in a timely manner, in order to perfect the
beneficial owner's appraisal rights. The written demand should set forth the
number of shares covered by the demand. Unless a demand specifies a lesser
number of shares, Renaissance will treat the demand as applying to all the
shares held in the name of the record holder.
Stockholders who wish to exercise appraisal rights may not vote in favor of
the proposal to approve the merger and merger agreement. A stockholder who votes
in favor of that proposal will not be entitled to exercise appraisal rights. The
submission of a signed blank proxy card will serve to waive appraisal rights.
However, failure to return a proxy card or vote (or abstaining from voting) will
not waive appraisal rights.
Within ten days after the merger closes, Renaissance will notify each
record holder of shares of Renaissance stock who has purported to comply with
the Massachusetts appraisal statute and whose shares were not voted in favor of
the merger and the merger agreement that the merger closed. That notice will not
be deemed to confer any rights to demand payment for the stockholder's stock. In
other words, if the Renaissance stockholder has not properly objected to the
merger and merger agreement and has not voted against the merger, the
Renaissance stockholder cannot demand payment, regardless of notice. Renaissance
or its agent will send the notice by registered or certified mail, addressed to
the stockholder at the stockholder's last known address as it appears on the
records of Renaissance transfer agent immediately before the merger. Within 20
days after that notice is mailed, the Renaissance stockholder must demand
payment for his or her stock in writing. Failure to make such a demand, within
that period, will serve to waive appraisal rights.
Once a Renaissance stockholder submits a demand for appraisal, the
stockholder may withdraw the demand only with Renaissance's approval. If the
demand is effectively withdrawn, then, absent an agreement between the
stockholder and Renaissance to the contrary, the stockholder would receive the
cash payable to stockholders who did not exercise appraisal rights.
A Renaissance stockholder who perfects appraisal rights by complying with
the above requirements and reaches agreement with Renaissance on the fair value
of the stockholder's shares will receive that value, with interest, by check
within 30 days of the demand. If the stockholder and Renaissance do not reach
agreement on fair value within 30 days after the end of the 20-day period during
which stockholders must make their demands for payment, either Renaissance or
the stockholder may bring an action, within four months after the end of those
30 days, to have the fair value determined through judicial proceedings in
Massachusetts Superior Court. Neither Renaissance nor Registry Holding Company
will have any obligation, and currently do not have any intention, to elect to
cause the fair value of the shares of dissenting stockholders to be determined
through judicial proceedings.
Although Massachusetts courts have broad discretion in determining the fair
value of stock of dissenting stockholders, they generally have used a weighted
average of the market, earnings and asset values for the stock. The
Massachusetts Supreme Judicial Court has held that this method is an
appropriate, but not required, method for determining the fair value of stock of
dissenting stockholders. The trial judge may determine the appropriate valuation
method to apply. The Massachusetts appraisal statute requires that Renaissance
pay a fair rate of interest on any award determined by the court. The value of
the shares, however determined, shall be determined as of the day preceding the
date of the vote and exclusive of any value as a result of the merger. Interest
runs from the date the Renaissance board approved the merger.
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For federal income tax purposes, Renaissance stockholders who receive cash
for their shares of Renaissance stock after exercising appraisal rights will
recognize taxable gain or loss. See "Material Federal Income Tax Consequences."
BUSINESS COMBINATIONS WITH INTERESTED PARTIES
State Anti-Takeover Laws
There are provisions of Massachusetts law that may be deemed to have an
anti-takeover effect. These provisions are designed to protect stockholders
against coercive, unfair or inadequate tender offers and other abusive tactics
and to encourage any person contemplating a business combination with
Renaissance to negotiate with the board of directors for the fair and equitable
treatment of all stockholders.
Under Massachusetts law, no Massachusetts corporation shall engage in a
"business combination" with an "interested stockholder" for a period of three
years following the date that the stockholder became an interested stockholder,
except in certain circumstances. "Business combination" includes a merger,
consolidation, asset sale or other transaction resulting in a financial benefit
to the interested stockholder. "Interested stockholder" is a person who,
together with affiliates and associates, owns, or within three years, did own 5%
or more of the corporation's voting stock. A Massachusetts corporation may
elect not to be governed by these restrictions. Renaissance has not so elected.
However, the above restrictions on business combinations are inapplicable to the
merger because, under Massachusetts law, Mr. Conway is not deemed to be an
interested stockholder as he owned more than 5% of Renaissance's voting stock
prior to the enactment of the law regarding business combinations with
interested stockholders.
Preemptive Rights
Under Massachusetts law, stockholders do not have any pre-emptive rights
unless they are provided in the corporation's articles of organization, in bylaw
provisions adopted by stockholders or are otherwise granted pursuant to an
agreement. Neither Renaissance's articles of organization nor bylaws, nor any
agreement to which Renaissance is a party, provides for preemptive rights.
EXPENSES
Renaissance has agreed to pay up to $250,000 of expenses incurred by Mr.
Conway through June 22, 2001. In addition, the merger agreement provides that
each party will pay all other costs and expenses incurred by such party in
connection with the merger, consisting primarily of SEC filing fees, fees and
expenses of investment bankers, attorneys and accountants, financial printing
and other related charges. Assuming the merger is completed, Renaissance
estimates such fees and expenses, will be approximately $4 million. Those fees
and expenses are as follows:
Filing Fees............................................................................................ $ 13,509
Financial Advisor's Fees and Expenses (estimated total for board of
directors and the special committee)................................................................. 505,000
Financial Advisor's Fees and Expenses (estimated total for Registry
Holding Company and Redwood Acquisition.............................................................. 1,840,000
Legal Fees and Expenses (estimated total for board of directors and
the special committee)............................................................................... 500,000
Legal Fees and Expenses (estimated total for Registry Holding Company, and
Redwood Acquisition)................................................................................. 400,000
Special Committee Fees................................................................................. 100,000
Accounting Fees and Expenses........................................................................... 100,000
Paying Agent Fees...................................................................................... 87,000
Printing and Mailing Costs............................................................................. 100,000
Estimated Fees and Expenses of Proxy Solicitor......................................................... 20,000
Hart-Scott-Rodino Filing............................................................................... 50,000
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Bank Fees.............................................................................................. 365,000
----------
Total............................................................................................ $4,080,509
==========
WHERE YOU CAN FIND MORE INFORMATION
Renaissance files annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any reports,
statements or other information that Renaissance files at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C., 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. The SEC also maintains an Internet world wide
web site that contains reports, proxy statements and other information about
issuers, including Renaissance, who file electronically with the SEC. The
address of that site is http://www.sec.gov.
Renaissance and Registry Holding Company have filed with the SEC a Rule
13e-3 Transaction Statement on Schedule 13E-3 with respect to the merger. As
permitted by the SEC, this proxy statement omits certain information contained
in the Schedule 13E-3. The Schedule 13E-3, including any amendments and exhibits
filed or incorporated by reference as a part thereof, is available for
inspection or copying as set forth above.
The SEC allows Renaissance to incorporate by reference information into
this proxy statement, which means that Renaissance can disclose important
information to you by referring you to other documents previously filed
separately by Renaissance with the SEC. The information incorporated by
reference is considered part of this proxy statement, except for any information
superceded by information contained directly in this proxy statement.
This proxy statement incorporates by reference the documents mentioned
below that Renaissance previously filed with the SEC. These documents contain
important business and financial information about Renaissance that is not
included within this proxy statement. We are delivering to you, simultaneously
with this proxy statement, our Annual Report on Form 10-K for the fiscal year
ended December 30, 2000, as filed on March 16, 2001 and Quarterly Report on Form
10-Q for the quarter ended June 30, 2001, as filed on August 7, 2001.
- ----------------------------------------------------------------------------------------------------------------------
Renaissance Filings
File No. (0-28192) Period
- ----------------------------------------------------------------------------------------------------------------------
Annual Report on Form 10-K Fiscal year ended December 30, 2000, as filed on March
16, 2001
- ----------------------------------------------------------------------------------------------------------------------
Quarterly Report on Form 10-Q Quarter ended March 31, 2001, as filed on May 2, 2001 and
quarter ended June 30, 2001, as filed on August 7, 2001
- ----------------------------------------------------------------------------------------------------------------------
Current Reports on Form 8-K Filed June 22, 2001 and July 12, 2001
- ----------------------------------------------------------------------------------------------------------------------
You should rely only on the information contained in this proxy statement
(or incorporated by reference as described above) to vote on the merger
agreement and the merger. We have not authorized anyone to provide you with
information that is different from what is contained in this document. This
proxy statement is dated August ___ , 2001. You should not assume that the
information in it is accurate as of any date other than that date, and its
mailing to stockholders shall not create any implication to the contrary.
-48-
INFORMATION ABOUT STOCKHOLDER PROPOSALS
Any stockholder wishing to include a proposal in our proxy statement for
the Annual Meeting of Stockholders in 2002 must submit it to us no later than
November 28, 2001. If a stockholder wishes to present a proposal before the
Annual Meeting of Stockholders in 2002, but does not wish to have the proposal
considered for inclusion in our proxy statement, such stockholder must also give
written notice to the clerk at our principal executive offices no later than
March 4, 2002 and no earlier than February 2, 2002; provided, however, that if
the Annual Meeting of Stockholders in 2002 is more than 30 days before or more
than 60 days after the May 3, 2001, first anniversary of the Annual Meeting of
Stockholders in 2001, the notice must be received no earlier than the close of
business on the 90th day prior to the meeting and no later than the close of
business on the later of (i) the 60th day prior to the meeting and (ii) the 10th
day following public announcement of the meeting.
By Order of the Board of Directors,
G. Drew Conway
Chief Executive Officer
August __ 2001
The Board of Directors hopes that stockholders will attend the meeting.
Whether or not you plan to attend, you are urged to complete, date, sign and
return the enclosed proxy in the accompanying envelope. A prompt response will
facilitate arrangements for the meeting. Your cooperation is appreciated.
-49-
Annex A
- --------------------------------------------------------------------------------
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
Dated as of June 21, 2001,
among
REGISTRY HOLDING COMPANY, INC.,
REDWOOD ACQUISITION CORP.
and
RENAISSANCE WORLDWIDE, INC.
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Table of Contents
Page
ARTICLE I
The Merger............................................................................. 1
Section 1.01. The Merger......................................................... 1
Section 1.02. Closing............................................................ 2
Section 1.03. Effective Time..................................................... 2
Section 1.04. Effects............................................................ 2
Section 1.05. Articles of Organization and By-laws............................... 2
Section 1.06. Section 1.06. Directors............................................ 2
Section 1.07. Section 1.07. Officers............................................. 2
ARTICLE II
Effect on the Capital Stock of the Constituent Corporations; Exchange of Certificates.. 3
Section 2.01. Effect on Capital Stock............................................ 3
Section 2.02. Exchange of Certificates........................................... 4
ARTICLE III
Representations and Warranties of the Company.......................................... 7
Section 3.01. Organization. Standing and Power................................... 7
Section 3.02. Company Subsidiaries; Equity Interests............................. 7
Section 3.03. Capital Structure.................................................. 7
Section 3.04. Authority; Execution and Delivery; Enforceability.................. 8
Section 3.05. No Conflicts: Consents............................................. 9
Section 3.06. SEC Documents; Undisclosed Liabilities............................. 10
Section 3.07. Information Supplied............................................... 11
Section 3.08. Absence of Certain Changes or Events............................... 11
Section 3.09. Taxes.............................................................. 12
Section 3.10. ERISA Compliance................................................... 13
Section 3.11. Litigation......................................................... 14
Section 3.12. Compliance with Applicable Laws.................................... 15
Section 3.13. Intellectual Property.............................................. 15
Section 3.14. Brokers............................................................ 16
Section 3.15. Opinion of Financial Advisor....................................... 16
Section 3.16. Stock Options and Employee Stock Purchase Plan..................... 16
ARTICLE IV
Representations and Warranties of Parent and Sub....................................... 16
Section 4.01. Organization, Standing and Power................................... 17
Section 4.02. Sub................................................................ 17
Section 4.03. Authority; Execution and Delivery; Enforceability.................. 17
Section 4.04. No Conflicts; Consents............................................. 17
Section 4.05. Information Supplied............................................... 18
Section 4.06. Brokers............................................................ 18
Section 4.07. Financial Ability to Perform....................................... 18
ARTICLE V
Covenants Relating to Conduct of Business.............................................. 19
Section 5.01. Conduct of Business................................................ 19
Section 5.02. No Solicitation by Company......................................... 23
ARTICLE VI
Additional Agreements.................................................................. 25
Section 6.01. Preparation of Proxy Statement; Stockholders Meeting............... 25
Section 6.02. Access to Information; Confidentiality............................. 26
Section 6.03. Reasonable Efforts; Notification................................... 26
Section 6.04. Benefit Plans...................................................... 27
Section 6.05. Indemnification; D&O Insurance, etc................................ 27
Section 6.06. Fees and Expenses.................................................. 29
Section 6.07. Public Announcements............................................... 30
Section 6.08. Actions Respecting Commitment Letters; Financing................... 30
Section 6.09. Rights Agreement................................................... 31
Section 6.10. Stockholder Litigation............................................. 31
ARTICLE VII
Conditions Precedent................................................................... 32
Section 7.01. Conditions to Each Party's Obligation To Effect The Merger......... 32
Section 7.02. Conditions Precedent to Parent's and Sub's Obligations............. 32
Section 7.03. Conditions to Obligation of Company................................ 33
ARTICLE VIII
Termination, Amendment and Waiver...................................................... 33
Section 8.01. Termination........................................................ 33
Section 8.02. Procedure and Effect of Termination................................ 35
Section 8.03. Amendment.......................................................... 35
Section 8.04. Extension; Waiver.................................................. 35
Section 8.05. Procedure for Termination, Amendment, Extension or Waiver.......... 36
ARTICLE IX
General Provisions..................................................................... 36
Section 9.01. Nonsurvival of Representations and Warranties...................... 36
Section 9.02. Notices............................................................ 36
Section 9.03. Definitions........................................................ 37
Section 9.04. Definitions Cross Reference Table.................................. 38
Section 9.05. Interpretation..................................................... 40
Section 9.06. Severability....................................................... 40
Section 9.07. Counterparts....................................................... 40
Section 9.08. Entire Agreement; No Third-Party Beneficiaries..................... 40
Section 9.09. Governing Law...................................................... 40
Section 9.10. Assignment......................................................... 41
Section 9.11. Enforcement........................................................ 41
Section 9.12. Consents........................................................... 41
Section 9.13. Headings........................................................... 41
Section 9.14. Parent Guarantee................................................... 41
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of June 21, 2001,
among Registry Holding Company, Inc., a Delaware corporation ("Parent"), Redwood
Acquisition Corp., a Massachusetts corporation ("Sub") and a wholly owned
Subsidiary (as defined in Section 9.03) of Parent, and Renaissance Worldwide,
Inc., a Massachusetts corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the Company
have approved the acquisition of the Company by Parent on the terms and subject
to the conditions set forth in this Agreement;
WHEREAS a special committee of the Board of Directors of the Company
comprised of the Company's independent directors (the "Special Committee") has
unanimously approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS the respective Boards of Directors of Parent, Sub and the Company
have approved the merger (the "Merger") of Sub with and into the Company, on the
terms and subject to the conditions set forth in this Agreement, whereby,
subject to the exceptions set forth below, each issued share of Common Stock, no
par value per share, of the Company ("Company Common Stock") shall be converted
into the right to receive cash consideration as specified below;
WHEREAS substantially concurrently herewith and as a condition and
inducement to the Company's willingness to enter into this Agreement, the chief
executive officer of the Company, who holds not less than 11,716,070 outstanding
shares of Company Common Stock, is entering into a Support Agreement and
Guarantee in the form of Exhibit A hereto (the "Support Agreement"); and
WHEREAS Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
The Merger
Section 1.01. The Merger. On the terms and subject to the satisfaction or
waiver of the conditions set forth in this Agreement, and in accordance with the
Massachusetts Business Corporation Law (the "BCL"), Sub shall be merged with and
into the Company at the Effective Time (as defined in Section 1.03). At the
Effective Time, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation"). The Surviving Corporation shall possess all the rights,
privileges, immunities, powers and franchises of the Company and Sub,
1
and the Surviving Corporation shall by operation of law become liable for all of
the debts, liabilities and duties of the Company and Sub. The name of the
Surviving Corporation shall continue to be Redwood, Inc. and the purpose thereof
shall be as set forth in Section 2 of the Articles of Organization of the
Surviving Corporation.
Section 1.02. Closing. The closing (the "Closing") of the Merger shall take
place at the offices of Bingham Dana LLP in Boston, MA at 10:00 a.m. on the
second business day following the satisfaction (or, to the extent permitted by
Law, waiver by the appropriate parties) of the conditions set forth in Article
VII, or at such other place, time and date as shall be agreed in writing between
Parent and the Company. The date on which the Closing occurs is referred to in
this Agreement as the "Closing Date".
Section 1.03. Effective Time. Prior to the Closing, Parent shall prepare
and give the Company and its counsel the opportunity to review, and on the
Closing Date or as soon as practicable thereafter Parent shall file with the
Secretary of State of The Commonwealth of Massachusetts, articles of merger or
other appropriate documents (in any such case, the "Articles of Merger")
executed in accordance with the relevant provisions of the BCL and shall make
all other filings or recordings required under the BCL. The Merger shall become
effective at such time as the Articles of Merger are duly filed with such
Secretary of State, or at such other time as Parent and the Company shall agree
and specify in the Articles of Merger (the time the Merger becomes effective
being the "Effective Time").
Section 1.04. Effects. The Merger shall have the effects set forth in
Section 80 of the BCL.
Section 1.05. Articles of Organization and By-laws.
(a) The Articles of Organization of the Company shall be amended and
restated at the Effective Time to read in the form of Exhibit B, and, as so
amended, such Articles of Organization shall be the Articles of
Organization of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable Law.
(b) Subject to Section 6.05, the By-laws of the Company as in effect
immediately prior to the Effective Time shall be the By-laws of the
Surviving Corporation until thereafter changed or amended as provided
therein or by applicable Law.
Section 1.06. Directors. At the Closing, Parent shall designate the
directors of the Surviving Corporation and such directors shall hold office
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Section 1.07. Officers. At the Closing, Parent shall designate the officers
of the Surviving Corporation and such officers shall hold office until the
earlier of their
2
resignation or removal or until their respective successors are duly elected or
appointed and qualified, as the case may be.
ARTICLE II
Effect on the Capital Stock of the Constituent Corporations;
Exchange of Certificates
Section 2.01. Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of capital
stock of Sub shall be converted into and become one fully paid and non-
assessable share of common stock, no par value per share, of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share
of Company Common Stock that is owned directly by the Company, any
Subsidiary of the Company, Parent or Sub shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and
no other consideration shall be delivered or deliverable in exchange
therefor.
(c) Conversion of Company Common Stock. Subject to Sections 2.01(b)
and 2.01(d), each issued share of Company Common Stock shall be converted
into the right to receive $1.65 in cash, subject to adjustment for any
stock split, stock dividend or combination of stock that may occur from the
date hereof and prior to the Effective Time. The aggregate cash payable
upon the conversion of shares of Company Common Stock pursuant to this
Section 2.01(c) is referred to as the "Merger Consideration". As of the
Effective Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such shares of
Company Common Stock shall cease to have any rights with respect thereto,
except the right to receive Merger Consideration upon surrender of such
certificate in accordance with Section 2.02, without interest.
(d) Appraisal Rights. Notwithstanding anything in this Agreement to
the contrary, shares ("Appraisal Shares") of Company Common Stock that are
outstanding immediately prior to the Effective Time and that are held by
any Person who is entitled to demand and properly demands appraisal of such
Appraisal Shares pursuant to, and who complies in all respects with,
Sections 86 through 97 of the BCL (the "Appraisal Provisions") shall not be
converted into Merger Consideration as provided in Section 2.01(c), but
rather the holders of Appraisal Shares shall be entitled to payment of the
fair value of such Appraisal Shares in accordance with the Appraisal
Provisions; provided, however, that if
3
any such holder shall fail to perfect or otherwise shall waive, withdraw or
lose the right to appraisal under the Appraisal Provisions, then the right
of such holder to be paid the fair value of such holder's Appraisal Shares
shall cease and such Appraisal Shares shall be deemed to have been
converted as of the Effective Time into, and to have become exchangeable
solely for the right to receive, Merger Consideration as provided in
Section 2.01(c), without interest, upon surrender of such certificate in
accordance with the provisions of Section 2.02. Company shall give Parent
(i) prompt notice of any demand for payment of fair market value received
by Company, the withdrawal of any such demand, and any other instrument
served pursuant to the Appraisal Provisions and received by Company and
(ii) the opportunity to direct all negotiations and proceedings with
respect to any demand for payment of fair market value under the Appraisal
Provisions. Company shall not, except with the prior written consent of
Parent, make any payment with respect to any demand for payment of fair
market value or offer to settle or settle any such demand, or agree to do
any of the foregoing.
(e) Company Stock Options. Parent and the Company agree that, in
accordance with the provisions of the Company Stock Option Plans (as
defined in Section 3.16), each outstanding option to purchase Company
Common Stock under any Company Stock Option Plan shall either (i) be
terminated as of the Effective Time or (ii) from and after the Effective
Time entitle the holder thereof to receive, upon exercise in accordance
with the terms thereof (including but not limited to any terms with respect
to vesting), an amount in cash (less applicable withholding taxes) equal to
the product of (x) the number of shares of Company Common Stock previously
subject to such stock option multiplied by (y) the amount, if any, by which
$1.65 (subject to adjustment for any stock split, stock dividend or
combination of stock that may occur from the date hereof and prior to the
Effective Time) exceeds the per share exercise price of such stock option.
In the event and to the extent that any Company Stock Option Plan permits
or requires the Company Board (or any committee thereof) to exercise
discretion with respect to outstanding stock options, the Company Board (or
such committee, as the case may be) will exercise such discretion with the
consent of Parent, which consent will not unreasonably be withheld.
Section 2.02. Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall select a
bank or trust company in the United States, reasonably acceptable to the
Company, to act as paying agent (the "Paying Agent") for the payment of the
Merger Consideration upon surrender of certificates representing Company
Common Stock. Parent shall take all steps necessary to provide, or to
enable and cause the Sub to provide, to the Paying Agent prior to the
Effective Time cash necessary to pay for the shares of Company Common Stock
converted into the right to receive cash pursuant to Section 2.01(c) (such
cash being hereinafter referred to as the "Exchange Fund"). If for any
reason (including losses) the Exchange Fund is inadequate to pay the
amounts to which holders of shares of
4
Company Common Stock shall be entitled under Section 2.01(c), Parent shall
take all steps necessary to enable or cause the Surviving Corporation
promptly to deposit in trust additional cash with the Paying Agent
sufficient to make all payments required under Section 2.01(c), and Parent
and the Surviving Corporation shall in any event be liable for payment
thereof. The Exchange Fund shall not be used for any purpose except as
expressly provided in this Agreement.
(b) Exchange Procedures. Promptly after the Effective Time (but in no
event later than five business days following such date), the Surviving
Corporation shall cause the Paying Agent to mail to each holder of record
of a certificate or certificates (the "Certificates") that immediately
prior to the Effective Time represented outstanding shares of Company
Common Stock whose shares were converted into the right to receive Merger
Consideration pursuant to Section 2.01, (i) 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 delivery of the Certificates to
the Paying Agent and shall be in such form and have such other provisions
as Parent may reasonably specify), and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent, together with such letter of transmittal, duly executed, and
such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange
therefor the amount of cash into which the shares of Company Common Stock
theretofore represented by such Certificate shall have been converted
pursuant to Section 2.01, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Company
Common Stock that is not registered in the transfer records of the Company,
payment may be made to a Person other than the Person 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 payment shall pay any transfer or other taxes
required by reason of the payment to a Person other than the registered
holder of such Certificate or establish to the satisfaction of Parent that
such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.02, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon
such surrender the amount of cash, without interest, into which the shares
of Company Common Stock theretofore represented by such Certificate have
been converted pursuant to Section 2.01. If any holder of shares of Company
Common Stock shall be unable to surrender such holder's Certificates
because such Certificates have been lost, mutilated or destroyed, such
holder may deliver in lieu thereof an affidavit and indemnity bond in form
and substance and with surety reasonably satisfactory to the Surviving
Corporation. No interest shall be paid or accrue on the cash payable upon
surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. The Merger
Consideration paid in accordance with the terms of this Article II upon
5
conversion of any shares of Company Common Stock shall be deemed to have
been paid in full satisfaction of all rights pertaining to such shares of
Company Common Stock, and after the Effective Time there shall be no
further registration of transfers on the stock transfer books of the
Surviving Corporation of shares of Company Common Stock that were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, any certificates formerly representing shares of Company
Common Stock are presented to the Surviving Corporation or the Paying Agent
for any reason, they shall be canceled and exchanged as provided in this
Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the holders of Company Common Stock for six
months after the Effective Time shall be delivered to Parent, upon demand,
and any holder of Company Common Stock who has not theretofore complied
with this Article II shall thereafter look only to Parent for payment of
its claim for Merger Consideration.
(e) No Liability. None of Parent, Sub, the Company or the Paying Agent
shall be liable to any Person in respect of any cash from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned
property, escheat or similar Law. If any Certificate has not been
surrendered prior to five years after the Effective Time (or immediately
prior to such earlier date on which Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 3.05(b))), any such shares,
cash, dividends or distributions in respect of such Certificate shall, to
the extent permitted by applicable Law, become the property of the
Surviving Corporation, free and clear of all claims or interest of any
Person previously entitled thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest any
cash included in the Exchange Fund, as directed by Parent, on a daily
basis. Any interest and other income resulting from such investments shall
be paid to Parent.
(g) Withholdings. Parent shall be entitled to deduct and withhold from
the consideration otherwise payable to any holder of Company Common Stock
pursuant to this Agreement such amounts as may be required to be deducted
and withheld with respect to the making of such payment under the Code (as
defined in Section 3.10(b)), or under any provision of state, local or
foreign tax Law.
(h) Charges and Expenses. The Surviving Corporation shall pay all
charges and expenses, including those of the Paying Agent, in connection
with the exchange of cash for shares of Company Common Stock.
6
ARTICLE III
Representations and Warranties of the Company
Company represents and warrants to each of Parent and Sub that, except as
indicated in the applicable section of the Disclosure Schedule furnished by
Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule") corresponding to the Sections and subsections set forth
below:
Section 3.01. Organization. Standing and Power. Each of the Company and
each of its Subsidiaries (the "Company Subsidiaries") is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized and has full corporate power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals, and
has made all filings, registrations and declarations, in each case whether
domestic or foreign, necessary to enable it to own, lease or otherwise hold its
properties and assets and to conduct its businesses as presently conducted, in
each case other than such franchises, licenses, permits, authorizations,
approvals, filings, registrations and declarations the lack of which,
individually and in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect (as defined in Section 9.03).
The Company and each Company Subsidiary is duly qualified to do business in each
jurisdiction where the nature of its business or their ownership or leasing of
its properties make such qualification necessary except where the failure to so
qualify has not had and would not reasonably be expected to have a Company
Material Adverse Effect. The Company has made available to Parent true and
complete copies of the articles of organization of the Company, as amended to
the date of this Agreement (as so amended, the "Company Charter"), and the by-
laws of the Company, as amended to the date of this Agreement (as so amended,
the "Company By-laws"), and the comparable charter and organizational documents
of each Company Subsidiary, in each case as amended through the date of this
Agreement.
Section 3.02. Company Subsidiaries; Equity Interests. The Company
Disclosure Schedule lists each Company Subsidiary and its jurisdiction of
organization. All of the outstanding shares of capital stock of each Company
Subsidiary have been validly issued and are fully paid and nonassessable and,
except as set forth in the Company Disclosure Schedule, are owned by the
Company, free and clear of all pledges, liens, charges, mortgages, encumbrances
and security interests of any kind or nature whatsoever except for those
pledges, liens, charges, mortgages, encumbrances and security interests that
have not and would not reasonably be expected to have a Company Material Adverse
Effect (collectively, "Liens").
Section 3.03. Capital Structure. The authorized capital stock of the
Company consists of 99,000,000 shares of Company Common Stock and 99,000 shares
of Series A Preferred Stock, par value $0.10 per share (the "Series A Preferred
Stock" and, together with the Company Common Stock, the "Company Capital
Stock"). At the close of business on June 15, 2001: (i) 52,567,027 shares of
Company Common Stock were issued and outstanding, (ii) 5,192,812 shares of
Company Common Stock were held by
7
the Company in its treasury, (iii) 4,977,780 shares of Company Common Stock were
subject to outstanding options to purchase Compa ny Common Stock (the "Company
Stock Options"), (iv) 1,524,653 shares of Company Common Stock were reserved for
issuance pursuant to the Company Stock Purchase Plan and (v) 99,000 shares of
Series A Preferred Stock were reserved for issuance (but not issued or
outstanding) in connection with the rights (the "Company Rights") issued
pursuant to the Rights Agreement dated as of June 13, 2000 (as amended and in
effect as of the date hereof, the "Company Rights Agreement"), between the
Company and Fleet National Bank, as Rights Agent. Except as set forth above, at
the close of business on June 15, 2001, no shares of capital stock or other
voting securities of the Company were issued, reserved for issuance or
outstanding. All outstanding shares of Company Capital Stock are, and all such
shares that may be issued prior to the Effective Time will be when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to or
issued in violation of any purchase option, call option, right of first refusal,
preemptive right, subscription right or any similar right under any provision of
the BCL, the Company Charter, the Company By-laws or any Contract (as defined in
Section 3.05(a)) to which the Company is a party or otherwise bound. There are
not any bonds, debentures, notes or other indebtedness of the Company having the
right to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which holders of Company Common Stock may vote
("Voting Company Debt"). Except as set forth above or referred to in Section
3.16, and except pursuant to the GovConnect, Inc. 2000 Stock Incentive Plan, as
of the date of this Agreement, there are not any options, warrants, rights,
convertible or exchangeable securities, "phantom" stock rights, stock
appreciation rights, stock-based performance units, commitments, Contracts,
arrangements or undertakings of any kind to which the Company or any Company
Subsidiary is a party or by which any of them is bound (i) obligating the
Company or any Company Subsidiary to issue or sell, or cause to be issued or
sold, additional shares of capital stock or other equity interests in, or any
security convertible or exercisable for or exchangeable into any capital stock
of or other equity interest in, the Company or of any Company Subsidiary or any
Voting Company Debt or (ii) obligating the Company or any Company Subsidiary to
issue, grant, extend or enter into any such option, warrant, right, security,
commitment, Contract, arrangement or undertaking. As of the date of this
Agreement, there are not any outstanding contractual obligations of the Company
or any Company Subsidiary to repurchase, redeem or otherwise acquire any shares
of capital stock of the Company or any Company Subsidiary. The Company has made
available to Parent a complete and correct copy of the Company Rights Agreement,
as amended to the date of this Agreement.
Section 3.04. Authority; Execution and Delivery; Enforceability.
(a) The Company has all requisite corporate power and authority to
execute and deliver this Agreement and, subject to the Company Stockholder
Approval (as defined in Section 3.04(c)) with respect to the Merger if
required by Law (as defined in Section 3.05(a)), to consummate the
transactions contemplated hereby. The execution and delivery by the Company
of this Agreement and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of the
8
Company, subject, in the case of the Merger, to receipt of the Company
Stockholder Approval. The Company has duly executed and delivered this
Agreement, and this Agreement constitutes its legal, valid and binding
obligation (subject to the Company Stockholder Approval with respect to the
Merger if required by Law), enforceable against it in accordance with its
terms, except to the extent that enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws of general applicability relating to or affecting the
enforcement of creditors' rights and by the effect of the principles of
equity (regardless of whether enforceability is considered in a proceeding
in equity or at law).
(b) Each of the Board of Directors of Company (the "Company Board")
and the Special Committee, in each case at a meeting duly called and held,
duly and unanimously adopted votes (i) approving this Agreement and the
Merger, (ii) determining that as of the date of this Agreement the terms of
the Merger are fair to and in the best interests of Company and its
stockholders, and (iii) as of the date of this Agreement recommending that
Company's stockholders approve this Agreement. Such votes are sufficient to
render inapplicable to Parent and Sub and this Agreement and the
transactions contemplated hereby the provisions of Chapter 110C of the BCL
(assuming the requirement that the terms of the Merger be furnished to
shareholders is satisfied). No other Massachusetts takeover statute or
similar statute or regulation, and to the Company's Knowledge no takeover
statute or similar statute or regulation of any other state, applies or
purports to apply to Company with respect to this Agreement or the
transactions contemplated hereby.
(c) The only vote of holders of any class or series of Company Capital
Stock necessary to approve and adopt this Agreement and the Merger is the
approval of this Agreement by the holders of not less than seventy-five
percent of the outstanding Company Common Stock (the "Company Stockholder
Approval").
Section 3.05. No Conflicts: Consents.
(a) Except as set forth in the Company Disclosure Schedule, the
execution and delivery by the Company of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance with
the terms hereof will not, result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation under, or
result in the creation of any Lien upon any of the properties or assets of
the Company or any Company Subsidiary under, or result in any grant of
additional rights to any party under, any provision of (i) the Company
Charter, the Company By-laws or the comparable charter or organizational
documents of any Company Subsidiary, (ii) any contract, lease, license,
indenture, note, bond, agreement, permit, concession, franchise or other
instrument (a "Contract") to which the Company or any Company Subsidiary is
9
a party or by which any of their respective properties or assets is bound
or (iii) subject to the filings and other matters referred to in Section
3.05(b), any judgment, order, injunction or decree, domestic or foreign
("Judgment"), or statute, law (including common law), legislation,
interpretation, ordinance, rule or regulation, domestic or foreign ("Law"),
applicable to the Company or any Company Subsidiary or their respective
properties or assets, other than, in the case of clauses (ii) and (iii)
above, any such items that, individually and in the aggregate, have not had
and would not reasonably be expected to have a Company Material Adverse
Effect.
(b) No consent, approval, license, permit, order or authorization
("Consent") of, or registration, declaration or filing with, any Federal,
state, local or foreign government or any court of competent jurisdiction,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (each, a "Governmental Entity") is
required to be obtained or made by or with respect to Company or any
Company Subsidiary in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, other than (i) if required, compliance with and filing
of a pre-merger notification report under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing with
the U.S. Securities and Exchange Commission (the "SEC") of a proxy
statement relating to the approval of this Agreement by the Company's
stockholders (the "Proxy Statement"), (iii) the filing of the Articles of
Merger with the Secretary of State of The Commonwealth of Massachusetts and
appropriate documents with the relevant authorities of the other
jurisdictions in which the Company is qualified to do business, (iv)
compliance with and filings under the Laws of any foreign jurisdictions, if
and to the extent required, and (v) such other items that, individually and
in the aggregate, have not had and would not reasonably be expected to have
a Company Material Adverse Effect.
(c) The Company and the Company Board have taken all action necessary
to (i) render the Company Rights inapplicable to this Agreement and the
transactions contemplated hereby and (ii) ensure that (A) neither Parent
nor any of its stockholders, Affiliates or associates is or will become an
"Acquiring Person" (as defined in the Company Rights Agreement) by reason
of this Agreement or the Merger), (B) a "Distribution Date" (as defined in
the Company Rights Agreement) shall not occur by reason of this Agreement
or the Merger and (C) the Company Rights shall expire immediately prior to
the Effective Time.
Section 3.06. SEC Documents; Undisclosed Liabilities. The Company has filed
all reports, schedules, forms, statements and other documents required to be
filed by the Company with the SEC since January 1, 1999 (the "Company SEC
Documents"). As of its respective date, each Company SEC Document complied in
all material respects with the requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or the Securities Act of 1933, as amended
(the "Securities Act"), as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such
10
Company SEC Document, and did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of the Company included in
the Company SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with United
States generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present, in all material respects, the consolidated
financial position of the Company and the Company Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). Except as set forth in the Filed Company SEC
Documents (as defined in Section 3.08), as of the date of this Agreement neither
the Company nor any Company Subsidiary has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) required by GAAP to
be set forth on a consolidated balance sheet of the Company and the Company
Subsidiaries or in the notes thereto, other than liabilities or obligations
incurred since the date of the most recent financial statements included in the
Filed Company SEC Documents in the ordinary course of business consistent with
prior practice or which, individually and in the aggregate, would not reasonably
be expected to have a Company Material Adverse Effect.
Section 3.07. Information Supplied. None of the information supplied or to
be supplied by the Company for inclusion or incorporation by reference in the
Proxy Statement will, at the date it is first mailed to the Company's
stockholders or at the time of the Company Stockholders Meeting (as defined in
Section 6.01(a)), 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 are
made, not misleading. The Proxy Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied in writing by Parent or Sub for inclusion or incorporation by reference
therein.
Section 3.08. Absence of Certain Changes or Events. Except as disclosed in
the Company SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed Company SEC Documents") or in the Company Disclosure
Schedule, from December 30, 2000 to the date of this Agreement, the Company has
conducted its business only in the ordinary course, and during such period there
has not been:
11
(i) any event, change, effect or development that, individually or
in the aggregate, has had or would reasonably be expected to
have a Company Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with
respect to any Company Capital Stock or any repurchase for value
by the Company of any Company Capital Stock;
(iii) any split, combination or reclassification of any Company
Capital Stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of Company Capital Stock;
(iv) (A) any granting by the Company or any Company Subsidiary to any
current or former director or executive officer of the Company
or any Company Subsidiary of any material increase in their
compensation, except to the extent required under employment
agreements in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC
Documents, (B) any granting by the Company or any Company
Subsidiary to any such director or executive officer of any
material increase in severance or termination pay, except as was
required under any employment, severance or termination policy,
practice or agreements in effect as of the date of the most
recent audited financial statements included in the Filed
Company SEC Documents or (C) any entry by the Company or any
Company Subsidiary into, or any material amendment of, any
employment, severance or termination agreement with any such
director or executive officer;
(v) any change in accounting methods, principles or practices by the
Company or any Company Subsidiary materially affecting the
consolidated assets, liabilities or results of operations of the
Company, except insofar as may have been required by a change in
GAAP; or
(vi) any material elections with respect to Taxes (as defined in
Section 3.09) by the Company or any Company Subsidiary or
settlement or compromise by the Company or any Company
Subsidiary of any material Tax liability or refund.
Section 3.09. Taxes.
(a) Each of the Company and each Company Subsidiary (for such periods
as each Subsidiary was owned, directly or indirectly, by the Company) has
timely filed, or has caused to be timely filed on its behalf, all Tax
Returns (as
12
defined in Section 3.09(d)) required to be filed by it (taking into account
any extensions of time for filing such Tax Returns), and has paid all Taxes
(as defined in Section 3.09(d)) shown thereon as owing, except where the
failure to file Tax Returns or to pay Taxes has not had and would not
reasonably be expected to have a Company Material Adverse Effect.
(b) The most recent financial statements contained in the Filed
Company SEC Documents reflect an adequate reserve (in accordance with GAAP)
for all Taxes payable by the Company and the Company Subsidiaries for all
Taxable periods and portions thereof through the date of such financial
statements (in addition to any reserve for deferred taxes established to
reflect timing differences between book and tax income).
(c) There are no material Liens for Taxes (other than for current
Taxes not yet due and payable) on the assets of the Company or any Company
Subsidiary.
(d) For purposes of this Agreement:
"Taxes" includes all forms of taxation imposed by any Federal, state,
local, foreign or other Governmental Entity, including income, franchise,
property, sales, use, excise, employment, unemployment, payroll, social
security, estimated, value added, ad valorem, transfer, recapture, withholding
and other Taxes of any kind, including all interest, penalties and additions
thereto.
"Tax Return" means all Federal, state, local, provincial and foreign Tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax return relating to Taxes.
Section 3.10. ERISA Compliance.
(a) The Company Disclosure Schedule contains a list of all material
"employee pension benefit plans" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
(sometimes referred to herein as "Company Pension Plans"), "employee
welfare benefit plans" (as defined in Section 3(1) of ERISA), a stock
bonus, stock purchase, stock option, restricted stock or similar equity-
based plan, and any other deferred-compensation, retirement, welfare-
benefit, bonus, incentive, severance or fringe benefit plan or arrangement
maintained, or contributed to, by the Company or any Company Subsidiary for
the benefit of any current or former employees, officers or directors of
the Company or any Company Subsidiary (together, the "Company Benefit
Plans"). The Company has made available to Parent true, complete and
correct copies of (i) each Company Benefit Plan (or, in the case of any
unwritten Company Benefit Plan, a brief description thereof), (ii) the most
recent annual report on Form 5500 filed with the Internal Revenue Service
with respect to each Company Benefit Plan (if any such report was
required), (iii) the most recent summary plan description for each Company
Benefit Plan for which such
13
summary plan description is required and (iv) each trust agreement and
group annuity contract relating to any Company Benefit Plan, if any.
(b) All Company Benefit Plans are in compliance in all material
respects with applicable Law (including, where applicable, the Code and
ERISA), except such noncompliance as has not had and would not reasonably
be expected to have a Company Material Adverse Effect. All Company Pension
Plans are intended to be tax-qualified under Section 401 (a) of the
Internal Revenue Code of 1986, as amended (the "Code") and, except as set
forth in the Company Disclosure Schedule, the Company has no reason to
believe that any of the Company Pension Plans are not so qualified under
Section 401 (a) of the Code. There is no pending or, to the Knowledge of
the Seller, threatened lawsuit, material claim or other material
controversy relating to any Company Benefit Plan, other than claims for
benefits in the normal course.
(c) No Company Pension Plan is a "defined benefit plan" within the
meaning of Section 3(35) of ERISA or is subject to the minimum funding
standards of Section 412 of the Code or Section 302 of ERISA, and neither
the Company nor any Company Subsidiary has any actual or contingent
liability under any defined benefit plan which it (or any Affiliate)
previously maintained or contributed to (or was obligated to maintain or
contribute to). None of the Company, any Company Subsidiary, any officer of
the Company or any Company Subsidiary or any of the Company Benefit Plans
which are subject to ERISA, including the Company Pension Plans, any trusts
created thereunder or any trustee or administrator thereof, has engaged in
a non-exempt "prohibited transaction" (as such term is defined in Section
406 of ERISA or Section 4975 of the Code) or any other breach of fiduciary
responsibility that could subject the Company, any Company Subsidiary or
any officer of the Company or any Company Subsidiary to any material tax or
penalty on prohibited transactions imposed by such Section 4975 or to any
material liability under Section 502(i) or 502(1) of ERISA that would
reasonably be expected to have a Company Material Adverse Effect.
(d) With respect to any Company Benefit Plan that is an employee
welfare benefit plan, (i) all such Company Benefit Plans are unfunded and
no such Company Benefit Plan is funded through a "welfare benefits fund"
(as such term is defined in Section 419(e) of the Code), and (ii) each such
Company Benefit Plan that is a "group health plan" (as such term is defined
in Section 5000(b)(1) of the Code), complies in all material respects with
the applicable requirements of Section 4980B(f) of the Code, except such
noncompliance as would not reasonably be expected to have a Company
Material Adverse Effect.
Section 3.11. Litigation. Except as disclosed in the Filed Company SEC
Documents or in the Company Disclosure Schedule, as of the date of this
Agreement, there is no suit, action or proceeding pending or, to the Knowledge
of the Company, overtly threatened against the Company or any Company Subsidiary
that, individually or in the aggregate, has had or would reasonably be expected
to have a Company Material
14
Adverse Effect, nor, as of the date of this Agreement, is there any Judgment
outstanding against the Company or any Company Subsidiary that has had or would
reasonably be expected to have a Company Material Adverse Effect.
Section 3.12. Compliance with Applicable Laws. Except as disclosed in the
Filed Company SEC Documents or in the Company Disclosure Schedule, the Company
and the Company Subsidiaries are in compliance with all applicable Laws,
including those relating to occupational health and safety and the environment,
except for instances of noncompliance that, individually and in the aggregate,
have not had and would not reasonably be expected to have a Company Material
Adverse Effect. This Section 3.12 does not relate to matters with respect to
Taxes, which are the subject of Section 3.09.
Section 3.13. Intellectual Property.
(a) Except as disclosed in the Filed Company SEC Documents or in the
Company Disclosure Schedule, the Company and the Company Subsidiaries own,
or are licensed or otherwise possess legally enforceable rights to use all
patents, trademarks, trade names, service marks, copyrights, and any
applications therefor, technology, know-how, computer software programs or
applications, and tangible or intangible proprietary information or
material that are used in the business of the Company and the Company
Subsidiaries as currently conducted, except as would not reasonably be
expected to have a Company Material Adverse Effect.
(b) Except as disclosed in the Filed Company SEC Documents or in the
Company Disclosure Schedule or as would not reasonably be expected to have
a Company Material Adverse Effect, the Company and the Company Subsidiaries
are not in violation of any licenses, sublicenses and other agreements as
to which the Company and/or the Company Subsidiaries are a party and
pursuant to which the Company and/or the Company Subsidiaries are
authorized to use any third-party patents, trademarks, service marks and
copyrights ("Third-Party Intellectual Property Rights"). Except as
disclosed in the Filed Company SEC Documents or in the Company Disclosure
Schedule and except as would not reasonably be expected to have a Company
Material Adverse Effect, as of the date of this Agreement no claims with
respect to the patents, registered and material unregistered trademarks and
service marks, registered copyrights, trade names and any applications
therefor owned by the Company or the Company Subsidiaries (the "Company
Intellectual Property Rights"), any trade secret material to the Company,
or Third-Party Intellectual Property Rights to the extent arising out of
any use, reproduction or distribution of such Third Party Intellectual
Property Rights by or through the Company or the Company Subsidiaries, are
currently pending (or, to the Knowledge of the Company, are overtly
threatened by any Person) against the Company.
(c) To the Company's Knowledge, all patents, registered trademarks,
service marks and copyrights held by the Company or the Company
Subsidiaries
15
are valid and subsisting. Except as disclosed in the Filed Company SEC
Documents or in the Company Disclosure Schedule, to the Company's
Knowledge, there is no material unauthorized use, infringement or
misappropriation of any Company Intellectual Property Rights by any third
party, including any employee or former employee of the Company or the
Company Subsidiaries.
Section 3.14. Brokers. No broker, investment banker, financial advisor or
other Person, other than Adams, Harkness & Hill, Inc., financial advisor to the
Special Committee, the fees and expenses of which will be paid by the Company,
and SG Cowen Securities Corporation, former financial advisor to the Company,
the fees and expenses of which will be paid by the Company under certain
circumstances, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of the Company.
Section 3.15. Opinion of Financial Advisor. The Company has received the
opinion of Adams, Harkness & Hill, Inc., dated the date of this Agreement, to
the effect that, as of such date, the consideration to be received in the Merger
by the holders of Company Common Stock not affiliated with Parent is fair to
such holders from a financial point of view and a copy of the signed opinion has
been provided to Parent.
Section 3.16. Stock Options and Employee Stock Purchase Plan. The Company
has provided Parent with true and complete copies of the Company's 1996 Stock
Plan, 1998 Acquisition Stock Option Plan, 1998 International Stock Option Plan,
Addendum to 1998 International Stock Option Plan, 1998 Directors Stock Plan,
Renaissance Solutions, Inc. 1995 Equity Incentive Plan, 2000 Directors Stock
Plan, GovConnect, Inc. 2000 Stock Incentive Plan, 1996 Eligible Directors Stock
Plan and The Hunter Group, Inc. Employee Non-Qualified Stock Option Plan
(collectively, the "Company Stock Option Plans"), including the form of option
certificates, restricted stock agreements and certain other documents related to
such Company Stock Option Plans, and the Company's 1996 Employee Stock Purchase
Plan (the "Company Stock Purchase Plan"). The Company Board has taken all
actions necessary under the Company Stock Purchase Plan to suspend the
commencement of the Offering Periods (as defined in the Company Stock Purchase
Plan) scheduled to commence on July 2, 2001 and thereafter.
ARTICLE IV
Representations and Warranties of Parent and Sub
Parent and Sub jointly and severally represent and warrant to Company that,
except as indicated in the applicable section of the Disclosure Schedule
furnished by Parent to Company prior to the execution of this Agreement (the
"Buyer Disclosure Schedule") corresponding to the Sections and subsections set
forth below:
16
Section 4.01. Organization, Standing and Power. Each of Parent and Sub is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate power and authority
and possesses all governmental franchises, licenses, permits, authorizations and
approvals, in each case whether domestic or foreign, necessary to enable it to
own, lease or otherwise hold its properties and assets and to conduct its
businesses as presently conducted, other than such franchises, licenses,
permits, authorizations and approvals the lack of which, individually and in the
aggregate, has not had and would not reasonably be expected to materially
adversely affect the ability of Parent or Sub to perform their obligations under
this Agreement and consummate the transactions contemplated hereby (a "Parent
Material Adverse Effect").
Section 4.02. Sub.
(a) Since the date of its incorporation, Sub has not, directly or
through a Subsidiary, carried on any business or conducted any operations
other than the execution of this Agreement, the performance of its
obligations hereunder and matters ancillary thereto. Sub was incorporated
solely for the purpose of consummating the transactions contemplated
hereby.
(b) The authorized capital stock of Sub consists of 1,000 shares of
common stock, no par value per share, all of which have been validly
issued, are fully paid and nonassessable and are owned by Parent free and
clear of any Lien.
Section 4.03. Authority; Execution and Delivery; Enforceability. Each of
Parent and Sub has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery by each of Parent and Sub of this Agreement and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Sub.
Parent, as sole stockholder of Sub, has approved this Agreement. Each of Parent
and Sub has duly executed and delivered this Agreement, and this Agreement
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability relating to or affecting
the enforcement of creditors' rights and by the effect of the principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
Section 4.04. No Conflicts; Consents.
(a) The execution and delivery by each of Parent and Sub of this
Agreement, do not, and the consummation of the transactions contemplated
hereby and compliance with the terms hereof will not, result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of any obligation under, or result in the creation of any Lien upon any of
the properties or assets of Parent or any of
17
its Subsidiaries under, any provision of (i) the charter, by-laws or other
organizational documents of Parent or any of its Subsidiaries, (ii) any
Contract to which Parent or any of its Subsidiaries is a party or by which
any of their respective properties or assets is bound or (iii) subject to
the filings and other matters referred to in Section 4.04(b), any Judgment
or Law applicable to Parent or any of its Subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) and (iii)
above, any such items that, individually and in the aggregate, have not had
and would not reasonably be expected to have a Parent Material Adverse
Effect.
(b) No Consent of, or registration, declaration or filing with, any
Governmental Entity is required to be obtained or made by or with respect
to Parent or any of its Subsidiaries in connection with the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, other than (i) if required, compliance
with and filing of a pre-merger notification report under the HSR Act, (ii)
the filing with the SEC of such reports under Section 13 of the Exchange
Act as may be required in connection with this Agreement and the
transactions contemplated hereby, (iii) the filing of the Articles of
Merger with the Secretary of State of The Commonwealth of Massachusetts and
appropriate documents with the relevant authorities of the other
jurisdictions in which Parent and Sub are qualified to do business, (iv)
compliance with and filings under the Laws of any foreign jurisdictions, if
and to the extent required, and (v) such other items that, individually and
in the aggregate, have not had and would not reasonably be expected to have
a Parent Material Adverse Effect.
Section 4.05. Information Supplied. None of the information supplied or to
be supplied by Parent or Sub for inclusion or incorporation by reference in the
Proxy Statement will, at the date it is first mailed to the Company's
stockholders or at the time of the Company Stockholders Meeting, 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 are made, not misleading.
Section 4.06. Brokers. No broker, investment banker, financial advisor or
other Person, other than SG Cowen Securities Corporation is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of the Parent or Sub.
Section 4.07. Financial Ability to Perform. On or before the Closing Date,
Parent will receive as a capital contribution from its equity investors no fewer
than 11,716,070 shares of Company Common Stock and Parent will be the beneficial
owner of such shares of Company Common Stock as of the Effective Time. Parent
and Sub have provided the Company with a commitment letter from JP Morgan
Business Credit Corp. and The Chase Manhattan Bank, dated as of June 15, 2001
(the "Commitment Letter"
18
and the financing to be provided thereunder, the "Financing"). To the Knowledge
of Parent and Sub, the obligation to fund the commitment under the Commitment
Letter is not subject to any condition other than as set forth in the Commitment
Letter. Parent and Sub are not aware of any fact or occurrence that makes any of
the assumptions or statements set forth in the Commitment Letter inaccurate or
that causes the Commitment Letter to be ineffective or that precludes the
satisfaction of the conditions set forth in the Commitment Letter. To the
Knowledge of Parent and Sub, the Commitment Letter has been duly executed by all
parties thereto and is in full force and effect. All commitment and other fees
required to be paid under the Commitment Letter on or prior to the date hereof
have been paid. The aggregate amount of financing committed pursuant to the
Commitment Letter is sufficient to fund all amounts required to be paid by
Parent or Sub in connection with the consummation of the transactions
contemplated hereby, including, but not limited to, the Merger Consideration.
ARTICLE V
Covenants Relating to Conduct of Business
Section 5.01. Conduct of Business.
(a) Conduct of Business by the Company. Except for matters set forth
in Section 5.01 of the Company Disclosure Schedule, expressly agreed to in
writing by Parent or otherwise expressly permitted by this Agreement, from
the date of this Agreement to the earlier to occur of the date of the
termination of this Agreement or the Effective Time, the Company shall, and
shall cause each Company Subsidiary to, conduct the business of the Company
and the Company Subsidiaries taken as a whole in the usual, regular and
ordinary course in substantially the same manner as previously conducted
and use reasonable efforts to preserve intact its current business
organization, keep available the services of its current officers and
employees and keep its relationships with customers, suppliers and others
having business dealings with them. In addition, and without limiting the
generality of the foregoing, except for matters set forth in Section 5.01
of the Company Disclosure Schedule, expressly agreed to in writing by
Parent or otherwise expressly permitted by this Agreement, from the date of
this Agreement to the earlier to occur of the date of the termination of
this Agreement or the Effective Time, the Company shall not, and shall not
permit any Company Subsidiary to, do any of the following without the prior
written consent of Parent, which will not be unreasonably withheld and
which consent will be given or denied within a reasonable time after any
written request for such consent:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock,
other than dividends and distributions by a direct or indirect
wholly owned Subsidiary of the Company to its parent, (B) split,
combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in
lieu of or in substitution for
19
shares of its capital stock, or (C) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or
any Company Subsidiary or any other securities thereof or any
rights, warrants or options to acquire any such shares or other
securities, except in the case of (B) and (C), as required by
any employee benefit plan of the Company or any Company
Subsidiary or agreement existing as of the date hereof;
(ii) issue, deliver, sell or grant (A) any shares of its capital
stock, (B) any Voting Company Debt or other voting securities,
(C) any securities convertible into or exchangeable for, or any
options, warrants or rights to acquire, any such shares, Voting
Company Debt, voting securities or convertible or exchangeable
securities or (D) any "phantom" stock, "phantom" stock rights,
stock appreciation rights or stock-based performance units,
other than (1) the issuance of Company Common Stock (and
associated Company Rights) upon the exercise of Company Stock
Options outstanding on the date of this Agreement and in
accordance with their present terms, (2) the issuance of Company
Common Stock upon the exercise of Company Rights, (3) the
issuance of Company Common Stock Options pursuant to the Company
Stock Option Plans and consistent with past practices; and (4)
the issuance of Company Common Stock (and associated Company
Rights) pursuant to the Company Stock Purchase Plan;
(iii) amend its articles of organization, by-laws or other comparable
charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or consolidating
with, or by purchasing a substantial equity interest in or
portion of the assets of, or by any other manner, any business
or any corporation, partnership, joint venture, association or
other business organization or division thereof or (B) any
assets that are material, individually or in the aggregate, to
the Company and the Company Subsidiaries taken as a whole,
except for purchases in the ordinary course of business
consistent with past practice;
(v) except as disclosed in Section 5.01 of the Company Disclosure
Schedule, (A) grant to any current or former director or
executive officer of the Company or any Company Subsidiary any
material increase in compensation, except in the ordinary course
of business consistent with past practices to the extent
required under employment agreements in effect as of the date of
the most recent audited financial statements included in the
Filed Company SEC Documents, (B) grant to any current or former
director or executive officer of the Company or any Company
Subsidiary any
20
increase in severance or termination pay, except to the extent
required under any agreement in effect as of the date of the
most recent audited financial statements included in the Filed
Company SEC Documents, (C) enter into any employment,
consulting, indemnification, severance or termination agreement
with any such director or executive officer, (D) establish,
adopt, enter into or amend in any material respect any
collective bargaining agreement or Company Benefit Plan or (E)
take any action to accelerate any rights or benefits, or make
any material determinations not in the ordinary course of
business consistent with prior practice, under any collective
bargaining agreement or Company Benefit Plan;
(vi) make any change in accounting methods, principles or practices
materially affecting the reported consolidated assets,
liabilities or results of operations of the Company, except
insofar as may have been required by a change in GAAP;
(vii) sell, lease (as lessor), license or otherwise dispose of or
subject to any Lien any material properties or assets, except
(A) sales of assets or inventory in the ordinary course of
business consistent with past practice and (B) sales or
dispositions of obsolete or worthless assets;
(viii) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another Person, issue or sell any debt
securities or warrants or other rights to acquire any debt
securities of the Company or any Company Subsidiary, guarantee
any debt securities of another Person, except for short-term
borrowings from Persons that are not directors, officers or
employees of the Company or any Company Subsidiary incurred in
the ordinary course of business consistent with past practice,
or (B) make any loans to, or investments in, any other Person,
other than to or in the Company or any direct or indirect wholly
owned Subsidiary of the Company or loans or investments in
connection with the sale of the services or products of the
Company and the Company Subsidiaries in the ordinary course of
business consistent with prior practice to Persons that are not
directors, officers or employees of the Company or any Company
Subsidiary, not to exceed $250,000 individually or $2,000,000 in
the aggregate;
(ix) make or agree to make new capital expenditures that are in
excess of $2,000,000 in the aggregate per calendar quarter;
(x) (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise) in excess of $250,000 individually or
$2,000,000 in the aggregate,
21
other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto) of the
Company included in the Filed Company SEC Documents or incurred
in the ordinary course of business consistent with past
practice, (B) cancel any indebtedness in excess of $250,000
individually or $2,000,000 in the aggregate or waive any claims
or rights of substantial value or (C) waive the benefits of, or
agree to modify in any manner, any confidentiality, standstill
or similar agreement to which the Company or any Company
Subsidiary is a party;
(xi) enter into, renew, extend, amend, modify, waive any material
provision of, or terminate any lease or similar commitment, in
each case providing for payments in excess of $250,000 over the
term of such lease or commitment (or until the date on which
such lease or commitment may be terminated by the Company
without penalty);
(xii) except as required by their terms, enter into, terminate or
breach in any material respect (or take or fail to take any
action, that, with or without notice or lapse of time or both,
would become a material breach) or materially amend any Contract
filed or that would be required to be filed in any Company SEC
Documents;
(xiii) without prior consultation with Parent (in addition to the
consent requirement described above) commence any litigation or
arbitration other than in accordance with past practice or
settle any litigation or arbitration for money damages or other
relief in excess of $250,000, or if as part of such settlement
Company or any Company Subsidiary would agree to any
restrictions on its operations, or which relates to this
Agreement or the transactions contemplated hereby;
(xiv) elect or appoint any new directors or officers of Company or any
Company Subsidiary;
(xv) take any action that would reasonably be expected to result in
the inability to satisfy the conditions to closing set forth in
Section 7.02(a);
(xvi) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction; or
(xvii) authorize, or commit or agree to take, any of the foregoing
actions.
22
For the purposes of this Section 5.01, any action taken or approved by G.
Drew Conway will be deemed to have been approved by Parent, regardless of
whether such action or approval is documented in writing.
(b) Advice of Changes. The Company shall use reasonable efforts to
promptly advise Parent orally and in writing of any change or event or
which the Company becomes aware that has or would reasonably be expected to
have a Company Material Adverse Effect.
Section 5.02. No Solicitation by Company.
(a) The Company agrees that, from the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, neither
Company nor any Company Subsidiary shall, nor shall either authorize or
permit any of its respective directors, officers or employees or any
representative retained by it (including any financial advisors) to,
directly or indirectly through another Person, (i) solicit, initiate or
encourage (including by way of furnishing non-public information) any
inquiries or the making of an Acquisition Proposal, or (ii) participate in
any discussions or negotiations regarding any Acquisition Proposal;
provided, however, that if, at any time, the Company Board or the Special
Committee determines in good faith, after consultation with outside legal
counsel, that it is necessary to do so in order to act in a manner
consistent with its fiduciary duties to Company's stockholders under
applicable Law, Company may, in response to a Superior Proposal which was
not solicited by Company in violation of Section 5.02(a) and which did not
otherwise result from a breach of this Section 5.02, and subject to
compliance with the provisions of paragraph (c) below, (x) furnish
information with respect to Company to any Person making such unsolicited
Superior Proposal pursuant to a confidentiality agreement entered into
between such Person and Company in form and substance reasonably
satisfactory to the Company Board or the Special Committee, and (y)
participate in discussions or negotiations regarding such unsolicited
Superior Proposal. For purposes of this Agreement, an "Acquisition
Proposal" means any inquiry, proposal or offer from any Person (i) relating
to any direct or indirect acquisition or purchase of (A) a business that
constitutes 15% or more of the net revenues, net income or the assets of
Company or any Company Subsidiary, or (B) 15% or more of any class of
equity securities of Company or any Company Subsidiary, (ii) relating to
any tender offer or exchange offer that if consummated would result in any
Person beneficially owning 15% or more of any class of equity securities of
Company or any Company Subsidiary, or (iii) relating to any merger,
consolidation, business combination, acquisition, recapitalization,
liquidation, dissolution or similar transaction involving Company or any
Company Subsidiary, in each case, other than the transactions contemplated
by this Agreement. Immediately following the execution and delivery of this
Agreement by the parties hereto, Company will cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties conducted with respect to the foregoing.
23
(b) Except as expressly permitted by this Section 5.02, the Company
Board shall not (i) withdraw or modify, or propose publicly to withdraw or
modify, in a manner adverse to Parent, the approval or recommendation by
the Company Board or Special Committee of this Agreement, the Merger or the
transactions contemplated hereby, (ii) approve or recommend, or propose
publicly to approve or recommend, any Acquisition Proposal, or (iii) cause
Company or any Company Subsidiary to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement
(each, a "Company Acquisition Agreement") related to any Acquisition
Proposal, other than any such agreement entered into concurrently with a
termination pursuant to the next sentence. Notwithstanding the foregoing,
if at any time the Company Board or the Special Committee determines in
good faith, after consultation with outside counsel, that it is necessary
to do so in order to act in a manner consistent with its fiduciary duties
to Company's stockholders under applicable law, subject to compliance with
paragraph (c) below, the Company Board may, in response to a Superior
Proposal which was not solicited by Company in violation of Section 5.02(a)
and which did not otherwise result from a breach of this Section 5.02
(subject to this and the remaining provisions of this Section 5.02), enter
into an agreement with respect to such Superior Proposal and, at the time
of execution of a binding agreement with respect thereto, terminate this
Agreement in accordance with Section 8.01(e). For purposes of this
Agreement, a "Superior Proposal" means any Acquisition Proposal which (i)
the Company Board or the Special Committee determines in good faith is
reasonably likely to be consummated, taking into account the Person making
the proposal and all legal, financial and regulatory aspects of the
proposal, and (ii) the Company Board or the Special Committee believes in
good faith (after consultation with and based upon the advice of its
outside financial advisors) would, if consummated, provide greater value to
Company's stockholders than the transactions contemplated by this
Agreement.
(c) In addition to the obligations of Company as set forth in
paragraphs (a) and (b) of this Section 5.02, Company shall advise Parent
orally within one business day and in writing within two business days of
any Acquisition Proposal in response to which the Company has furnished (or
proposes to furnish) confidential information to the proponent thereof or
has commenced (or proposes to commence) negotiations with the proponent
thereof. Such notice shall include the material terms of any such
Acquisition Proposal (with any such notice referred to as a "Company
Notice"). The Company shall use its reasonable efforts to keep Parent
informed of the status and details (including any change to the terms
thereof) of any such Acquisition Proposal. In addition, in the event
Company intends to enter into a Company Acquisition Agreement relating to a
Superior Proposal, Company will deliver a Company Notice at least 48 hours
prior to entering into such definitive agreement, which Company Notice will
identify and detail the proposed terms of such Superior Proposal.
24
ARTICLE VI
Additional Agreements
Section 6.01. Preparation of Proxy Statement; Stockholders Meeting.
(a) The Company shall, as soon as practicable following the date of
execution of this Agreement, prepare and file with the SEC the Proxy
Statement (as defined in Section 6.01(c)) in preliminary form (provided
that Parent, Sub and their counsel shall be given reasonable opportunity to
review and comment on the Proxy Statement prior to its filing with the
SEC), and each of the Company, Parent and Sub shall use its best efforts to
respond as promptly as practicable to any comments of the SEC with respect
thereto. The Company shall notify Parent promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Proxy Statement or for
additional information and shall supply Parent with copies of all
correspondence between the Company or any of its representatives, on the
one hand, and the SEC or its staff, on the other hand, with respect to the
Proxy Statement. If at any time prior to receipt of the Company Stockholder
Approval there shall occur any event that should be set forth in an
amendment or supplement to the Proxy Statement, the Company shall promptly
prepare and mail to its stockholders such an amendment or supplement. The
Company shall use reasonable efforts to cause the Proxy Statement to be
mailed to the Company's stockholders as promptly as practicable after
filing with the SEC. Subject to the fiduciary duties of the Company Board
under applicable law, (i) the Proxy Statement shall contain the
recommendation of the Company Board that the stockholders of the Company
vote to adopt and approve this Agreement and the Merger and (ii) if
requested to do so by Parent at any time prior to the Company Stockholders
Meeting (as defined in Section 6.01(b)) and subject to compliance with
applicable laws, if there shall have been publicly announced an alternative
Acquisition Proposal, the Company Board shall within a reasonable period of
time following such request (and prior to the Company Stockholders Meeting)
publicly reaffirm such recommendation and/or shall publicly announce that
it is not recommending that the stockholders of the Company accept an
alternative Acquisition Proposal, provided that such reaffirmation or
announcement does not require significant delay in the timing of the
Company Stockholders Meeting.
(b) The Company shall, as soon as practicable following the date of
execution of this Agreement, duly call, give notice of, convene and hold a
meeting of its stockholders (the "Company Stockholders Meeting") for the
purpose of seeking the Company Stockholder Approval. Subject to Section
5.02, the Company shall, through the Company Board, recommend to its
stockholders that they give the Company Stockholder Approval. Without
limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to the first sentence of this Section 6.01(b) shall
not be affected by the
25
commencement, public proposal, public disclosure or communication to the
Company of any Acquisition Proposal.
(c) Parent shall cause any and all shares of Company Common Stock
owned by Parent, Sub or any other Subsidiary of Parent to be voted in favor
of the approval of this Agreement.
Section 6.02. Access to Information; Confidentiality. The Company shall,
and shall cause each Company Subsidiary to, afford to Parent, and to Parent's
officers, employees, accountants, counsel, financial advisors and other
representatives, upon reasonable notice, reasonable access during normal
business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel and records and,
during such period, the Company shall, and shall cause each Company Subsidiary
to, furnish promptly to Parent such information concerning its business,
properties and personnel as Parent may reasonably request; provided, however,
that the Company may withhold the documents and information described in the
Company Disclosure Schedule to the extent required to comply with the terms of a
confidentiality agreement with a third party in effect on the date of this
Agreement; provided further, that the Company shall use reasonable efforts to
obtain, as promptly as practicable, any consent from such third party required
to permit the Company to furnish such documents and information to Parent.
Subject to the requirements of Law, Parent shall, and shall cause its officers,
employees, agents, consultants and affiliates to, hold all information obtained
pursuant to this Agreement in confidence and in the event of termination of this
Agreement for any reason, Parent shall promptly return or destroy all nonpublic
documents obtained from Company and any copies made of such documents for Parent
and all documentation and other material prepared by Parent or its advisors
based on written nonpublic information furnished by Company or its advisors
shall be destroyed.
Section 6.03. Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties shall use all reasonable efforts to take, or
cause to be taken, all reasonable actions, and to do, or cause to be done,
and to assist and cooperate with the other parties in doing, all things
reasonably necessary, proper or advisable to consummate and make effective,
in the most expeditious manner practicable, the transactions contemplated
hereby, including without limitation (i) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and the taking of
all reasonable steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Entity, (ii)
the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby, including, when
reasonable, seeking to have
26
any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (iv) the execution and delivery
of any additional instruments necessary to consummate the transactions
contemplated hereby and to fully carry out the purposes of this Agreement;
provided, however, that the obligations set forth in this sentence shall
not be deemed to have been breached as a result of actions by the Company
expressly permitted under Section 5.02 or 8.01. In connection with and
without limiting the foregoing, the Company and the Company Board shall, at
the request of Parent: (i) take all action within its power reasonably
requested by Parent as necessary to ensure that no state takeover statute
or similar statute or regulation is or becomes applicable to this Agreement
or the transactions contemplated hereby, and (ii) if any state takeover
statute or similar statute or regulation becomes applicable to this
Agreement or the transactions contemplated hereby, take all action within
its power reasonably requested by Parent as necessary to ensure that the
transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the transactions
contemplated hereby. Nothing in this Agreement shall be deemed to require
any party to waive any substantial rights or agree to any substantial
limitation on its operations or to dispose of any significant asset or
collection of assets.
(b) The Company shall give prompt notice to Parent, and Parent or Sub
shall give prompt notice to the Company, of (i) any representation or
warranty made by it becoming untrue or inaccurate in any material respect
or (ii) the failure by it to comply with or satisfy in any material respect
any covenant, condition or agreement to be complied with or satisfied by it
under this Agreement; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
Section 6.04. Benefit Plans. Parent shall have sole discretion with respect
to the determination as to whether or when to terminate, merge or continue any
employee benefit plans and programs of Company after the Effective Time. Nothing
herein contained shall be construed to guarantee continued employment to any
Company Employee or change the "at-will" status of any Company Employee.
Section 6.05. Indemnification; D&O Insurance, etc.
(a) Parent shall, to the fullest extent permitted by Law, cause the
Surviving Corporation (from and after the Effective Time) to honor all the
Company's obligations to indemnify, defend and hold harmless (including any
obligations to advance funds for expenses) the current and former directors
and officers of the Company and its Subsidiaries against all losses,
claims, damages or liabilities arising out of acts or omissions by any such
directors and officers occurring prior to the Effective Time to the maximum
extent that such obligations of the Company exist on the date of this
Agreement, whether pursuant to the
27
Company Charter, the Company By-laws, the BCL, individual indemnity
agreements or otherwise, and such obligations shall survive the Merger and
shall continue in full force and effect in accordance with the terms of the
Company Charter, the Company By-laws, the BCL and such individual indemnity
agreements from the Effective Time until the expiration of the applicable
statute of limitations with respect to any claims against such directors or
officers arising out of such acts or omissions. In the event a current or
former director or officer of the Company or any of its Subsidiaries is
entitled to indemnification under this Section 6.05(a), such director or
officer shall be entitled to reimbursement from the Company (from and after
the Effective Time) or the Surviving Corporation (from and after the
Effective Time) for reasonable attorney fees and expenses incurred by such
director or officer in pursuing such indemnification, including payment of
such fees and expenses by the Surviving Corporation or the Company, as
applicable, in advance of the final disposition of such action upon receipt
of an undertaking by such current or former director or officer to repay
such payment if it shall be adjudicated that such current or former
director or officer was not entitled to such payment.
(b) The Company will maintain, through the Effective Time, the
Company's existing directors' and officers' insurance in full force and
effect without reduction of coverage. From and after the Effective Time and
for a period of six years after the Effective Time, Parent shall cause to
be maintained in effect the current policies of directors' and officers'
liability insurance and indemnification maintained by the Company (provided
that Parent may substitute therefor policies with reputable and financially
sound carriers, which policies provide coverage of the types, in the
amounts and containing terms and conditions which are no less advantageous
than those maintained by the Company) with respect to claims arising from
or related to facts or events which occurred at or before the Effective
Time; provided, however, that Parent shall not be obligated to make annual
premium payments for such insurance to the extent such premiums exceed 200%
of the annual premiums paid as of the date hereof by the Company for such
insurance (such 200% amount, the "Maximum Premium"). If such insurance
coverage cannot be obtained at all, or can only be obtained at an annual
premium in excess of the Maximum Premium, Parent shall maintain the most
advantageous policies of directors' and officers' insurance obtainable for
an annual premium equal to the Maximum Premium. The Company represents to
Parent that the Maximum Premium is $1,080,500.
(c) The Articles of Organization of the Surviving Corporation shall
contain the provisions that are set forth in Section 6B of the Company
Charter, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner
that would affect adversely the rights thereunder of individuals who at or
at any time prior to the Effective Time were directors, officers, employees
or other agents of the Company.
28
(d) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger and the continuing or surviving entity does not assume the
obligations of the Surviving Corporation set forth in this Section 6.05, or
(ii) transfers all or substantially all of its properties and assets to any
Person, then, and in each such case, proper provision shall be made so that
the successors and assigns of the Surviving Corporation assume, as a matter
of law or otherwise, the obligations set forth in this Section 6.05.
(e) Parent guarantees that if for any reason the Company or the
Surviving Corporation, as the case may be, shall not meet its obligations
pursuant to this Section 6.05, it shall meet such obligations in full when
and as such obligations arise.
Section 6.06. Fees and Expenses.
(a) Except as otherwise provided in this Agreement or in that certain
letter agreement, dated as of June 13, 2001, between the Company and G.
Drew Conway, and whether or not the transactions contemplated by this
Agreement are consummated, all costs and expenses incurred in connection
with the transactions contemplated by this Agreement shall be borne by the
party incurring such costs and expenses.
(b) The Company shall pay to Parent the amount of $2,000,000 by wire
transfer of immediately available funds as reimbursement of Parent's
expenses and as liquidated damages (the "Company Break-Up Fee") in the
event that:
(i) Parent or the Company terminates this Agreement pursuant to
Section 8.01(b)(i) and (x) at the time of such termination there
is a publicly announced Acquisition Proposal from a bona fide
proponent not affiliated or acting in concert with Parent or any
of Parent's Affiliates, which Acquisition Proposal has not been
withdrawn and (y) within six months of such termination the
Company enters into a definitive agreement with respect to any
alternative Acquisition Proposal; or
(ii) Parent or the Company terminates this Agreement pursuant to
Section 8.01(b)(iii) following the Company Stockholders Meeting
if (x) the stockholders of the Company shall have failed to
approve this Agreement and the Merger at the Company
Stockholders Meeting and (y) at the time of the Company
Stockholders Meeting there is a publicly announced Acquisition
Proposal from a bona fide proponent not affiliated or acting in
concert with Parent or any of Parent's Affiliates, which
Acquisition Proposal has not been
29
withdrawn and (z) within six months of such termination the
Company enters into a definitive agreement with respect to any
alternative Acquisition Proposal; or
(iii) Parent terminates this Agreement pursuant to Section 8.01(c); or
(iv) Parent terminates this Agreement pursuant to Section 8.01(d) ;
or
(v) The Company terminates this Agreement pursuant to Section
8.01(e).
The Company Break-Up Fee shall be paid within three (3) business days after
a termination by Parent pursuant to Section 8.01(c) or 8.01(d) or a
termination by the Company pursuant to Section 8.01(e); and in the case of
the events specified in clause (i) or clause (ii) of this Section 6.06(b)
shall be made within three business days of the execution of such
definitive agreement.
Section 6.07. Public Announcements. Parent and Sub, on the one hand, and
the Company, on the other hand, shall consult with each other before issuing,
and provide each other the opportunity to review and comment upon, any press
release or other public statements with respect to the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
Law (including foreign regulations relating to competition), court process or by
obligations pursuant to any listing agreement with any national securities
exchange.
Section 6.08. Actions Respecting Commitment Letters; Financing.
(a) Parent and Sub shall use commercially reasonable efforts to
perform all obligations required to be performed by them in accordance with
and pursuant to the Commitment Letter and shall not amend, terminate or
waive any provisions under such Commitment Letter without the Company's
consent if the effect thereof would be reasonably likely to prevent or
materially delay the consummation of the transactions contemplated hereby.
(b) Parent and Sub shall use their commercially reasonable efforts to
obtain the financing on the terms set forth in the Commitment Letter;
provided, however, that in the event that the sources of debt financing
identified in the Commitment Letter indicate that they are not willing to
consummate the financing, Parent and Sub shall use commercially reasonable
efforts to obtain substitute financing with other nationally recognized
financial institutions ("Substitute Financing"), provided that such
Substitute Financing is not on terms materially more burdensome to Parent
and Sub. Parent and Sub shall from time to time provide such information as
the Company may reasonably request regarding the status of the financing of
the Merger and related negotiations.
30
(c) Parent and Sub shall provide prompt written notice to the Company
of the receipt of notification by the contemplated lender(s) under the
Commitment Letter or in connection with any Substitute Financing, of its or
their unwillingness or intended unwillingness to provide the financing
described in the Commitment Letter and, in each case, the stated reasons
therefor, if known (such written notice to be provided as promptly as
practicable and, in any event, within one business day of Parent or Sub
becoming aware of such event).
(d) Parent and Sub shall not, at any time prior to the earlier of the
Effective Time or six months after termination of this Agreement in
accordance with its terms, directly or indirectly: (i) declare, set aside
or pay any dividends on, or make any other distributions in respect of, any
of its capital stock, (ii) purchase, redeem or otherwise acquire any shares
of capital stock of Parent or Sub or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities,
(iii) create or contribute cash or other property to any subsidiary, (iv)
make any loans to or investments in any Person (other than the acquisition
of shares of the Company through the transactions contemplated hereby) or
(v) make any other payments or distributions of cash or other property to
any of its Affiliates.
(e) Company shall provide all information reasonably requested by
Parent or Sub in connection with the financing to be supplied pursuant to
the Commitment Letter.
Section 6.09. Rights Agreement. The Company Board shall take all action
requested in writing by Parent in order to render the Company Rights
inapplicable to the transactions contemplated hereby. Except as approved in
writing by Parent, the Company Board shall not (i) amend the Company Rights
Agreement, (ii) redeem the Company Rights or (iii) take any action with respect
to, or make any determination under, the Company Rights Agreement, in each case
in a manner adverse to Parent or Sub.
Section 6.10. Stockholder Litigation. The Company shall give Parent the
opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and/or its directors relating to this Agreement
or the transactions contemplated hereby; provided, however, that Parent shall
have the right to prevent the Company from entering into any such settlement
without Parent's consent, which consent shall not be unreasonably withheld or
delayed, if Parent agrees to indemnify the Company and each director of the
Company for the amount of its, his or her liability, if any, arising from the
underlying claim, net of any insurance proceeds received by such Person, that is
in excess of the amount for which such Person would have been liable under such
settlement.
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ARTICLE VII
Conditions Precedent
Section 7.01. Conditions to Each Party's Obligation To Effect The Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or express written waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. The Company shall have obtained the Company
Stockholder Approval.
(b) Antitrust. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act, if the HSR Act is applicable,
shall have been terminated or shall have expired. Any consents, approvals
and filings under any other foreign antitrust Law the absence of which
would prohibit the consummation of Merger, shall have been obtained or
made.
(c) No Injunctions or Restraints. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or
permanent injunction or other order enacted, entered, promulgated, enforced
or issued by any Governmental Entity or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect;
provided, however, that prior to asserting this condition each of the
parties shall have used all reasonable efforts to prevent the entry of any
such injunction or other order and to appeal as promptly as possible any
such injunction or other order that may be entered.
Section 7.02. Conditions Precedent to Parent's and Sub's Obligations.
Parent and Sub shall be obligated to effect the Merger only if each of the
following conditions is satisfied at or prior to the Closing Date, unless any
such condition is waived in writing by Parent:
(a) Representations and Warranties. The representations and warranties
of Company set forth in this Agreement shall be true and correct in all
material respects (without giving duplicative effect to any materiality
qualification contained in the applicable representation or warranty) as of
the Closing Date with the same force and effect as though made again at and
as of the Closing Date, except for any representations and warranties that
address matters only as of a particular date (which shall remain true and
correct in all material respects (without giving duplicative effect to any
materiality qualification contained in the applicable representation or
warranty) as of such date).
(b) Performance of Obligations of Company. Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date.
32
(c) Absence of Material Adverse Changes. There shall not have occurred
any change in the business, assets, financial condition or results of
operations of Company or any of its Subsidiaries which has had, or is
reasonably likely to have, individually or in the aggregate, a Company
Material Adverse Effect.
(d) Financing. The financing contemplated in the Commitment Letter, or
the Substitute Financing, shall have been consummated.
Section 7.03. Conditions to Obligation of Company. Company shall be
obligated to effect the Merger only if each of the following conditions is
satisfied at or prior to the Closing Date, unless any such condition is waived
in writing by Company:
(a) Representations and Warranties. The representations and warranties
of Parent and Sub set forth in this Agreement shall be true and correct in
all material respects (without giving duplicative effect to any materiality
qualification contained in the applicable representation or warranty) as of
the Closing Date with the same force and effect as though made again at and
as of the Closing Date, except for any representations and warranties that
address matters only as of a particular date (which shall remain true and
correct in all material respects (without giving duplicative effect to any
materiality qualification contained in the applicable representation or
warranty) as of such date).
(b) Performance of Obligations of Parent and Sub. Parent and Sub shall
each have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date.
ARTICLE VIII
Termination, Amendment and Waiver
Section 8.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after receipt of Company
Stockholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger is not consummated on or before December 31, 2001;
(ii) if any Governmental Entity shall have issued an order, decree or
ruling or takes any other action enjoining, restraining or
otherwise prohibiting the Merger and such order, decree, ruling
or other action shall have become final and nonappealable; or
33
(iii) if the stockholders of the Company shall fail to approve this
Agreement and the Merger at the Company Stockholders Meeting;
(c) by Parent, if (i) the representations and warranties of the
Company set forth in this Agreement are not true and correct in all
material respects (without giving duplicative effect to any materiality
qualification contained in the applicable representations and warranties)
as of the date hereof (or, in the case of any representations and
warranties that address matters only as of a particular date other than the
date hereof, as of such other specified date) and such misrepresentations
cannot be or have not been cured within the 30 day period (or such longer
period as may be expressly permitted by Parent) following the giving by
Parent of written notice to the Company of such breach or (ii) the Company
violates or fails to perform in any material respect its covenants
contained in Section 5.02, which breach or failure to perform cannot be or
has not been cured within the 30 day period (or such longer period as may
be expressly permitted by Parent) following the giving by Parent of written
notice to the Company of such violation or breach or (iii) the Company
violates or fails to perform in any material respect any of its other
covenants contained in this Agreement, which breach or failure to perform
would give rise to the failure of a condition set forth in Section 7.02(b)
and cannot be or has not been cured within the 30 day period (or such
longer period as may be expressly permitted by Parent) following the giving
by Parent of written notice to the Company of such violation or breach;
(d) by Parent, if the Company Board/Special Committee (i) withdraws or
modifies in a manner adverse to Parent or Sub, or publicly resolves to
withdraw or modify in a manner adverse to Parent or Sub, its approval or
recommendation of this Agreement or the Merger, (ii) fails to recommend to
the Company's stockholders that they approve the Merger and give the
Company Stockholder Approval, (iii) publicly approves or recommends, or
resolves to approve or recommend, any alternative Acquisition Proposal or
(iv) in violation of the provisions of Section 6.01(b), fails to reconfirm
the recommendation referred to in clause (ii) above if requested in
accordance with the applicable provisions of Section 6.01(b), or fails to
publicly announce (in accordance with the applicable provisions of Section
6.01(b)) that the Company Board/Special Committee is not recommending any
alternative Acquisition Proposal;
(e) by the Company pursuant to Section 5.02;
(f) by the Company, if either (i) the representations and warranties
of Parent and Sub set forth in this Agreement are not true and correct in
all material respects (without giving duplicative effect to any materiality
qualification contained in the applicable representations and warranties)
as of the date hereof (or, in the case of any representations and
warranties that address matters only as of a particular date other than the
date hereof, as of such other specified date) and such misrepresentations
cannot be or have not been cured within the 30 day period (or such longer
period as may be expressly permitted by the Company)
34
following the giving by the Company of written notice to Parent of such
breach or (ii) Parent or Sub violates or fails to perform in any material
respect any of their covenants contained in this Agreement, which breach or
failure to perform would give rise to the failure of a condition set forth
in Section 7.03(b) and cannot be or has not been cured within the 30 day
period (or such longer period as may be expressly permitted by the Company)
following the giving by the Company of written notice to Parent of such
violation or breach; or
(g) by either the Company or Parent if any of the events specified in
Section 6.08(c) occurs and notwithstanding the commercially reasonable
efforts of Parent and Sub to secure Substitute Financing as contemplated by
Section 6.08(b) Parent and Sub are not able to obtain such Substitute
Financing within thirty (30) days of delivery of notice pursuant to Section
6.08(c).
Section 8.02. Procedure and Effect of Termination. In the event of the
termination of this Agreement by Company or Parent as provided in Section 8.01,
this Agreement shall forthwith become void and have no effect other than Section
3.14, Section 4.06, Section 6.02, Section 6.06, Section 6.08(d), this Section
8.02 and Article IX, which provisions shall survive such termination, and all
obligations of the parties hereunder (other than pursuant to such enumerated
provisions) shall terminate without any liability or obligation on the part of
Parent, Sub or the Company, to any party, except that such termination will not
affect the respective rights or obligations of the parties with respect to any
breach of any representation, warranty or covenant set forth in this Agreement
prior to such termination.
Section 8.03. Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties. This Agreement
may be so amended by the parties at any time before or after receipt of the
Company Stockholder Approval; provided, however, that after receipt of the
Company Stockholder Approval, there shall be made no amendment that by Law
requires further approval by the stockholders of the Company without the further
approval of such stockholders; and provided, further, that after this Agreement
is adopted by the Company's stockholders, no such amendment or modification
shall be made that reduces the amount or changes the form of Merger
Consideration or otherwise materially and adversely affects the rights of the
Company's stockholders hereunder, without the further approval of such
stockholders.
Section 8.04. Extension; Waiver. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 8.03, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
35
Section 8.05. Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement, an amendment of this Agreement pursuant to
Section 8.03 or an extension or waiver pursuant to Section 8.04 shall, in order
to be effective, require in the case of Parent, Sub or the Company, action by
its Board of Directors or the duly authorized designee of its Board of
Directors.
ARTICLE IX
General Provisions
Section 9.01. Nonsurvival of Representations and Warranties. Except as
provided in the last sentence of this Section 9.01, none of the representations,
warranties and covenants in this Agreement (including any rights arising out of
any breach of such representations, warranties and covenants) or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 9.01 (including any rights arising out of any breach of such
representations and warranties) shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time.
Section 9.02. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given (i) seven days after mailing by certified mail, (ii) when delivered by
hand, (iii) upon confirmation of receipt by telecopy or (iv) one business day
after sending by overnight delivery service, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to Company:
Renaissance Worldwide, Inc.
52 Second Avenue
Waltham, MA 02451
Attention: Chief Financial Officer
Telecopy: (781) 290-3913
With a copy to:
Ropes & Gray
One International Place
Boston, MA 02110-2624
Attention: Keith F. Higgins, Esq.
Telecopy: (617) 951-7050
36
(b) If to Parent or Sub:
c/o G. Drew Conway
Renaissance Worldwide, Inc.
52 Second Avenue
Waltham, MA 02451
Telecopy: (781) 290-3913
With copies to:
Bingham Dana LLP
150 Federal Street
Boston, MA 02110
Attention: Julio E. Vega, Esq.
Telecopy: (617) 951-8736
Section 9.03. Definitions. For purposes of this Agreement:
An "Affiliate" of any Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person. As used in this definition the
term "control" (including the terms "controlled by" and "under common control
with") means, with respect to the relationship between or among two or more
Persons, the possession, directly or indirectly or as trustee or executor, of
the power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or otherwise, including, without limitation, the
ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
A "Company Material Adverse Effect" means any change, effect, event,
occurrence, state of facts or development that is materially adverse to the
business, assets, financial condition, or results of operations of the Company
and the Company Subsidiaries, or that materially and adversely affects the
ability of the Company to perform its obligations under this Agreement and
consummate the transactions contemplated hereby; provided however, that none of
the following shall be deemed in themselves, either alone or in combination, to
constitute, and none of the following shall be taken into account in determining
whether there has been or will be a Company Material Adverse Effect: (a) any
change in the market price or trading volume of Company's stock after the date
hereof, (b) any adverse change, effect, event, occurrence, state of facts or
development to the extent attributable to the announcement or pendency of the
transactions contemplated hereby (including any cancellations of or delays in
customer orders, any reduction in sales, any disruption in supplier,
distributor, partner or similar relationships or any loss of employees); (c) any
adverse change, effect, event, occurrence, state of facts or development
attributable to conditions affecting the industries in which Company
participates, the economy of the United States as a whole or foreign economies
in any locations where the Company or any Company Subsidiary has
37
material operations or sales which does not have a disproportionate effect on
the Company and its Subsidiaries, (d) any adverse change, effect, event,
occurrence, state of facts or development arising from or relating to compliance
with the terms of, or the taking of any action required by, this Agreement, or
(e) any adverse change, effect, event, occurrence, state of facts or development
arising from any action taken by Parent, Sub or any of their respective
directors, officers, employees, agents or Affiliates.
A "Person" means any individual, firm, corporation, partnership, company,
limited liability company, trust, joint venture, association, Governmental
Entity or other entity.
A "Subsidiary" of any Person means another Person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first Person.
"to the Knowledge" of any specified corporation means to the actual
knowledge of any current director or executive officer of such corporation (and,
in the case of the Parent or Sub, shall include, without limitation, the actual
knowledge of G. Drew Conway.
Section 9.04. Definitions Cross Reference Table. The following terms
defined elsewhere in this Agreement in the Sections set forth below shall have
the respective meanings therein defined:
Term Definition
"Affiliate" Section 9.03
"Agreement" Preamble
"Appraisal Provisions" Section 2.01(d)
"Appraisal Shares" Section 2.01 (d)
"Acquisition Proposal" Section 5.02(a)
"Articles of Merger" Section 1.03
"BCL" Section 1.03
"Buyer Disclosure Schedules" Article IV
"Certificates" Section 2.02(b)
"Closing" Section 1.02
"Closing Date" Section 1.04
"Code" Section 3.10(b)
"Commitment Letter" Section 4.07
"Company" Preamble
"Company Acquisition Agreement" Section 5.02(b)
"Company Benefit Plans" Section 3.10(a)
"Company Board" Section 3.04(b)
"Company Break-Up Fees" Section 6.06(b)
38
"Company By-laws" Section 3.01
"Company Capital Stock" Section 3.03
"Company Charter" Section 3.01
"Company Common Stock" Preamble
"Company Disclosure Schedule" Article III
"Company Intellectual Property Rights" Section 3.13(b)
"Company Material Adverse Effect" Section 9.03
"Company Notice" Section 5.02(c)
"Company Rights" Section 3.03
"Company Rights Agreement" Section 3.03
"Company SEC Documents" Section 3.06
"Company Stock Options" Section 3.03
"Company Stock Option Plan" Section 3.16
"Company Stock Purchase Plan" Section 3.16
"Company Stockholder Approval" Section 3.04(c)
"Company Stockholders Meeting" Section 6.01(b)
"Company Subsidiaries" Section 3.01
"Consent" Section 3.05(b)
"Contract" Section 3.05(a)
"Effective Time" Section 1.05
"ERISA" Section 3.10(a)
"Exchange Act" Section 3.06
"Exchange Fund" Section 2.02(a)
"Filed Company SEC Documents" Section 3.08
"Financing" Section 4.07
"GAAP" Section 3.06
"Governmental Entity" Section 3.05(b)
"HSR Act" Section 3.05(b)
"Judgment" Section 3.05(a)
"Law" Section 3.05(a)
"Liens" Section 3.02
"Maximum Premium" Section 6.05(b)
"Merger" Preamble
"Merger Consideration" Section 2.01(c)
"Parent" Preamble
"Parent Material Adverse Effect" Section 4.01
"Paying Agent" Section 2.02(a)
"Person" Section 9.03
"Proxy Statement" Section 3.05(b)
"SEC" Section 3.05(b)
"Securities Act" Section 3.06
"Series A Preferred Stock" Section 3.03
"Special Committee" Recitals
"Sub" Preamble
"Subsidiary" Section 9.03
"Substitute Financing" Section 6.08(b)
39
"Superior Proposal" Section 5.02(b)
"Support Agreement" Recitals
"Surviving Corporation" Section 1.01
"Tax Return" Section 3.09(d)
"Taxes" Section 3.09(d)
"Third-Party Intellectual Property Rights" Section 3.13(b)
"to the Knowledge" Section 9.03
"Voting Company Debt" Section 3.03
Section 9.05. Interpretation. When a reference is made in this Agreement to
a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".
Section 9.06. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or 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.
Section 9.07. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 9.08. Entire Agreement; No Third-Party Beneficiaries. This
Agreement, taken together with the Company Disclosure Schedule, the Support
Agreement and that certain letter agreement, dated as of June 13, 2001, between
the Company and G. Drew Conway, (a) constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the transactions contemplated hereby and (b) except
for the provisions of Article II, Section 6.04 and Section 6.05, is not intended
to confer upon any Person other than the parties any rights or remedies.
Section 9.09. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of The Commonwealth of Massachusetts,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
40
Section 9.10. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned Subsidiary of
Parent, but no such assignment shall relieve Sub of any of its obligations under
this Agreement. Any purported assignment without such consent shall be void.
Subject to the preceding sentences, this Agreement will be binding upon, inure
to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
Section 9.11. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Massachusetts state court or
any Federal court located in The Commonwealth of Massachusetts, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
Personal jurisdiction of any Massachusetts state court or any Federal court
located in The Commonwealth of Massachusetts in the event any dispute arises out
of this Agreement or any transactions contemplated hereby, (b) agrees that it
will not attempt to deny or defeat such Personal jurisdiction by motion or other
request for leave from any such court, (c) agrees that it will not bring any
action relating to this Agreement or any transactions contemplated hereby in any
court other than any Massachusetts state court or any Federal court sitting in
The Commonwealth of Massachusetts and (d) waives any right to trial by jury with
respect to any action related to or arising out of this Agreement or any
transactions contemplated hereby.
Section 9.12. Consents. Whenever this Agreement requires or permits consent
by or on behalf of any party hereto, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set forth
in Sections 8.04 and 8.05. Sub hereby agrees that any consent or waiver of
compliance given by Parent hereunder shall be conclusively binding upon it,
whether given expressly on its behalf or not.
Section 9.13. 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 9.14. Parent Guarantee.
(a) Parent hereby agrees to cause Sub and the Surviving Corporation to
perform in full all of their obligations (including, without limitation,
the obligation to pay any amounts due pursuant to this Agreement). The
Parent hereby further unconditionally guarantees the full and punctual
payment of all amounts payable by Sub or the Surviving Corporation under
this Agreement.
41
Upon failure by Sub or the Surviving Corporation to pay punctually any such
amount, Parent shall forthwith on demand pay the amount not so paid.
(b) The obligations of the Parent hereunder shall be unconditional and
absolute and, without limiting the generality of the foregoing, shall not
be released, discharged or otherwise affected by any change in the
corporate existence, structure or ownership of Sub or the Surviving
Corporation, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting Sub or the Surviving Corporation or their assets or
any resulting release or discharge of any obligation of the Sub or the
Surviving Corporation contained in this Agreement.
(c) The Parent irrevocably waives acceptance hereof, presentment,
demand, protest and any notice not provided for herein, as well as any
requirement that at any time any action be taken by any person or entity
against the Sub or the Surviving Corporation or any other person or entity.
42
IN WITNESS WHEREOF, Parent, Sub and Company have caused this Agreement and Plan
of Merger to be executed as an instrument under seal as of the date first
written above by their respective officers thereunto duly authorized.
REGISTRY HOLDING COMPANY, INC.
By /s/ G. Drew Conway
---------------------
Name: G. Drew Conway
Title: President
REDWOOD ACQUISITION CORP.
By /s/ G. Drew Conway
---------------------
Name: G. Drew Conway
Title: President
By /s/ G. Drew Conway
---------------------
Name: G. Drew Conway
Title: Treasurer
RENAISSANCE WORLDWIDE, INC.
By /s/ Christopher D. T. Guiffre
--------------------------------
Name: Christopher D. T. Guiffre
Title: Vice President
By /s/ Joseph F. Pesce
-----------------------
Name: Joseph F. Pesce
Title: Treasurer
43
(Annex B)
June 21, 2001
Special Committee of the Board of Directors
Renaissance Worldwide, Inc.
52 Second Avenue
Waltham, MA 02451
Members of the Special Committee:
You have requested our opinion (the "Fairness Opinion") as to the fairness, from
a financial point of view, of the per share cash consideration (the "Merger
Consideration") to be received in connection with the proposed acquisition of
Renaissance Worldwide, Inc. (the "Company") by Holdings, Inc. (the "Parent"),
pursuant to the draft Agreement and Plan of Merger related thereto and dated
June 19, 2001 (the "Merger Agreement"), by holders of Company common stock not
affiliated with the Parent (the "Non-affiliated Stockholders"). Pursuant to the
terms of the Merger Agreement, at closing Acquisition Corp., a wholly-owned
subsidiary of Parent, shall merge with and into the Company (the "Merger"),
whereupon each share of Company common stock shall be converted into the right
to receive cash consideration of $1.65 per share of common stock.
Adams, Harkness & Hill, Inc., as part of its investment banking activities, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. We have been engaged to render a
Fairness Opinion in connection with the Merger by the Special Committee of the
Board of Directors of the Company and will receive a fee for our services.
Our Fairness Opinion addresses only the fairness of the Merger Consideration
from a financial point of view to the Non-affiliated Shareholders and does not
address any other aspect of the Merger, nor does it constitute a recommendation
to any holder of common stock as to how to vote with respect to the Merger. In
the ordinary course of our business, we may trade in the common stock of the
Company for our own account and for the accounts of our customers and may at any
time hold a long or short position in the Company's common stock.
In developing our Fairness Opinion, we have, among other things: (i) reviewed
the Company's Forms 10-K, 10-Q and other documents as filed with the Securities
and Exchange Commission for the five-year period ending March 31, 2001; (ii)
analyzed certain internal financial statements including projected financial and
operating data concerning the Company prepared by Company management; (iii)
conducted discussions with members of senior management of the Company; (iv)
reviewed the historical market prices and trading activity for the Company
common shares and compared them with those of certain publicly traded companies
we deemed to be relevant and comparable to the Company; (v) compared the results
of operations of the Company with those of certain companies we deemed to be
relevant and comparable to the Company; (vi) compared the financial terms of the
Merger with the financial terms of certain other mergers and acquisitions we
deemed to be relevant and comparable to the Merger; (vii) reviewed the draft
Merger Agreement and Exhibits thereto; (viii) reviewed the efforts previously
undertaken by the Company to execute a potential sale of the Company, in whole
or in part, to a third party; (ix) reviewed the Company's standing with its
listing agent, the NASDAQ National Market; and (x) reviewed such other financial
studies and analyses, performed such other investigations,
Special Committee of the Board of Directors
Renaissance Worldwide, Inc.
June 21, 2001
Page 2
and took into account such other matters as we deemed necessary, including an
assessment of general economic, market and monetary conditions.
In connection with our review and arriving at our Fairness Opinion, we have not
independently verified any information received from the Company, have relied on
such information, have assumed that all such information is complete and
accurate in all material respects, and have relied on assurances of management
that they are not aware of any facts that would make such information
misleading. With respect to any internal forecasts reviewed relating to the
prospects of the Company, we have assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of Company management. We have also assumed that the Merger will be
consummated upon the terms set forth in the Merger Agreement.
Our Fairness Opinion is rendered on the basis of economic and market conditions
prevailing and on the prospects, financial and otherwise of the Company known to
us as of the date hereof. It should be understood that (i) subsequent
developments may affect the conclusions expressed in this Fairness Opinion if
this Fairness Opinion were rendered as of a later date, and (ii) Adams, Harkness
& Hill, Inc. disclaims any obligation to advise any person of any change in any
manner affecting this Fairness Opinion that may come to our attention after the
date of this Fairness Opinion, except as expressly provided in the Merger
Agreement. We have not conducted, nor have we received copies of, any
independent valuation or appraisal of any of the assets of the Company. In
addition, we have assumed, with your consent that any material liabilities
(contingent or otherwise, known or unknown) of the Company are as set forth in
the financial statements of the Company.
It is agreed between the Special Committee and Adams, Harkness & Hill, Inc. that
this letter is for the information of the Special Committee and the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent, except that this Fairness Opinion may be included in its
entirety in any filing made by the Company with the Securities and Exchange
Commission with respect to the Merger as contemplated. It is also agreed that
this Fairness Opinion does not address the relative merits of the Merger or the
other business strategies that the Special Committee has considered or may be
considering, nor does it address the decision of the Special Committee or the
Board of Directors of the Company to proceed with the Merger.
Based upon and subject to the foregoing, it is our opinion that the Merger
Consideration to be received by the Company's Non-affiliated Shareholders is
fair, from a financial point of view, to such holders.
Sincerely,
/s/ Theodore L. Stebbins
ADAMS, HARKNESS & HILL, INC.
ANNEX C
SECTIONS 85 THROUGH 98, INCLUSIVE OF CHAPTER 156B
OF THE GENERAL LAWS OF MASSACHUSETTS
(S) 85. Dissenting stockholder; right to demand payment for stock;
exception
A stockholder in any corporation organized under the laws of Massachusetts
which shall have duly voted to consolidate or merge with another corporation or
corporations under the provisions of sections seventy-eight or seventy-nine who
objects to such consolidation or merger may demand payment for his stock from
the resulting or surviving corporation and an appraisal in accordance with the
provisions of sections eighty-six to ninety-eight, inclusive, and such
stockholder and the resulting or surviving corporation shall have the rights and
duties and follow the procedure set forth in those sections. This section shall
not apply to the holders of any shares of stock of a constituent corporation
surviving a merger if, as permitted by subsection (c) of section seventy-eight,
the merger did not require for its approval a vote of the stockholders of the
surviving corporation.
(S) 86. Sections applicable to appraisal; prerequisites
If a corporation proposes to take a corporate action as to which any
section of this chapter provides that a stockholder who objects to such action
shall have the right to demand payment for his shares and an appraisal thereof,
sections eighty-seven to ninety-eight, inclusive, shall apply except as
otherwise specifically provided in any section of this chapter. Except as
provided in sections eighty-two and eighty-three, no stockholder shall have such
right unless (1) he files with the corporation before the taking of the vote of
the stockholders on such corporate action, written objection to the proposed
action stating that he intends to demand payment for his shares if the action is
taken and (2) his shares are not voted in favor of the proposed action.
(S) 87. Statement of rights of objecting stockholders in notice of meeting;
form
The notice of the meeting of stockholders at which the approval of such
proposed action is to be considered shall contain a statement of the rights of
objecting stockholders. The giving of such notice shall not be deemed to create
any rights in any stockholder receiving the same to demand payment for his
stock, and the directors may authorize the inclusion in any such notice of a
statement of opinion by the management as to the existence or non-existence of
the right of the stockholders to demand payment for their stock on account of
the proposed corporate action. The notice may be in such form as the directors
or officers calling the meeting deem advisable, but the following form of notice
shall be sufficient to comply with this section:
"If the action proposed is approved by the stockholders at the meeting and
effected by the corporation, any stockholder (1) who files with the
corporation before the taking of the vote on the approval of such action,
written objection to the proposed action stating that he intends to demand
payment for his shares if the action is taken and (2) whose shares are not
voted in favor of such action has or may have the right to demand in
writing from the corporation (or, in the case of a consolidation or merger,
the name of the resulting or surviving corporation shall be inserted),
within twenty days after the date of mailing to him of notice in writing
that the corporate action has become effective, payment for his shares and
an appraisal of the value thereof. Such corporation and any such
stockholder shall in such cases have the rights and duties and shall follow
the procedure set forth in sections 88 to 98, inclusive, of chapter 156B of
the General Laws of Massachusetts."
(S) 88. Notice of effectiveness of action objected to
The corporation taking such action, or in the case of a merger or
consolidation the surviving or resulting corporation, shall, within ten days
after the date on which such corporate action became effective, notify each
stockholder who filed a written objection meeting the requirements of section
eighty-six and whose shares were not voted in favor of the approval of such
action, that the action approved at the meeting of the corporation of which he
is a stockholder has become effective. The giving of such notice shall not be
deemed to create any rights in any stockholder receiving the same to demand
payment for his stock. The notice shall be sent by registered or certified mail,
addressed to the stockholder at his last known address as it appears in the
records of the corporation.
(S) 89. Demand for payment; time for payment
If within twenty days after the date of mailing of a notice under
subsection (e) of section eighty-two, subsection (f) of section eighty-three, or
section eighty-eight, any stockholder to whom the corporation was required to
give such notice shall demand in writing from the corporation taking such
action, or in the case of a consolidation or merger from the resulting or
surviving corporation, payment for his stock, the corporation upon which such
demand is made shall pay to him the fair value of his stock within thirty days
after the expiration of the period during which such demand may be made.
(S) 90. Demand for determination of value; bill in equity; venue
If during the period of thirty days provided for in section eighty-nine the
corporation upon which such demand is made and any such objecting stockholder
fail to agree as to the value of such stock, such corporation or any such
stockholder may within four months after the expiration of such thirty-day
period demand a determination of the value of the stock of all such objecting
stockholders by a bill in equity filed in the superior court in the county where
the corporation in which such objecting stockholder held stock had or has its
principal office in the commonwealth.
(S) 91. Parties to suit to determine value; service
If the bill is filed by the corporation, it shall name as parties
respondent all stockholders who have demanded payment for their shares and with
whom the corporation has not reached agreement as to the value thereof. If the
bill is filed by a stockholder, he shall bring the bill in his own behalf and in
behalf of all other stockholders who have demanded payment for their shares and
with whom the corporation has not reached agreement as to the value thereof, and
service of the bill shall be made upon the corporation by subpoena with a copy
of the bill annexed. The corporation shall file with its answer a duly verified
list of all such other stockholders, and such stockholders shall thereupon be
deemed to have been added as parties to the bill. The corporation shall give
notice in such form and returnable on such date as the court shall order to each
stockholder party to the bill by registered or certified mail, addressed to the
last known address of such stockholder as shown in the records of the
corporation, and the court may order such additional notice by publication or
otherwise as it deems advisable. Each stockholder who makes demand as provided
in section eighty-nine shall be deemed to have consented to the provisions of
this section relating to notice, and the giving of notice by the corporation to
any such stockholder in compliance with the order of the court shall be a
sufficient service of process on him. Failure to give notice to any stockholder
making demand shall not invalidate the proceedings as to other stockholders to
whom notice was properly given, and the court may at any time before the entry
of a final decree make supplementary orders of notice.
(S) 92. Decree determining value and ordering payment; valuation date
After hearing the court shall enter a decree determining the fair value of
the stock of those stockholders who have become entitled to the valuation of and
payment for their shares, and shall order the corporation to make payment of
such value, together with interest, if any, as hereinafter provided, to the
stockholders entitled thereto upon the transfer by them to the corporation of
the certificates representing such stock if certificated or, if uncertificated,
upon receipt of an instruction transferring such stock to the corporation. For
this purpose, the value of the shares shall be determined as of the day
preceding the date of the vote approving the proposed corporate action and shall
be exclusive of any element of value arising from the expectation or
accomplishment of the proposed corporate action.
(S) 93. Reference to special master
The court in its discretion may refer the bill or any question arising
thereunder to a special master to hear the parties, make findings and report the
same to the court, all in accordance with the usual practice in suits in equity
in the superior court.
(S) 94. Notation on stock certificates of pendency of bill
On motion the court may order stockholder parties to the bill to submit
their certificates of stock to the corporation for the notation thereon of the
pendency of the bill and may order the corporation to note such pendency in its
records with respect to any uncertificated shares held by such stockholder
parties, and may on motion dismiss
the bill as to any stockholder who fails to comply with such order.
(S) 95. Costs; interest
The costs of the bill, including the reasonable compensation and expenses
of any master appointed by the court, but exclusive of fees of counsel or of
experts retained by any party, shall be determined by the court and taxed upon
the parties to the bill, or any of them, in such manner as appears to be
equitable, except that all costs of giving notice to stockholders as provided in
this chapter shall be paid by the corporation. Interest shall be paid upon any
award from the date of the vote approving the proposed corporate action, and the
court may on application of any interested party determine the amount of
interest to be paid in the case of any stockholder.
(S) 96. Dividends and voting rights after demand for payment
Any stockholder who has demanded payment for his stock as provided in this
chapter shall not thereafter be entitled to notice of any meeting of
stockholders or to vote such stock for any purpose and shall not be entitled to
the payment of dividends or other distribution on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the date of the vote approving the proposed corporate action) unless:
(1) A bill shall not be filed within the time provided in section ninety;
(2) A bill, if filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the corporation,
or in the case of a consolidation or merger, the resulting or surviving
corporation, deliver to it a written withdrawal of his objections to and an
acceptance of such corporate action.
Notwithstanding the provisions of clauses (1) to (3), inclusive, said
stockholder shall have only the rights of a stockholder who did not so demand
payment for his stock as provided in this chapter.
(S) 97. Status of shares paid for
The shares of the corporation paid for by the corporation pursuant to the
provisions of this chapter shall have the status of treasury stock, or in the
case of a consolidation or merger the shares or the securities of the resulting
or surviving corporation into which the shares of such objecting stockholder
would have been converted had he not objected to such consolidation or merger
shall have the status of treasury stock or securities.
(S) 98. Exclusive remedy; exception
The enforcement by a stockholder of his right to receive payment for his
shares in the manner provided in this chapter shall be an exclusive remedy
except that this chapter shall not exclude the right of such stockholder to
bring or maintain an appropriate proceeding to obtain relief on the ground that
such corporate action will be or is illegal or fraudulent as to him.
APPENDIX I
DETACH HERE
PROXY
RENAISSANCE WORLDWIDE, INC.
PROXY SOLICITED ON BEHALF OF THE SPECIAL COMMITTEE OF THE
BOARD OF DIRECTORS AND THE BOARD OF DIRECTORS
Special Meeting of Stockholders to be held
September __, 2001
The undersigned, revoking all prior proxies, hereby appoints Robert P. Badavas
and Paul C. O'Brien, and each of them, with full power of substitution, as
proxies for the undersigned to act and to vote at the special meeting of
stockholders of Renaissance Worldwide, Inc. to be held on September __, 2001 and
at any adjournment or adjournments of the meeting as designated in this proxy
upon all matters referred to on the reverse side of this proxy and as described
in the proxy statement for the meeting and, in their discretion, upon any
matters that may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THE PROXIES WILL VOTE FOR
PROPOSAL 1.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE OF THIS PROXY AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE SEE REVERSE SIDE
RENAISSANCE WORLDWIDE, INC. c/o EQUISERVE P.O. BOX 9398 BOSTON, MA 02205-9398
DETACH HERE
[X] Please mark votes as in this example.
THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS AND THE BOARD OF DIRECTORS
RECOMMEND THAT YOU INSTRUCT THE PROXIES TO VOTE FOR PROPOSAL 1.
1. Approval of the Agreement and Plan of Merger dated as of June 21, 2001 by
and among Renaissance Worldwide, Inc., Registry Holding Company, Inc. and
Redwood Acquisition Corp. and the merger of Redwood Acquisition Corp. with and
into Renaissance Worldwide, Inc., with Renaissance Worldwide, Inc. as the
surviving corporation and with each outstanding share of Renaissance Worldwide,
Inc.'s common stock being converted into the right to receive $1.65 in cash,
other than shares held by Registry Holding Company, Inc. and Redwood Acquisition
Corp.
[_] FOR [_] AGAINST [_] ABSTAIN
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
Please sign exactly as name(s) appear(s) on this proxy. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation or partnership,
please sign by authorized person.
Signature: Date: Signature: Date: