Exhibit 2.1
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AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF OCTOBER 4, 2001
BY AND BETWEEN
MCSi, INC.,
AND
ZENGINE, INC.
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TABLE OF CONTENTS
PAGE
ARTICLE I THE OFFER............................................................................2
SECTION 1.1 The Offer.................................................................2
SECTION 1.2 Zengine Actions...........................................................3
SECTION 1.3 SEC Documents.............................................................3
ARTICLE II THE MERGER..........................................................................4
SECTION 2.1 The Merger................................................................4
SECTION 2.2 Effective Time............................................................4
SECTION 2.3 Closing of the Merger.....................................................5
SECTION 2.4 Effects of the Merger.....................................................5
SECTION 2.5 Articles of Incorporation and Bylaws......................................5
SECTION 2.6 Directors.................................................................5
SECTION 2.7 Officers..................................................................5
ARTICLE III CONVERSION OF SHARES...............................................................6
SECTION 3.1 Conversion of Capital Stock...............................................6
SECTION 3.2 Exchange of Certificates..................................................6
SECTION 3.3 Withholding Taxes.........................................................8
SECTION 3.4 Zengine Stock Options.....................................................8
SECTION 3.5 Appraisal Rights..........................................................8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ZENGINE...........................................9
SECTION 4.1 Organization and Qualification; Subsidiaries..............................9
SECTION 4.2 Capitalization of Zengine and Its Subsidiaries............................9
SECTION 4.3 Authority Relative to This Agreement; Stockholder Approval...............10
SECTION 4.4 SEC Reports; Financial Statements........................................11
SECTION 4.5 No Undisclosed Liabilities...............................................12
SECTION 4.6 Absence of Changes.......................................................12
SECTION 4.7 Schedule 14D-9; Offer Documents; Proxy Statement.........................12
SECTION 4.8 Consents and Approvals; No Violations....................................13
SECTION 4.9 No Default...............................................................13
SECTION 4.10 Litigation..............................................................13
SECTION 4.11 Compliance with Applicable Law..........................................14
SECTION 4.12 Tax Matters.............................................................14
SECTION 4.13 Opinion of Financial Advisor............................................14
SECTION 4.14 Brokers; Bust-Up Fee....................................................14
SECTION 4.15 Takeover Statute; Dissenters' Rights....................................15
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE V REPRESENTATIONS AND WARRANTIES OF COMPANY..........................................15
SECTION 5.1 Organization and Qualification; Subsidiaries............................15
SECTION 5.2 Capitalization of Company and Its Subsidiaries..........................15
SECTION 5.3 Authority Relative to This Agreement....................................16
SECTION 5.4 SEC Reports; Financial Statements.......................................16
SECTION 5.5 No Undisclosed Liabilities..............................................17
SECTION 5.6 Absence of Changes......................................................17
SECTION 5.7 Registration Statement; Offer Documents.................................17
SECTION 5.8 Consents and Approvals; No Violations...................................18
ARTICLE VI COVENANTS RELATED TO CONDUCT OF BUSINESS..........................................18
SECTION 6.1 Conduct of Business of Zengine..........................................18
SECTION 6.2 Access to Information...................................................21
ARTICLE VII ADDITIONAL AGREEMENTS............................................................21
SECTION 7.1 Zengine Stockholder Meeting; Proxy Statement............................21
SECTION 7.2 Reasonable Best Efforts.................................................22
SECTION 7.3 Acquisition Proposals...................................................22
SECTION 7.4 Public Announcements....................................................23
SECTION 7.5 Indemnification; Directors' and Officers' Insurance.....................23
SECTION 7.6 Notification of Certain Matters.........................................24
SECTION 7.7 SEC Filings.............................................................24
SECTION 7.8 Antitakeover Statutes...................................................25
ARTICLE VIII CONDITIONS TO CONSUMMATION OF THE MERGER........................................25
SECTION 8.1 Conditions to Each Party's Obligations to Effect the Merger.............25
ARTICLE IX TERMINATION; AMENDMENT; WAIVER....................................................25
SECTION 9.1 Termination.............................................................25
SECTION 9.2 Effect of the Termination...............................................26
SECTION 9.3 Fees and Expenses.......................................................27
SECTION 9.4 Amendment...............................................................27
SECTION 9.5 Extension; Waiver.......................................................27
ARTICLE X MISCELLANEOUS......................................................................27
SECTION 10.1 Nonsurvival of Representations and Warranties..........................27
SECTION 10.2 Entire Agreement; Assignment...........................................27
SECTION 10.3 Notices................................................................28
SECTION 10.4 Governing Law..........................................................29
SECTION 10.5 Descriptive Headings...................................................29
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 10.6 Parties in Interest....................................................29
SECTION 10.7 Severability...........................................................29
SECTION 10.8 Specific Performance...................................................29
SECTION 10.9 Counterparts...........................................................30
SECTION 10.10 Interpretation........................................................30
SECTION 10.11 Definitions...........................................................30
SIGNATURES
ANNEX A
iii
GLOSSARY OF DEFINED TERMS
DEFINED TERMS DEFINED IN SECTION
Acquisition Proposal................................................................10.11(a)
Agreement...........................................................................Recitals
Audit Date..........................................................................4.4
Beneficial Ownership................................................................10.11(b)
Beneficially Own....................................................................10.11(b)
Business Day........................................................................10.3
Certificate of Merger...............................................................2.2
Certificates........................................................................3.2(b)
Closing.............................................................................2.3
Closing Date........................................................................2.3
Code................................................................................3.3
Company.............................................................................Recitals
Company Common Stock................................................................Recitals
Company SEC Reports.................................................................5.4
Company Securities..................................................................5.2
Covered Transactions................................................................4.15
DGCL................................................................................2.1
Dissenting Shares...................................................................3.5
Dissenting Stockholders.............................................................3.5
Effective Time......................................................................2.2
Exchange Act........................................................................1.1(a)
Exchange Agent......................................................................3.2(a)
Exchange Ratio......................................................................Recitals
Expenses............................................................................9.3(b)
Financial Advisor...................................................................1.2(a)
GAAP................................................................................4.4
Governmental Entity.................................................................4.8
Indemnified Parties.................................................................7.5(a)
Indemnified Party...................................................................7.5(a)
Know................................................................................10.11(c)
Knowledge...........................................................................10.11(c)
Law.................................................................................4.9
Lien................................................................................4.2(b)
Material Adverse Effect.............................................................10.11(d)
Merger..............................................................................2.1
Merger Consideration................................................................3.1(c)
MGCL................................................................................2.1
iv
DEFINED TERMS DEFINED IN SECTION
Offer...............................................................................1.1(a)
Offer Documents.....................................................................1.3(a)
Offer Price.........................................................................1.1(a)
Offer to Purchase...................................................................1.1(b)
Person..............................................................................10.11(e)
Proxy Statement.....................................................................4.7
Registration Statement..............................................................1.3
Schedule TO.........................................................................1.3(a)
Schedule 14D-9......................................................................1.3(a)
SEC.................................................................................1.1(c)
Securities Act......................................................................4.4
Shares..............................................................................1.1(a)
Special Committee...................................................................Recitals
Subsidiary..........................................................................10.11(f)
Surviving Corporation...............................................................2.1
Takeover Statutes...................................................................4.15
Taxes...............................................................................10.11(g)
Transactions........................................................................1.2(a)
Zengine.............................................................................Recitals
Zengine Board.......................................................................Recitals
Zengine Common Stock................................................................Recitals
Zengine Disclosure Schedule.........................................................Article IV
Zengine Option Plans................................................................3.4(b)
Zengine Permits.....................................................................4.11
Zengine Requisite Vote..............................................................4.3(b)
Zengine SEC Reports.................................................................4.4
Zengine Securities..................................................................4.2(a)
Zengine Stock Option................................................................3.4(a)
Zengine Stockholder Meeting.........................................................7.1(a)
v
AGREEMENT AND PLAN OF REORGANIZATION
THIS
AGREEMENT AND PLAN OF REORGANIZATION ("AGREEMENT") dated as of
October 4, 2001, is by and between MCSi, Inc., a Maryland corporation (the
"COMPANY"), and Zengine, Inc., a
Delaware corporation ("ZENGINE").
WHEREAS, Company beneficially owns approximately 58.5% of the
outstanding shares of common stock, no par value per share (the "ZENGINE COMMON
STOCK"), of Zengine; and
WHEREAS, it is proposed that Company make a tender offer to acquire all
outstanding shares of Zengine Common Stock not already owned by Company in
exchange for 0.2259 shares ("EXCHANGE RATIO") of Company common stock, no par
value per share ("COMPANY COMMON STOCK"), upon the terms and subject to the
conditions set forth herein; and
WHEREAS, it is proposed that, subject to and following the consummation
of the Offer, Zengine shall be merged with and into Company in a tax free
reorganization, with Company as the surviving corporation, and in such merger
all outstanding Zengine Common Stock (with certain exceptions specified herein)
shall be converted into the right to receive 0.2259 shares of Company Common
Stock for each share of Zengine Common Stock then owned;
WHEREAS, the Board of Directors of Zengine (the "ZENGINE BOARD"), based
on the unanimous recommendation of a special committee of independent directors
of Zengine (the "SPECIAL COMMITTEE"), has (i) determined that each of this
Agreement, the Offer (as hereinafter defined) and the Merger (as hereinafter
defined) pursuant to which Zengine shall merge with and into the Company, with
the Company as the surviving corporation, is in the best interests of the
stockholders of Zengine (other than Company), (ii) resolved to approve the
Offer, the Merger and this Agreement and the transactions contemplated hereby,
and (iii) recommended acceptance of the Offer and, if applicable, adoption of
this Agreement by such stockholders of Zengine, subject to the terms and
conditions set forth herein; and
WHEREAS, the Company and Zengine desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company and Zengine hereby agree as
follows:
Agreement and Plan of Reorganization
Page 2
ARTICLE I
THE OFFER
SECTION 1.1 THE OFFER. (a) As promptly as practicable after the
execution of this Agreement, Company shall commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT")) a tender offer (the "OFFER") for all of the outstanding shares of Zengine
Common Stock (other than for shares owned by the Company at the time of the
Offer) (the "SHARES") in exchange for shares of Company Common Stock at the
exchange ratio of 0.2259 shares of Company Common Stock in exchange for each
share of Zengine Common Stock (such price, or such higher price per Share as may
be paid in the Offer, being referred to herein as the "OFFER PRICE"), subject to
the conditions set forth herein and in ANNEX A hereto. No fraction of a share of
Company Common Stock will be issued. Instead each Zengine stockholder, whether
in the Offer or in the Merger, who would otherwise be entitled to receive a
fraction of a share of Company Common Stock, after combining all fractional
shares to which such stockholder would be entitled, will receive cash in an
amount equal to the product obtained by multiplying (i) the fraction of a share
of Company Common Stock to which the holder would otherwise be entitled by (ii)
$16.60.
(b) The obligations of Company to commence the Offer and to accept for
payment and to pay for any Shares validly tendered on or prior to the expiration
of the Offer and not withdrawn shall be subject only to the conditions set forth
herein and in ANNEX A hereto, any of which conditions may be waived by Company
in its sole discretion. The Offer shall be made by means of an offer to purchase
(the "OFFER TO PURCHASE") containing the terms set forth in this Agreement and
the conditions set forth in ANNEX A hereto.
(c) Company expressly reserves the right to modify the terms of the
Offer; provided, that, without Zengine's prior written consent, Company shall
not decrease the Offer Price or decrease the number of Shares sought, change the
form of consideration or amend any condition of the Offer in any manner adverse
to the holders of the Shares (other than with respect to insignificant changes
or amendments and subject to the penultimate sentence of this Section 1.1(c)) ;
PROVIDED, HOWEVER, that, if on the initial scheduled expiration date of the
Offer, which shall be 20 business days after the date that the Offer is
commenced, all conditions to the Offer shall not have been satisfied or waived,
Company may, from time to time until such time as all such conditions are
satisfied or waived, in its sole discretion, extend the expiration date;
PROVIDED FURTHER, HOWEVER, that without Zengine's prior written consent, the
expiration date of the Offer may not be extended beyond 60 calendar days after
commencement of the Offer. In addition, the Offer Price may be increased and the
Offer may be extended to the extent required by applicable Law (as hereinafter
defined) in connection with such increase, in each case without the consent of
Zengine. If, immediately prior to the initial expiration date of the Offer, the
Shares validly tendered and not withdrawn pursuant to the Offer together with
the Shares beneficially owned by Company equal less than 90% of the outstanding
Shares, Company may extend the Offer for a period not to exceed 20 business
days, notwithstanding that all conditions to the Offer are satisfied as of such
expiration date of the Offer. In addition, Company may make available a
"subsequent offering period," in accordance with Rule 14d-11 of the United
States Securities and Exchange Commission (the "SEC"), of not greater than 20
business
Agreement and Plan of Reorganization
Page 3
days. On the terms and subject to the prior satisfaction or waiver of the
conditions of the Offer and this Agreement, Company shall, accept for payment
and pay for all Shares validly tendered and not withdrawn pursuant to the Offer
as soon as practicable after the expiration of the Offer.
SECTION 1.2 ZENGINE ACTIONS. (a) Zengine hereby approves of and
consents to the Offer and represents that the Zengine Board, based on the
unanimous recommendation of the Special Committee, has (i) determined that each
of the Agreement, the Offer and the Merger (as hereinafter defined) are
advisable and in the best interests of, the stockholders of Zengine (other than
Company), (ii) received the opinion of McDonald Investments Inc., financial
advisor to Zengine (the "FINANCIAL ADVISOR"), to the effect that, subject to the
assumptions therein stated, the Offer Price to be received by holders of Shares
pursuant to the Offer and the Merger Consideration (as hereinafter defined)
pursuant to the Merger is fair to the stockholders of Zengine (other than
Company) from a financial point of view, (iii) approved this Agreement and the
transactions contemplated hereby, including the Offer and the Merger
(collectively, the "TRANSACTIONS") and (iv) resolved to recommend that the
stockholders of Zengine (other than Company) accept the Offer, tender their
Shares thereunder to Company and approve and adopt this Agreement and the
Merger. Zengine has been advised by each of its directors and by each executive
officer who, as of the date hereof, is actually aware (to the knowledge of
Zengine) of the Transactions that each such person either intends to tender
pursuant to the Offer all Shares owned by such person or vote all Shares owned
by such person in favor of the Merger.
(b) In connection with the Offer, Zengine will promptly furnish or
cause to be furnished to Company mailing labels, security position listings and
any available listings or computer files containing the names and addresses of
all holders of record of the Shares as of a recent date, and shall furnish
Company with such additional information (including, but not limited to, updated
lists of holders of the Shares and their addresses, mailing labels and lists of
security positions) and such assistance as Company or its agents may reasonably
request in communicating the Offer to the record and beneficial holders of the
Shares. Subject to the requirements of applicable Law, and except for such steps
as are necessary to disseminate the Offer Documents (as hereinafter defined) and
any other documents necessary to consummate the Merger, Company and its
affiliates and associates shall hold in confidence the information contained in
any such labels, listings and files and all other information delivered pursuant
to this Section 1.2(b), will use such information only in connection with the
Offer and the Merger and, if this Agreement shall be terminated, will deliver to
Zengine all copies, extracts or summaries of such information in their
possession or the possession of their agents.
SECTION 1.3 SEC DOCUMENTS. (a) On the date the Offer is commenced,
Company shall file with SEC (i) a registration statement on Form S-4 containing
a preliminary prospectus ("REGISTRATION STATEMENT") (ii) a Tender Offer
Statement on Schedule TO in accordance with the Exchange Act with respect to the
Offer (together with all amendments and supplements thereto and including the
exhibits thereto, the "SCHEDULE TO"). The Schedule TO will include, as exhibits,
the Offer to Purchase and a form of letter of transmittal and certain other
ancillary documents (collectively, together with any amendments and supplements
thereto, the "OFFER DOCUMENTS"). Promptly after, or concurrently with, the
filing of the Schedule TO by Company, Zengine shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 in accordance with the
Exchange Act (together with all amendments and
Agreement and Plan of Reorganization
Page 4
supplements thereto and including the exhibits thereto, the "SCHEDULE 14D-9"),
which shall, except as otherwise provided herein, contain the recommendation
referred to in clause (iv) of Section 1.2(a) hereof.
(b) Company will take all steps necessary to ensure that the
registration statement and the Offer Documents, and Zengine will take all steps
necessary to ensure that the Schedule 14D-9, will comply in all material
respects with the provisions of applicable Federal and state securities Laws.
The information provided and to be provided by Company or Zengine for use in the
registration statement, Schedule TO, the Offer Documents and the Schedule 14D-9
shall not, on the date first filed with the SEC or first published, sent or
provided to stockholders, as the case may be, 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. Each of Company will take all steps
necessary to cause the registration statement and the Offer Documents, and
Zengine will take all steps necessary to cause the Schedule 14D-9, to be filed
with the SEC and to be disseminated to holders of the Shares, in each case as
and to the extent required by applicable Federal and state securities Laws. Each
of Company, on the one hand, and Zengine, on the other hand, will promptly
correct any information provided by it for use in the registration statement and
the Offer Documents and the Schedule 14D-9 if and to the extent that it shall
have become false and misleading in any material respect and Company will take
all steps necessary to cause the registration statement and the Offer Documents,
and Zengine will take all steps necessary to cause the Schedule 14D-9, as so
corrected to be filed with the SEC and to be disseminated to holders of the
Shares, in each case as and to the extent required by applicable Federal and
state securities Laws. Company and its counsel shall be given a reasonable
opportunity to review and comment upon the Schedule 14D-9 and all amendments and
supplements thereto prior to their filing with the SEC or dissemination to
stockholders of Zengine. Zengine agrees to provide Company and its counsel with
copies of any written comments that Zengine or its counsel may receive from the
SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt
of such comments and Company agrees to provide Zengine and its counsel with
copies of any written comments that Company or their counsel may receive from
the SEC or its staff with respect to the registration statement or the Offer
Documents promptly after the receipt of such comments.
ARTICLE II
THE MERGER
SECTION 2.1 THE MERGER. At the Effective Time (as hereinafter defined)
and upon the terms and subject to the conditions of this Agreement and in
accordance with the
Delaware General Corporation Law (the "DGCL") and with the
Maryland General Corporation Law ("MGCL"), Zengine shall be merged with and into
Company (the "MERGER"). Following the Merger, Company shall continue as the
surviving corporation (the "SURVIVING CORPORATION") and the separate corporate
existence of Zengine shall cease.
SECTION 2.2 EFFECTIVE TIME. Subject to the provisions of this
Agreement, Company and Zengine shall cause the Merger to be consummated by
filing an appropriate
Agreement and Plan of Reorganization
Page 5
Certificate or Articles of Merger or, if applicable, a Certificate of Ownership
and Merger, or other appropriate documents (as applicable, the "CERTIFICATE OF
MERGER") with the Secretary of State of the State of
Delaware and with the
Maryland Department of Assessments and Taxation in such form as required by, and
executed in accordance with, the relevant provisions of the DGCL and MGCL, as
soon as practicable on or after the Closing Date (as hereinafter defined). The
Merger shall become effective upon such filing or at such time thereafter as is
provided in the Certificate of Merger (the "EFFECTIVE TIME").
SECTION 2.3 CLOSING OF THE MERGER. The closing of the Merger (the
"CLOSING") will take place at a time and on a date to be specified by the
parties (the "CLOSING DATE"), which shall be no later than the third business
day after satisfaction or waiver of the conditions set forth in Article VIII
(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver of those conditions), at the
offices of Elias, Matz, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, or at such other time, date or place as agreed to in
writing by the parties hereto.
SECTION 2.4 EFFECTS OF THE MERGER. (a) The Merger shall have the
effects set forth in the DGCL or MGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of Zengine shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Zengine shall become the
debts, liabilities and duties of the Surviving Corporation.
(b) It is intended by the parties hereto that the Merger shall
constitute a "reorganization," within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended ("Code"). The parties hereto adopt
this Agreement as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
SECTION 2.5 ARTICLES OF INCORPORATION AND BYLAWS. The articles of
incorporation of Company in effect at the Effective Time shall be the articles
of incorporation of the Surviving Corporation. The bylaws of the Company in
effect at the Effective Time shall be the bylaws of the Surviving Corporation
until amended in accordance with applicable Law.
SECTION 2.6 DIRECTORS. The directors of Company at the Effective Time
shall be the directors of the Surviving Corporation, to hold office in
accordance with the articles of incorporation and bylaws of the Surviving
Corporation until their successors are duly elected or appointed and qualified
or until their earlier death, resignation or removal.
SECTION 2.7 OFFICERS. The officers of Company at the Effective Time
shall be the officers of the Surviving Corporation, to hold office in accordance
with the articles of incorporation and bylaws of the Surviving Corporation until
their successors are duly elected or appointed and qualified or until their
earlier death, resignation or removal.
Agreement and Plan of Reorganization
Page 6
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Shares or any shares of capital stock of Zengine:
(a) Each issued and outstanding share of common stock, no par value per
share, of Company shall remain issued and outstanding as a fully paid and
nonassessable share of common stock, no par value per share, of the Surviving
Corporation.
(b) All Shares that are owned by the Company or any Subsidiary of the
Company and any Shares owned by Zengine or any Subsidiary of Zengine shall be
cancelled and retired and shall cease to exist and no consideration shall be
delivered in exchange therefor.
(c) Each issued and outstanding Share (other than Shares to be
cancelled in accordance with Section 3.1(b) and Dissenting Shares (as
hereinafter defined)) shall be converted into the right to receive the Offer
Price, without interest (the "MERGER CONSIDERATION"). All such Shares, when so
converted, shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therfor upon the
surrender of such certificate in accordance with Section 3.2, without interest.
SECTION 3.2 EXCHANGE OF CERTIFICATES.
(a) Prior to the Effective Time, Company shall designate a bank,
transfer agent, trust company or other person, reasonably acceptable to Zengine,
to act as agent for the holders of the Shares in connection with the Merger (the
"EXCHANGE AGENT") to receive certificates representing Shares from Zengine
stockholders, to issue in exchange therefor certificates representing the Offer
Price and the Merger Consideration and to pay Company funds for fractional
shares to which holders of the Shares shall become entitled pursuant to Section
3.1(c). Company shall, reserve sufficient authorized shares of Company Common
Stock in order to pay the full Offer Price and Merger Consideration and shall,
from time to time, make available to the Exchange Agent funds in amounts and at
times necessary for the prompt payment of the cash in lieu of fractional shares
as provided herein. All interest earned on such funds shall be paid to Company.
(b) As soon as reasonably practicable after the Effective Time, Company
shall cause the Exchange Agent to mail to each holder of record of a certificate
or certificates which immediately prior to the Effective Time represented
outstanding Shares (the "CERTIFICATES") whose Shares were converted into the
right to receive the Merger Consideration pursuant to Section 3.1, (i) a letter
of transmittal (which shall specify that delivery shall be effective, and risk
of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form not inconsistent
with this Agreement as Company
Agreement and Plan of Reorganization
Page 7
may specify) and (ii) instructions for use in surrendering the Certificates in
exchange for payment of the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, Company shall cause the Exchange Agent to pay to
the holder of such Certificate the Merger Consideration plus cash in lieu of a
fractional share, if any, and the Certificate so surrendered shall forthwith be
cancelled. In the event of a surrender of a Certificate representing Shares
which are not registered in the transfer records of Zengine under the name of
the person surrendering such Certificate, 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 (as hereinafter defined) required by reason of payment to a person other
than the registered holder of such Certificate or establish to the satisfaction
of the Exchange Agent that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 3.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration which the holder thereof
has the right to receive in respect of such Certificate pursuant to the
provisions of this Article III. No interest shall be paid or will accrue on the
Merger Consideration payable to holders of Certificates pursuant to the
provisions of this Article III.
(c) At the Effective Time, the stock transfer books of Zengine shall be
closed and thereafter there shall be no further registration of transfers of the
Shares on the records of Zengine. From and after the Effective Time, the holders
of Certificates evidencing ownership of the Shares outstanding immediately prior
to the Effective Time shall cease to have rights with respect to such Shares,
except as otherwise provided for herein or by applicable Law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article III.
(d) At any time following six months after the Effective Time, the
Surviving Corporation shall be entitled to require the Exchange Agent to deliver
to it any funds (including any interest received with respect thereto) which had
been made available to the Exchange Agent and which have not been disbursed to
holders of Certificates, and thereafter such holders shall be entitled to look
to the Surviving Corporation (subject to abandoned property, escheat or other
similar Laws) only as general unsecured creditors thereof with respect to the
Merger Consideration payable upon due surrender of their Certificates, without
any interest thereon. Notwithstanding the foregoing, none of the Surviving
Corporation or the Exchange Agent shall be liable to any holder of a Certificate
for Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law.
(e) If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed and, if required by the Surviving Corporation,
the posting by such person of a bond in such amount as the Surviving Corporation
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent shall pay in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration pursuant to this
Agreement.
Agreement and Plan of Reorganization
Page 8
SECTION 3.3 WITHHOLDING TAXES. Company shall be entitled to deduct and
withhold, or cause the Exchange Agent to deduct and withhold, from the Offer
Price or the Merger Consideration payable to a holder of Shares pursuant to the
Offer or the Merger any withholding and stock transfer Taxes and such amounts as
are required under the Internal Revenue Code of 1986, as amended (the "CODE"),
or any applicable provision of state, local or foreign Tax law. Company shall
take appropriate steps to minimize such Taxes. To the extent that amounts are so
withheld by Company, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the Shares in respect of
which such deduction and withholding was made by Company.
SECTION 3.4 ZENGINE STOCK OPTIONS. (a) At the Effective Time, each
then outstanding option to purchase any shares of capital stock of Zengine
(in each case, a "ZENGINE STOCK OPTION"), which are then (i) vested and/or
exercisable, or (ii) held by persons who will continue as employees of Company
after the Effective Time, shall be exchanged for an option to purchase 0.2259
shares of Company Common Stock for each option to purchase Zengine Common
Stock, such option to have the same exercise price as the cancelled Zengine
Stock Option as adjusted by dividing such price by 0.2259 (rounded up to the
nearest cent), and except as set forth herein such option shall continue with
the same terms and conditions under which such option was granted. No
option for a fractional share of Company Common Stock shall be issued, but
the number of options to be issued shall be rounded up to the next highest
number. Each Zengine Stock Option which is not vested or held by a person who
will not continue as an employee of the Company after the Effective Time
shall be cancelled at the Effective Time.
(b) Zengine shall take all actions necessary and appropriate so that
all stock option plans or other equity based plans maintained with respect to
the Shares, including, without limitation, the plans listed in Section 4.2
hereof ("ZENGINE OPTION PLANS"), shall terminate as of the Effective Time and
the provisions in any other benefit plan providing for the issuance, transfer or
grant of any capital stock of Zengine or any interest in respect of any capital
stock of Zengine shall be deleted as of the Effective Time, and Zengine shall
use its best efforts to ensure that following the Effective Time no holder of a
Zengine Stock Option or any participant in any Zengine Option Plan shall have
any right thereunder to acquire any capital stock of Company or the Surviving
Corporation.
(c) Prior to the Effective Time, Zengine shall (i) obtain all necessary
consents from, and provide (in a form acceptable to Company) any required
notices to, holders of Zengine Stock Options and (ii) amend the terms of the
applicable Zengine Option Plan, in each case as is necessary to give effect to
the provisions of paragraphs (a) and (b) of this Section 3.4.
SECTION 3.5 APPRAISAL RIGHTS. Notwithstanding anything in this
Agreement to the contrary, Shares (the "DISSENTING SHARES") that are issued and
outstanding immediately prior to the Effective Time and which are held by
stockholders who did not vote in favor of the Merger and who comply with all of
the relevant provisions of Section 262 of the DGCL (the "DISSENTING
STOCKHOLDERS") shall not be converted into or be exchangeable for the right to
receive the Merger Consideration, unless and until such holders shall have
failed to perfect or shall have effectively withdrawn or lost their rights to
appraisal under the DGCL. If any Dissenting Stockholder shall have failed to
perfect or shall have effectively withdrawn or lost such right, such holder's
Shares shall thereupon be converted into and become exchangeable
Agreement and Plan of Reorganization
Page 9
for the right to receive, as of the Effective Time, the Merger Consideration
without any interest thereon. Zengine shall give Company (i) prompt notice of
any written demands for appraisal of any Shares, attempted withdrawals of such
demands and any other instruments served pursuant to the DGCL and received by
Zengine relating to stockholders' rights of appraisal, and (ii) the opportunity
to direct all negotiations and proceedings with respect to demands for appraisal
under the DGCL. Neither Zengine nor the Surviving Corporation shall, except with
the prior written consent of Company, voluntarily make any payment with respect
to, or settle or offer to settle, any such demand for payment. If any Dissenting
Stockholder shall fail to perfect or shall have effectively withdrawn or lost
the right to dissent, the Shares held by such Dissenting Stockholder shall
thereupon be treated as though such Shares had been converted into the right to
receive the Merger Consideration pursuant to Section 3.1(c).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF ZENGINE
Except as set forth in the disclosure schedule delivered by Zengine to
Company prior to the execution of this Agreement (the "ZENGINE DISCLOSURE
SCHEDULE") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein),
Zengine hereby represents and warrants to Company as follows:
SECTION 4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a) Zengine
and each of its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the Laws of the jurisdiction of its incorporation and
has all requisite corporate, partnership or similar power and authority to own,
lease and operate its properties and to carry on its businesses as now
conducted. Each of Zengine and its Subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing does not and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Zengine. Zengine has only one Subsidiary, Zengine K.K.
SECTION 4.2 CAPITALIZATION OF ZENGINE AND ITS SUBSIDIARIES. (a) The
authorized capital stock of Zengine, immediately prior to the Closing, will
consist of (i) 100,000,000 Shares of which, as of the date hereof, 14,614,519
are issued and outstanding and (ii) 20,000,000 shares of preferred stock, no par
value per share, none of which are issued and outstanding as of the date hereof.
All issued and outstanding Shares (i) have been duly authorized and validly
issued, (ii) are fully paid and non-assessable, (iii) were issued in compliance
with all applicable federal and state Laws concerning the issuance of securities
and (iv) are free of preemptive rights. As of the date hereof, (i) 3,384,300
Shares were reserved for issuance and are issuable upon or otherwise deliverable
in connection with the exercise of outstanding options issued to directors,
officers, employees and consultants pursuant to Zengine's stock option plans.
Except as and to the extent publicly disclosed by Zengine in the
Agreement and Plan of Reorganization
Page 10
Zengine SEC Reports (as hereinafter defined), since August 31, 2001, no shares
of Zengine's capital stock have been issued other than pursuant to Zengine Stock
Options already in existence on such date, and, since May 21, 2001, no Zengine
Stock Options have been granted. Except as set forth above, as of the date
hereof, there are outstanding (i) no shares of capital stock or other voting
securities of Zengine; (ii) no securities of Zengine or any of its Subsidiaries
convertible into or exchangeable for shares of capital stock or voting
securities of Zengine; (iii) except for the Zengine Stock Options, no options or
other rights to acquire from Zengine or any of its Subsidiaries, and no
obligations of Zengine or any of its Subsidiaries to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of Zengine; and (iv) no equity equivalents, interests
in the ownership or earnings of Zengine or any of its Subsidiaries or other
similar rights (including stock appreciation rights) (collectively, "ZENGINE
SECURITIES"). There are no outstanding obligations of Zengine or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Zengine Securities.
There are no stockholder agreements, voting trusts or other agreements or
understandings to which Zengine or any of its Subsidiaries is a party or to
which it is bound relating to the voting of any shares of capital stock of
Zengine. Section 4.2 of the Zengine Disclosure Schedule sets forth information
regarding the current exercise price, date of grant and number granted of
Zengine Stock Options for each holder thereof. Following the Effective Time, no
holder of Zengine Stock Options will have any right to receive shares of common
stock of the Surviving Corporation upon exercise of the Zengine Stock Options.
(b) All of the outstanding capital stock of Zengine's only Subsidiary,
Zengine K.K., is owned by Zengine, directly or indirectly, free and clear of any
Lien (as hereinafter defined) or any other limitation or restriction (including
any restriction on the right to vote or sell the same, except as may be provided
as a matter of Law). There are no securities of Zengine or its Subsidiary
convertible into or exchangeable for, no options or other rights to acquire from
Zengine or its Subsidiary, and no other contract, understanding, arrangement or
obligation (whether or not contingent) providing for the issuance or sale,
directly or indirectly of, any capital stock or other ownership interests in, or
any other securities of, any Subsidiary of Zengine. There are no outstanding
contractual obligations of Zengine or its Subsidiary to repurchase, redeem or
otherwise acquire any outstanding shares of capital stock or other ownership
interests in the only Subsidiary of Zengine. For purposes of this Agreement,
"LIEN" means, with respect to any asset (including, without limitation, any
security) any mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset.
SECTION 4.3 AUTHORITY RELATIVE TO THIS AGREEMENT; STOCKHOLDER APPROVAL.
(a) Zengine has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
No other corporate proceedings on the part of Zengine are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby (other
than, with respect to the Merger and this Agreement, the Zengine Requisite Vote
(as hereinafter defined)). This Agreement has been duly and validly executed and
delivered by Zengine and constitutes a valid, legal and binding agreement of
Zengine, enforceable against Zengine in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principals of equity, including principles of
commercial reasonableness, good faith and fair dealing
Agreement and Plan of Reorganization
Page 11
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
(b) The Zengine Board has, by unanimous vote and acting on the
unanimous recommendation of the Special Committee, duly and validly authorized
the execution and delivery of this Agreement and approved the consummation of
the transactions contemplated hereby, and taken all corporate actions required
to be taken by the Zengine Board for the consummation of the transactions,
including the Offer and the Merger, contemplated hereby and has resolved (i) to
deem this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, taken together, advisable and in the best interests of,
Zengine and its stockholders (other than Company); and (ii) to recommend that
the stockholders of Zengine approve and adopt this Agreement. The Zengine Board
has directed that this Agreement, to the extent required, be submitted to the
stockholders of Zengine for their approval. The affirmative approval of the
holders of Shares representing a majority of the votes that may be cast by the
holders of all outstanding Shares (voting as a single class) as of the record
date for Zengine (the "ZENGINE REQUISITE VOTE") is the only vote of the holders
of any class or series of capital stock of Zengine necessary to adopt this
Agreement and approve the transactions contemplated hereby, including the Offer
and the Merger.
SECTION 4.4 SEC REPORTS; FINANCIAL STATEMENTS. Zengine has filed all
required forms, reports and documents with the SEC since May 4, 2000, each of
which has complied in all material respects with all applicable requirements of
the Securities Act of 1933, as amended (the "SECURITIES ACT"), and the Exchange
Act, each as in effect on the dates such forms, reports and documents were
filed. Zengine has heretofore delivered to Company, in the form filed with the
SEC (including any amendments thereto), (i) its Annual Reports on Form 10-K for
each of the fiscal years ended on or after September 30, 2000 (the "AUDIT
DATE"); (ii) all definitive proxy statements relating to Zengine's meetings of
stockholders (whether annual or special) held since September 20, 2000; and
(iii) all other reports or registration statements filed by Zengine with the SEC
since September 20, 2000 (the "ZENGINE SEC REPORTS"). None of such forms,
reports or documents, including, without limitation, any financial statements or
schedules included or incorporated by reference therein, contained, when filed,
any untrue statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference 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 Zengine
included in the Zengine SEC Reports complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto and fairly present, in conformity with generally
accepted accounting principles applied on a consistent basis ("GAAP") (except as
may be indicated in the notes thereto), the consolidated financial position of
Zengine and its consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments). Except as and to the extent
publicly disclosed by Zengine in the Company SEC Reports filed prior to the date
hereof, since September 30, 2000, there has not been any change, or any
application or request for any change, by Zengine or any of its Subsidiaries in
accounting principles, methods or policies for financial accounting or Tax
purposes (subject, in the case of the unaudited interim financial statements, to
normal year-end adjustments).
Agreement and Plan of Reorganization
Page 12
SECTION 4.5 NO UNDISCLOSED LIABILITIES. Except as and to the extent
publicly disclosed by Zengine in the Zengine SEC Reports filed prior to the date
hereof or reflected in written information provided to the Zengine Board or to
representatives of Zengine after September 20, 2000 and prior to the date
hereof, none of Zengine or its Subsidiaries has any liabilities or obligations
of any nature, whether or not accrued, contingent or otherwise, and whether due
or to become due or asserted or unasserted, which would be required by GAAP to
be reflected in, reserved against or otherwise described in the consolidated
balance sheet of Zengine (including the notes thereto) or which have or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Zengine.
SECTION 4.6 ABSENCE OF CHANGES. Except as and to the extent publicly
disclosed by Zengine in the Zengine SEC Reports filed as of the date hereof or
reflected in written information provided to the Zengine Board or to
representatives of Company after September 20, 2000 and prior to the date
hereof, the business of Zengine and its Subsidiaries has been carried on only in
the ordinary and usual course consistent with past practice, none of Zengine or
its Subsidiaries has incurred any liabilities of any nature, whether or not
accrued, contingent or otherwise, which do or which would reasonably be expected
to have, and there have been no events, changes or effects with respect to
Zengine or its Subsidiaries, which do or which would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Zengine.
SECTION 4.7 SCHEDULE 14D-9; OFFER DOCUMENTS; PROXY STATEMENT. Neither
the Schedule 14D-9, any other document required to be filed by Zengine with the
SEC in connection with the Transactions, nor any information supplied by Zengine
for inclusion in the Offer Documents shall, at the respective times the Schedule
14D-9, any such other filings by Zengine, the Offer Documents or any amendments
or supplements thereto are filed with the SEC or are first published, sent or
given to stockholders of Zengine, as the case may be, 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 made therein, in
light of the circumstances under which they are made, not misleading. The proxy
statement (the "PROXY STATEMENT") relating to the Zengine Stockholder Meeting
(as hereinafter defined) to be held in connection with the Merger, if required
to be held pursuant to applicable Law, will not, on the date the Proxy Statement
(including any amendment or supplement thereto) is first mailed to stockholders
of Zengine, 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 made therein, in light of the circumstances under which they are
made, not misleading or shall, at the time of the Zengine Stockholder Meeting or
at the Effective Time, omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Zengine Stockholder Meeting which shall have become false or
misleading in any material respect. The Schedule 14D-9, any other document
required to be filed by Zengine with the SEC in connection with the Transactions
and the Proxy Statement will, when filed by Zengine with the SEC, comply as to
form in all material respects with the applicable provisions of the Exchange Act
and the rules and regulations thereunder. Notwithstanding the foregoing, Zengine
makes no representation or warranty with respect to the statements made in any
of the foregoing documents based on and in conformity with information
Agreement and Plan of Reorganization
Page 13
supplied in writing by or on behalf of Company specifically for inclusion
therein.
SECTION 4.8 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, state securities or blue sky
Laws, the filing and recordation of the Certificate of Merger as required by the
DGCL and the MGCL and as otherwise set forth in Section 4.8 to the Zengine
Disclosure Schedule, no filing with or notice to, and no permit, authorization,
consent or approval of, any court or tribunal or administrative, governmental or
regulatory body, agency or authority (a "GOVERNMENTAL ENTITY") is necessary for
the execution and delivery by Zengine of this Agreement or the consummation by
Zengine of the transactions contemplated hereby, except where the failure to
obtain such permits, authorizations, consents or approvals or to make such
filings or give such notice does not and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Zengine.
Neither the execution, delivery and performance of this Agreement by Zengine nor
the consummation by Zengine of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
certificate or articles of incorporation or bylaws (or similar governing
documents) of Zengine or of its sole Subsidiary, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration or Lien) under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Zengine or its Subsidiary is a party or by
which any of them or any of their respective properties or assets may be bound,
or (iii) violate any Law applicable to Zengine or of its Subsidiary or any of
their respective properties or assets, except in the case of (ii) or (iii) for
violations, breaches or defaults which do not or would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Zengine.
SECTION 4.9 NO DEFAULT. Neither Zengine nor its sole Subsidiary are in
violation of any term of (i) its certificate of incorporation, bylaws or other
organizational documents, (ii) any agreement or instrument related to
indebtedness for borrowed money or any other agreement to which it is a party or
by which it is bound, or (iii) any foreign or domestic law, order, writ,
injunction, decree, ordinance, award, stipulation, statute, judicial or
administrative doctrine, rule or regulation entered by a Governmental Entity
("LAW") applicable to Zengine, its sole Subsidiary or any of their respective
properties or assets, the consequence of which violation does or would
reasonably be expected to (A) have, individually or in the aggregate, a Material
Adverse Effect on Zengine or (B) prevent or materially delay the performance of
this Agreement by Zengine.
SECTION 4.10 LITIGATION. Except as and to the extent publicly disclosed
by Zengine in the Zengine SEC Reports filed as of the date hereof, there is no
suit, claim, action, proceeding or investigation pending or, to Zengine's
knowledge, threatened against Zengine or its Subsidiary or any of their
respective properties or assets which (a) does or would reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on Zengine
or (b) as of the date hereof, questions the validity of this Agreement or any
action to be taken by Zengine in connection with the consummation of the
transactions contemplated hereby or could otherwise prevent or delay the
consummation of the transactions contemplated by this
Agreement and Plan of Reorganization
Page 14
Agreement. Except as and to the extent publicly disclosed by Zengine in the
Zengine SEC Reports filed as of the date hereof, none of Zengine or its
Subsidiary is subject to any outstanding order, writ, injunction or decree which
does or would reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on Zengine.
SECTION 4.11 COMPLIANCE WITH APPLICABLE LAW. Zengine and its sole
Subsidiary hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "ZENGINE PERMITS"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which do not or
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Zengine. Zengine and its Subsidiary are in compliance
with the terms of the Zengine Permits, except where the failure to so comply
does not or would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Zengine. To the knowledge of Zengine the
businesses of Zengine and its Subsidiary are not being conducted in material
violation of any Law applicable to Zengine or its Subsidiary, except for
violations which do not and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Zengine. To
Zengine's knowledge, no investigation or review by any Governmental Entity with
respect to Zengine or its Subsidiary is pending or threatened, nor, to Zengine's
knowledge, has any Governmental Entity indicated an intention to conduct the
same, other than those which do not or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Zengine.
SECTION 4.12 TAX MATTERS. There are no employment, severance or
termination agreements, other compensation arrangements or Employee Benefit
Plans currently in effect which provide for the payment of any amount (whether
in cash or property or the vesting of property) as a result of any of the
transactions contemplated by this Agreement that would give rise to a payment
which is nondeductible by reason of Section 280G of the Code.
SECTION 4.13 OPINION OF FINANCIAL ADVISOR. The Financial Advisor has
delivered to the Zengine Board its opinion, dated the date of this Agreement, to
the effect that, as of such date, the consideration to be received in the Offer
and the Merger by Zengine's stockholders is fair to Zengine's stockholders
(other than Company) from a financial point of view, and such opinion has not
been withdrawn or modified. Zengine has been authorized by the Financial Advisor
to permit the inclusion of such opinion in its entirety in the Offer Documents,
the Schedule 14D-9 and the Proxy Statement, so long as such inclusion is in form
and substance satisfactory to the Financial Advisor and its counsel.
SECTION 4.14 BROKERS; BUST-UP FEE. No broker, finder or investment
banker (other than the Financial Advisor, a true and correct copy of whose
engagement agreement has been provided to Company) is entitled to any brokerage,
finder's or other fee or commission or expense reimbursement in connection with
the transactions contemplated by this Agreement based upon arrangements made by
and on behalf of Zengine or any of its affiliates. Zengine is not obligated to
pay any third party fee, expense or any amount whatsoever as a result of its
execution, delivery and/or performance of this Agreement.
Agreement and Plan of Reorganization
Page 15
SECTION 4.15 TAKEOVER STATUTE; DISSENTERS' RIGHTS. Zengine has taken
all action required to be taken by it in order to exempt this Agreement, the
Offer, the acquisition of Shares pursuant to the Offer, the Merger, and the
transactions contemplated hereby and thereby from, and this Agreement, the
Offer, the acquisition of Shares pursuant to the Offer, the Merger, and the
transactions contemplated hereby and thereby (the "COVERED TRANSACTIONS") are
exempt from, the requirements of any "moratorium," "control share," "fair
price," "affiliated transaction," "business combination" or other antitakeover
Laws and regulations of any state (collectively, "TAKEOVER STATUTES"),
including, without limitation, Section 203 of the DGCL, or any antitakeover
provision in Zengine's certificate of incorporation and bylaws. The provisions
of Section 203 of the DGCL do not apply to the Covered Transactions.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF COMPANY
Company hereby represents and warrants to Zengine as follows:
SECTION 5.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a) Company
and each of its Subsidiaries (which, for purposes of this Agreement shall not
include Zengine) is a corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and has all
requisite corporate, partnership or similar power and authority to own, lease
and operate its properties and to carry on its businesses as now conducted. Each
of Company and its Subsidiaries is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing does not and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Company.
SECTION 5.2 CAPITALIZATION OF COMPANY AND ITS SUBSIDIARIES. The
authorized capital stock of Company, immediately prior to the Closing, will
consist of (i) 30,000,000 Shares of which, as of the date hereof, approximately
16,980,330 are issued and outstanding and (ii) 5,000,000 shares of preferred
stock, no par value per share, none of which are issued and outstanding as of
the date hereof. All issued and outstanding Shares (i) have been duly authorized
and validly issued, (ii) are fully paid and non-assessable, (iii) were issued in
compliance with all applicable federal and state Laws concerning the issuance of
securities and (iv) are free of preemptive rights. As of the date hereof, (i)
430,807 Shares were reserved for issuance and are issuable upon or otherwise
deliverable in connection with the exercise of outstanding options issued to
directors, officers, employees and consultants pursuant to Company stock option
plans. Except as and to the extent publicly disclosed by Company in the Company
SEC Reports (as hereinafter defined), since September 10, 2001, no shares of
Company capital stock have been issue other than pursuant to Company Stock
Options already in existence on such date. Except as set forth above, as of the
date hereof, there are outstanding (i)
Agreement and Plan of Reorganization
Page 16
no shares of capital stock or other voting securities of Company; (ii) no
securities of Company or any of its Subsidiaries convertible into or
exchangeable for shares of capital stock or voting securities of Company; (iii)
except for the Company Stock Options, no options or other rights to acquire from
Company or any of its Subsidiaries, and no obligations of Company or any of its
Subsidiaries to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Company except for the Company's obligation to pay the deferred portion of the
purchase price for certain acquired entities in Company Shares; and (iv) no
equity equivalents, interests in the ownership of earnings of Company or any of
its Subsidiaries or other similar rights (including stock appreciation rights)
(collectively, "COMPANY SECURITIES"). There are no outstanding obligations of
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any Company Securities. To the Company's knowledge, there are no stockholder
agreements, voting trusts or other agreements or understandings to which Company
or any of its Subsidiaries is a party or to which it is bound relating to the
voting of any shares of capital stock of Company.
SECTION 5.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to consummate the Transactions contemplated hereby. No other corporate
proceedings on the part of Company are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. The Board of Directors of
Company have duly and validly authorized the execution and delivery of this
Agreement and the consummation of the Transactions contemplated hereby, and
taken all corporate actions required to be taken by such Board of Directors for
the consummation of the transactions. This Agreement has been duly and validly
executed and delivered by Company and constitutes a valid, legal and binding
agreement of Company, enforceable against Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
SECTION 5.4 SEC REPORTS; FINANCIAL STATEMENTS. Company has timely filed
all required forms, reports and documents ("COMPANY SEC REPORTS") with the SEC
since December 31, 2000, each of which has complied in all material respects
with all applicable requirements of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and the Exchange Act, each as in effect on the dates such
forms, reports and documents were filed. None of such forms, reports or
documents, including, without limitation, any financial statements or schedules
included or incorporated by reference therein, contained, when filed, any untrue
statement of a material fact or omitted to state a material fact required to be
stated or incorporated by reference therein necessary in order to make the
statements therein, inlight of the circumstances under which they were made, not
misleading. The consolidated financial statements of Company included in the
Company SEC Reports complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto and fairly present, in conformity with GAAP (except as may be
indicated in the notes thereto), the consolidated financial position of Company
and its consolidated Subsidiaries as of the dates thereof and their consolidated
results of operations and changes in financial position for the periods then
ended (subject, in the case of the unaudited
Agreement and Plan of Reorganization
Page 17
interim financial statements, to normal year-end adjustments). Except as and to
the extent publicly disclosed by Company in the Company SEC Reports filed prior
to the date hereof, since December 31, 2000, there has not been any change, or
any application or request for any change, by Company or any of its Subsidiaries
in accounting principles, methods or policies for financial accounting or Tax
purposes (subject, in the case of the unaudited interim financial statements, to
normal year-end adjustments).
SECTION 5.5 NO UNDISCLOSED LIABILITIES. Except as and to the extent
publicly disclosed by Company in the Company SEC Reports filed prior to the date
hereof or reflected in written information provided to the Special Committee of
the Zengine Board prior to the date hereof, none of Company or its Subsidiaries
has any liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, and whether due or to become due or asserted or
unasserted, which would be required by GAAP to be reflected in, reserved against
or otherwise described in the consolidated balance sheet of Company (including
the notes thereto) or which have or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Company.
SECTION 5.6 ABSENCE OF CHANGES. Except as and to the extent publicly
disclosed by Company in the Company SEC Reports filed as of the date hereof or
reflected in written information provided to the Special Committee of the
Zengine Board prior to the date hereof, the business of Company and its
Subsidiaries has been carried on only in the ordinary and usual course
consistent with past practice, none of Company or its Subsidiaries has incurred
any liabilities of any nature, whether or not accrued, contingent or otherwise,
which do or which would reasonably be expected to have, and there have been no
events, changes or effects with respect to Company or its Subsidiaries, which do
or which would reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on Company.
SECTION 5.7 REGISTRATION STATEMENT; OFFER DOCUMENTS. The Offer
Documents and any other documents to be filed by Company with the SEC or any
other Government Entity in connection with the Offer, the Merger and the other
Transactions will (in the case of the Registration Statement, the Offer
Documents and any such other documents filed with the SEC under the Securities
Act or the Exchange Act) comply as to form in all material respects with the
requirements of the Exchange Act and the Securities Act, respectively, and will
not, on the date of filing with the SEC or, in the case of the Registration
Statement, on the date the Registration Statement becomes effective, 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 made therein,
in the light of the circumstances under which they are made, not misleading or
shall, at the time the Company accepts tendered shares for exchange or at the
Effective Time, omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the exchange of shares
for Company Common Stock which shall have become false or misleading in any
material respect. Notwithstanding the foregoing, Company makes no representation
or warranty with respect to the statements made in any of the foregoing
documents based on and in conformity with information supplied by or on behalf
of Zengine specifically for inclusion therein.
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SECTION 5.8 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky Laws and the filing and recordation of the Certificate of
Merger as required by the DGCL and the MGCL, no filing with or notice to, and no
permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution and delivery by Company of this Agreement or the
consummation by Company of the Transactions contemplated hereby, except where
the failure to obtain such permits, authorizations, consents or approvals or to
make such filings or give such notice do not or would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on Company.
Neither the execution, delivery and performance of this Agreement by Company nor
the consummation by Company of the Transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the articles of
incorporation or bylaws (or similar governing documents) of Company or any of
Company's Subsidiaries, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration or Lien)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Company or any of Company's Subsidiaries is a party or by which any of
them or any of their respective properties or assets may be bound, or (iii)
violate any Law applicable to Company or any of Company's Subsidiaries or any of
their respective properties or assets, except in the case of (ii) or (iii) for
violations, breaches or defaults which do not, or would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Company.
ARTICLE VI
COVENANTS RELATED TO CONDUCT OF BUSINESS
SECTION 6.1 CONDUCT OF BUSINESS OF ZENGINE. Except as contemplated by
this Agreement, during the period from the date hereof to the Effective Time,
Zengine will, and will cause each of its Subsidiaries to, conduct its operations
in the ordinary and usual course of business consistent with past practice and,
to the extent consistent therewith, with no less diligence and effort than would
be applied in the absence of this Agreement, and, except with the prior written
consent of Company seek to preserve intact its current business organizations,
seek to keep available the service of its current officers and employees and
seek to preserve its relationships with customers, suppliers and others having
business dealings with it to the end that goodwill and ongoing businesses shall
be unimpaired at the Effective Time. Without limiting the generality of the
foregoing, and except as otherwise expressly provided in this Agreement or in
the Zengine Disclosure Schedule, prior to the Effective Time, neither Zengine
nor its sole Subsidiary will, without the prior written consent of Company:
(a) amend its certificate of incorporation or bylaws (or other similar
governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver
Agreement and Plan of Reorganization
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(whether through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock of any class or any
other securities convertible into or exchangeable for any stock or any equity
equivalents (including, without limitation, any stock options or stock
appreciation rights) of Zengine or any Subsidiary, except for the issuance or
sale of Shares pursuant to the valid exercise of outstanding Zengine Stock
Options;
(c) (i) split, combine or reclassify any shares of its capital stock;
(ii) declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock; (iii) make any other actual, constructive or deemed distribution in
respect of any shares of its capital stock or otherwise make any payments to
stockholders in their capacity as such; or (iv) redeem, repurchase or otherwise
acquire any of its securities or any securities of any of its Subsidiaries;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of Zengine or any of its Subsidiaries (other than the Merger);
(e) alter through merger, liquidation, reorganization, restructuring or
in any other fashion the corporate structure or ownership of any Subsidiary;
(f) (i) incur or assume any long-term or short-term debt or issue any
debt securities; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person, except in the ordinary and usual course of business consistent
with past practice and in amounts not material to Zengine and its Subsidiary,
taken as a whole; (iii) make any loans, advances or capital contributions to, or
investments in, any other person (other than to Company or customary loans or
advances to employees in the ordinary and usual course of business consistent
with past practice and in amounts not material to the maker of such loan or
advance); (iv) pledge or otherwise encumber shares of capital stock of Zengine
or its Subsidiary; or (v) mortgage or pledge any of its material assets,
tangible or intangible, or create or suffer to exist any material Lien
thereupon;
(g) except as may be required by Law or as contemplated by this
Agreement, enter into, adopt or amend or terminate any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation right,
restricted stock, performance unit, stock equivalent, stock purchase agreement,
pension, retirement, deferred compensation, employment, severance or other
employee benefit agreement, trust, plan, fund, award or other arrangement for
the benefit or welfare of any director, officer or employee in any manner, or
(except as set forth in Section 6.1(g) of the Zengine Disclosure Schedule, and
as required under existing agreements) increase in any manner the compensation
or fringe benefits of any director, officer or employee or pay any benefit not
required by any plan and arrangement as in effect as of the date hereof
(including, without limitation, the granting of stock appreciation rights or
performance units);
(h) acquire, sell, lease or dispose of any assets outside the ordinary
and usual course of business consistent with past practice or any assets which
in the aggregate are material to Zengine and its Subsidiary taken as a whole,
enter into any commitment or transaction outside the ordinary and usual course
of business consistent with past practice or grant any exclusive
Agreement and Plan of Reorganization
Page 20
distribution rights;
(i) except as may be required as a result of a change in Law or in
GAAP, change any of the accounting principles or practices used by it;
(j) revalue in any material respect any of its assets, including,
without limitation, writing down the value of software, capital equipment or
inventory or writing-off notes or accounts receivable other than in the ordinary
and usual course of business consistent with past practice or as required by
GAAP;
(k) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof or any equity interest therein; (ii) enter into any contract or
agreement, other than in the ordinary and usual course of business consistent
with past practice or amend in any material respect any material contracts or
agreements; (iii) authorize any new capital expenditure or expenditures which,
individually, is in excess of $10,000 or, in the aggregate, are in excess of
$30,000; or (iv) enter into or amend any contract, agreement, commitment or
arrangement providing for the taking of any action that would be prohibited
hereunder;
(l) make or revoke any Tax election, or settle or compromise any Tax
liability, or change (or make a request to any taxing authority to change) any
aspect of its method of accounting for Tax purposes;
(m) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
and usual course of business consistent with past practice of liabilities
reflected or reserved against in the consolidated financial statements of
Zengine and its Subsidiaries or incurred in the ordinary and usual course of
business consistent with past practice or waive the benefits of, or agree to
modify in any manner, any confidentiality, standstill or similar agreement to
which Zengine or any of its Subsidiaries is a party;
(n) settle or compromise any pending or threatened suit, action or
claim relating to the transactions contemplated hereby;
(o) enter into any agreement or arrangement that limits or otherwise
restricts Zengine or any of its Subsidiaries or any successor thereto or that
could, after the Effective Time, limit or restrict the Surviving Corporation and
its affiliates (including Company) or any successor thereto, from engaging or
competing in any line of business or in any geographic area; or
(p) take, propose to take, or agree in writing or otherwise to take,
any of the actions described in Sections 6.1(a) through 6.1(o) or any action
which would make any of the representations or warranties of Zengine contained
in this Agreement (i) which are qualified as to materiality untrue or incorrect,
or (ii) which are not so qualified untrue or incorrect in any material respect.
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SECTION 6.2 ACCESS TO INFORMATION. Between the date hereof and the
Effective Time, Zengine will give Company and their authorized representatives
(including counsel, financial advisors and auditors) reasonable access during
normal business hours to all employees, offices, warehouses and other facilities
and to all books and records of Zengine and its Subsidiary, will permit Company
to make such inspections as Company may reasonably require and will cause
Zengine's officers and those of its Subsidiary to furnish Company with such
financial and operating data and other information with respect to the business,
properties and personnel of Zengine and its Subsidiary as Company may from time
to time reasonably request, provided that no investigation pursuant to this
Section 6.2 shall affect or be deemed to modify any of the representations or
warranties made by Zengine.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 ZENGINE STOCKHOLDER MEETING; PROXY STATEMENT. (a) If
required by applicable Law in order to consummate the Merger, Zengine, acting
through its Board of Directors, shall, in accordance with applicable Law, its
Certificate of Incorporation and Bylaws:
(i) as promptly as practicable following the acceptance for payment
and purchase of Shares by Company pursuant to the Offer duly call,
give notice of, convene and hold a special meeting of its
stockholders (the "ZENGINE STOCKHOLDER MEETING") for the purposes
of considering and taking action upon the approval of the Merger
and the approval and adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or information
statement relating to the Merger and this Agreement and (x) obtain
and furnish the information required to be included by the SEC in
the Proxy Statement and, after consultation with Company, respond
promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a definitive
proxy or information statement, including any amendment or
supplement thereto to be mailed to its stockholders at the
earliest practicable date; PROVIDED that no amendment or
supplement to the Proxy Statement will be made by Zengine without
consultation with Company and its counsel, and (y) use its
reasonable best efforts to obtain the necessary approvals of the
Merger and this Agreement by its stockholders; and
(iii) unless this Agreement has been terminated in accordance with
Article IX, subject to its rights pursuant to Section 7.3,
include in the Proxy Statement the recommendation of its Board of
Directors that stockholders of Zengine vote in favor of the
approval of the Merger and the approval and adoption of this
Agreement.
(b) Company shall vote, or cause to be voted, all of the Shares then
owned by it or any of its other Subsidiaries in favor of the approval and
adoption of this Agreement.
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(c) Notwithstanding anything else herein or in this Section 7.1, in the
event that Company and any other Subsidiaries of Company shall acquire in the
aggregate a number of the outstanding shares of each class of capital stock of
Zengine, pursuant to the Offer or otherwise, sufficient to enable Company or
Zengine to cause the Merger to become effective under applicable Law without a
meeting of stockholders of Zengine, the parties hereto shall, at the request of
Company and subject to Article VIII, take all necessary and appropriate action
to cause the Merger to become effective as soon as practicable after the
consummation of such acquisition, without a meeting of stockholders of Zengine,
in accordance with Section 253 of the DGCL.
SECTION 7.2 REASONABLE BEST EFFORTS. Subject to the terms and
conditions of this Agreement, each party will use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws to consummate the
Offer and the Merger and the other Transactions contemplated by this Agreement.
SECTION 7.3 ACQUISITION PROPOSALS. (a) From the date hereof until the
Closing Date or the termination hereof, Zengine may, directly or indirectly, (i)
solicit, initiate or encourage the submission of any Acquisition Proposal (as
hereinafter defined) or (ii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take any
other action to facilitate, any Acquisition Proposal or any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal. Zengine shall, promptly upon receipt of any
request for information or Acquisition Proposal, provide all information in its
possession regarding such request or proposal to the Company and shall promptly
update Company, on a daily basis, of the status of any and all discussions which
may in any way relate to an Acquisition Proposal.
(b) Neither the Zengine Board nor the Special Committee will withdraw
or modify, or propose to withdraw or modify, in a manner adverse to Company, its
approval or recommendation of this Agreement, the Offer or the Merger unless the
Zengine Board or the Special Committee, after consultation with and based upon
the written legal opinion of independent legal counsel, determines in good faith
that such action is necessary for the Zengine Board or the Special Committee to
comply with the fiduciary duties to Zengine's stockholders under applicable Law.
Nothing contained in this Section 7.3(b) shall prohibit Zengine from taking and
disclosing to its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any disclosure to Zengine's
stockholders which, in the good faith reasonable judgment of the Zengine Board
and the Special Committee, based on the advice of independent legal counsel, is
required under applicable Law; PROVIDED, that except as otherwise permitted in
this Section 7.3(b), Zengine does not withdraw or modify, or propose to withdraw
or modify, its position with respect to the Offer or the Merger or approve or
recommend, or propose to approve or recommend, an Acquisition Proposal.
Notwithstanding anything contained in this Agreement to the contrary, any action
by the Zengine Board or the Special Committee permitted by, and taken in
accordance with, this Section 7.3(b) shall not constitute a breach of this
Agreement by Zengine. Nothing in this Section 7.3(b) shall (i) permit Zengine to
terminate this Agreement (except as provided in Article IX hereof) or (ii)
affect any other obligations of Zengine under this Agreement.
Agreement and Plan of Reorganization
Page 23
SECTION 7.4 PUBLIC ANNOUNCEMENTS. Each of Company and Zengine will
consult with one another before issuing any press release or otherwise making
any public statements with respect to the transactions contemplated by this
Agreement, including, without limitation, the Merger, 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 or by obligations pursuant to any
listing agreement with the Nasdaq, as determined by Zengine or Company, as the
case may be.
SECTION 7.5 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a)
Following the Effective Time, Company shall cause the Surviving Corporation, to
the fullest extent permitted by applicable Law, to indemnify, defend and hold
harmless each person who is now, or has been at any time prior to the date
hereof, or who becomes prior to the Effective Time, a director, officer or
employee of the parties hereto or any Subsidiary thereof (each an "INDEMNIFIED
PARTY" and, collectively, the "INDEMNIFIED PARTIES") against all losses,
expenses (including reasonable attorneys' fees and expenses), claims, damages or
liabilities or, subject to the proviso of the next succeeding sentence, amounts
paid in settlement, arising out of actions or omissions occurring at or prior to
the Effective Time and whether asserted or claimed prior to, at or after the
Effective Time that are in whole or in part (i) based on, or arising out of the
fact that such person is or was a director, officer or employee of such party or
a Subsidiary of such party or (ii) based on, arising out of or pertaining to the
Transactions contemplated by this Agreement. In the event of any such loss,
expense, claim, damage or liability (whether or not arising before the Effective
Time), (i) the Surviving Corporation shall pay the reasonable fees and expenses
of counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to the Surviving Corporation, promptly after statements
therefor are received and otherwise advance to such Indemnified Party upon
request reimbursement of documented expenses reasonably incurred, in either case
to the extent not prohibited by the MGCL and upon receipt of any affirmation and
undertaking required by the MGCL, (ii) the Surviving Corporation will cooperate
in the defense of any such matter and (iii) any determination required to be
made with respect to whether an Indemnified Party's conduct complies with the
standards set forth under the MGCL and Company's articles of incorporation or
bylaws shall be made by independent counsel mutually acceptable to Company and
the Indemnified Party; PROVIDED, HOWEVER, that the Surviving Corporation shall
not be liable for any settlement effected without its written consent (which
consent shall not be unreasonably withheld). The Indemnified Parties as a group
may retain only one law firm with respect to each related matter except to the
extent there is, in the opinion of counsel to an Indemnified Party, under
applicable standards of professional conduct, a conflict on any significant
issue between positions of any two or more Indemnified Parties.
(b) For a period of six (6) years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the policies of
directors' and officers' liability insurance maintained by Zengine for the
benefit of those persons who are covered by such policies at the Effective Time
(or the Surviving Corporation may substitute therefor policies of at least the
same coverage with respect to matters occurring prior to the Effective Time), to
the extent that such liability insurance can be maintained annually at a cost to
the Surviving Corporation not greater than 150 percent of the premium for the
current Zengine directors' and officers' liability
Agreement and Plan of Reorganization
Page 24
insurance; PROVIDED THAT if such insurance cannot be so maintained or obtained
at such costs, the Surviving Corporation shall maintain or obtain as much of
such insurance as can be so maintained or obtained at a cost equal to 150
percent of the current annual premiums of Zengine for such insurance.
(c) In the event 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 or such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then and in either such case, proper provision shall be made so
that the successors and assigns of the Surviving Corporation shall assume the
obligations set forth in this Section 7.5.
(d) To the fullest extent permitted by Law, from and after the
Effective Time, all rights to indemnification now existing in favor of the
employees, agents, directors or officers of Zengine and its Subsidiary with
respect to their activities as such prior to the Effective Time, as provided in
Zengine's certificate of incorporation or bylaws, in effect on the date thereof
or otherwise in effect on the date hereof, shall survive the Merger and shall
continue in full force and effect for a period of not less than six (6) years
from the Effective Time.
(e) The provisions of this Section 7.5 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
SECTION 7.6 NOTIFICATION OF CERTAIN MATTERS. Zengine shall give prompt
notice to Company, and Company shall give prompt notice to Zengine, of (i) the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which would be likely to cause any representation or warranty contained in this
Agreement, which is qualified as to materiality, to be untrue or inaccurate, or
any representation or warranty not so qualified, to be untrue or inaccurate in
any material respect at or prior to the Effective Time, (ii) any material
failure of Company or Zengine, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, (iii) any notice of, or other communication relating to, a default or
event which, with notice or lapse of time or both, would become a default,
received by it or any of its Subsidiaries subsequent to the date of this
Agreement and prior to the Effective Time, under any contract or agreement
material to the financial condition, properties, businesses, results of
operations or prospects of it and its Subsidiaries taken as a whole to which it
or any of its Subsidiaries is a party or is subject, (iv) any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement, or (v) any Material Adverse Effect in their respective financial
condition, properties, businesses, results of operations or prospects, taken as
a whole, other than changes resulting from general economic conditions;
PROVIDED, HOWEVER, that the delivery of any notice pursuant to this Section 7.6
shall not cure such breach or non-compliance or limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
SECTION 7.7 SEC FILINGS. Each of Company and Zengine shall promptly
provide the other party (or its counsel) with copies of all filings made by the
other party or any of its Subsidiaries with the SEC or any other state or
federal Governmental Entity in connection with
Agreement and Plan of Reorganization
Page 25
this Agreement and the transactions contemplated hereby.
SECTION 7.8 ANTITAKEOVER STATUTES. If any Takeover Statute is or may
become applicable to the Merger, each of Company and Zengine shall take such
actions as are necessary so that the transactions contemplated by this Agreement
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise act to eliminate or minimize the effects of any Takeover Statute
on the Merger.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 8.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE
MERGER. The respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following conditions, any or all of which may be
waived in whole or in part by the party being benefited thereby, to the extent
permitted by applicable Law:
(a) This Agreement shall have been approved and adopted by the Zengine
Requisite Vote, if required by applicable Law.
(b) There shall not be in effect any Law of any Governmental Entity of
competent jurisdiction, restraining, enjoining or otherwise preventing
consummation of the Transactions contemplated by this Agreement or permitting
such consummation only subject to any condition or restriction that has or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Zengine (or an effect on Company and its Subsidiaries that,
were such effect applied to Zengine and its Subsidiaries, has or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Zengine) and no Governmental Entity shall have instituted any
proceeding which continues to be pending seeking any such Law.
(c) Company or its affiliates shall have purchased all Shares validly
tendered and not withdrawn pursuant to the Offer.
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
SECTION 9.1 TERMINATION. This Agreement may be terminated and the
Merger contemplated herein may be abandoned at any time prior to the Effective
Time, whether before or after approval of matters presented in connection with
the Merger by the stockholders of the Company:
(a) By the mutual written consent of Company and Zengine;
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Page 26
(b) By either of Zengine or Company if (i) a statute, rule or executive
order shall have been enacted, entered or promulgated prohibiting the
Transactions on the terms contemplated by this Agreement, or (ii) any
governmental entity shall have issued an order, decree or ruling or taken any
other action (which order, decree, ruling or other action the parties hereto
shall use their reasonable efforts to lift), in each case permanently
restraining, enjoining or otherwise prohibiting the Transactions and such order,
decree, ruling or other action shall have become final and non-appealable.
(c) By either of Company or Zengine if the Offer has not been
consummated on or before the ninetieth (90) day following the commencement of
the Offer (or, if such date is not a business day in the United States, the
first such business day thereafter) or the Effective Time shall not have
occurred on or before the two hundred and tenth (210) day following the
commencement of the Offer (or, if such date is not a business day in the United
States, the first such business day thereafter); PROVIDED, that the party
seeking to terminate this Agreement pursuant to this Section 9.1(c) shall not
have breached in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the failure to consummate
the Merger on or before such date;
(d) By Zengine:
(i) if Company shall have terminated the Offer or the Offer
expires without Company purchasing any Shares pursuant thereto;
provided, that Zengine may not terminate this agreement pursuant to
this Section 9.1(d)(i) if Zengine is in material breach of this
Agreement; or
(ii) if there shall be a material breach by Company of any of
their representations, warranties, covenants or agreements contained in
this Agreement; or
(e) By Company:
(i) if prior to the purchase of the Shares pursuant to the
Offer, (A) the Zengine Board or the Special Committee shall have
withdrawn, or modified or changed in a manner adverse to Company its
approval or recommendation of the Offer, this Agreement or the Merger
or shall have recommended or approved an Acquisition Proposal, or (B)
there shall have been a material breach of any provision of Section
7.3; or
(ii) if Company shall have terminated the Offer without
Company purchasing any Shares thereunder; provided that Company may not
terminate this Agreement pursuant to this Section 9.1(e)(ii) if Company
is in material breach of this Agreement; or
(iii) if there shall be a material breach by Zengine of any of
its representations, warranties, covenants or agreements contained in
this Agreement.
SECTION 9.2 EFFECT OF THE TERMINATION. In the event of termination of
this Agreement by either the Company or Zengine as provided in Section 9.1, this
Agreement shall
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forthwith become void and have no effect, without any liability or obligation on
the part of Company or Zengine, other than the provisions of this Section 9.2,
Section 9.3 and Article X and except to the extent that such termination results
from the willful and material breach by a party of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
SECTION 9.3 FEES AND EXPENSES. (a) Except as provided below, all fees
and expenses incurred in connection with the Offer, the Merger, this Agreement
and the Transactions shall be paid by the party incurring such fees or expenses,
whether or not the Offer or the Merger is consummated.
(b) Zengine shall pay all Taxes, such as (a) transfer, stamp and
documentary Taxes or fees and (b) sales, use, gains, real property transfer and
other or similar Taxes or fees, incident to preparing for, entering into and
carrying out this Agreement and the consummation of the transactions
contemplated hereby.
SECTION 9.4 AMENDMENT. This Agreement may be amended by action taken by
Company and Zengine at any time before or after approval of the Merger by the
Zengine Requisite Vote but, after any such approval, no amendment shall be made
which requires the approval of such stockholders under applicable Law without
such approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of the parties hereto.
SECTION 9.5 EXTENSION; WAIVER. At any time prior to the Effective Time,
each party hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document, certificate or writing delivered pursuant hereto, or (iii) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of either party hereto 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 either party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations, warranties, covenants and agreements in this Agreement or in
any exhibit, schedule or instrument delivered pursuant to this Agreement shall
survive beyond the Effective Time, except for those covenants and agreements
contained herein and therein that by their terms apply or are to be performed in
whole or in part after the Effective Time and this Article X. This Section 10.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 10.2 ENTIRE AGREEMENT; ASSIGNMENT. (a) This Agreement
constitutes the entire agreement between the parties hereto with respect to the
subject matter
Agreement and Plan of Reorganization
Page 28
hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by operation of Law (including, but not
limited to, by merger or consolidation) or otherwise; PROVIDED, HOWEVER, that
Company may assign, in its sole discretion, any or all of its rights, interests
and obligations under this Agreement to any direct wholly owned Subsidiary, but
no such assignment shall relieve Company of its obligations hereunder if such
assignee does not perform such obligations. Any assignment in violation of the
preceding sentence shall be void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns and the Indemnified
Parties set forth in Section 7.5.
SECTION 10.3 NOTICES. All notices, requests, instructions or other
documents to be given under this Agreement shall be in writing and shall be
deemed given, (i) five (5) business days following sending by registered or
certified mail, postage prepaid, (ii) when sent if sent by facsimile; PROVIDED,
that the fax is promptly confirmed by telephone confirmation thereof, (iii) when
delivered, if delivered personally to the intended recipient, and (iv) one (1)
business day following sending by overnight delivery via a national courier
service, and in each case, addressed to a party at the following address for
such party:
if to Company to: MCSi, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman, President and Chief Exeutive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to Zengine, to: Zengine, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Agreement and Plan of Reorganization
Page 29
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above. A
"business day" is any day other than a Saturday, Sunday or Federal holiday.
SECTION 10.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of
Delaware, without giving
effect to the choice of Law principles thereof.
SECTION 10.5 DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 10.6 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and, except as provided in Section 7.5, nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
SECTION 10.7 SEVERABILITY. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or any
circumstance, is invalid or unenforceable, (a) if necessary, a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision, and (b) the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
SECTION 10.8 SPECIFIC PERFORMANCE. 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 court of the
United States located in the State of
Delaware or in
Delaware state court, 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 federal court located in the State of
Delaware
or any
Delaware state court in the event any dispute arises out of this
Agreement or any of the 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 of the transactions contemplated hereby
in any court other than a federal or state court sitting in the State of
Delaware, and (d) hereby agrees to waive a trial by jury.
Agreement and Plan of Reorganization
Page 30
SECTION 10.9 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 10.10 INTERPRETATION. (a) The words "hereof," "herein" and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." All terms defined in
this Agreement shall have the defined meanings contained herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time, amended, qualified or supplemented, including (in
the case of agreements and instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and all attachments
thereto and instruments incorporated therein. References to a person are also to
its permitted successors and assigns.
(b) The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to October 4, 2001. The phrase "made available" in this Agreement shall
mean that the information referred to has been actually delivered to the party
to whom such information is to be made available.
(c) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
SECTION 10.11 DEFINITIONS. (a) "ACQUISITION PROPOSAL" means an offer or
proposal regarding any of the following (other than the transactions
contemplated by this Agreement) involving Zengine or any of its Subsidiaries:
(i) any merger, consolidation, share exchange, recapitalization, business
combination or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of all or substantially all the
assets of Zengine and its Subsidiaries, taken as a whole, in a single
transaction or series of related transactions; (iii) any tender offer or
exchange offer for 10 percent or more of the outstanding Shares or the filing of
a registration statement under the Securities Act in connection therewith; or
(iv) any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
(b) "BENEFICIAL OWNERSHIP" or "BENEFICIALLY OWN" shall have the meaning
Agreement and Plan of Reorganization
Page 31
provided in Section 13(d) of the Exchange Act and the rules and regulations
thereunder.
(c) "KNOW" or "KNOWLEDGE" means, with respect to any party, the actual
knowledge of such party's executive officers, without any duty of inquiry.
(d) "MATERIAL ADVERSE EFFECT" means with respect to any entity, any
change, circumstance or effect that, individually or in the aggregate with all
other changes, circumstances and effects, is or is reasonably likely to be
materially adverse to (i) the assets, properties, condition (financial or
otherwise) or results of operations of such entity and its Subsidiaries taken as
a whole, or (ii) the ability of such party to consummate the transactions
contemplated by this Agreement, excluding any such effect resulting from or
arising in connection with (A) general economic conditions affecting generally
the industry in which Zengine or Company, as appropriate, competes, or (B)
general market conditions in the United States.
(e) "PERSON" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
(f) "SUBSIDIARY" means, when used with reference to any entity, any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other Subsidiary of such party is a general or
managing partner, or (ii) a majority of the outstanding voting securities or
interests of which, having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization, is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries.
(g) "TAX" or "TAXES" means all Taxes, charges, fees, imposts, levies,
gaming or other assessments, including, without limitation, all net income,
gross receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
property and estimated Taxes, customs duties, fees, assessments and charges of
any kind whatsoever, together with any interest and any penalties, fines,
additions to Tax or additional amounts imposed by any taxing authority (domestic
or foreign) and shall include any transferee liability in respect of Taxes, any
liability in respect of Taxes imposed by contract, Tax sharing agreement, Tax
indemnity agreement or any similar agreement.
[SIGNATURE PAGE FOLLOWS]
Agreement and Plan of Reorganization
Page 32
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
ZENGINE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Special Committee of
the Zengine Board of Directors
MCSi, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman, President and Chief Executive
Officer
ANNEX A
CONDITIONS TO THE OFFER
Capitalized terms used but not defined herein shall have the meanings
set forth in the Agreement and Plan of Reorganization of which this ANNEX A is a
part. Notwithstanding any other provision of the Offer, Company shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Company's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, and, subject to the terms of the Agreement, may delay
acceptance for payment or terminate the Offer and not accept for payment any
tendered Shares, if at any time on or after the date of the Agreement and prior
to the acceptance for payment of Shares pursuant to the Offer, any of the
following events shall occur:
(a) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to the
Offer or the Merger, or any suit, action or proceeding shall be taken by any
Governmental Entity (i) seeking to prohibit or impose any material limitations
on Company's ownership or operation (or that of any of its Subsidiaries or
affiliates) of all or a material portion of its or Zengine's businesses or
assets, (ii) seeking to compel Company or its Subsidiaries and affiliates to
dispose of or hold separate any material portion of the business or assets of
Zengine or Company and their respective Subsidiaries, in each case taken as a
whole, (iii) seeking to restrain or prohibit the making or consummation of the
Offer or the Merger or the performance of any of the other Transactions, (iv)
seeking to obtain from Zengine any damages that would be reasonably likely to
have a Material Adverse Effect on Zengine, (v) seeking to impose material
limitations on the ability of Company, or rendering Company unable, to accept
for payment, pay for or purchase some or all of the Shares pursuant to the Offer
and the Merger, (vi) imposes material limitations on the ability of Company
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by it on all matters
properly presented to Zengine's stockholders, or (vii) which otherwise is
reasonably likely to have a Material Adverse Effect on Zengine or, as a result
of the Transactions, Company and its Subsidiaries; or
(b) there shall have occurred (1) and be continuing as of the closing
of the Offer or the Effective Time, as applicable, any general suspension of
trading in, or limitation on prices for, securities on the New York Stock
Exchange, the American Stock Exchange or in the Nasdaq National Market System,
for a period in excess of twenty-four hours, (2) and be continuing as of the
closing of the Offer or the Effective Time, as applicable, a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory), (3) any limitation or proposed
limitation (whether or not mandatory) by any United States governmental
authority or agency that has a material adverse effect generally on the
extension of credit by banks or other financial institutions, (4) any change in
general financial bank or capital market conditions which has a material adverse
effect on the ability of financial institutions in the United States to extend
credit or syndicate loans, or (5) in thecase of any of the situations in clauses
(1) through (5) inclusive, existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof; or
A-1
(c) the representations and warranties of Zengine set forth in the
Agreement shall not be true and accurate as of the date of consummation of the
Offer as though made on or as of such date (except for those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and accurate as of
such date or with respect to such period), or Zengine shall have breached or
failed to perform or comply with any obligation, agreement or covenant required
by the Agreement to be performed or complied with by it except, in each case
where the failure of such representations and warranties to be true and accurate
(without giving effect to any limitation as to "materiality" or "material
adverse effect" set forth therein), or the failure to perform or comply with
such obligations, agreements or covenants, do not, individually or in the
aggregate, have a Material Adverse Effect on Zengine or a materially adverse
effect on the ability to consummate the Offer or the Merger; or
(d) Zengine's Board of Directors or the Special Committee (i) shall
have withdrawn, or modified or changed in a manner adverse to Company (including
by amendment of the Schedule 14D-9) its recommendation of the Offer, the
Agreement, or the Merger, (ii) shall have recommended an Acquisition Proposal,
(iii) shall have adopted any resolution to effect any of the foregoing, or (iv)
upon request of Company, shall fail to reaffirm its approval or recommendation
of the Offer, the Agreement, or the Merger; or
(e) the Agreement shall have been terminated in accordance with its
terms; or
(f) Company shall not have received in the Offer sufficient Shares to
bring the number of shares of Zengine Common Stock owned by Company on the Offer
expiration date equal to or greater than 90% of the total shares of Zengine
Common Stock then issued and outstanding; or
(g) the SEC shall not have declared Company's registration statement
effective within a reasonable period of time after the filing thereof; or
(h) the Nasdaq shall have failed to list the shares of Company Common
Stock for trading on the Nasdaq National Market;
which in the reasonable judgment of Company, in any such case, and
regardless of the circumstances (including any action or inaction by Company)
giving rise to such condition makes it inadvisable to proceed with the Offer
and/or with such acceptance for payment of or payments for Shares and/or to
proceed with the Merger, in Company's sole discretion.
The foregoing conditions are for the sole benefit of Company and may be
waived by Company, in whole or in part, at any time and from time to time, in
the sole discretion of Company. The failure by Company at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
A-2
