CONFIDENTIAL
Exhibit (d)(1)
AGREEMENT AND PLAN OF MERGER
by and among
Career Holdings, Inc.,
CB Merger Sub, Inc. and
HeadHunter.NET, Inc.
Dated as of August 24, 2001
TABLE OF CONTENTS
Page
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ARTICLE I THE CASH TENDER OFFER........................................... 2
1.1 The Offer............................................................ 2
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1.2 Company Actions...................................................... 4
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1.3 Directors............................................................ 6
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ARTICLE II THE MERGER...................................................... 8
2.1 The Merger........................................................... 8
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2.2 Closing.............................................................. 8
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2.3 Effective Time....................................................... 8
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2.4 Effects of the Merger................................................ 8
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2.5 Articles of Incorporation and By-Laws................................ 8
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2.6 Directors and Officers............................................... 9
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ARTICLE III CONVERSION OF SECURITIES IN THE MERGER.......................... 9
3.1 Effect of Merger on Capital Stock.................................... 9
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3.2 Exchange of Certificates.............................................10
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................12
4.1 Organization, Standing and Power; Subsidiaries.......................12
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4.2 Capitalization.......................................................14
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4.3 Authority; No Conflict; Required Filings and Consents................15
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4.4 SEC Filings; Financial Statements; Information Provided..............18
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4.5 Absence of Undisclosed Liabilities...................................19
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4.6 Absence of Certain Changes or Events.................................19
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4.7 Taxes................................................................19
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4.8 Real Properties......................................................22
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4.9 Intellectual Property................................................22
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4.10 Agreements, Contracts and Commitments................................24
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4.11 Litigation; Product Liability........................................26
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4.12 Environmental Matters................................................26
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4.13 Employee Benefit Plans...............................................29
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4.14 Compliance With Laws.................................................32
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4.15 Permits..............................................................32
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4.16 Labor Matters........................................................32
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4.17 Insurance............................................................32
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4.18 Affiliate Transactions...............................................33
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4.19 Assets...............................................................33
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4.20 Warranty.............................................................33
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4.21 Customers and Suppliers..............................................33
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4.22 Opinion of Financial Advisor.........................................34
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4.23 Rights Agreement.....................................................34
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4.24 Brokers..............................................................34
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PARENT AND
THE MERGER SUB..................................................34
5.1 Organization, Standing and Power.....................................34
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5.2 Authority; No Conflict; Required Filings and Consents................35
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TABLE OF CONTENTS
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5.3 Information Provided.................................................36
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5.4 Interim Operations of the Merger Sub.................................36
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5.5 Financing............................................................36
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ARTICLE VI CONDUCT OF BUSINESS..............................................37
6.1 Conduct Prior to Effective Time......................................37
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6.2 Confidentiality......................................................40
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ARTICLE VII ADDITIONAL AGREEMENTS............................................40
7.1 No Solicitation......................................................40
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7.2 Efforts; Consents, Notices and Approvals.............................43
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7.3 Notification of Certain Matters......................................44
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7.4 Company Stockholder Approval of the Merger...........................45
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7.5 Access to Information................................................46
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7.6 Public Disclosure....................................................47
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7.7 Indemnification......................................................47
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7.8 Company Stock Options; Warrants; Convertible Debt....................48
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7.9 Employee Stock Purchase Plan.........................................50
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7.10 Stockholder Litigation...............................................50
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7.11 401(k) Plan..........................................................50
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ARTICLE VIII CONDITIONS.......................................................50
8.1 Conditions to Obligation of Each Party to Effect the Merger .........50
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ARTICLE IX TERMINATION, AMENDMENT AND WAIVER................................51
9.1 Termination..........................................................51
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9.2 Effect of Termination................................................52
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9.3 Fees and Expenses....................................................52
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9.4 Amendment............................................................53
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9.5 Extension; Waiver....................................................53
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9.6 Procedure for Termination, Amendment, Extension or Waiver............53
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ARTICLE X MISCELLANEOUS....................................................54
10.1 Nonsurvival of Representations and Warranties........................54
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10.2 Notices..............................................................54
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10.3 Entire Agreement.....................................................55
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10.4 No Third Party Beneficiaries.........................................55
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10.5 Assignment...........................................................55
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10.6 Severability.........................................................55
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10.7 Counterparts and Signature...........................................56
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10.8 Interpretation.......................................................56
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10.9 Governing Law........................................................56
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10.10 Remedies.............................................................56
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10.11 Submission to Jurisdiction...........................................57
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10.12 WAIVER OF JURY TRIAL.................................................57
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ii
TABLE OF DEFINED TERMS
Defined Term Section
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Acquisition Agreement 7.1
Acquisition Proposal 7.1
Affiliate 1.3
Agreement Introduction
Article 13 3.1(b)
Certificate of Merger 2.3
Certificate 3.2
Closing 2.2
Closing Date 2.2
Code 1.1
Company Introduction
Company Balance Sheet 4.4
Company Board 1.2
Company Common Stock Introduction
Company Credit Agreement 7.8(e)
Company Disclosure Schedule Article IV
Company Employee Plans 4.13
Company Financial Statements 4.4
Company Intellectual Property 4.9(b)
Company Leases 4.8
Company Permits 4.15
Company SEC Reports 4.4
Company Stockholders Meeting 7.4
Company Stock Options 4.2
Company Stock Plans 4.2
Company Warrants 4.2
Confidential IP Information 4.9(e)
Confidentiality Agreement 6.2
Contamination 4.12(b)(ii)
Dissenting Shares 3.1
D&O Insurance 7.7(b)
Effective Time 2.3
Employee Benefit Plan 4.13
Environmental Law 4.12
ERISA 4.13
ERISA Affiliate 4.13
ESPP 7.9
Exchange Act 1.1
Exchange Fund 3.2
Fairness Opinion 4.22
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TABLE OF DEFINED TERMS
Defined Term Section
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Financial Advisor 4.22
GAAP 4.4(b)
GBCC Introduction
Governmental Entity 3.2(e)
Hazardous Substance 4.12
HSR Act 4.3
HSR Condition Annex I
Independent Directors 1.3
Insurance Policies 4.17
Intellectual Property 4.9
Letter of Transmittal 1.1
Liens 4.19
Material Adverse Effect 4.1
Material Customer 4.21
Merger Introduction
Merger Consideration 3.1
Merger Sub Introduction
Merger Sub Designees 1.3
Minimum Condition 1.1(a)
Offer Introduction
Offer Consideration 1.1
Offer to Purchase 1.1
Offer Documents 1.1
Omnicom Credit Agreement 4.3(d)
Ordinary Course of Business 4.5
Outside Date 9.1
Parent Introduction
Paying Agent 3.2
Preferred Stock 4.2
Proxy Statement 7.4
Release 4.12(b)(iii)
Representatives 7.1
Rights Introduction
Rights Agreement Introduction
Rights Agreement Amendment 4.23
Schedule TO 1.1
Schedule 14D-9 1.2
SEC 1.1
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TABLE OF DEFINED TERMS
Defined Term Section
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Securities Act 1.3(a)
Shares Introduction
Software 4.9(g)
Specified Time 7.1
Stockholder Agreements Introduction
Subsidiary 4.1
Superior Proposal 7.1
Surviving Corporation 2.1
Taxes 4.7
Tax Returns 4.7
Third Party Intellectual Property 4.9(b)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
August 24, 2001, is by and among Career Holdings, Inc., a Delaware corporation
(the "Parent"), CB Merger Sub, Inc., a Georgia corporation and a wholly owned
subsidiary of the Parent (the "Merger Sub"), and HeadHunter.NET, Inc., a Georgia
corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Parent, the Merger
Sub and the Company have determined that it would be advisable and in the best
interests of their respective stockholders for the Parent to acquire the Company
upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, the Merger Sub will make a
cash tender offer (as it may be amended from time to time as permitted under
this Agreement, the "Offer") to purchase all of the issued and outstanding
shares of common stock, $0.01 par value per share (the "Company Common Stock"),
of the Company, including the associated junior participating preferred stock
purchase right (the "Rights" and, together with the Company Common Stock, the
"Shares") issued pursuant to a Shareholder Protection Rights Agreement, dated as
of April 15, 2000, between the Company and American Stock Transfer and Trust
Company, as amended by Amendment No. 1 to the Shareholder Protection Rights
Agreement, dated as of February 27, 2001 (the "Rights Agreement"), at a price of
$9.25 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, to effectuate such acquisition, following consummation of the
Offer, the Merger Sub will be merged with and into the Company, with the Company
continuing as the surviving corporation in such merger (the "Merger");
WHEREAS, in connection with such acquisition, the Parent and the Merger
Sub have entered into certain Stockholder Agreements, dated as of the date
hereof (collectively, the "Stockholder Agreements") with certain of the
stockholders of the Company; and
WHEREAS, the Board of Directors of the Company has (i) determined that
the Offer and the Merger are fair to, and in the best interest of, the Company
and its stockholders; (ii) approved this Agreement and the Stockholder
Agreements and the transactions contemplated hereby and thereby, including the
Offer and the Merger, in accordance with the Business Corporation Code of the
State of Georgia (the "GBCC") and (iii) resolved to recommend that the holders
of the Shares accept the Offer and approve this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
Parent, the Merger Sub and the Company agree as follows:
ARTICLE I
THE CASH TENDER OFFER
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1.1 The Offer.
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(a) Commencement of the Offer; Acceptance of Shares. Subject to the
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terms and conditions of this Agreement, as soon as practicable after the date of
this Agreement, the Merger Sub shall commence (within the meaning of Rule 14d-2
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
within seven business days of the public announcement of this Agreement by the
Parties, the Offer to purchase any and all outstanding Shares at a price of
$9.25 per Share, net to the seller in cash, without interest thereon (the "Offer
Consideration"). On the terms and subject to the prior satisfaction or waiver of
the conditions of the Offer and this Agreement, the Merger Sub shall accept for
payment all Shares validly tendered and not properly withdrawn pursuant to the
Offer as soon as legally permitted to do so under applicable law and shall pay
for all such Shares promptly after acceptance. The obligation of the Parent and
the Merger Sub to commence the Offer and to accept for payment and pay for
Shares validly tendered in the Offer and not properly withdrawn shall be subject
to the condition that there shall be validly tendered and not withdrawn
immediately prior to the expiration of the Offer such number of Shares that
would constitute at least a majority of the Shares that in the aggregate are
outstanding determined on a fully diluted basis (after giving maximum effect to
the exercise of all options, warrants and other rights to purchase, and the
conversion or exchange of all securities convertible or exchangeable into,
Shares outstanding at the expiration date of the Offer, whether or not vested,
exercised or converted at the time of determination) (the "Minimum Condition")
and to the conditions set forth in Annex I to this Agreement. Subject to the
terms and conditions of the Offer and this Agreement, the Merger Sub shall, and
the Parent shall cause the Merger Sub to, accept for payment, and pay for, all
Shares validly tendered and not withdrawn pursuant to the Offer that the Merger
Sub becomes obligated to accept for payment, as soon as legally permitted to do
so under applicable law, after the expiration of the Offer, and in any event in
compliance with the obligations respecting prompt payment pursuant to Rule
14e-1(c) under the Exchange Act.
(b) Expiration Date; Extensions and Amendments; Subsequent Offering
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Period. The initial expiration date of the Offer shall be the 20th business day
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after commencement of the Offer (determined in accordance with Rules 14d-1(g)(3)
and 14d-2 under the Exchange Act). The Merger Sub expressly reserves the right,
subject to compliance with the Exchange Act, to waive, amend or modify any term
or condition of the Offer in its sole discretion; provided, however, that,
without the prior consent of the Company, the Merger Sub shall not:
(i) change the form of consideration payable in the Offer,
decrease the Offer Consideration or decrease the number of Shares
sought pursuant to the Offer;
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(ii) extend the expiration date of the Offer except (A) as
required by applicable law (including for any period required by any
rule, regulation, interpretation or position of the Securities and
Exchange Commission (the "SEC") or the staff thereof), (B) that if,
immediately prior to the scheduled expiration date of the Offer (as it
may be extended), any condition to the Offer has not been satisfied or
waived, the Merger Sub may, in its sole discretion, extend the
expiration date of the Offer for one or more periods (not in excess of
10 business days each), (C) that if, immediately prior to the scheduled
expiration date of the Offer (as it may be extended), the Shares
validly tendered and not properly withdrawn pursuant to the Offer
constitute at least the Minimum Condition but less than 90% of the
outstanding Shares, the Merger Sub may, in its sole discretion, extend
the Offer for one or more periods not to exceed an aggregate of five
business days, notwithstanding that all conditions to the Offer are
satisfied as of such expiration date of the Offer, (D) in connection
with an increase in the consideration to be paid pursuant to the Offer
so as to comply with applicable rules and regulations of the SEC, or
(E) in the Merger Sub's sole discretion, for any other reason for one
or more periods not to exceed an aggregate of five business days;
(iii) amend or waive the Minimum Condition;
(iv) amend any material term of the Offer in any manner
adverse to holders of Shares; or
(v) impose any condition to the Offer not set forth in Annex
I. The Merger Sub may, without the consent of the Company, elect to
provide a subsequent offering period for the Offer in accordance with
Rule 14d-11 of the Exchange Act following its acceptance for payment of
Shares in the Offer.
Notwithstanding the foregoing, subject to the provisions of Section
9.1(b)(i)(y), if on the initial expiration date of the Offer or any subsequent
expiration date (related to an extension of the Offer), (x) the HSR Condition
(as defined in Annex I) has not been satisfied or (y) any of the events set
forth in clauses (ii)(A) or (B) of Annex I shall have occurred and be continuing
and the Company shall be contesting such event to the extent required by Section
7.2 (and the condition in Annex I with respect to the applicable clause shall
not have been waived by the Merger Sub) then, in each such case, the Merger Sub
shall extend the Offer from time to time, provided that in no event shall the
Merger Sub be required to extend the Offer to a date which is more than 75 days
after the execution of this Agreement.
(c) Schedule TO and Offer Documents. On the date of commencement of the
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Offer, the Parent and the Merger Sub shall file with the SEC a Tender Offer
Statement on Schedule TO (together with all amendments and supplements thereto,
the "Schedule TO") with respect to the Offer. The Schedule TO shall contain an
offer to purchase (the "Offer to Purchase"), a form of the related letter of
transmittal (the "Letter of Transmittal"), and ancillary
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documents and instruments pursuant to which the Offer will be made
(collectively, together with any supplements or amendments thereto, the "Offer
Documents"). The Parent and the Merger Sub agree that the Offer Documents shall
comply in all material respects with the requirements of applicable U.S. federal
securities laws and, on the date first filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation or warranty is made by the Parent or the Merger Sub with
respect to information supplied by the Company or any of its stockholders in
writing for inclusion or incorporation by reference in the Offer Documents. The
Parent and the Merger Sub shall take all steps necessary to cause the Offer
Documents to be disseminated to holders of Shares, as and to the extent required
by applicable U.S. federal securities laws. The Parent, the Merger Sub and the
Company each shall promptly correct any information provided by it for use in
the Schedule TO or the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect, and
the Parent and the Merger Sub shall take all steps necessary to amend or
supplement the Schedule TO and, as applicable, the Offer Documents and to cause
the Schedule TO as so amended and supplemented to be filed with the SEC and the
Offer Documents as so amended and supplemented to be disseminated to holders of
Shares, in each case as and to the extent required by applicable U.S. federal
securities laws. The Company and its counsel shall be given reasonable
opportunity to review and comment upon the Offer Documents and any amendments
thereto prior to the filing thereof with the SEC or dissemination to the
stockholders of the Company. The Parent and the Merger Sub shall provide the
Company and its counsel with a copy of any written comments or telephonic
notification of any oral comments the Parent, the Merger Sub or their counsel
may receive from the SEC or its staff with respect to the Offer promptly after
the receipt thereof, shall consult with the Company and its counsel prior to
responding to any such comments, and shall provide the Company and its counsel
with a copy of any written responses thereto and telephonic notification of any
oral responses thereto of the Parent or the Merger Sub or their counsel.
(d) Provisions of Funds by the Parent. The Parent shall provide or
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cause to be provided to the Merger Sub on a timely basis the funds necessary to
purchase any and all Shares that the Merger Sub becomes obligated to purchase
pursuant to the Offer.
(e) Tax Withholding. The Merger Sub shall be entitled to deduct and
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withhold from the consideration otherwise payable pursuant to the Offer such
amounts as the Merger Sub reasonably determines that it is required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "Code"), or under any other applicable
law.
1.2 Company Actions.
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(a) The Company hereby approves of and consents to the Offer and the
Merger and represents and warrants that the Board of Directors of the Company
(the "Company Board"), at a meeting duly called and held, has, by unanimous vote
of all members of the
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Company Board (i) determined that each of the transactions contemplated by this
Agreement, including the Offer and the Merger, and the Stockholder Agreements
are fair to, and in the best interests of, the Company and its stockholders,
(ii) duly adopted and approved this Agreement, the Stockholder Agreements, and
the transactions contemplated hereby and thereby, including the Offer and the
Merger, which adoption and approval are sufficient to (X) satisfy the
requirements of Section 14-2-1111 of the GBCC and (Y) render the restrictions
under Section 14-2-1132 of the GBCC on "business combinations" (as defined in
Section 14-2-1131 of the GBCC) with an "interested shareholder" (as defined
under Section 14-2-1110 of the GBCC), inapplicable to this Agreement, the
Stockholder Agreements and the transactions contemplated hereby and thereby,
including the Offer and the Merger and (iii) after consideration of its
fiduciary duties under applicable laws, resolved to recommend acceptance of the
Offer and adoption and approval of the Merger by the holders of the Shares. The
Company Board has approved an amendment to the Rights Agreement so as to provide
that (i) neither the Parent nor the Merger Sub will become an "Acquiring Person"
and (ii) no "Stock Acquisition Date" or "Flip-In Date" (as such terms are
defined in the Company Rights Plan) will occur in each case, as a result of the
approval, execution and delivery of this Agreement and the Stockholder
Agreements and the consummation of the transactions contemplated by this
Agreement, including the Offer and the Merger in each case in accordance with
their terms.
(b) Schedule 14D-9. As soon as practicable after the commencement of
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the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer (together with all
amendments and supplements thereto, the "Schedule 14D-9") and disseminate the
Schedule 14D-9, to the extent required by Rule 14d-9 promulgated under the
Exchange Act and any other applicable laws, to the stockholders of the Company.
Subject to Section 7.1, the Offer Documents and the Schedule 14D-9 shall contain
the recommendation of the Company Board in favor of the Offer and the approval
of this Agreement and the transactions contemplated hereby, including the
Merger, and the Company hereby consents to the inclusion in the Offer Documents
of such recommendation. The Company agrees that the Schedule 14D-9 shall comply
in all material respects with the requirements of applicable U.S. federal
securities laws and on the date first filed with the SEC and, on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation or warranty is made by the Company with respect to
information supplied by the Parent or the Merger Sub in writing for inclusion or
incorporation by reference in the Schedule 14D-9. The Company, the Parent and
the Merger Sub each shall promptly correct any information provided by it for
use in the Schedule 14D-9 if and to the extent that such information shall have
become false or misleading in any material respect, and the Company shall take
all steps necessary to amend or supplement the Schedule 14D-9 and to cause the
Schedule 14D-9 as so amended or supplemented to be filed with the SEC and
disseminated to the Company's stockholders, in each case as and to the extent
required by applicable U.S. federal securities laws. The Parent and its counsel
shall be given reasonable opportunity to review and comment upon the Schedule
14D-9 and any amendments thereto prior to the filing thereof with the SEC or
dissemination to stockholders of the Company.
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The Company shall provide the Parent and its counsel with a copy of any written
comments or telephonic notification of any oral comments the Company or its
counsel may receive from the SEC or its staff with respect to the Offer promptly
after the receipt thereof, shall consult with the Parent and its counsel prior
to responding to any such comments, and shall provide the Parent and its counsel
with a copy of any written responses thereto and telephonic notification of any
oral responses thereto of the Company or its counsel.
(c) Provision of Information for Offer Documents. The Company shall
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promptly supply to the Parent and the Merger Sub in writing, for inclusion in
the Offer Documents, all information concerning the Company required under
applicable U.S. federal securities laws to be included in the Offer Documents or
that may be reasonably requested by the Parent and the Merger Sub in connection
with the preparation of the Offer Documents.
(d) Intention to Tender of Directors and Officers. The Company
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represents that each member of the Company Board and each executive officer of
the Company has advised the Company that his or her current intention is to
tender all Shares, if any, beneficially owned by him or her pursuant to the
Offer.
(e) Stockholder Lists. The Company shall promptly furnish (or cause its
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transfer agent or agents to furnish) to the Merger Sub or its designated agent
mailing labels containing the names and addresses of (i) the record holders of
the Shares as of a recent date, (ii) those persons becoming record holders
subsequent to such date and updated on a daily basis, (iii) to the extent known,
a list of the beneficial owners of the Shares as of a recent date, and (iv) to
the extent known, those persons becoming beneficial owners of the Shares
subsequent to such date and updated on a daily basis, together with copies of
all security position listings and all other computer files and other
information in the Company's possession or control regarding the record holders
and beneficial owners of the Shares, and shall furnish to the Merger Sub such
information and assistance (including updated lists and information) as it may
request for the purpose of communicating the Offer to the Company's
stockholders. From and after the date of this Agreement, all such information
concerning the Company's record and, to the extent known, beneficial holders
shall be made available to the Merger Sub. Subject to the requirements of
applicable laws and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer, the
Merger and the other transactions contemplated by this Agreement, the Parent and
the Merger Sub shall, until consummation of the Offer, hold in confidence the
information contained in any of such labels and lists, shall use such
information only in connection with the Offer, the Merger and the other
transactions contemplated by this Agreement and, if this Agreement shall be
terminated in accordance with Section 9.1 of this Agreement, shall, upon
request, deliver to the Company all copies of such information then in their
possession or under their control.
1.3 Directors.
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(a) Promptly after the acceptance for payment of, and payment by the
Merger Sub for, any Shares tendered pursuant to the Offer, and from time to time
thereafter as Shares are
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accepted for payment and paid for by the Merger Sub, the Merger Sub shall be
entitled to designate such number of members of the Company Board (the "Merger
Sub Designees"), rounded up to the nearest whole number, as will give the Merger
Sub representation on the Company Board equal to the product of the total number
of members of the Company Board (after giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the number of
Shares beneficially owned by the Parent or the Merger Sub at such time
(including Shares so accepted for payment) bears to the total number of Shares
then outstanding; provided that in no event shall the Merger Sub Designees
constitute less than a majority of the Company Board. In furtherance thereof,
the Company shall, upon the request of, and as specified by, the Merger Sub,
promptly (and in any event within one business day) either increase the size of
the Company Board or secure the resignations of such number of the Company's
incumbent directors, or both, as is necessary to enable the Merger Sub Designees
to be so elected or appointed to the Company Board and the Company shall take
all actions available to the Company to cause the Merger Sub Designees to be so
elected or appointed. At such time, the Company shall, if requested by the
Merger Sub, also take all action necessary to cause persons designated by the
Merger Sub to constitute at least the same percentage (rounded up to the next
whole number) as is on the Company Board of (i) each committee of the Company
Board, (ii) each board of directors (or similar body) of each subsidiary of the
Company and (iii) each committee (or similar body) of each such board, in each
case only to the extent permitted by applicable law or the rules of any stock
exchange or trading market on which the Company Common Stock is listed and
traded. The provisions of this Section 1.3 are in addition to and shall not
limit any rights which the Merger Sub, the Parent or any of their affiliates (as
such term is defined in Rule 405 promulgated under the Securities Act of 1933,
as amended (the "Securities Act")) ("Affiliates") may have as a holder or
beneficial owner of Shares as a matter of applicable law with respect to the
election of directors or otherwise.
(b) Compliance with Section 14(f) and Rule 14f-1. The Company shall
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take all actions required in order to fulfill its obligations under Section
1.3(a), including mailing to its stockholders the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder as part
of the Schedule 14D-9. The Parent and the Merger Sub shall supply to the Company
in writing any information with respect to the Parent and the Merger Sub and the
Merger Sub Designees to the extent required by such Section 14(f) and Rule
14f-1.
(c) Independent Directors. Notwithstanding the provisions of this
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Section 1.3, the parties hereto shall use their respective reasonable best
efforts to ensure that at least two of the members of the Company Board shall,
at all times prior to the Effective Time (as defined in Section 2.3), be
directors of the Company who were directors of the Company on the date hereof
(the "Independent Directors"), provided that, if there shall be in office less
than two Independent Directors for any reason, the Company Board shall cause the
person designated by the remaining Independent Director to fill such vacancy who
shall be deemed to be an Independent Director for all purposes of this
Agreement, or if no Independent Directors then remain, the other directors of
the Company then in office shall designate two persons to fill such vacancies
who will not be directors, officers, employees or Affiliates of the Parent or
the Merger Sub and such persons shall be deemed to be Independent Directors for
all purposes of this Agreement. From and after
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the time, if any, that the Merger Sub Designees constitute a majority of the
Company Board and prior to the Effective Time, subject to the terms hereof, any
amendment or modification of this Agreement, any termination of this Agreement
by the Company, any extension of time for performance of any of the obligations
of the Parent or the Merger Sub hereunder, any waiver of any condition to the
Company's obligations hereunder or any of the Company's rights hereunder may be
effected only if (in addition to the approval of the Board of Directors as a
whole) there are in office one or more Independent Directors and such action is
approved by at least one of the Independent Directors then in office.
ARTICLE II
THE MERGER
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2.1 The Merger. Upon the terms and subject to the conditions set forth
----------
in this Agreement, and in accordance with the GBCC, the Merger Sub shall be
merged with and into the Company at the Effective Time (as defined in Section
2.3). At the Effective Time, the separate corporate existence of the Merger Sub
shall cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all the rights and
obligations of the Merger Sub in accordance with the GBCC.
2.2 Closing. Upon the terms and subject to the conditions set forth in
-------
this Agreement, the closing of the merger (the "Closing") shall take place at
11:00 a.m., Eastern time, on the second business day after the satisfaction or
(to the extent permitted by applicable law) waiver of the conditions set forth
in Article VIII (other than those that by their terms cannot be satisfied until
the time of the Closing but subject to the fulfillment or waiver of such
conditions), at the offices of Hale and Dorr LLP, 11951 Freedom Drive, Suite
1400, Reston, Virginia, or at such other time, date or place agreed to in
writing by the Parent and the Company. The date on which the Closing occurs is
referred to in this Agreement as the "Closing Date".
2.3 Effective Time. Upon the terms and subject to the conditions set
--------------
forth in this Agreement, as soon as practicable on or after the Closing Date, a
certificate of merger or other appropriate documents (in any such case, the
"Certificate of Merger") shall be duly prepared, executed and acknowledged by
the parties in accordance with the relevant provisions of the GBCC and filed
with the Secretary of State of the State of Georgia. The Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Georgia or at such subsequent time or date as the Parent
and the Company shall agree and specify in the Certificate of Merger. The time
at which the Merger becomes effective is referred to in this Agreement as the
"Effective Time".
2.4 Effects of the Merger. The Merger shall have the effects set forth
---------------------
in the GBCC.
2.5 Articles of Incorporation and By-Laws. At the Effective Time, the
-------------------------------------
Articles of Incorporation of the Company, as amended, shall be amended and
restated in its entirety to read as set forth on Exhibit E hereto, and as so
---------
amended and restated shall be the articles of
- 8 -
incorporation of the Surviving Corporation, until thereafter amended as provided
therein and by applicable law, and the by-laws of the Merger Sub in effect
immediately prior to the Effective Time shall be the by-laws of the Surviving
Corporation, until thereafter amended as provided therein and by applicable law.
2.6 Directors and Officers. The directors of the Merger Sub immediately
----------------------
prior to the Effective Time will be the initial directors of the Surviving
Corporation, and the officers of the Merger Sub immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation, in
each case until their successors are elected and qualified. Prior to the
Effective Time, the Company shall cause each member of the Company Board, other
than the Merger Sub Designees, to execute and deliver a letter effectuating his
or her resignation as a director of the Company effective upon the Effective
Time.
ARTICLE III
CONVERSION OF SECURITIES IN THE MERGER
--------------------------------------
3.1 Effect of Merger on Capital Stock.
---------------------------------
(a) Conversion of Securities. At the Effective Time, by virtue of the
------------------------
Merger and without any action on the part of the Merger Sub, the Company, the
Surviving Corporation or the holder of any of the following securities:
(i) each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares of Company
Common Stock to be cancelled pursuant to clause (ii) below and any
Dissenting Shares (as defined in Section 3.1(b)) shall be
automatically cancelled and extinguished and be converted into and
become the right to receive from the Surviving Corporation $9.25 in
cash per share (or any such higher price per Share as may be paid in
the Offer) without any interest thereon (the "Merger Consideration");
(ii) each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time that is owned by the Parent,
the Merger Sub or the Company or any direct or indirect subsidiary of
the Company, including all shares of Company Common Stock held by the
Company as treasury stock, shall automatically be cancelled and
retired, and no payment shall be made with respect thereto; and
(iii) each share of the Merger Sub's capital stock issued and
outstanding immediately prior to the Effective Time shall be converted
into and become one validly issued, fully paid and nonassessable share
of the same class of capital stock of the Surviving Corporation.
(b) Dissenting Shares. Notwithstanding anything in this Agreement to
-----------------
the contrary, shares (the "Dissenting Shares") of the Company Common Stock that
are issued and
- 9 -
outstanding immediately prior to the Effective Time and that are held by any
holder who is entitled to demand and who properly demands appraisal of such
shares pursuant to, and who complies in all respects with, the provisions of
Article 13 of the GBCC ("Article 13") shall not be converted into the right to
receive the Merger Consideration as provided in Section 3.1(a)(i), but instead
such holder shall be entitled to payment of the appraised value of such
Dissenting Shares in accordance with the provisions of Article 13.
Notwithstanding the foregoing, if any such holder shall fail to perfect or
otherwise shall waive, withdraw or lose the right to appraisal under Article 13
or a court of competent jurisdiction shall determine that such holder is not
entitled to the relief provided by Article 13, then the right of such holder to
be paid the appraised value of such holder's Dissenting Shares under Article 13
shall cease and such Dissenting Shares shall be deemed to have been converted at
the Effective Time into, and shall have become, the right to receive the Merger
Consideration as provided in Section 3.1(a)(i). The Company shall give the
Parent and the Merger Sub prompt notice of any demands for payment, or notices
of intent to demand payment, received by the Company with respect to shares of
Company Common Stock, and the Parent and the Merger Sub shall have the right to
participate in and direct all negotiations and proceedings with respect to such
demands. Prior to the Effective Time, the Company shall not, except with the
prior written consent of the Parent and the Merger Sub, make any payment with
respect to, or settle, or offer to settle, any such demands, or agree to do any
of the foregoing.
(c) Treatment of Company Stock Options and Company Warrants. The
-------------------------------------------------------
Company Stock Options (as defined in Section 4.2(b)) and Company Warrants (as
defined in Section 4.2(b)) shall be treated in the manner set forth in Section
7.8.
3.2 Exchange of Certificates.
------------------------
(a) Paying Agent. Prior to the Effective Time, the Parent shall select
------------
a bank or trust company (or such other person as shall be reasonably acceptable
to the Company) to act as agent (the "Paying Agent") for the payment after the
Effective Time of the Merger Consideration upon surrender of stock certificates
that immediately prior to the Effective Time represented outstanding Shares
which Shares were converted into the right to receive Merger Consideration
pursuant to Section 3.1(a)(i) (each, a "Certificate"). From time to time after
the Effective Time, the Parent shall provide, or cause the Surviving Corporation
to provide, to the Paying Agent, on a timely basis as and when needed, cash
necessary for payment of the Merger Consideration pursuant to Section 3.1(a)(i)
upon surrender of Certificates (such cash being hereinafter referred to as the
"Exchange Fund").
(b) Exchange Procedure. As soon as reasonably practicable after the
------------------
Effective Time, but in any event, not later than the fifth business day
following the Effective Time the Paying Agent shall mail to each holder of
record of a Certificate (i) a Letter of Transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificate shall
pass, only upon delivery of the Certificate to the Paying Agent and shall be in
such form and have such other provisions as the Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificate in
exchange for the Merger
- 10 -
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by the Parent,
together with such Letter of Transmittal, duly completed and properly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor the
amount of cash into which the shares of Company Common Stock formerly
represented by such Certificate shall have been converted pursuant to Section
3.1(a)(i) into the right to receive, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Company Common
Stock that is not registered in the stock transfer records of the Company,
payment may be made to a person other than the person in whose name the
Certificate so surrendered is registered if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of such Certificate or
establish to the satisfaction of the Parent 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 amount of cash, without
interest, into which the shares of Company Common Stock formerly represented by
such Certificate have been converted pursuant to Section 3.1. No interest shall
be paid or shall accrue on the cash payable upon surrender of any Certificate.
(c) No Further Ownership Rights in Company Capital Stock. The Merger
----------------------------------------------------
Consideration paid upon the surrender of a Certificate in accordance with the
terms of this Article III shall be deemed to have been paid in full satisfaction
of all rights pertaining to the shares of Company Common Stock formerly
represented by such Certificate. Upon the Effective Time, the stock transfer
books of the Company shall be closed, and there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of shares
of Company Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, any Certificates are presented to the
Surviving Corporation or the Paying Agent for any reason, they shall be canceled
and exchanged as provided in this Article III.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund that
----------------------------
remains undistributed to the holders of Certificates for twelve months after the
Effective Time shall be delivered by the Paying Agent to the Parent, upon
demand, and any holder of a Certificate who has not theretofore complied with
this Article III shall thereafter look only to the Parent for payment of the
Merger Consideration, but shall have no greater rights against the Parent than
may be accorded to general unsecured creditors of the Parent under applicable
law.
(e) No Liability. None of the Parent, its Affiliates, the Merger Sub,
------------
the Company, the Surviving Corporation or the Paying Agent shall be liable to
any person in respect of any cash from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificate has not been surrendered prior to five years after the
Effective Time (or immediately prior to such earlier date on which the Merger
Consideration in respect of such Certificate would otherwise escheat to or
become the
- 11 -
property of any court, arbitrational tribunal, administrative agency or
commission or other governmental or regulatory authority, agency or
instrumentality (a "Governmental Entity"), any such cash in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest any cash
---------------------------
included in the Exchange Fund as directed by the Parent. Any interest and other
income resulting from such investments shall be paid to the Parent.
(g) Lost Certificates. If any Certificate shall have been lost, stolen
-----------------
or destroyed, the Paying Agent shall pay to such holder the Merger Consideration
required pursuant to Section 3.1(a)(i), in exchange for such lost, stolen or
destroyed Certificate, upon the making of an affidavit of that fact by the
holder thereof with such assurances as the Parent, in its discretion and as a
condition precedent to the payment of the Merger Consideration, may require of
the holder of such lost, stolen or destroyed Certificate.
(h) Withholding Rights. The Parent, the Surviving Corporation and the
------------------
Paying Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement such amounts as it
reasonably determines that it is required to deduct and withhold with respect to
the making of such payment under the Code or any other applicable law. To the
extent that amounts are so withheld and paid over to the appropriate taxing
authority by the Parent, the Surviving Corporation or the Paying Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Company Common Stock in respect of
which such deduction and withholding was made by the Parent, the Surviving
Corporation or the Paying Agent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to the Parent and the Merger Sub as follows,
taking into account the information included in the disclosure schedule attached
hereto (the "Company Disclosure Schedule"). The Company Disclosure Schedule
shall be arranged in paragraphs corresponding to the numbered and lettered
paragraphs contained in this Article IV and the disclosure in any paragraph
shall qualify only such specifically enumerated paragraph.
4.1 Organization, Standing and Power; Subsidiaries.
----------------------------------------------
(a) Organization, Standing and Power. Each of the Company and its
--------------------------------
Subsidiaries (as defined in Section 4.1(b)) is a corporation or limited
liability company duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or formation, has all
requisite corporate power and authority to own, lease and operate its properties
and assets and to carry on its business as now being conducted and as
- 12 -
proposed to be conducted, and is duly qualified to do business and is in good
standing as a foreign entity in each jurisdiction where the character of its
properties owned, operated or leased or the nature of its activities makes such
qualification necessary, except for such failures to be so organized, qualified
or in good standing, individually or in the aggregate, which have not had, and
are reasonably likely to have a Material Adverse Effect. For purposes of this
Agreement, the term "Material Adverse Effect" means any change, event,
circumstance, development or effect that is or is reasonably likely to have a
materially adverse effect on (i) the business, assets, liabilities, condition
(financial or other), or results of operations of the Company and its
Subsidiaries, taken as a whole or (ii) the ability of the Company to consummate
the transactions contemplated by this Agreement; provided, however, that in no
event shall any of the following be taken into account (alone or in combination
with any other event identified in this proviso) in determining whether there
has been such a Material Adverse Effect: (i) any change, event, circumstance,
development or effect that results from or arises out of the public announcement
or pendency of the Offer, the Merger or of the other transactions contemplated
by this Agreement; (ii) any change, event, circumstance, development or effect
attributable to conditions generally affecting the industry as a whole in which
the Company participates; (iii) changes in United States generally accepted
accounting principles ("GAAP") for companies operating in the industry in which
the Company participates; or (iv) actions or omissions of the Company taken with
the prior written consent of the Parent or the Merger Sub.
(b) Subsidiaries. Section 4.1(b) of the Company Disclosure Schedule
------------
sets forth a complete and accurate list of all of the Company's Subsidiaries as
of the date hereof and the Company's direct or indirect equity interest therein.
Except as so listed, neither the Company nor any of its Subsidiaries directly or
indirectly owns any equity, membership, partnership or similar interest in, or
any interest convertible into or exchangeable or exercisable for any equity,
membership, partnership or similar interest in, any corporation, partnership,
joint venture, limited liability company or other business association or
entity, whether incorporated or unincorporated except for publicly traded
securities of unaffiliated entities where the Company's beneficial ownership
constitutes less than five percent of such entity's outstanding capital stock.
Neither the Company nor any of its Subsidiaries has at any time been a general
partner or managing member of any general partnership, limited partnership,
limited liability company or other entity, except for Headhunters L.L.C. As used
in this Agreement, the word "Subsidiary" means, with respect to a party, any
corporation, partnership, joint venture, limited liability company or other
business association or entity, whether incorporated or unincorporated, of which
(i) such party or any other Subsidiary of such party is a general partner or a
managing member (excluding partnerships, the general partnership interests of
which held by such party and/or one or more of its Subsidiaries do not have a
majority of the voting interest in such partnership), (ii) such party and/or one
or more of its Subsidiaries holds voting power to elect a majority of the board
of directors or other governing body performing similar functions, or (iii) such
party and/or one or more of its Subsidiaries, directly or indirectly, owns or
controls more than 50% of the equity, membership, partnership or similar
interests.
(c) Organizational Documents. The Company has delivered to the Parent
------------------------
complete and accurate copies of the Articles of Incorporation and By-laws of the
Company, each
- 13 -
as amended, and the charter, by-laws or other organizational documents of each
Subsidiary of the Company as in effect as of the date hereof.
4.2 Capitalization.
--------------
(a) Authorized and Outstanding Capitalization. The authorized capital
-----------------------------------------
stock of the Company consists of 45,500,000 shares of Company Common Stock and
12,500,000 shares of preferred stock, $.01 par value per share ("Preferred
Stock"). As of August 24, 2001, (i) 20,406,872 shares of Company Common Stock
were issued and outstanding, (ii) no shares of Company Common Stock were held in
the treasury of the Company or by Subsidiaries of the Company, and (iii) no
shares of the Preferred Stock were issued and outstanding. Section 4.2(a) of the
Company Disclosure Schedule lists all issued and outstanding shares of Company
Common Stock that are subject to a repurchase or redemption right or right of
first refusal in favor of the Company and whether (and to what extent) such
rights will terminate as a result of the transactions contemplated by this
Agreement or by termination of employment or change in position following
consummation of the Offer and Merger.
(b) Options and Other Shares Reserved for Issuance. Section 4.2(b)(i)
----------------------------------------------
of the Company Disclosure Schedule lists the number of shares of Company Common
Stock reserved for future issuance pursuant to stock options granted and
outstanding as of the date of this Agreement and the plans or other arrangements
under which such options were granted (collectively, the "Company Stock Plans")
and sets forth a complete and accurate list of all holders of outstanding
options to purchase shares of Company Common Stock (such outstanding options,
the "Company Stock Options") under the Company Stock Plans, indicating with
respect to each Company Stock Option, the number of shares of Company Common
Stock subject to such Company Stock Option, and the exercise price, date of
grant and expiration date of such Company Stock Options. Section 4.2(b)(ii) of
the Company Disclosure Schedule shows the number of shares of Company Common
Stock reserved for future issuance pursuant to warrants or other outstanding
rights to purchase shares of Company Common Stock outstanding as of the date of
this Agreement (other than Company Stock Options) (such outstanding warrants or
other rights, the "Company Warrants") and the agreement or other document under
which such Company Warrants were granted and sets forth a complete and accurate
list of all holders of Company Warrants indicating the number and type of shares
of Company Common Stock subject to each Company Warrant, and the exercise price,
date of grant and expiration date thereof. Except (x) as set forth in Section
4.2(a) and this Section 4.2(b), and (y) the Rights issued pursuant to the Rights
Agreement, (i) there are no equity securities of any class of the Company or any
of its Subsidiaries, or any security exchangeable into or exercisable for such
equity securities, issued, reserved for issuance (except pursuant to the
Company's Employee Stock Purchase Plan) or outstanding and (ii) there are no
options, warrants, securities, calls, rights, commitments, instruments or
agreements of any kind or character to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound obligating the Company or any of its Subsidiaries to issue, exchange,
transfer, deliver or sell, or cause to be issued, exchanged, transferred,
delivered or sold, additional shares of capital stock or other equity interests
of the Company or any of its Subsidiaries or any security or rights
- 14 -
convertible into or exchangeable or exercisable for any such shares or other
equity interests, or obligating the Company or any of its Subsidiaries to grant,
extend, accelerate the vesting of, otherwise modify or amend or enter into any
such option, warrant, equity security, call, right, commitment or agreement,
except as expressly contemplated by this Agreement. Neither the Company nor any
of its Subsidiaries has outstanding any stock appreciation rights, phantom
stock, performance based rights or similar rights or obligations. Other than (i)
the Stockholder Agreements, and (ii) the Amended and Restated Shareholders'
Agreement, dated as of February 27, 2001, by and among the Company, Omnicom
Group Inc., Bernard Hodes Group Inc., Omnicom Finance, Inc. and ITC Holding
Company, Inc., neither the Company nor any of its Subsidiaries is a party to or
is bound by any, and to the knowledge of the Company, there are no, agreements
or understandings with respect to the voting (including voting trusts and
proxies) or sale or transfer (including agreements imposing transfer
restrictions) of any shares of capital stock or other equity interests of the
Company or any of its Subsidiaries. Section 4.2(b)(iii) of the Company
Disclosure Schedule includes each registration rights agreement, rights
agreement, "poison pill" anti-takeover plan or other agreement or understanding
to which the Company or any of its Subsidiaries is a party or by which it or
they are bound with respect to any equity security of any class of the Company
or any of its Subsidiaries or with respect to any equity security, partnership
interest or similar ownership interest of any class of any of its Subsidiaries.
The Company has made available to the Parent accurate and complete copies of all
Company Stock Plans and all Company Warrants and has made available forms of all
stock option agreements evidencing Company Stock Options.
(c) Status of Shares. All outstanding shares of Company Common Stock
----------------
are, and all shares of Company Common Stock subject to issuance as specified in
Section 4.2(b) above, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be, duly authorized,
validly issued, fully paid and nonassessable and not subject to or issued in
violation of any purchase option, call option, right of first refusal,
preemptive right, subscription right or any similar right under any provision of
the GBCC, the Company's Articles of Incorporation or By-laws, each as amended,
or any agreement to which the Company is a party or is otherwise bound. Except
as set forth on Section 4.2(c) of the Company Disclosure Schedule, there are no
obligations, contingent or otherwise, of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any shares of Company Common Stock or
the capital stock of the Company or any of its Subsidiaries or to provide funds
to or make any material investment (in the form of a loan, capital contribution
or otherwise) in the Company or any Subsidiary of the Company or any other
entity.
(d) Capital Stock of Subsidiaries. All of the outstanding shares of
-----------------------------
capital stock and other equity securities or interests of each of the Company's
Subsidiaries are duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights and all such shares are owned, of record and
beneficially, by the Company or another wholly-owned Subsidiary of the Company
free and clear of all Liens (as defined in Section 4.19), agreements,
limitations in the Company's voting rights, charges or other encumbrances of any
nature.
4.3 Authority; No Conflict; Required Filings and Consents.
-----------------------------------------------------
- 15 -
(a) Power and Authority; Execution and Delivery. The Company has all
-------------------------------------------
requisite corporate power and authority to enter into this Agreement and,
subject to the approval of this Agreement by the Company's stockholders under
the GBCC, to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Company, subject
only to the approval of this Agreement by the Company's stockholders under the
GBCC (if required under the GBCC). This Agreement has been duly executed and
delivered by the Company and assuming due and valid authorization, execution,
and delivery by the other parties to this Agreement, constitutes the valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) Absence of Conflicts. The execution and delivery of this Agreement
--------------------
by the Company does not, and the consummation of the transactions contemplated
by this Agreement will not, (i) conflict with, or result in any violation or
breach of, any provision of the Articles of Incorporation or By-laws of the
Company, each as amended, or the charter, by-laws, or other organizational
document of any Subsidiary of the Company, (ii) conflict with, or result in any
violation or breach of, or constitute (with or without notice or lapse of time,
or both) a default (or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any material benefit) under, or
require a consent or waiver under, constitute a change in control under, require
the payment of a penalty under or result in the imposition of any Lien on the
Company's or any of its Subsidiary's assets under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license, contract
or other agreement, instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets are bound, in each case that is material to the Company, or (iii) subject
to compliance with the requirements specified in clauses (i) through (v) of
Section 4.3(c) hereof, conflict with or violate any license, judgment,
injunction, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or any of its or their
properties or assets, except in the cases of clauses (ii) and (iii) of this
Section 4.3(b) for any such conflicts, violations, breaches, defaults,
terminations, cancellations, accelerations or losses which, individually or in
the aggregate, are not reasonably likely to have a Material Adverse Effect.
Section 4.3(b) of the Company Disclosure Schedule lists all consents, waivers
and approvals under any of the Company's or any of its Subsidiaries' notes,
bonds, mortgages, indentures, leases, licenses, contracts or other agreements,
instruments or obligations required to be obtained in connection with the
consummation of the transactions contemplated hereby.
(c) Absence of Required Consents. No consent, approval, license,
----------------------------
permit, order or authorization of, or registration, declaration, notice or
filing with any (x) Governmental Entity or (y) person (other than a Governmental
Entity) is required by or with respect to the
- 16 -
Company or any of its Subsidiaries in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated by this
Agreement, except for (i) the pre-merger notification requirements under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the filing of the Certificate of Merger with the Secretary of State
of the State of Georgia and appropriate corresponding documents with the
Secretaries of State of other states in which the Company is qualified as a
foreign corporation to transact business, (iii) filings or consents under and
compliance with the Exchange Act as may be required in connection with this
Agreement, the Offer, and the Merger and the transactions contemplated hereby
and (iv) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable state securities
laws, (v) consents identified in Section 4.3(c) of the Company Disclosure
Schedule and (vi) filings with the Nasdaq Stock Market Inc.
(d) Required Vote. The affirmative vote for approval of this Agreement
-------------
by the holders of a majority of the outstanding shares of Company Common Stock
on the record date for the Company Stockholders Meeting (as defined in Section
7.4) is the only vote of the holders of any class or series of the Company's
capital stock or other securities necessary to approve this Agreement and for
the consummation by the Company of the other transactions contemplated by this
Agreement. There are no bonds, debentures, notes or other indebtedness having
general voting rights (including without limitation the right to vote upon any
of the matters contemplated hereby, including the Offer and Merger and the
election of directors) (or convertible into, or exchangeable for, securities
having such rights) of the Company or any of its Subsidiaries issued and
outstanding, except (i) subject to certain restrictions based on the trading
price of the Company Common Stock, under the Amended and Restated Credit
Agreement, dated as of February 27, 2001, between the Company and Omnicom
Finance, Inc., as amended by the Amendment to Amended and Restated Credit
Agreement, dated May 10, 2001 (collectively, the "Omnicom Credit Agreement"),
Omnicom Finance, Inc. has the right to convert outstanding principal and unpaid
interest into shares of Company Common Stock at the "Applicable Conversion
Price" (as defined in the Omnicom Credit Agreement), and (ii) during a "Blockage
Period" (as defined in the Omnicom Credit Agreement), Omnicom Finance, Inc. may
require the Company to prepay certain interest and/or pay any interest that is
due and payable by issuing shares of Company Common Stock at the "Applicable
Interest Conversion Price" (as defined in the Omnicom Credit Agreement).
(e) Actions by the Company Board. The Company Board, at a meeting duly
----------------------------
called and held, has, by the unanimous vote of all members of the Company Board
(i) determined that each of the transactions contemplated by this Agreement,
including the Offer and the Merger, and the Stockholder Agreements is fair to,
and in the best interests of, the Company and its stockholders, (ii) duly
adopted and approved this Agreement, the Stockholder Agreements, and the
transactions contemplated hereby and thereby, including the Offer and the
Merger, which adoption and approval are sufficient to (X) satisfy the
requirements of Section 14-2-1111 of the GBCC and (Y) render the restrictions
under Section 14-2-1132 of the GBCC on "business combinations" (as defined in
Section 14-2-1131 of the GBCC) with an "interested shareholder" (as defined
under Section 14-2-1110 of the GBCC), inapplicable to this Agreement,
- 17 -
the Stockholder Agreements and the transactions contemplated thereby, including
the Offer and the Merger, (iii) resolved to recommend acceptance of the Offer
and adoption and approval of this Agreement by holders of Shares, (iv) to the
extent necessary, adopted a resolution having the effect of causing the Company
not to be subject to any state takeover law or similar law that might otherwise
apply to the Offer or the Merger and any other transactions contemplated by this
Agreement, (v) determined to waive any rights the Company may have under any
agreement or otherwise to object to the transfer to the Merger Sub in the Offer
of all Shares and (vi) consented to the transfer to the Merger Sub of all
Shares, and none of the aforesaid actions by the Company Board has been amended,
rescinded or modified. No other state takeover statute is applicable to the
Merger or the transactions contemplated by this Agreement.
4.4 SEC Filings; Financial Statements; Information Provided.
-------------------------------------------------------
(a) Company SEC Reports. The Company has filed all registration
-------------------
statements, forms, reports and other documents required to be filed by the
Company with the SEC since January 1, 1999, and copies of all registration
statements, forms, reports and other documents filed by the Company with the SEC
since such date are publicly available. All such registration statements, forms,
reports and other documents (including those that the Company may file after the
date hereof until the Closing) are referred to herein as the "Company SEC
Reports." The Company SEC Reports (i) were or will be filed on a timely basis,
(ii) at the time filed, were or will be prepared in compliance in all material
respects with the applicable requirements of the Securities Act, and the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Company SEC Reports, and (iii) did not or will not
at the time they were or are filed or, if amended on the date such amendment was
or is filed contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Company SEC Reports or necessary in
order to make the statements in such Company SEC Reports, in the light of the
circumstances under which they were made, not misleading. No Subsidiary of the
Company is subject to the reporting requirements of Section 15(d) of the
Securities Act or Section 13(a) of the Exchange Act.
(b) Financial Statements. Each of the consolidated financial statements
--------------------
(including, in each case, any related notes and schedules) (the "Company
Financial Statements") contained or to be contained in the Company SEC Reports
(i) complied or will comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, (ii) were or will be prepared in accordance with GAAP applied
on a consistent basis throughout the periods involved (except as may be
indicated in the notes to such financial statements or, in the case of unaudited
statements, as permitted by the SEC on Form 10-Q under the Exchange Act) and
(iii) fairly presented or will fairly present the consolidated financial
condition of the Company and its Subsidiaries as of the dates thereof and the
consolidated results of its operations and cash flows for the periods indicated,
consistent with the books and records of the Company and its Subsidiaries,
except that the unaudited interim financial statements were subject to normal
and recurring year-end adjustments which were not material in amount. The
unaudited balance sheet of the Company as of June 30, 2001,
- 18 -
as filed with the SEC prior to the date hereof, is referred to herein as the
"Company Balance Sheet."
(c) Information Provided. The information to be supplied by or on
--------------------
behalf of the Company for inclusion or incorporation by reference in the
Schedule TO or the Offer Documents, on the date the Schedule TO is filed with
the SEC and on the date the Offer Documents are first published, sent or given
to stockholders of the Company, shall comply in all material respects with the
provisions of applicable securities laws and shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Closing any event relating to the
Company or any of its Affiliates, officers or directors should be discovered by
the Company which is required to be set forth in an amendment to the Schedule TO
or a supplement to the Offer Documents or the Proxy Statement (as defined in
Section 7.4), the Company shall promptly inform the Parent.
4.5 Absence of Undisclosed Liabilities. Except as disclosed in the
----------------------------------
Company Financial Statements and except for normal or recurring liabilities
incurred since the date of the Company Balance Sheet in ordinary course of
business consistent with past practice (the "Ordinary Course of Business"), the
Company and its Subsidiaries have not incurred any liabilities, either accrued,
contingent or otherwise (whether or not required to be reflected in financial
statements in accordance with GAAP), and whether due or to become due
aggregating in excess of $500,000. The accounts receivable of the Company
reflected on the Company Balance Sheet arose from bona fide sales of goods and
services in the Ordinary Course of Business, are not subject to any set-offs or
counterclaims and have not been revalued in any material respect since the date
of the Company Balance Sheet.
4.6 Absence of Certain Changes or Events. Since the date of the Company
------------------------------------
Balance Sheet, the Company and its Subsidiaries have conducted their respective
businesses only in the Ordinary Course of Business and, since such date, there
has not been (i) any change, event, circumstance, development or effect that
individually or in the aggregate, has had, or is reasonably likely to have, a
Material Adverse Effect; or (ii) any other action or event (other than actions
or events in anticipation of or required in connection with the transactions
contemplated by this Agreement) that would have required the consent of the
Parent pursuant to Section 6.1 of this Agreement had such action or event
occurred at a time when the Company was subject to such restrictions.
4.7 Taxes.
-----
(a) Filing of Tax Returns and Payment of Taxes; Definitions. The
-------------------------------------------------------
Company and each of its Subsidiaries has timely filed all Tax Returns (as
defined below) that it was required to file, and all such Tax Returns were
correct and complete in all material respects. The Company and each of its
Subsidiaries has paid on a timely basis all Taxes (as defined below) that are or
were due and payable. The unpaid Taxes of the Company and its Subsidiaries for
Tax periods through the date of the Company Balance Sheet do not exceed the
accruals and reserves
- 19 -
for Taxes set forth on the Company Balance Sheet exclusive of any accruals and
reserves for "deferred taxes" or similar items that reflect timing differences
between Tax and financial accounting principles. All material Taxes that the
Company or any of its Subsidiaries is or was required by law to withhold or
collect (including withholding of Taxes pursuant to Sections 1441, 1442, 3121
and 3402 of the Code or similar provisions under any state, local or foreign
laws) have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Entity. For purposes of this Agreement, (i)
"Taxes" means all taxes, charges, fees, levies or other similar assessments or
liabilities, including income, gross receipts, ad valorem, premium, value-added,
excise, real property, personal property, sales, use, services, transfer,
withholding, employment, payroll and franchise taxes imposed by the United
States of America or any state, local or foreign government, or any agency
thereof, or other political subdivision of the United States or any such
government, and any interest, fines, penalties, assessments or additions to tax
resulting from, attributable to or incurred in connection with any tax or any
contest or dispute thereof and (ii) "Tax Returns" means all reports, returns,
declarations, statements or other information required to be supplied to a
taxing authority in connection with Taxes.
(b) Deficiencies and Audits. The Company has delivered to the Parent
-----------------------
correct and complete copies of all federal income Tax Returns, examination
reports and statements of deficiencies assessed against or agreed to by the
Company or any of its Subsidiaries since January 1, 1999. The federal income Tax
Returns of the Company and each of its Subsidiaries have been audited by the
Internal Revenue Service or are closed by the applicable statute of limitations
for all taxable years through the taxable year specified in Section 4.7(b) of
the Company Disclosure Schedule. The Company has made available to the Parent
correct and complete copies of all other Tax Returns of the Company and its
Subsidiaries together with all related examination reports and statements of
deficiency for all periods from and after January 1, 1999. No examination or
audit of any Tax Return of the Company or any of its Subsidiaries by any
Governmental Entity is currently in progress or, to the knowledge of the
Company, threatened or contemplated. Neither the Company nor any of its
Subsidiaries has been informed by any Governmental Entity that the Governmental
Entity believes that the Company or any of its Subsidiaries was required to file
any Tax Return that was not filed. Neither the Company nor any of its
Subsidiaries has waived any statute of limitations with respect to Taxes or
agreed to an extension of time with respect to a Tax assessment or deficiency.
(c) Absence of Certain Tax Elections and Liabilities. Neither the
------------------------------------------------
Company nor any of its Subsidiaries: (i) is a "consenting corporation" within
the meaning of Section 341(f) of the Code, and none of the assets of the Company
or its Subsidiaries are subject to an election under Section 341(f) of the Code;
(ii) has been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(l)(A)(ii) of the Code; (iii) has made any payments, is
obligated to make any payments, or is a party to any agreement that could
obligate it to make any payments that may be treated as an "excess parachute
payment" under Section 280G of the Code; (iv) has any actual or potential
liability for any Taxes of any person (other than the Company and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
- 20 -
provision of law in any jurisdiction), or as a transferee or successor, by
contract, or otherwise; or (v) is or has been required to make a basis reduction
pursuant to Treasury Regulation Section 1.1502-20(b) or Treasury Regulation
Section 1.337(d)-2(b).
(d) Sections 168, 103 and 7701(h). None of the assets of the Company or
-----------------------------
any of its Subsidiaries: (i) is property that is required to be treated as being
owned by any other person pursuant to the provisions of former Section 168(f)(8)
of the Code; (ii) is "tax-exempt use property" within the meaning of Section
168(h) of the Code; (iii) directly or indirectly secures any debt the interest
on which is tax exempt under Section 103(a) of the Code; or (iv) is subject to a
lease under Section 7701(h) of the Code or under any predecessor section.
(e) Section 481. There are no adjustments under Section 481 of the Code
-----------
(or any similar adjustments or any provision of the Code or the corresponding
federal, state or local Tax laws) that are required to be taken into account by
the Company or any of its Subsidiaries in any period ending after the Closing
Date by reason of a change in method of accounting in any taxable period ending
on or before the Closing Date.
(f) Sections 382, 383 and 384. There is no limitation on the
-------------------------
utilization by either the Company or any of its Subsidiaries of its net
operating losses, built-in losses, Tax credits, or similar items under Sections
382, 383, or 384 of the Code or comparable provisions of state law (other than
any such limitation arising as a result of the consummation of the transactions
contemplated by this Agreement).
(g) Absence of Group Memberships and Tax Agreements. Neither the
-----------------------------------------------
Company nor any of its Subsidiaries (i) is or has ever been a member of a group
of corporations with which it has filed (or been required to file) consolidated,
combined or unitary Tax Returns, other than a group of which only the Company
and its Subsidiaries are or were members or (ii) is a party to or bound by any
Tax indemnity, Tax sharing, Tax allocation or similar agreement.
(h) Section 999. Neither the Company nor any of its Subsidiaries has
-----------
ever participated in an international boycott as defined in Section 999 of the
Code.
(i) Section 355. Neither the Company nor any of its Subsidiaries has
-----------
distributed to its stockholders or security holders stock or securities of a
controlled corporation, nor has stock or securities of the Company or any of its
Subsidiaries been distributed, in a transaction to which Section 355 of the Code
applies (i) in the two years prior to the date of this Agreement or (ii) in a
distribution that could otherwise constitute part of a "plan" or "series of
related transactions" (within the meaning of Section 355(e) of the Code) that
includes the transactions contemplated by this Agreement.
(j) Section 4.7(j) of the Company Disclosure Schedule sets forth each
jurisdiction (other than United States Federal) in which the Company or any of
its Subsidiaries files, is required to file or has been required to file a Tax
Return or is or has been liable for any Taxes on a "nexus" basis at any time for
taxable periods ending after January 1, 1998.
- 21 -
4.8 Real Properties.
---------------
(a) Owned Real Properties. The Company does not and has never owned
---------------------
any real property.
(b) Leased Real Properties. Section 4.8(b) of the Company
----------------------
Disclosure Schedule sets forth a complete and accurate list of all real property
leased, subleased or licensed by the Company or its Subsidiaries (collectively
"Company Leases") and the location of the premises. Neither the Company nor any
of its Subsidiaries nor, to the Company's knowledge, any other party to any
Company Lease, is in default under any of the Company Leases, except as would
not have a Material Adverse Effect. Each of the Company Leases is in full force
and effect and is enforceable in accordance with its terms (except in all cases
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought) and shall not cease to be in full force and effect as a result of
the transactions contemplated by this Agreement. Neither the Company nor any of
its Subsidiaries leases, subleases or licenses any real property to any person
other than the Company and its Subsidiaries. The Company has made available to
the Parent complete and accurate copies of all material Company Leases.
4.9 Intellectual Property.
---------------------
(a) Company Intellectual Property Rights. The Company and its
------------------------------------
Subsidiaries own, or license or otherwise possess legally enforceable rights to
use, without any obligation to make any fixed or contingent payments, including
any royalty payments, all Intellectual Property (as defined below) used or
necessary to (1) use, manufacture, market and distribute the products
manufactured, marketed, sold or licensed, and to provide the services provided,
by the Company to other parties or (2) to operate the Company's internal systems
that are material to the business or operations of the Company, including,
without limitation, computer hardware systems, software applications and
embedded systems in order to conduct the business of the Company and its
Subsidiaries as currently conducted (excluding off-the-shelf software programs
licensed pursuant to shrinkwrap licenses). For purposes of this Agreement, the
term "Intellectual Property" means (i) trademarks, service marks and trade names
(whether registered or unregistered), patents, domain names, copyrights,
designs, mask works, trade secrets, confidential business information and
inventions, whether patentable or unpatentable and whether or not reduced to
practice, know-how, manufacturing and production processes and techniques,
research and development information, copyrightable works, financial, marketing
and business data, pricing and cost information, business and marketing plans
and customer and supplier lists and information, (ii) applications for and
registrations of such patents, trademarks, service marks, trade names, domain
names, copyrights, mask works and designs, (iii) processes, formulae, methods,
schematics, technology, know-how, computer software programs and applications,
and (iv) other tangible or intangible proprietary or confidential information or
material or rights relating to the foregoing. Section 4.9(a) of the Company
Disclosure Schedule
- 22 -
lists each patent, patent application, copyright registration or application
therefor, mask work registration or application therefor, and trademark, service
mark and domain name registration or application therefore of the Company.
(b) Third Party Intellectual Property Rights. The execution and
----------------------------------------
delivery of this Agreement and consummation of the Merger will not result in the
breach of, or create on behalf of any third party the right to terminate or
modify, (i) any license, sublicense or other agreement relating to any
Intellectual Property owned by the Company that is material to the business of
the Company and its Subsidiaries, taken as a whole, including software that is
used in the manufacture of, incorporated in, or forms a part of any product or
service sold by or expected to be sold by the Company or any of its Subsidiaries
(the "Company Intellectual Property") or (ii) any license, sublicense and other
agreement as to which the Company or any of its Subsidiaries is a party and
pursuant to which the Company or any of its Subsidiaries is authorized to use
any third party Intellectual Property that is material to the business of the
Company and its Subsidiaries, taken as a whole, including software that is used
in the manufacture of, incorporated in, or forms a part of any product or
service sold by or expected to be sold by the Company or any of its Subsidiaries
(the "Third Party Intellectual Property"). Section 4.9(b)(i) of the Company
Disclosure Schedule sets forth a complete and accurate list of the Company
Intellectual Property and Section 4.9(b)(ii) of the Company Disclosure Schedule
sets forth a complete and accurate list of all material Third Party Intellectual
Property and the license or agreement pursuant to which the Company uses it.
Section 4.9(b)(iii) of the Company Disclosure Schedule identifies each material
license or material agreement pursuant to which the Company has licensed,
distributed or otherwise granted any rights to any third party with respect to
any Company Intellectual Property, except for any end user software licenses to
a customer of the Company and other than licenses in the Ordinary Course of
Business. Section 4.9(b)(iv) of the Company Disclosure Schedule identifies each
material item of Company Intellectual Property that is owned by a party other
than the Company, and the license or agreement pursuant to which the Company
uses it.
(c) Valid Rights; No Infringement By Others. All registrations and
---------------------------------------
applications for patents, trademarks, service marks, copyrights and domain names
which are held by the Company or any of its Subsidiaries and which are material
to the business of the Company and its Subsidiaries, taken as a whole, are valid
and subsisting. The Company and its Subsidiaries have taken reasonable measures
to protect the proprietary nature of each item of the Company Intellectual
Property. To the knowledge of the Company, no other person or entity is
infringing, violating or misappropriating any of the Company Intellectual
Property or Third Party Intellectual Property.
(d) No Infringement By the Company. None of the (i) products previously
------------------------------
or currently sold by the Company or any of its Subsidiaries or (ii) business or
activities previously or currently conducted by the Company or any of the
Subsidiaries infringes, violates or constitutes a misappropriation of, any
intellectual property right or other right of any third party, except for
infringements, violations or misappropriations that do not result in a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has received any
complaint, claim or
- 23 -
notice alleging any such infringement, violation or misappropriation of (i)
products previously or currently sold by the Company or any of its Subsidiaries
or (ii) business or activities previously or currently conducted by the Company
or any of its Subsidiaries. Section 4.9(d) of the Company Disclosure Schedule
lists any complaint, claim or notice, or written threat thereof, received by the
Company or any Subsidiary alleging any such infringement, violation or
misappropriation; and the Company has made available to the Parent complete and
accurate copies of all written documentation in the possession of the Company or
any Subsidiary relating to any such complaint, claim, notice or threat.
(e) Rights in Confidential Information. The Company has secured written
----------------------------------
assignments from all current and former consultants and employees who
contributed to the creation or development of the Company Intellectual Property
of the rights to such contributions that the Company does not already own by
operation of law, recognizing the Company's ownership of all the Company
Intellectual Property, and agreeing to hold such of it as is not protected by
patents or copyright ("Confidential IP Information") in confidence and not to
use any Confidential IP Information except in connection with such consultant's
or employee's work for or on behalf of the Company. Except as set forth on
Schedule 4.9(e) of the Company Disclosure Schedule, no current employee, officer
or consultant of the Company has excluded works or inventions made prior to his
or her employment with the Company from his or her assignment of inventions
pursuant to such employee's, officer's or consultant's assignment of inventions
agreement. The Company does not believe it is or will be necessary to use any
inventions of any of its employees (or persons it currently intends to hire)
made prior to their employment by the Company. The Company has not granted or
assigned to any other person or entity any right to manufacture, have
manufactured, assemble, sell, market or distribute the products or proposed
products or to provide the services or proposed services of the Company.
(f) No Intellectual Property Contracts Affecting the Parent. The
-------------------------------------------------------
Company is not party to any agreement under which a third party would be
entitled to receive a license or any other right to intellectual property of the
Parent or any of its Affiliates (other than the Company) following the Closing.
(g) Company Software. Neither the Company nor any Subsidiary has
----------------
disclosed the source code for any of the software owned by the Company or a
Subsidiary (the "Software") or other Confidential Information constituting,
embodied in or pertaining to the Software to any person or entity, except
pursuant to the agreements listed in Section 4.10 of the Company Disclosure
Schedule, and the Company has taken reasonable measures to prevent disclosure of
such source code.
(h) Product Defects. The products previously or currently sold by the
---------------
Company or any of its Subsidiaries and the Company's internal systems that are
material to the business or operations of the Company are free from significant
defects or programming errors, except for any currently in development.
4.10 Agreements, Contracts and Commitments.
-------------------------------------
- 24 -
(a) The Company is not a party to and is not bound by and neither it
nor its assets or properties are subject to, any contract or other agreement
required to be disclosed in a Form 10-K, Form 10-Q or Form 8-K which is not
disclosed in the Company's Form 10-K filed February 28, 2001 or the Company's
Form 10-Qs filed May 15, 2001 and August 14, 2001. All of such contracts and
other agreements and all of the contracts required to be set forth in Section
4.10 of the Company Disclosure Schedule are valid, subsisting, in full force and
effect, binding upon the Company, and, to the knowledge of the Company, binding
upon the other parties thereto in accordance with their terms, and the Company
has paid in full or accrued substantially all amounts now due from it
thereunder, and has satisfied in full or provided for all of its liabilities and
obligations thereunder which are presently required to be satisfied or provided
for and is not in default under any of them, nor does any condition exist that
with notice or lapse of time or both would constitute a default by the Company
thereunder, except for defaults which individually or in the aggregate are not
reasonably expected to result in a Material Adverse Effect, nor, to the
knowledge of the Company, is any other party to any such contract or other
agreement in default thereunder, except for defaults which individually or in
the aggregate could not reasonably be expected to result in a Material Adverse
Effect, nor does any condition exist that with notice or lapse of time or both
would constitute a default thereunder, except for defaults which individually or
in the aggregate would not have a Material Adverse Effect. The Company has made
available to the Parent true and complete copies of all of the contracts and
other agreements referred to in this Section 4.10.
(b) Section 4.10 of the Company Disclosure Schedule sets forth a list
of the following contracts and other agreements to which the Company is a party
or by or to it or its assets or properties are bound or subject:
(i) any agreement (A) involving research, development or the
license of Intellectual Property, (B) granting a right of first
refusal, or right of first offer or comparable right with respect to
Intellectual Property, (C) providing for the payment or receipt by the
Company of milestone payments or royalties, or (D) that individually
requires aggregate expenditures by the Company in any one year of more
than $250,000;
(ii) any indenture, trust agreement, loan agreement or note
that involves or evidences outstanding indebtedness, obligations or
liabilities for borrowed money in excess of $250,000;
(iii) any agreement of surety, guarantee or indemnification
that involves potential obligations in excess of $250,000;
(iv) any interest rate, equity or other swap or derivative
instrument; or
(v) any agreement obligating the Company to register
securities under the Securities Act.
- 25 -
(c) To the knowledge of the Company and except as disclosed in the
Company SEC Reports, no executive officer or director of the Company has
(whether directly or indirectly through another entity in which such person has
a material interest, other than as the holder of less than 2% of a class of
securities of a publicly traded company) any material interest in any property
or assets of the Company (except as a stockholder), any competitor, customer,
supplier or agent of the Company or any person that is currently a party to any
material contract or agreement with the Company.
(d) Section 4.10 of the Company Disclosure Schedule sets forth a
complete and accurate list of each non-competition or other similar agreement,
commitment, judgment, injunction or order which the Company or any Subsidiary of
the Company is a party or subject to that has or could reasonably be expected to
have the effect of prohibiting or impairing the conduct of the business by the
Company or any of its Subsidiaries in any material respect. Except as set forth
in Section 4.10 of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries has entered into (or is otherwise bound by) any agreement
under which it or any of its Subsidiaries and successors is restricted in any
material respect from selling, licensing or otherwise distributing any of its
technology or products, or providing services to, customers or potential
customers or any class of customers, in any geographic area, during any period
of time or any segment of the market or line of business.
4.11 Litigation; Product Liability. There is no action, suit,
-----------------------------
proceeding, claim, arbitration or investigation pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries, except as which would not reasonably be expected to have a
Material Adverse Effect. There are no material judgments, orders or decrees
outstanding against the Company or any of its Subsidiaries. No product liability
claims have been asserted or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries relating to products or product
candidates developed, tested, manufactured, marketed, distributed or sold by the
Company or any of its Subsidiaries except as which would not reasonably be
expected to have a Material Adverse Effect. No claims have been asserted or, to
the knowledge of the Company, threatened against or affecting the Company or any
of its Subsidiaries relating to underwriting compensation in connection with
securities offerings by the Company or any of its Subsidiaries.
4.12 Environmental Matters.
---------------------
(a) Compliance. Except as set forth in Section 4.12(a) of the Company
----------
Disclosure Schedule,
(i) the Company and each of its Subsidiaries are currently in
compliance with, and have at all times complied with, all applicable
Environmental Laws (as defined in Section 4.12(b));
(ii) the Company and each of its Subsidiaries have all
permits, licenses and approvals required under Environmental Laws to
operate and conduct their
- 26 -
respective businesses as currently operated and conducted, and as
proposed to be conducted;
(iii) to the knowledge of the Company, there is no
Contamination (as defined in Section 4.12(b)) of or at the properties
currently owned, leased or operated by the Company or any of its
Subsidiaries;
(iv) to the knowledge of the Company, there was no
Contamination of or at the properties formerly owned, leased or
operated by the Company or any of its Subsidiaries prior to or during
the period of time such properties were owned, leased or operated by
the Company or any of its Subsidiaries;
(v) neither the Company nor any of its Subsidiaries are
subject to liability for a Release of any Hazardous Substance or
Contamination on the property of any third party;
(vi) neither the Company nor any of its Subsidiaries have
Released any Hazardous Substance to the environment;
(vii) neither the Company nor any of its Subsidiaries has
received any notice, demand, letter, claim or request for information,
nor is the Company or any of its Subsidiaries aware of any pending or
threatened notice, demand, letter, claim or request for information,
alleging that the Company or any of its Subsidiaries may be in
violation of, liable under or have obligations under any Environmental
Law;
(viii) neither the Company nor any of its Subsidiaries is
subject to any orders, decrees, injunctions or other arrangements with
any Governmental Entity or is subject to any indemnity or other
agreement with any third party, including leases for real property,
relating to liabilities or obligations under any Environmental Law or
relating to Hazardous Substances;
(ix) none of the properties currently or formerly owned,
leased or operated by the Company or any of its Subsidiaries is listed
on the National Priorities List or any other list, schedule, log,
inventory or record maintained by any federal, state or local
governmental agency with respect to sites from which there is or has
been a Release of any Hazardous Substance or any Contamination;
(x) to the knowledge of the Company, none of the properties
currently or formerly owned, leased or operated by the Company or any
of its Subsidiaries is used, nor was ever used, (A) as a landfill, dump
or other disposal, storage, transfer or handling area for Hazardous
Substances, excepting, however, for the routine storage and use of
Hazardous Substances from time to time in the Ordinary Course of
Business, in compliance with Environmental Laws and in compliance with
good commercial practice; (B) for industrial, military or
- 27 -
manufacturing purposes; or (C) as a gasoline service station or a
facility for selling, dispensing, storing, transferring or handling
petroleum and/or petroleum products;
(xi) to the knowledge of the Company, there are not now, nor
have there ever been, underground or above ground storage tanks
(whether or not currently in use), urea-formaldehyde materials,
asbestos, asbestos containing materials, polychlorinated biphenyls
(PCBs) or nuclear fuels or wastes, located on or under any of the
properties currently or formerly owned, leased or operated by the
Company or any of its Subsidiaries; and
(xii) there are no liens against any of the properties
currently owned, leased or operated by the Company or any of its
Subsidiaries arising under any Environmental Law.
(b) Definitions. For purposes of this Agreement,
-----------
(i) "Environmental Law" means any law, regulation, order,
decree, permit, authorization, opinion, common law or agency
requirement of any jurisdiction relating to: (i) the protection,
investigation or restoration of the environment, human health and
safety, or natural resources, (ii) the handling, use, storage,
treatment, manufacture, transportation, presence, disposal, release or
threatened release of any Hazardous Substance or (iii) noise, odor,
wetlands, pollution, contamination or any injury or threat of injury to
persons or property.
(ii) "Contamination" means the presence of, or Release on,
under, from or to, any property, including soils, groundwater, surface
water, buildings or other structures, of any Hazardous Substance,
except for the routine storage and use of Hazardous Substances from
time to time in the Ordinary Course of Business, in compliance with
Environmental Laws and in compliance with good commercial practice.
(iii) "Release" or "Released" means the spilling, leaking,
disposing, discharging, emitting, depositing, injecting, leaching,
escaping or any other release, however defined, and whether intentional
or unintentional, of any Hazardous Substance. The term "Release" shall
include any threatened release.
(iv) "Hazardous Substance" means any substance that is: (A)
listed, classified, regulated or which falls within the definition of a
"hazardous substance," "hazardous material," or "hazardous waste"
pursuant to any Environmental Law; (B) any petroleum product or
by-product, asbestos-containing material, lead-containing paint, pipes
or plumbing, polychlorinated biphenyls, radioactive materials or radon;
or (C) any other substance which is the
- 28 -
subject of regulatory action by any Governmental Entity pursuant to any
Environmental Law.
(c) Environmental Reports. Section 4.12(c) of the Company Disclosure
---------------------
Schedule sets forth a list of all documents, reports, investigations, audits or
other communications, whether in hard copy or electronic form, that contain
information regarding environmental, human health and safety, or natural
resources issues relating to premises currently or previously owned or operated
by the Company or any of its Subsidiaries (whether conducted by or on behalf of
the Company or one of its Subsidiaries or a third party, and whether done at the
initiative of the Company or one of its Subsidiaries or directed by a
Governmental Entity or other third party) which were issued or conducted during
the past five years and of which the Company or any of its Subsidiaries has
possession or to which the Company or any of its Subsidiaries has access. A
complete and accurate copy of each such document has been provided to the
Parent.
4.13 Employee Benefit Plans.
----------------------
(a) Company Employee Plans; Definitions. Section 4.13(a) of the Company
-----------------------------------
Disclosure Schedule sets forth a complete and accurate list of all Employee
Benefit Plans maintained, or contributed to, by the Company, any of the
Company's Subsidiaries or any of their ERISA Affiliates (together, the "Company
Employee Plans"). For purposes of this Agreement, the following terms shall have
the following meanings: (i) "Employee Benefit Plan" means any "employee pension
benefit plan" (as defined in Section 3(2) of ERISA), any "employee welfare
benefit plan" (as defined in Section 3(1) of ERISA), and any other written or
oral plan, agreement or arrangement involving direct or indirect compensation,
including insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
compensation and all unexpired severance agreements, written or otherwise, for
the benefit of, or relating to, any current or former employee of the Company or
any of its Subsidiaries or an ERISA Affiliate; (ii) "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended; and (iii) "ERISA Affiliate"
means any entity which is, or at any applicable time was, a member of (1) a
controlled group of corporations (as defined in Section 414(b) of the Code), (2)
a group of trades or businesses under common control (as defined in Section
414(c) of the Code), or (3) an affiliated service group (as defined under
Section 414(m) of the Code or the regulations under Section 414(o) of the Code),
any of which includes or included the Company or a Subsidiary.
(b) Documentation Relating to Company Employee Plans. With respect to
------------------------------------------------
each Company Employee Plan, the Company has furnished to the Parent, a complete
and accurate copy of (i) such Company Employee Plan (or a written summary of any
unwritten plan), (ii) the most recent annual report (Form 5500) filed with the
Internal Revenue Service, (iii) each trust agreement, group annuity contract and
summary plan description, if any, relating to such Company Employee Plan, (iv)
the most recent financial statements for each Company Employee Plan that is
funded, (v) all personnel, payroll and employment manuals and policies, (vi) all
- 29 -
employee handbooks, and (vii) all reports regarding the satisfaction of the
nondiscrimination requirements of Sections 410(b), 401(k) and 401(m) of the
Code.
(c) Administration of Company Employee Plans. Each Company Employee
----------------------------------------
Plan has been administered in all material respects in accordance with ERISA,
the Code and all other applicable laws and the regulations thereunder and in
accordance with its terms and each of the Company, the Company's Subsidiaries
and their ERISA Affiliates has in all material respects met its obligations with
respect to such Company Employee Plan and has made all required contributions
thereto (or reserved such contributions on the Company Balance Sheet). All
filings and reports as to each Company Employee Plan required to have been
submitted to the Internal Revenue Service or to the United States Department of
Labor have been timely submitted. With respect to the Company Employee Plans, no
event has occurred, and there exists no condition or set of circumstances in
connection with which the Company or any of its Subsidiaries could be subject to
any liability under ERISA, the Code or any other applicable law.
(d) Benefit Obligations. With respect to the Company Employee Plans,
-------------------
there are no benefit obligations for which contributions have not been made or
properly accrued and there are no benefit obligations which have not been
accounted for by reserves, or otherwise properly footnoted in accordance with
GAAP, on the financial statements of the Company. The assets of each Company
Employee Plan which is funded are reported at their fair market value on the
books and records of such Employee Benefit Plan.
(e) Qualification of Company Employee Plans. All the Company Employee
---------------------------------------
Plans that are intended to be qualified under Section 401(a) of the Code have
received determination letters from the Internal Revenue Service to the effect
that such Company Employee Plans are qualified and the plans and trusts related
thereto are exempt from federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, no such determination letter has been revoked and
revocation has not been threatened, and no such Employee Benefit Plan has been
amended or operated since the date of its most recent determination letter or
application therefor in any respect, and no act or omission has occurred, that
would adversely affect its qualification or materially increase its cost. Each
Company Employee Plan that is required to satisfy Section 401(k)(3) or Section
401(m)(2) of the Code has been tested for compliance with, and satisfies the
requirements of Section 401(k)(3) and Section 401(m)(2) of the Code, as the case
may be, for each plan year ending prior to the Closing Date.
(f) Absence of Certain Obligations. Neither the Company, any Subsidiary
------------------------------
of the Company nor any ERISA Affiliate has (i) ever maintained a Company
Employee Plan which was ever subject to Section 412 of the Code or Title IV of
ERISA or (ii) ever been obligated to contribute to a "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA). No Company Employee Plan is funded by,
associated with or related to a "voluntary employee's beneficiary association"
within the meaning of Section 501(c)(9) of the Code. No Company Employee Plan
holds securities issued by the Company, any of the Company's Subsidiaries or any
of their ERISA Affiliates.
- 30 -
(g) Ability to Amend or Terminate. Each Company Employee Plan is
-----------------------------
amendable and terminable unilaterally by the Company and any of the Company's
Subsidiaries which are a party thereto, or covered thereby at any time without
liability to the Company or any of its Subsidiaries as a result thereof and no
Company Employee Plan, plan documentation or agreement, summary plan description
or other written communication distributed generally to employees by its terms
prohibits the Company or any of its Subsidiaries from amending or terminating
any such Company Employee Plan. The investment vehicles used to fund the Company
Employee Plans may be changed at any time without incurring a material sales
charge, surrender fee or other similar expense.
(h) Employment Related Agreements. Except as set forth in Section
-----------------------------
4.13(h) of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to any oral or written (i) agreement with any
stockholders, director, executive officer or other key employee of the Company
or any of its Subsidiaries (A) the benefits of which are contingent, or the
terms of which are materially altered, upon the occurrence of a transaction
involving the Company or any of its Subsidiaries of the nature of any of the
transactions contemplated by this Agreement, (B) providing any term of
employment or compensation guarantee or (C) providing severance benefits or
other benefits after the termination of employment of such director, executive
officer or key employee; (ii) agreement, plan or arrangement under which any
person may receive payments from the Company or any of its Subsidiaries that may
be subject to the tax imposed by Section 4999 of the Code or included in the
determination of such person's "parachute payment" under Section 280G of the
Code, without regard to Section 280G(b)(4); or (iii) agreement or plan binding
the Company or any of its Subsidiaries, including any stock option plan, stock
appreciation right plan, restricted stock plan, stock purchase plan or severance
benefit plan, any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement. The Company has provided to the Parent the information
necessary to accurately calculate any excise tax due under Section 4999 of the
Code as a result of the transactions contemplated by this Agreement for which
the Company or the Parent may directly or indirectly become liable and the
amount of deductions that may be disallowed under Section 280G of the Code as a
result of the transactions contemplated by this Agreement.
(i) Retiree Benefits. None of the Company Employee Plans promises or
----------------
provides retiree medical or other retiree welfare benefits to any person, except
as required by applicable law.
(j) No employee of the Company or any of its Subsidiaries (i) to the
knowledge of the Company, is in violation of any term of any patent disclosure
agreement, non-competition agreement, or any restrictive covenant to a former
employer relating to the right of any such employee to be employed by the
Company or any of its Subsidiaries because of the nature of the business
conducted or presently proposed to be conducted by the Company or any of its
Subsidiaries or to the use of trade secrets or proprietary information of
others, or (ii) in the
- 31 -
case of any key employee or group of key employees, has given notice to the
Company or any of its Subsidiaries that such employee or any employee in a group
of key employees intends to terminate his or her employment with the Company.
4.14 Compliance With Laws. The Company and each of its Subsidiaries has
--------------------
complied with, is not in violation of, and has not received any notice alleging
any violation with respect to, any applicable provisions of any statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its properties or assets, except which, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect.
4.15 Permits. The Company and each of its Subsidiaries have all
-------
permits, licenses and franchises (the "Company Permits") from Governmental
Entities required to conduct their businesses as now being conducted, except for
such permits, licenses and franchises the absence of which, individually or in
the aggregate, have not resulted in, and are not reasonably likely to result in
a Material Adverse Effect. The Company and its Subsidiaries are in compliance
with the terms of the Company Permits except for such failures to so comply
which, individually or in the aggregate, have not had, and are not reasonably
likely to a Material Adverse Effect. No material Company Permit will cease to be
effective as a result of the consummation of transactions contemplated by this
Agreement.
4.16 Labor Matters.
-------------
(a) Labor Unions and Collective Bargaining Agreements. None of the
-------------------------------------------------
Company, any of its Subsidiaries or their employees is a party to or otherwise
bound by any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization. Neither the Company nor
any of its Subsidiaries is the subject of any proceeding asserting that the
Company or any of its Subsidiaries has committed an unfair labor practice or is
seeking to compel it to bargain with any labor union or labor organization
which, individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect, nor is there pending or, to the knowledge of the Company,
threatened, any labor strike, dispute, walkout, work stoppage, slow-down or
lockout involving the Company or any of its Subsidiaries. Section 4.16(a) of the
Company Disclosure Schedule lists all employees of the Company who are not
citizens or permanent resident aliens of the United States.
(b) Employment Practices. The Company and each of its Subsidiaries is
--------------------
in compliance with all Federal, foreign (as applicable), and state laws
regarding employment practices, including laws relating to workers' safety,
sexual harassment or discrimination, except where the failure to so be in
compliance, individually or in the aggregate, has not, and is not reasonably
likely to have a Material Adverse Effect.
4.17 Insurance. Each of the Company and its Subsidiaries maintains
---------
insurance policies (the "Insurance Policies") with reputable insurance carriers
against all risks of a character and in such amounts as are usually insured
against by similarly situated companies in the same or similar businesses.
Section 4.17 of the Company Disclosure Schedule sets forth the insurance
- 32 -
coverages maintained by the Company and its Subsidiaries and a history of any
claims made and claims paid since January 1, 2000. Each Insurance Policy is in
full force and effect and is valid, outstanding and enforceable, and all
premiums due thereon have been paid in full. None of the Insurance Policies
shall terminate or lapse (or be affected in any other materially adverse manner)
by reason of the transactions contemplated by this Agreement. The Company and
each of its Subsidiaries have complied in all material respects with the
provisions of each Insurance Policy under which it is the insured party. No
insurer under any Insurance Policy has canceled or generally disclaimed
liability under any such policy or indicated any intent to do so or not to renew
any such policy. All material claims under the Insurance Policies have been
filed in a timely fashion.
4.18 Affiliate Transactions. Section 4.18 of the Company Disclosure
----------------------
Schedule sets forth a complete list of each contract or agreement to which the
Company or any of its Subsidiaries is a party or bound with any Affiliate of the
Company (other than any Subsidiary which is a direct or indirect wholly owned
Subsidiary of the Company). Complete and accurate copies of all the agreements,
contracts and arrangements set forth in Section 4.18 of the Company Disclosure
Schedule have heretofore been furnished to the Parent. Except as disclosed in
the Company's proxy statement filed on April 30, 2001, neither the Company nor
any of its Subsidiaries has entered into any transaction with any director,
officer or other Affiliate of the Company or any of its Subsidiaries or any
transaction that would be subject to proxy statement disclosure pursuant to Item
404 of Regulation S-K.
4.19 Assets. The Company or one of its Subsidiaries owns or leases all
------
tangible assets necessary for the conduct of their businesses as presently
conducted. All of such tangible assets which are owned, are owned free and clear
of all mortgages, security interest, pledges, liens and encumbrances ("Liens")
except for Liens which individually and in the aggregate, do not materially
interfere with the ability of the Company and its Subsidiaries to conduct their
business as currently conducted and have not resulted in, and are not reasonably
likely to result in, a Material Adverse Effect. The tangible assets of the
Company and its Subsidiaries, taken as a whole, are free from material defects,
have been maintained in accordance with normal industry practice, are in good
operating condition and repair (subject to normal wear and tear) and are
suitable for the purpose for which they are presently used.
4.20 Warranty. Except as set forth in Section 4.20 of the Company
--------
Disclosure Schedule, no product or service manufactured, sold, leased, licensed,
delivered or otherwise provided by the Company or any of its Subsidiaries is
subject to any guaranty, warranty, right of return or other indemnity.
4.21 Customers and Suppliers. Section 4.21 of the Company Disclosure
-----------------------
Schedule accurately identifies, and provides an accurate and complete breakdown
of the revenues received from, each customer of the Company or any of its
Subsidiaries that represented 5% or more of the Company's consolidated revenues
in the fiscal year ended December 31, 2000 or in the seven-month period ended
July 31, 2001 (a "Material Customer"). No Material Customer has indicated to the
Company or any of its Subsidiaries that it will stop, or decrease the rate of,
- 33 -
buying materials, products or services from the Company or any of its
Subsidiaries. Except as set forth in Section 4.21 of the Company Disclosure
Schedule, no material supplier of the Company or any of its Subsidiaries has
indicated to the Company or any of its Subsidiaries that it will stop, or
decrease the rate of, supplying materials, products or services to them.
4.22 Opinion of Financial Advisor. The financial advisor of the Company
----------------------------
Credit Suisse First Boston (the "Financial Advisor") has delivered to the
Company a written opinion dated the date of this Agreement to the effect, as of
such date, that, on the basis of and subject to the assumptions set forth
therein, the cash consideration of $9.25 per Share to be received by holders of
Shares pursuant to the Offer and the Merger is fair to the holders of Shares
from a financial point of view (the "Fairness Opinion"). The Company has
delivered to the Parent and the Merger Sub a signed copy of the Fairness
Opinion, together with the Financial Advisor's written consent to the inclusion
of or reference to the Fairness Opinion in the Schedule TO, the Offer Documents,
the Schedule 14D-9 and the Proxy Statement.
4.23 Rights Agreement. The Company has duly entered into an amendment
----------------
to the Rights Agreement, a signed copy of which has been delivered to the Parent
(the "Rights Agreement Amendment"), and taken all other action necessary or
appropriate so that the execution, delivery and performance of this Agreement
and/or the Stockholder Agreements do not and will not result in the ability of
any person to exercise any of the Rights under the Rights Agreement Amendment or
enable or require the Rights issued thereunder to separate from the shares of
Company Common Stock to which they are attached or to be triggered or become
exercisable or cease to be redeemable.
4.24 Brokers. No agent, broker, investment banker, financial advisor or
-------
other firm or person is or shall be entitled, as a result of any action,
agreement or commitment of the Company or any of its Affiliates, to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with any of the transactions contemplated by this Agreement, except
the Financial Advisor, whose fees and expense will be paid by the Company. The
Company has delivered to the Parent a complete and accurate copy of all
agreements pursuant to which the Financial Advisor is entitled to any fees and
expenses in connection with any of the transactions contemplated by this
Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND THE MERGER SUB
--------------------------------
The Parent and the Merger Sub each represents and warrants to the
Company as follows:
5.1 Organization, Standing and Power. Each of the Parent and the Merger
--------------------------------
Sub is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of its incorporation, has all requisite corporate
power and authority to own, lease and operate its properties and assets and to
carry on its business as now being conducted, and is duly
- 34 -
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the failure to be so qualified or in good standing,
individually or in the aggregate, would materially impair the ability of the
Parent or the Merger Sub to perform its obligations hereunder.
5.2 Authority; No Conflict; Required Filings and Consents.
-----------------------------------------------------
(a) Power and Authority; Execution and Delivery. Each of the Parent and
-------------------------------------------
the Merger Sub has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by the Parent and the
Merger Sub and the consummation by the Parent and the Merger Sub of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of each of the Parent and the Merger Sub
(including the approval of the Merger by the Parent in its capacity as the sole
stockholder of the Merger Sub). This Agreement has been duly executed and
delivered by each of the Parent and the Merger Sub and assuming due and valid
authorization, execution, and delivery by the other parties to this Agreement,
constitutes the valid and binding obligation of each of the Parent and the
Merger Sub, enforceable in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Absence of Conflicts. The execution and delivery of this Agreement
--------------------
by each of the Parent and the Merger Sub does not, and the consummation by the
Parent and the Merger Sub of the transactions contemplated by this Agreement
will not, (i) conflict with, or result in any violation or breach of, any
provision of the Certificate of Incorporation or By-laws of the Parent or the
Merger Sub, (ii) conflict with, or result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of any material benefit) under, or require a consent or waiver under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract or other agreement, instrument or obligation
to which the Parent or the Merger Sub is a party or by which either of them or
any of their properties or assets may be bound, or (iii) subject to compliance
with the requirements specified in clauses (i) through (v) of Section 5.2(c),
conflict with or violate any permit, concession, franchise, license, judgment,
injunction, order, decree, statute, law, ordinance, rule or regulation
applicable to the Parent or the Merger Sub or any of their properties or assets,
except in the case of clauses (ii) and (iii) of this Section 5.2(b) for any such
conflicts, violations, breaches, defaults, terminations, cancellations,
accelerations or losses which, individually or in the aggregate, would not
materially impair the ability of the Parent or the Merger Sub to perform their
obligations hereunder.
(c) Absence of Required Consents. No consent, approval, license,
----------------------------
permit, order or authorization of, or registration, declaration, notice or
filing with any Governmental Entity is required by or with respect to the Parent
or the Merger Sub in connection with the
- 35 -
execution and delivery of this Agreement or the consummation by the Parent or
the Merger Sub of the transactions contemplated by this Agreement, except for
(i) the pre-merger notification requirements under the HSR Act, (ii) the filing
of the Certificate of Merger with the Secretary of State of the State of Georgia
and appropriate corresponding documents with the Secretaries of State of other
states in which the Company is qualified as a foreign corporation to transact
business, (iii) required filings under the Securities Act and the Exchange Act,
(iv) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable "takeover" or state
securities laws and (v) such consents, approvals, orders, registrations,
declarations and filings, the failure of which to make or obtain would not
individually or in the aggregate, materially impair the ability of the Parent or
the Merger Sub to perform their obligations hereunder.
5.3 Information Provided. The written information supplied by or on
--------------------
behalf of the Parent or the Merger Sub for inclusion in the Schedule 14D-9, on
the date the Schedule 14D-9 is filed with the SEC, and on the date the Schedule
14D-9 is first published, sent or given to stockholders of the Company, shall
comply in all material respects with the provisions of applicable securities
laws, shall not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. If, at any time prior to Closing, any event relating to
the Parent or Merger Sub should be discovered by the Parent which should be set
forth in an amendment to the Schedule 14D-9, the Parent shall promptly inform
the Company.
5.4 Interim Operations of the Merger Sub. The Merger Sub was formed
------------------------------------
solely for the purpose of engaging in the transactions contemplated by this
Agreement, has not engaged in any other business activities and has conducted
its operations only as contemplated hereby.
5.5 Financing. At the expiration of the Offer and at the Effective
---------
Time, the Parent and the Merger Sub will have available all the funds necessary
to purchase all the Shares pursuant to the Offer and the Merger and to pay all
fees and expenses payable by the Parent or the Merger Sub related to the
transactions contemplated by this Agreement. The Parent and the Merger Sub have
entered into an Investment Agreement with certain stockholders of the Parent,
which provides sufficient funding for the Parent and the Merger Sub to satisfy
all of their funding obligations under this Agreement. The execution and
delivery of the Investment Agreement by all of the parties thereto have been
duly authorized by all necessary corporate action on the part of the parties
thereto, and the Investment Agreement constitutes a valid and binding obligation
of each of the parties thereto, enforceable in accordance with its terms (except
in all cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship, moratorium, or
similar laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought), and do not (i) conflict with, or result in any
violation or breach of, any provision of the organizational documents of the
parties thereto, (ii) conflict with, or result in, any violation or breach of,
or constitute with or without notice or lapse of time, or both,
- 36 -
a default (or give rise to a right of termination, cancellation or acceleration
of any obligation or loss of any material benefit) under, or require consent or
waiver under, any of the terms, conditions, or provisions of any note, bond,
mortgage, indenture, lease, license, contract or other agreement, instrument or
obligation to which any of the parties thereto is a party or by which any of
their properties or assets may be bound, or (iii) conflict with or violate any
permit, concession, franchise, license, judgment, injunction, order, decree,
statute, law, ordinance, rule or regulation applicable to any of the parties to
the Investment Agreement or any of their properties or assets. Under the terms
of the Investment Agreement, a copy of which has been provided to the Company,
the Company has been granted third-party beneficiary rights and no material
conditions are required to be satisfied prior to the funding provided for under
Investment Agreement being made available to the Parent and the Merger Sub.
ARTICLE VI
CONDUCT OF BUSINESS
-------------------
6.1 Conduct Prior to Effective Time. Except as expressly contemplated
-------------------------------
by this Agreement, as consented to in writing by the Parent, from and after the
date of this Agreement until the earlier of the termination of this Agreement in
accordance with its terms or the Effective Time, the Company shall, and shall
cause each of its Subsidiaries to, act in the Ordinary Course of Business, and
use commercially reasonable efforts to maintain and preserve its and each
Subsidiary's business organization, assets, and properties, keep available the
services of its present officers and employees and preserve its advantageous
business relationships with customers, strategic partners, suppliers,
distributors and others having business dealings with it to the end that its
goodwill and ongoing business shall be unimpaired at the Effective Time. Without
limiting the generality of the foregoing, from and after the date of this
Agreement until the earlier of the termination of this Agreement in accordance
with its terms or the Effective Time, the Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, without the prior
written consent of the Parent:
(a) (A) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, securities or other property) in respect of, any
of its capital stock (other than dividends and distributions by a direct or
indirect wholly owned Subsidiary of the Company to its parent); (B) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or any of its other securities; or (C) purchase,
redeem or otherwise acquire any shares of its capital stock or any other
securities or any rights, warrants or options to acquire any such shares or
other securities;
(b) issue, deliver, sell, grant, pledge or otherwise dispose of or
encumber any shares of its capital stock, any other voting securities or any
securities convertible into or exchangeable for, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible or
exchangeable securities (other than the issuance of Shares upon the exercise of
- 37 -
Company Stock Options or Company Warrants outstanding on the date of this
Agreement in accordance with their present terms);
(c) amend its articles of incorporation, by-laws or other comparable
charter or organizational documents, except as expressly provided by this
Agreement;
(d) acquire (A) by merging or consolidating with, or by purchasing all
or a substantial portion of the assets or any stock of, or by any other manner,
any business or any corporation, partnership, joint venture, limited liability
company, association or other business organization or division thereof or (B)
any assets that are material, in the aggregate, to the Company and its
Subsidiaries, taken as a whole, except purchases of inventory and components in
the Ordinary Course of Business;
(e) except in the Ordinary Course of Business, sell, lease, license,
pledge, or otherwise dispose of or encumber any properties or assets of the
Company or of any of its Subsidiaries;
(f) whether or not in the Ordinary Course of Business, sell, dispose
of, or otherwise transfer any assets material to the Company and its
Subsidiaries, taken as a whole (including any accounts, leases, contracts or
intellectual property or any assets or the stock of any Subsidiaries, but
excluding the sale or non-exclusive license of products in the Ordinary Course
of Business);
(g) adopt or implement any stockholder rights plan or, except as
provided in Section 4.23, alter or further amend the Rights Agreement or the
Rights;
(h) enter into an agreement with respect to any merger, consolidation,
liquidation or business combination, or any acquisition or disposition of all or
substantially all of the assets or securities of the Company or any of its
Subsidiaries;
(i) (A) except as permitted under Section 7.8(e), incur or suffer to
exist any indebtedness for borrowed money other than such indebtedness reflected
on the Company Balance Sheet or guarantee any such indebtedness of another
person, (B) issue, sell or amend any debt securities or warrants or other rights
to acquire any debt securities of the Company or any of its Subsidiaries,
guarantee any debt securities of another person, enter into any "keep well" or
other agreement to maintain any financial statement condition of another person
or enter into any arrangement having the economic effect of any of the
foregoing, (C) make any loans, advances (other than routine advances to
employees of the Company in the Ordinary Course of Business) or capital
contributions to, or investments in, any other person, other than the Company or
any of its direct or indirect wholly owned Subsidiaries, or (D) enter into any
hedging agreement or other financial agreement or arrangement fluctuations in
commodities prices or exchange rates;
(j) make any capital expenditures or other expenditures with respect to
property, plant or equipment in excess of $500,000 in the aggregate for the
Company and its Subsidiaries, taken as a whole;
- 38 -
(k) make any change in accounting methods, principles or practices,
except insofar as may have been required by a change in GAAP or, except as so
required, change any assumption underlying, or method of calculating, any bad
debt, contingency or other reserve;
(l) (A) pay, discharge, settle or satisfy any claims, liabilities or
obligations (whether absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the Ordinary
Course of Business or in accordance with their terms as in effect on the date of
this Agreement, of claims, liabilities or obligations reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) of the Company included in the Company SEC
Reports filed prior to the date of this Agreement (to the extent so reflected or
reserved against) or incurred since the date of such financial statements in the
Ordinary Course of Business, or (B) waive any material benefits of, modify in
any adverse respect, fail to enforce, or consent to any matter with respect to
which its consent is required under, any confidentiality, standstill or similar
agreements to which the Company or any of its Subsidiaries is a party;
(m) modify, amend or terminate any material contract or agreement to
which the Company or any of its Subsidiaries is party, other than contemplated
modifications, terminations or amendments reflected on the Company Disclosure
Schedule, or knowingly waive, release or assign any material rights or claims
(including any write-off or other compromise of any accounts receivable of the
Company or any of its Subsidiaries);
(n) (A) except in the Ordinary Course of Business enter into any
contract or agreement relating to the rendering of services or the distribution,
sale or marketing by third parties of the products of, or products licensed by,
the Company or any of its Subsidiaries or (B) license any material intellectual
property rights to or from any third party, other than non-exclusive licenses
which may not be canceled without penalty by the Company or its Subsidiaries
upon written notice of 30 days or less;
(o) except as required to comply with applicable law or agreements,
plans or arrangements existing on the date hereof, (A) take any action with
respect to, adopt, enter into, terminate or amend any employment, severance of
similar agreement or benefit plan for the benefit or welfare of any current or
former director, officer, employee or consultant or any collective bargaining
agreement, (B) increase in any material respect the compensation or fringe
benefits of, or pay any bonus to, any director, officer, key employee or
consultant, (C) amend or accelerate the payment, right to payment or vesting of
any compensation or benefits, including any outstanding options or any
restricted stock awards (other than the acceleration of the Company's Stock
Options for the purpose of treatment of such options under Section 7.8 hereof),
(D) pay any material benefit not provided for as of the date of this Agreement
under any benefit plan, (E) grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or benefit plan, including
the grant of stock options, stock appreciation rights, stock based or stock
related awards, performance units or restricted stock, or the removal of
existing restrictions in any benefit plans or agreements or awards made
thereunder, or (F) take any action other than in the Ordinary Course of Business
to fund or in any other way secure the
- 39 -
payment of compensation or benefits under any employee plan, agreement, contract
or arrangement or benefit plan;
(p) make or rescind any Tax election, settle or compromise any Tax
liability or amend any Tax return;
(q) commence any offering of Shares pursuant to the ESPP (as defined in
Section 7.9);
(r) initiate, compromise or settle any material litigation or
arbitration proceeding;
(s) open or close any material facility or office;
(t) fail to maintain insurance at levels substantially comparable to
levels existing as of the date of this Agreement;
(u) fail to pay accounts payable and other obligations in the Ordinary
Course of Business; or
(v) authorize any of, or commit or agree, in writing or otherwise, to
take any of, the foregoing actions or any action which would cause any
representation or warranty of the Company set forth in this Agreement to be
inaccurate under the applicable standard included in paragraph (E) of Annex I,
or would materially impair or prevent the satisfaction of any condition in Annex
-----
I or Article VIII.
- -
6.2 Confidentiality. The parties acknowledge that the Parent and the
---------------
Company have previously executed a confidentiality agreement, dated as of August
6, 2001 (the "Confidentiality Agreement"), which Confidentiality Agreement shall
continue in full force and effect in accordance with its terms, except as
expressly modified herein.
ARTICLE VII
ADDITIONAL AGREEMENTS
---------------------
7.1 No Solicitation.
---------------
(a) Neither the Company nor any of its Subsidiaries shall, and the
Company shall cause its or their directors, officers, employees, investment
bankers, attorneys, accountants or other agents, advisors or representatives
(such directors, officers, employees, investment bankers, attorneys,
accountants, other agents, advisors and representatives, collectively,
"Representatives") not to, directly or indirectly: (i) solicit, initiate,
participate, encourage or take any other action which facilitate, any inquiries
or the making of any proposal or offer that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal (as defined in Section 7.1(f)) or
(ii) enter into, continue or otherwise participate in any discussions or
- 40 -
negotiations regarding, furnish to any person any information with respect to,
assist or participate in any effort or attempt by any person with respect to, or
otherwise cooperate in any way with, any Acquisition Proposal. Notwithstanding
the foregoing, prior to the acceptance for payment of any Shares pursuant to the
Offer (the "Specified Time"), the Company may, to the extent required by the
fiduciary obligations of the Company Board, as determined in good faith by the
Company Board after consultation with outside counsel, in response to a Superior
Proposal (as defined in Section 7.1(f)) that did not result from a breach of
this Section 7.1, and subject to compliance with Section 7.1(c), (x) furnish
information with respect to the Company to the person making such Superior
Proposal pursuant to a customary confidentiality agreement not less restrictive
of the other party than the Confidentiality Agreement and (y) participate in
discussions or negotiations with such person regarding any Superior Proposal.
Without limiting the foregoing, it is agreed that any violation of the
restrictions set forth in this Section 7.1(a) by any Representative of the
Company or any of its Subsidiaries, whether or not such person is purporting to
act on behalf of the Company or otherwise, shall be deemed to be a breach of
this Section 7.1(a) by the Company.
(b) The Company Board shall recommend the Offer and the Merger to the
Company stockholders, and neither the Company Board nor any committee thereof
shall (i) except as set forth in this Section 7.1, withdraw or modify, or
propose to withdraw or modify, in a manner adverse to the Parent or the Merger
Sub, the approval or recommendation by the Company Board or any such committee
of this Agreement, the Offer or the Merger; (ii) cause or permit the Company to
enter into any letter of intent, memorandum of understanding, agreement in
principle, acquisition agreement, merger agreement or similar agreement (an
"Acquisition Agreement") constituting or relating to any Acquisition Proposal;
or (iii) adopt, approve or recommend, or propose to adopt, approve or recommend,
any Acquisition Proposal. Notwithstanding the foregoing, prior to the Specified
Time and from the third business day following the Parent's receipt of written
notice advising the Parent that the Company Board has decided to accept a
Superior Proposal, specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal, the Company
Board may, in response to a Superior Proposal that did not result from a breach
of this Section 7.1, withdraw or modify the recommendation by the Company Board
of this Agreement, the Offer or the Merger or terminate this Agreement, if the
Company Board determines in good faith, after consultation with outside counsel,
that failure to do so would be inconsistent with its fiduciary obligations (and
concurrently therewith causes the Company to enter into an Acquisition Agreement
with respect to such Superior Proposal). Nothing in this Section 7.1 shall be
deemed to permit the Company to take any action described in clauses (ii) or
(iii) of the first sentence of this Section 7.1(b) unless it has terminated this
Agreement pursuant to Section 9.1(e) and paid to the Parent the fees specified
in Section 9.3.
(c) The Company shall immediately advise the Parent orally, with
written confirmation to follow within 24 hours, of any Acquisition Proposal or
any request for nonpublic information in connection with any Acquisition
Proposal, or any inquiry with respect to, or that could reasonably be expected
to lead to any Acquisition Proposal, the material terms and conditions of any
such Acquisition Proposal or inquiry and the identity of the person making any
- 41 -
such Acquisition Proposal or inquiry. The Company shall not provide any
information to or participate in discussions or negotiations with the person or
entity making any Superior Proposal until two business days after the Company
has first notified the Parent of such Acquisition Proposal as required by the
preceding sentence. The Company shall (i) keep the Parent informed of the status
and details (including any change to the terms) of any such Acquisition Proposal
or inquiry, and (ii) if the Parent shall make a counterproposal, consider and
cause its financial and legal advisors to negotiate on its behalf in good faith
with respect to the terms of such counterproposal. Contemporaneously with
providing any information to a third party in connection with any such Superior
Proposal or inquiry, the Company shall furnish a copy of such information to the
Parent.
(d) Nothing contained in this Agreement shall be deemed to prohibit the
Company from taking and disclosing to its stockholders a position with respect
to a tender or exchange offer by a third party required pursuant to Rule 14d-9
and 14e-2(a) promulgated under the Exchange Act; provided, however, that, except
-------- -------
as set forth in Section 7.1(b), in no event shall the Company Board or any
committee thereof withdraw or modify, or propose to withdraw or modify, its
position with respect to this Agreement, the Offer or the Merger or adopt,
approve or recommend, or propose to adopt, approve or recommend, any Acquisition
Proposal.
(e) The Company shall, and shall cause its Subsidiaries and its and
their Representatives to, cease immediately all discussions and negotiations
regarding any proposal that constitutes, or may reasonably be expected to lead
to, an Acquisition Proposal. The Company shall use its reasonable best efforts
to have all copies of all nonpublic information it or its Subsidiaries and its
and their Representatives have distributed on or prior to the date of this
Agreement to other potential purchasers returned to the Company as soon as
possible.
(f) For purposes of this Agreement:
"Acquisition Proposal" means (i) any inquiry, proposal or offer for a
merger, consolidation, dissolution, sale of substantial assets, tender offer,
recapitalization, share exchange or other business combination involving the
Company or any of its Subsidiaries, (ii) any proposal for the issuance by the
Company or any of its Subsidiaries of over 15% of its equity securities
(provided that, so long as the Stockholder Agreements are in full force and
effect without material breach thereof solely for purposes of Section
9.3(b)(iii), such percentage shall be 40% of its equity securities) or (iii) any
proposal or offer to acquire in any manner, directly or indirectly, over 15%
(provided that, so long as the Stockholder Agreements are in full force and
effect without material breach there of solely for purposes of Section
9.3(b)(iii), such percentage shall be 40%) of the equity securities or
consolidated total assets of the Company, in each case other than the
transactions contemplated by this Agreement.
"Superior Proposal" means any unsolicited, bona fide written proposal
made by a third party to acquire substantially all the equity securities or
assets of the Company, pursuant to a tender or exchange offer, a merger, or a
sale of its assets, (i) on terms which the Company Board determines, at a duly
constituted meeting of the Company Board or by unanimous written
- 42 -
consent, in its reasonable good faith judgment to be reasonably likely to be
more favorable, both financially and otherwise, to the holders of Company Common
Stock than the transactions contemplated by this Agreement (after receiving the
advice of the Company's independent financial advisor that the value of the
consideration provided for in such proposal exceeds the value of the
consideration provided for in the Merger), taking into account all the terms and
conditions of such proposal and this Agreement (including any proposal by the
Parent to amend the terms of this Agreement) and (ii) that in the good faith
judgment of the Company Board (after consultation with outside counsel) is
reasonably capable of being completed timely on the terms proposed, taking into
account all financial, regulatory, legal and other aspects of such proposal; and
for which financing, to the extent required, is then committed or which, in the
reasonable good faith judgment of the Company Board, as expressed in a
resolution adopted at a duly constituted meeting (based on the advice of the
Company's independent financial advisor), is reasonably capable of being
obtained by such third party.
7.2 Efforts; Consents, Notices and Approvals.
----------------------------------------
(a) General. Subject to the terms and conditions herein provided, each
-------
of the parties hereto shall 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 to consummate and make effective, as promptly as practicable
following the date of this Agreement, the Offer, the Merger and the other
transactions contemplated by this Agreement and the Stockholder Agreements, and
to cooperate with each of the other parties hereto in connection with the
foregoing, including using its reasonable best efforts: (A) to obtain all
necessary waivers, consents and approvals from third parties; (B) to obtain all
necessary consents, approvals and authorizations as are required to be obtained
under any federal, state or foreign laws or regulations; (C) to lift or rescind
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby; (D)
to effect all necessary registrations and filings, including filings under the
HSR Act and submissions of information requested by governmental authorities;
and (E) to fulfill all conditions to this Agreement. Notwithstanding anything to
the contrary contained in this Agreement, in connection with any filing or
submission required or action to be taken by either the Parent or the Company to
effect the Offer, the Merger and to consummate the other transactions
contemplated hereby, the Company shall not, without the Parent's prior written
consent, commit to any divestiture transaction, and neither the Parent nor any
of its Affiliates shall be required to divest or hold separate or otherwise take
or commit to take any action that limits its freedom of action with respect to,
or its ability to retain, the Company or any of the businesses or assets of the
Parent or any of its Affiliates or that otherwise would result in a change,
event, circumstance, development or effect that is or is reasonably likely to
have a materially adverse effect on the business, assets, liabilities,
capitalization, prospects, condition (financial or other), or results of
operations of the Parent and the Affiliates of Parent which are controlled by
Parent ("Controlled Parent Affiliates"), taken as a whole, or of any of Parent's
other Affiliates.
(b) Without limitation, for purposes of the foregoing, the obligation
of the Parent and the Merger Sub to use "reasonable best efforts" to obtain
waivers, consents and
- 43 -
approvals to loan agreements, leases and other contracts shall not include any
obligation to agree to a modification of the terms of such documents, or to make
any guaranty or monetary payment in consideration of such waiver, consent or
approval.
(c) Notifications by Company. The Company shall confer with the Parent
------------------------
on a regular and frequent basis as reasonably requested by the Parent concerning
operational matters and promptly advise the Parent orally and in writing of any
change or event having, or which, insofar as reasonably can be foreseen, could
have, a Material Adverse Effect. The Company shall promptly provide to the
Parent (or its counsel) copies of all filings made by the Company with any
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
(d) State Takeover Law. Without limiting the generality of Section
------------------
7.2(a), if any "fair price" or "business combination" or "control share
acquisition" or "anti-takeover" statute, or other similar statute or regulation
or any state "blue sky" statute shall become applicable to the transactions
contemplated by this Agreement or by the Stockholder Agreements, the Company and
the Company Board shall grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby and thereby may be
consummated as promptly as practicable on the terms contemplated hereby and
thereby, and otherwise act to minimize the effects of such statute or regulation
on the transactions contemplated hereby or thereby.
7.3 Notification of Certain Matters.
-------------------------------
(a) By the Company. The Company shall give prompt notice to the Parent
--------------
of (i) the inaccuracy of representation or warranty made by the Company
contained in this Agreement that is qualified as to materiality becoming untrue
or inaccurate in any respect or any such representation or warranty that is not
so qualified becoming untrue or inaccurate in any material respect, or (ii) the
failure by the Company to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; provided, however, that no such notification shall be deemed to
-------- -------
cure any breach or otherwise affect the representations, warranties, covenants
or agreements of the Company or the conditions to the obligations of the parties
hereunder. Without limiting the foregoing, the Company shall, promptly and in
any event within 24 hours after it has notice of any of the following, notify
the Parent of:
(i) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection
with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any Governmental
Entity in connection with the transactions contemplated by this
Agreement; and
- 44 -
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge, threatened against,
relating to or involving or otherwise affecting the Company or any
Subsidiary which, if pending on the date of this Agreement would have
been required to have been disclosed pursuant to this Agreement or
which relate to the consummation of the transaction contemplated
hereby.
(b) By the Parent. The Parent shall give prompt notice to the Company
-------------
of (i) any representation or warranty made by the Parent or the Merger Sub
contained in this Agreement that is qualified as to materiality becoming untrue
or inaccurate in any respect or any such representation or warranty that is not
so qualified becoming untrue or inaccurate in any material respect, or (ii) the
failure by the Parent or the Merger Sub to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by them under this Agreement; provided, however, that no such
-------- -------
notification shall be deemed to cure any breach or otherwise affect the
representations, warranties, covenants or agreements of the Parent or the Merger
Sub or the conditions to the obligations of the parties hereunder.
7.4 Company Stockholder Approval of the Merger.
------------------------------------------
(a) Calling of Company Stockholders Meeting. If the approval of this
---------------------------------------
Agreement by the stockholders of the Company is required under the GBCC in order
to consummate the Merger, the Company shall, acting through the Company Board,
at the Parent's request, as soon as practicable following the acceptance for
payment of, and payment for, Shares by the Merger Sub in the Offer (coordinating
the timing thereof with the Parent), duly call, give notice of, convene and hold
a meeting of its stockholders (the "Company Stockholders Meeting") for the
purpose of obtaining such stockholder approval. The Company shall, through the
Company Board, recommend to its stockholders that they approve this Agreement
and approve the Merger. Without limiting the generality of the foregoing, the
Company agrees that its obligations pursuant to the first sentence of this
Section 7.4(a) shall not be affected by (i) the commencement, public proposal,
public disclosure or communication to the Company of any Acquisition Proposal or
(ii) the withdrawal or modification by the Company Board of its approval or
recommendation of this Agreement, the Offer or the Merger. Notwithstanding the
foregoing, if the Merger Sub or any other subsidiary of the Parent shall acquire
at least 90% of the outstanding Shares, the parties shall, at the request of the
Parent, take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
stockholders meeting in accordance with Section 14-2-1104 of the GBCC. To the
extent permitted by the GBCC and Article 7.1 of the Company's Articles of
Incorporation, as amended, and in accordance with all relevant provisions
thereof, at Parent's request, the Company shall take all necessary and
appropriate action to obtain the requisite approval and adoption by the
Company's stockholders of this Agreement and the Merger by written consent
without a meeting.
(b) Preparation of Proxy Statement. If the approval of this Agreement
------------------------------
by the stockholders of the Company is required under the GBCC in order to
consummate the Merger,
- 45 -
the Company shall, at the Parent's request, as soon as practicable following the
acceptance for payment of, and payment for, shares by the Merger Sub in the
Offer, prepare and file with the SEC a proxy or information statement (the
"Proxy Statement") in accordance with the Exchange Act and any other applicable
laws, and will use its commercially reasonable efforts to respond to any
comments of the SEC or its staff and to cause the Proxy Statement to be mailed
to the Company's stockholders as promptly as practicable after responding to all
such comments to the satisfaction of the staff. The Company shall notify the
Parent promptly upon the receipt of any comments from the SEC or its staff or
any other government officials and of any request by the SEC or its staff or any
other government officials for amendments or supplements to the Proxy Statement
or for additional information, and shall supply the Parent with copies of all
correspondence between the Company or any of its representatives, on the one
hand, and the SEC, or its staff, or any other government officials on the other
hand with respect to the Proxy Statement. The Company shall consult with the
Parent and its counsel prior to responding to any comments from the SEC or its
staff or any other government officials. If at any time prior to the Company
Stockholders Meeting there shall occur any event that should be set forth in an
amendment or supplement to the Proxy Statement, the Company shall promptly
prepare and mail to its stockholders and file with the SEC any such amendment or
supplement. The Company shall not mail any Proxy Statement, or any amendment or
supplement thereto, to the Company's stockholders unless it has first obtained
the consent of the Parent to such mailing, which consent shall not be
unreasonably withheld.
(c) Voting of Shares by the Parent and the Merger Sub. The Parent
-------------------------------------------------
shall cause all Shares purchased by the Merger Sub pursuant to the Offer and all
other Shares owned by the Parent or the Merger Sub or any other subsidiary of
the Parent to be voted in favor of the approval of this Agreement.
7.5 Access to Information. The Company shall, and shall cause each of
---------------------
its Subsidiaries and the Company's and such Subsidiaries' Representatives to,
afford to the Parent and its Representatives reasonable access, at all
reasonable times, during the period prior to the Effective Time, to all of the
Company's and any of its Subsidiaries', properties, books, records, contracts,
commitments and personnel and shall furnish the Parent all financial, operating
and other data and information as the Parent may reasonably request. Unless
otherwise required by law, the Parent will hold any such information which is
nonpublic in confidence in accordance with the Confidentiality Agreement.
Without limiting the generality of the foregoing, the Company shall, within two
business days of any request therefor, provide to the Parent the information
described in Rule 14a-7(a)(2)(ii) under the Exchange Act and any information to
which a holder of Company Common Stock would be entitled under Section 14-2-1602
of the GBCC (assuming such holder met the requirements of such section). The
Company shall use its commercially reasonable efforts to secure for the Company
access to and copies of the workpapers of its independent public accountants. No
information or knowledge obtained in any investigation pursuant to this Section
or otherwise shall affect or be deemed to modify any representation or warranty
contained in the Agreement or the conditions to the obligations of the parties
to consummate the Offer or the Merger.
- 46 -
7.6 Public Disclosure. Except as may be required by law or stock market
-----------------
regulations, (i) the press release announcing the execution of this Agreement
shall be issued only in such form as shall be mutually agreed upon by the
Company and the Parent and (ii) the Parent and the Company shall each use its
reasonable best efforts to consult with the other party before issuing, and
provide each other with a reasonable opportunity to review and comment upon, any
other press release or otherwise making any public statement with respect to the
transactions contemplated by this Agreement, including the Offer and the Merger,
and shall not issue any such press release or make any such public statement
prior to using such efforts; provided that nothing in this Section 7.6 shall be
deemed to prohibit any party from making any disclosure which its counsel deems
necessary or advisable in order to satisfy such party's disclosure obligations
imposed by law.
7.7 Indemnification.
---------------
(a) For a period of six years from and after the Effective Time, in the
event of any threatened or actual claim, action, suit, proceeding, or
investigation, whether civil, criminal, or administrative, including, without
limitation, any such claim, action, suit, proceeding or investigation in which
any person who is now, or has been at any time prior to the date of this
Agreement, a director or officer of the Company (the "Indemnified Parties") is,
or is threatened to be, made a party based in whole or in part on, or arising in
whole or in part out of, or pertaining to (i) the fact that he or she is or was
a director, officer, or employee of the Company, or (ii) this Agreement or any
of the transactions contemplated hereby, whether in any case asserted or arising
before or after the Effective Time, the Surviving Corporation shall indemnify
and hold harmless, as and to the fullest extent permitted by law, each such
Indemnified Party against any liability (including reasonable attorneys' fees
and expenses in advance of the final disposition of any claim, suit, proceeding,
or investigation to each Indemnified Party to the fullest extent permitted by
law upon receipt of any undertaking required by applicable law in form and
substance which is reasonably satisfactory to the Surviving Corporation),
judgments, fines, and amounts paid in settlement in connection with any such
threatened or actual claim, action, suit, proceeding, or investigation, and in
the event of any such threatened or actual claim, action, suit, proceeding, or
investigation (whether asserted or arising before or after the Effective Time),
the Indemnified Parties may retain counsel reasonably satisfactory to them;
provided, however, that (a) the Surviving Corporation shall have the right to
assume the defense thereof and upon such assumption the Surviving Corporation
shall not be liable to any Indemnified Party for any legal expenses of other
counsel or any other expenses subsequently incurred by any Indemnified Party in
connection with the defense thereof, except that if the Surviving Corporation
elects not to assume such defense or counsel for the Indemnified Parties
reasonably advises the Indemnified Parties that there are issues which raise
conflicts of interest between the Surviving Corporation and the Indemnified
Parties, the Indemnified Parties may retain one (but only one) counsel
reasonably satisfactory to them and Surviving Corporation, and in such instance
the Surviving Corporation shall pay the reasonable fees and expenses of such
counsel for the Indemnified Parties, (b) the Surviving Corporation shall not be
liable for any settlement effected without its prior written consent, and (c)
the Surviving Corporation shall have no obligation hereunder to any Indemnified
Party when and if a court of competent jurisdiction shall
- 47 -
ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
(b) The Surviving Corporation agrees that all rights to indemnification
and all limitations on liability existing in favor of the directors, officers,
and employees of the Company and its Subsidiaries (the "Covered Parties") as
provided in their respective articles of incorporation, bylaws, or similar
governing instruments as in effect as of the date of this Agreement with respect
to matters occurring prior to the Effective Time shall survive the Merger and
shall continue in full force and effect, and shall be honored by such entities
or their respective successors as if they were the indemnifying party
thereunder, without any amendment thereto, for a period of six years after the
Effective Time; provided, further, however, that nothing contained in this
Section 7.7(b) shall be deemed to preclude the liquidation, consolidation, or
merger of the Company or any Company Subsidiary, in which case all of such
rights to indemnification and limitations on liability shall be deemed to so
survive and continue notwithstanding any such liquidation, consolidation, or
merger. Without limiting the foregoing, in any case in which approval by the
Surviving Corporation is required to effectuate any indemnification, the Parent
shall direct, at the election of the Indemnified Party, that the determination
of any such approval shall be made after consultation with independent counsel
mutually agreed upon between the Surviving Corporation and the Indemnified
Party.
(c) The Parent, from and after the Effective Time, will directly or
indirectly cause the persons who served as directors or officers of the Company
at or before the Effective Time to be covered by the Company's existing
directors' and officers' liability insurance policy (provided that the Parent
may substitute therefor policies of substantially similar coverage and amounts
containing terms and conditions which are not less advantageous than such
policy), provided that the Parent shall not be required to pay an annual premium
for such insurance in excess of 200% of the last annual premiums paid prior to
the date hereof (which premiums the Company has disclosed to the Parent), but in
such case shall purchase as much coverage as possible for such amount. Such
insurance coverage shall commence at the Effective Time and will be provided for
a period of no less than six years after the Effective Time.
(d) If the Parent or any of its successors or assigns shall consolidate
with or merge into any other person and shall not be the continuing or surviving
person of such consolidation or merger or shall transfer all or substantially
all of its assets to any person, then and in each case, proper provision shall
be made so that the successors and assigns of the Parent shall assume the
obligations set forth in this Section 7.7.
7.8 Company Stock Options; Warrants; Convertible Debt.
-------------------------------------------------
(a) Payment for Company Stock Options. As soon as practicable following
---------------------------------
the date of this Agreement, the Company Board (or, if appropriate, any committee
administering the Company Stock Plans) shall adopt such resolutions or take such
other actions as are required to adjust the terms of all outstanding Company
Stock Options heretofore granted under any
- 48 -
Company Stock Plan to provide that each Company Stock Option outstanding shall
be canceled in exchange for a cash payment by the Company at the Effective Time
of an amount equal to (i) the excess, if any, of (x) the Merger Consideration
per Share over (y) the exercise price per Share subject to such Company Stock
Option, multiplied by (ii) the number of Shares for which such Company Stock
Option shall not theretofore have been exercised. The Company shall use its best
efforts to obtain all consents of the holders of the Company Stock Options as
shall be necessary to effectuate the foregoing. Notwithstanding anything to the
contrary contained in this Agreement, payment shall, at the Parent's request, be
withheld in respect of any Company Stock Option until all necessary consents are
obtained.
(b) Withholding Taxes; Consents Required; No Acceleration. All amounts
-----------------------------------------------------
payable pursuant to this Section 7.8 shall be subject to any required
withholding of Taxes and shall be paid without interest.
(c) Termination of Company Stock Plans. The Company Stock Plans shall
----------------------------------
terminate as of the Effective Time, and the provisions in any other Company
Employee Plan providing for the issuance, transfer or grant of any capital stock
of the Company or any interest in respect of any capital stock of the Company
shall terminate and be deleted as of the Effective Time or (if permissible) at
the Merger Sub's request, upon the initial acceptance of the Shares pursuant to
the Offer, and the Company shall ensure that following the Effective Time no
holder of a Company Stock Option or any participant in any Company Stock Plan or
other Company Employee Plan shall have any right thereunder to acquire any
capital stock of the Company or the Surviving Corporation.
(d) Payment of Company Warrants. As soon as practicable following the
---------------------------
date of this Agreement, the Company Board shall adopt such resolutions or take
such other actions as are required to adjust the terms of all outstanding
Company Warrants heretofore granted to provide that each Company Warrant
outstanding shall be canceled in exchange for a cash payment by the Company at
the Effective Time of an amount equal to (i) the excess, if any, of (x) the
Merger Consideration per Share over (y) the exercise price per Share subject to
such Company Warrant, multiplied by (ii) the number of Shares for which such
Company Warrant shall not theretofore have been exercised. The Company shall use
its commercially reasonable efforts to obtain all consents of the holders of the
Company Warrants as shall be necessary to effectuate the foregoing.
(e) Treatment of Convertible Debt. The Company shall take all actions
-----------------------------
necessary to block the conversion into Company Common Stock of any unpaid
principal and interest outstanding under that certain Amended and Restated
Credit Agreement, dated February 27, 2001, between the Company and Omnicom
Finance, Inc., as amended (the "Company Credit Agreement") including, but not
limited to issuing a conversion blockage notice and prepaying any unpaid
principal and interest thereunder in cash within ten business days after the
delivery of such conversion blockage notice. The Company shall repay all unpaid
amounts of principal and interest under the Company Credit Agreement in full
prior to the Effective Time. Unless the obligation to make such repayment is
waived by Parent, Parent shall provide financing on commercially reasonable
terms in light of the nature of this transaction in amounts sufficient to
- 49 -
satisfy such obligation to Omnicom Finance, Inc. under the terms of the Company
Credit Agreement as in effect on the date of this Agreement.
7.9 Employee Stock Purchase Plan. As soon as practicable following the
----------------------------
date of this Agreement, the Company Board or, if appropriate, any committee
administering the Company 2000 Employee Stock Purchase Plan (the "ESPP"), shall,
if permitted by the terms of the ESPP, adopt such resolutions or take such
actions as are required to (i) cancel all options under such plan and (ii)
terminate such plan prior to the Effective Time and return all payroll
deductions credited to the participants in such plan entitled thereto.
7.10 Stockholder Litigation. The Company shall keep the Parent fully
----------------------
informed of any stockholder litigation against the Company and its directors
relating to any Transaction; provided, however, that no settlement of any such
litigation shall be agreed to without the Parent's consent.
7.11 401(k) Plan. In the event Closing occurs before October 1, 2001,
-----------
the Company will amend its 401(k) Plan to provide that it covers only employees
of the Company.
ARTICLE VIII
CONDITIONS
----------
8.1 Conditions to Obligation of Each Party to Effect the Merger. The
-----------------------------------------------------------
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of each of the following
conditions:
(a) the Parent or the Merger Sub shall have made, or caused to be
made, the Offer on the terms and conditions set forth therein and shall have
purchased, or caused to be purchased, all Shares validly tendered and not
withdrawn pursuant to the Offer;
(b) this Agreement and the Merger shall have been approved and
adopted by the requisite vote or consent of the stockholders of the Company, if
any, required by the GBCC and the Company's Articles of Incorporation, as
amended;
(c) any requisite waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act and any other
applicable competition, merger, control, antitrust or similar law or regulation
shall have expired or been terminated; and
(d) no temporary restraining order, preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by any Governmental Entity nor any statute, rule, regulation or
executive order promulgated or enacted by any Governmental Entity shall be in
effect, which would make the acquisition or holding by the Parent or its
subsidiaries of the Shares or shares of common stock of the Surviving
Corporation illegal or otherwise prevent the consummation of the Merger.
- 50 -
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
9.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Effective Time, whether prior to or after approval by the stockholders of
the Company, as follows:
(a) subject to Section 1.3(c), by mutual written consent of the
Parent and the Company;
(b) by either the Parent or the Company:
(i) if (x) as a result of the failure of any of the offer
conditions set forth in Annex I the Offer shall have terminated or
-------
expired in accordance with its terms without the Merger Sub having
accepted for payment any Shares pursuant to the Offer or (y) the Merger
Sub shall not have accepted for payment any Shares pursuant to the
Offer on or before November 20, 2001, provided that if on such date
each of the offer conditions other than the HSR Condition has been
fulfilled or is capable of being fulfilled, then such date shall be
extended to January 20, 2002 (as applicable, the "Outside Date");
provided, further, however, that the right to terminate this Agreement
-------- ------- -------
pursuant to this Section 9.1(b)(i) shall not be available to any party
whose failure to fulfill any obligations under this Agreement has been
a principal cause of or resulted in the failure of the Offer to be
consummated on or before the Outside Date; or
(ii) if any Governmental Entity issues an order, decree or
ruling or takes any other action permanently enjoining, restraining or
otherwise prohibiting the acceptance for payment of, or payment for,
any Shares pursuant to the Offer or the Merger and such order, decree,
ruling or other action shall have become final and nonappealable;
provided, however, that the right to terminate this Agreement pursuant
to this Section 9.1(b)(ii) shall not be available to any party which
has not performed its obligations under Section 7.2;
(c) by the Parent prior to the purchase of Shares pursuant to the
Offer:
(i) in the event of a breach by the Company of any
representation, warranty, covenant or other agreement contained in this
Agreement which (X) would give rise to the failure of a condition set
forth in paragraph (ii)(E) or (ii)(F) of Annex I and (Y) cannot be or
-------
has not been cured within 20 days after the giving of written notice to
the Company; or
(ii) if the Parent is entitled to terminate the Offer as a
result of the occurrence of any event set forth in paragraph (ii)(G) of
Annex I or if the Company breaches Section 7.1.
-------
- 51 -
(d) by the Company, prior to the purchase of any Shares pursuant to the
Offer, if the Parent or the Merger Sub breaches or fails to perform in any
material respect any of their respective representations, warranties or
covenants contained in this Agreement, which breach or failure to perform
materially impairs the Parent's and the Merger Sub's ability to consummate the
Offer or the Merger and which breach or failure to perform cannot be or has not
been cured within 20 days after the giving of written notice to the Parent of
such breach (provided that the Company is not then in material breach of any
representation, warranty or covenant contained in this Agreement); or
(e) by the Company in connection with entering into a definitive
agreement as permitted by Section 7.1(b), provided the Company has complied with
all provisions thereof, including the notice provisions therein, and that the
Company makes simultaneous payment to the Parent of funds as required by Section
9.3(b).
9.2 Effect of Termination. In the event of the termination of this
---------------------
Agreement as provided in Section 9.1, all obligations and agreements of the
parties set forth in this Agreement shall forthwith terminate and be of no
further force or effect, and there shall be no liability on the part of the
Parent, the Merger Sub or the Company hereunder, except as set forth in 4.24,
Section 5.5, Section 6.2, this Section 9.2, Section 9.3 and Article X, which
provisions shall survive such termination; provided that the foregoing shall not
relieve any party for liability for a willful or intentional breach of this
Agreement.
9.3 Fees and Expenses.
-----------------
(a) General. Except as otherwise provided in Section 9.2 or this
-------
Section 9.3, each party shall bear all of the fees and expenses incurred by it
in connection with the negotiation and performance of this Agreement, and no
party may recover any such fees and expenses from the other parties upon any
termination of this Agreement.
(b) Payment of Fees by the Company to the Parent. The Company shall
--------------------------------------------
immediately pay to the Parent the following amounts under the circumstances and
on the terms set forth as follows, in cash by wire transfer of same-day
available funds if:
(i) the Company terminates this Agreement pursuant to Section
9.1(e), the Company shall pay the Termination Fee (as defined in
Section 9.3(c)) within one business day following such termination;
(ii) the Parent terminates this Agreement pursuant to Section
9.1(c)(ii) or as a result of the Company's breach of or failure to
perform Section 7.1, the Company shall pay the Termination Fee within
one business day following such termination; and
(iii) the Parent terminates this Agreement pursuant to Section
9.1(c)(i) and after the date hereof and prior to such termination an
Acquisition Proposal shall have been made (x) the Company shall pay the
Expenses of the Parent upon
- 52 -
demand, and (y) if concurrently therewith or within nine months
thereafter, the Company enters into a merger agreement, acquisition
agreement or similar agreement (including a letter of intent) with
respect to an Acquisition Proposal, or an Acquisition Proposal is
consummated, then, the Company shall pay the Termination Fee upon the
earlier of the execution of such agreement or upon consummation of such
Acquisition Proposal.
(c) Termination Fee and Expenses. For the purpose of this Agreement,
----------------------------
(i) "Expenses" means documented out-of-pocket fees and expenses incurred or paid
by or on behalf of the Parent and/or the Merger Sub in connection with the
Offer, the Merger or the consummation of any of the transactions contemplated by
this Agreement, including all fees and expenses of law firms, investment banking
firms, accountants, experts and consultants to the Parent and/or the Merger Sub,
and (ii) "Termination Fee" means $8,000,000, less the aggregate amount of
Expenses paid to the Parent pursuant to this Agreement.
9.4 Amendment. At any time prior to the Effective Time, the parties may amend,
---------
modify and supplement this Agreement in any and all respects, whether before or
after any vote of the stockholders of the Company contemplated hereby; provided,
--------
however, that after any such stockholder approvals shall have been obtained, no
- -------
amendment shall be made which, under applicable law, requires the further
approval of such stockholders without such approval. Any such amendment,
modification or supplement shall be valid only if set forth in a written
instrument executed and delivered by a duly authorized officer on behalf of each
of the parties.
9.5 Extension; Waiver. At any time prior to the Effective Time, the parties
-----------------
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties, (b) waive any inaccuracies in the representations and
warranties of the other parties contained in this Agreement or in any document
delivered pursuant to this Agreement, or (c) subject to the proviso in Section
9.4, waive compliance with any of the agreements or conditions of the other
parties contained in this Agreement. Any agreement on the part of a party to any
such extension or waiver shall be valid only if set forth in a written
instrument executed and delivered by a duly authorized officer on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights.
9.6 Procedure for Termination, Amendment, Extension or Waiver. A termination
---------------------------------------------------------
of this Agreement pursuant to Section 9.1, an amendment, modification or
supplement of this Agreement pursuant to Section 9.4 or an extension or waiver
of this Agreement pursuant to Section 9.5 shall, in order to be effective,
require, in the case of the Merger Sub or the Company, action by its Board of
Directors or the duly authorized designee of its Board of Directors (which, in
the case of the Company, shall include the approval contemplated by Section
1.3(c)).
- 53 -
ARTICLE X
MISCELLANEOUS
-------------
10.1 Nonsurvival of Representations and Warranties. The respective
---------------------------------------------
representations and warranties of the Company, the Parent and the Merger Sub
contained in this Agreement shall expire with, and be terminated and
extinguished upon, the Effective Time. This Section 10.1 shall have no effect
upon any other obligation of the parties hereto, whether to be performed before
or after the consummation of the Merger.
10.2 Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed duly delivered if delivered by hand, by facsimile
transmission, or by courier or overnight carrier to the persons at the addresses
set forth below:
(a) If to the Parent or the Merger Sub:
c/o CareerBuilder, Inc.
10970 Parkridge Boulevard
Suite 200
Reston, VA 20191
Attention: Robert J. McGovern
Facsimile No.: 703-259-5510
with a copy to:
Hale and Dorr LLP
11951 Freedom Drive, Suite 1400
Reston, Virginia 20190
Attention: Donald L. Toker, Jr., Esq.
Facsimile No. (703) 654-7100
(b) If to the Company:
333 Research Court
Suite 200
Norcross, GA 30092
Attention: Robert M. Montgomery
Facsimile No.:
with a copy to:
Alston & Bird LLP
- 54 -
1201 West Peachtree Street
Atlanta, GA 30390
Attention: J. Vaughan Curtis, Esq.
Telecopy No.: (404) 881-7777
Any party to this Agreement may give any notice or other communication
hereunder using any other means (including personal delivery, messenger service,
telecopy, telex, ordinary mail or electronic mail), but no such notice or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended.
Any party to this Agreement may change the address to which notices and
other communications hereunder are to be delivered by giving the other parties
to this Agreement notice in the manner herein set forth.
10.3 Entire Agreement. This Agreement (including the Schedules and
----------------
Exhibits hereto) constitutes the entire agreement among the parties hereto and
supersedes any prior understandings, agreements or representations by or among
the parties hereto, or any of them, written or oral, with respect to the subject
matter hereof; provided that the Confidentiality Agreement shall remain in
effect in accordance with its terms.
10.4 No Third Party Beneficiaries. Except as provided in Section 7.7
----------------------------
above, this Agreement is not intended, and shall not be deemed, to confer any
rights or remedies upon any other person other than the parties hereto and their
respective successors and permitted assigns, to create any agreement of
employment with any person or to otherwise create any third-party beneficiary
hereto.
10.5 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise by any of the parties hereto
without the prior written consent of the other parties, and any such assignment
without such prior written consent shall be null and void, except that the
Parent and/or the Merger Sub may assign this Agreement to any direct or indirect
wholly owned Subsidiary of the Parent without the consent of the Company,
provided that the Parent and/or the Merger Sub, as the case may be, shall remain
liable for all of its obligations under this Agreement. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and permitted
assigns.
10.6 Severability. Any term or provision of this Agreement that is
------------
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the
- 55 -
parties hereto agree that the court making such determination shall have the
power to limit the term or provision, to delete specific words or phrases, or to
replace any invalid or unenforceable term or provision with a term or provision
that is valid and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified. In the event such court does not exercise the power
granted to it in the prior sentence, the parties hereto agree to replace such
invalid or unenforceable term or provision with a valid and enforceable term or
provision that will achieve, to the extent possible, the economic, business and
other purposes of such invalid or unenforceable term.
10.7 Counterparts and Signature. This Agreement may be executed in two
--------------------------
or more counterparts, each of which shall be deemed an original but all of which
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties hereto and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart. This Agreement may be executed and delivered by
facsimile transmission.
10.8 Interpretation. When reference is made in this Agreement to an
--------------
Article or a Section, such reference shall be to an Article or a Section of this
Agreement unless otherwise indicated. The table of contents, table of defined
terms and headings contained in this Agreement are for convenience of reference
only and shall not affect in any way the meaning or interpretation of this
Agreement. The language used in this Agreement shall be deemed to be the
language chosen by the Parties to express their mutual intent, and no rule of
strict construction shall be applied against any Party. Whenever the context may
require, any pronouns used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns and pronouns
shall include the plural, and vice versa. Any reference to any federal, state,
local or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
Whenever the words "include", "includes" or "including" are used in this
Agreement, including Annex I, they shall be deemed to be followed by the words
-------
"without limitation." For purposes of this Agreement, the Company shall not be
deemed to be an Affiliate or Subsidiary of the Merger Sub or the Parent. No
summary of this Agreement prepared by any party shall affect the meaning or
interpretation of this Agreement.
10.9 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the internal laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of laws
of any jurisdictions other than those of the State of Delaware; except to the
extent that the laws of the State of Georgia apply to the Merger and the rights
of the Company stockholders relative to the Merger.
10.10 Remedies. Except as otherwise provided herein, any and all
--------
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy. The parties hereto agree that
- 56 -
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. Accordingly, the parties hereto 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, this being in addition
to any other remedy to which they are entitled at law or in equity.
10.11 Submission to Jurisdiction. Each of the parties hereto (a)
--------------------------
consents to submit itself to the personal jurisdiction of any state or federal
court sitting in the State of Delaware in any action or proceeding arising out
of or relating to this Agreement or any of the transactions contemplated by this
Agreement, (b) agrees that all claims in respect of such action or proceeding
may be heard and determined in any such court, (c) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court, and (d) agrees not to bring any action or
proceeding arising out of or relating to this Agreement or any of the
transaction contemplated by this Agreement in any other court. Each of the
parties hereto waives any defense or inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety or other
security that might be required of any other party with respect thereto. Any
party hereto may make service on another party by sending or delivering a copy
of the process to the party to be served at the address and in the manner
provided for the giving of notices in Section 10.2. Nothing in this Section
10.11, however, shall affect the right of any party to serve legal process in
any other manner permitted by law.
10.12 WAIVER OF JURY TRIAL. EACH OF THE PARENT, THE MERGER SUB AND THE
--------------------
COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THE ACTIONS OF THE PARENT, THE MERGER SUB OR THE COMPANY IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
[Remainder of page intentionally left blank.]
- 57 -
SIGNATURE PAGE TO THE AGREEMENT AND PLAN OF MERGER
IN WITNESS WHEREOF, the Parent, the Merger Sub and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
PARENT COMPANY
Date of Execution: August 22, 2001 By: /s/ JAMES THOLEN
-----------------------------------
Name: James Tholen
------------------------------
Title: Vice President
-----------------------------
BIDDER COMPANY
Date of Execution: August 22, 2001 By: /s/ JAMES THOLEN
-----------------------------------
Name: James Tholen
------------------------------
Title: Vice President
-----------------------------
SUBJECT COMPANY
Date of Execution: August 24, 2001 By: /s/ ROBERT M. MONTGOMERY
-----------------------------------
Name: Robert M. Montgomery
------------------------------
Title: Chief Executive Officer
-----------------------------
- 58 -
ANNEX I
-------
CONDITIONS OF THE OFFER
Capitalized terms used in this Annex I but not defined herein have the
meanings assigned to such terms in the Agreement and Plan of Merger (the
"Agreement") of which this Annex I is a part.
Notwithstanding any other provisions of the Offer or the Agreement, and in
addition to (and not in limitation of) the Merger Sub's rights to extend and
amend the Offer at any time in its sole discretion (subject to the provisions of
the Agreement), the Merger Sub 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 the Merger Sub'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 may
terminate or amend the Offer as to any Shares not then paid for, if:
(i) prior to the expiration date of the Offer, (A) the Minimum
Condition shall not have been satisfied, or (B) any waiting period under the HSR
Act pursuant to the Offer shall not have expired or been terminated ("HSR
Condition"), or
(ii) at any time on or after the date of the Agreement and prior to the
expiration date of the Offer, any of the following conditions shall exist and be
continuing:
(A) there shall be threatened in writing, instituted or pending
any suit, action or proceeding by any Governmental Entity (1) seeking to
challenge, or which could reasonably be expected to make illegal, impede, delay
or otherwise directly or indirectly restrain, prohibit or make materially more
costly, the transactions contemplated by the Agreement or the Stockholder
Agreements, including the Offer and the Merger, or seeking to obtain from the
Company or (to the extent it relates to the transactions contemplated by the
Agreement or the Stockholder Agreements, including the Offer or the Merger) the
Parent or any of its Affiliates, any material damages, (2) seeking to prohibit
or limit the ownership or operation by the Company, the Parent or the Merger Sub
of all or any material portion of the business or assets of the Company and its
Subsidiaries taken as a whole or (to the extent it relates to the transactions
contemplated by the Agreement or the Stockholder Agreements, including the Offer
or the Merger) of the Parent and its Affiliates, (3) seeking to compel the
Company, the Parent or the Merger Sub to dispose of or to hold separate all or
any material portion of the business or assets of the Company or any of its
Subsidiaries taken as a whole or (to the extent it relates to the transactions
contemplated by the Agreement or the Stockholder Agreements, including the Offer
or the Merger) of the Parent or any of its Affiliates, (4) seeking to impose any
material limitation on the ability of the Company, the Parent or the Merger Sub
to conduct the business or own a material portion of the assets of the Company
and its Subsidiaries taken as a whole, or (to the extent it relates to the
transactions contemplated by the Agreement or Stockholder Agreements, including
the Offer or the Merger)
A - 1
of the Parent or any of its Affiliates, (5) seeking to impose limitations on the
ability of the Parent or the Merger Sub to acquire or hold, or to exercise full
rights of ownership of any Shares, including the right to vote such Shares on
all matters properly presented to the Company's stockholders, (6) seeking to
require divestiture by the Parent or the Merger Sub of all or any of the Shares,
(7) seeking to impose material limitations on the ability of the Merger Sub, or
rendering the Merger Sub unable, to accept for payment, pay for or purchase all
of the Shares pursuant to the Offer and the Merger, or (8) that otherwise has
resulted in, or could reasonably be expected to result in, a Material Adverse
Effect;
(B) there shall be any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction enacted,
promulgated, entered, enforced, amended or issued, by any Governmental Entity,
which is applicable to or deemed applicable to (x) the Parent, the Merger Sub,
the Company or any Subsidiary of the Company or (y) the Offer, the Merger, the
Agreement or the Stockholder Agreements, other than the routine application to
the Offer, the Merger or the transactions contemplated by the Stockholder
Agreements of the waiting period provisions under the HSR Act, that result in,
or could reasonably be expected to result in, directly or indirectly, any of the
consequences referred to in paragraph (ii)(A) above;
(C) any change or event shall have occurred which has had or
could reasonably be expected to result in, a Material Adverse Effect;
(D) there shall have occurred (1) any general suspension of
trading in, or limitation on prices for, securities on any U.S. securities
exchange or in the Nasdaq National Market for a period in excess of five hours
(excluding any coordinated trading halt triggered solely as a result of a
specified decrease in a market index and any suspensions or limitations
resulting solely from physical damage or interference with such markets not
related to market conditions), (2) any decline in any of the Dow Jones
Industrial Average or the Nasdaq National Market in excess of 40% measured from
the close of business on the trading day immediately preceding the date of the
Agreement, (3) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (4) any material limitation
(whether or not mandatory) by any Governmental Entity on the extension of credit
by banks or other financial institutions, (5) a commencement or escalation of a
war or armed hostilities or other national or international calamity directly or
indirectly involving the United States, or (6) in the case of any of the
foregoing existing at the date of the Agreement, an acceleration or worsening
thereof;
(E) (I) the representations and warranties of the Company set
forth in Section 4.2 of the Agreement shall be inaccurate in any respect except
for de minimis amounts as of the date of the Agreement or the scheduled or
extended expiration date of the Offer, (II) the representations and warranties
of the Company set forth in Section 4.3 of the Agreement shall be inaccurate in
any material respect as of the date of the Agreement or the scheduled or
extended expiration date of the Offer or (III) the representations and
warranties of the Company set forth
A - 2
in the Agreement (other than Sections 4.2 and 4.3 of the Agreement) shall be
inaccurate as of the date of the Agreement or the scheduled or extended
expiration date of the Offer (except to the extent that any such representation
or warranty refers specifically to a particular date, in which case such
representation or warranty shall be true and correct as of such date) unless the
inaccuracies (without giving effect to any materiality or Material Adverse
Effect qualification or expectations contained therein) under such
representations and warranties, taking all the inaccuracies under all such
representations and warranties together in their entirety, do not result in a
Material Adverse Effect;
(F) the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with any agreement
or covenant of the Company to be performed or complied with by it under the
Agreement;
(G) (1) the Company Board or any committee thereof shall have
(A) withdrawn or modified, or proposed to withdraw or modify, in a manner
adverse to the Parent or the Merger Sub its approval or recommendation of the
Offer, the Merger, the Agreement or the Stockholder Agreements, or (B) approved
or recommended, or proposed to approve or recommend, or announced a neutral
position with respect to, any Acquisition Proposal (2) the Company shall have
entered into, or publicly announced its intention to enter into, any agreement
with respect to any Acquisition Proposal or (3) the Company Board or any
committee thereof shall have resolved to do any of the foregoing;
(H) beneficial ownership (as defined in Rule 13d-3 promulgated
under the Exchange Act) of 25% or more of the Shares has been acquired by any
person or group (as defined in Section 13(d)(3) of the Exchange Act), provided,
that in the case of ITC such beneficial ownership shall not have been increased
above 28%;
(I) the Agreement shall have been terminated in
accordance with its terms; or
(J) all consents necessary to the consummation of the Offer or
the Merger including, without limitation, consents from parties to loans,
contracts, leases or other agreements shall not have been obtained, other than
consents the failure to obtain which would not have a Material Adverse Effect;
which in the sole judgment of the Parent and the Merger Sub, in any such case
and regardless of the circumstances giving rise to any such condition, makes it
inadvisable to proceed with the Offer or with acceptance for payment or payment
for Shares.
The foregoing conditions are for the sole benefit of the Parent and the
Merger Sub and may be asserted by the Parent and the Merger Sub regardless of
the circumstances giving rise to any such condition and may be waived by the
Parent or the Merger Sub (except for the Minimum Condition), in whole or in
part, at any time and from time to time, in their respective sole
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discretion. The failure by the Parent or the Merger Sub at any time to exercise
any of the foregoing rights will not be deemed a waiver of any such right, the
waiver of any such right with respect to any particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and circumstances
and each such right will be deemed an ongoing right that may be asserted at any
time and from time to time.
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