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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CHOICEPOINT INC.
CHOICEPOINT ACQUISITION CORPORATION
AND
DBT ONLINE, INC.
DATED AS OF FEBRUARY 14, 2000
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TABLE OF CONTENTS
ARTICLE I THE MERGER.....................................................................................2
Section 1.1. The Merger.............................................................................2
Section 1.2. Effective Time; Closing................................................................2
Section 1.3. Effect of the Merger...................................................................2
Section 1.4. Conversion of Company Common Stock.....................................................2
Section 1.5. Tax-Free Reorganization................................................................3
ARTICLE II EXCHANGE OF CERTIFICATES......................................................................3
Section 2.1. Exchange Agent.........................................................................3
Section 2.2. Exchange Procedures....................................................................4
Section 2.3. Distributions with Respect to Unexchanged Shares.......................................4
Section 2.4. No Further Ownership Rights in the Company Common Stock................................5
Section 2.5. No Fractional Shares of Parent Common Stock............................................5
Section 2.6. No Liability...........................................................................5
Section 2.7. Lost Certificates......................................................................6
Section 2.8. Withholding Rights.....................................................................6
Section 2.9. Stock Transfer Books...................................................................6
Section 2.10. Shares held by the Company Affiliates..................................................6
ARTICLE III THE SURVIVING CORPORATION....................................................................7
Section 3.1. Certificate of Incorporation...........................................................7
Section 3.2. Bylaws.................................................................................7
Section 3.3. Directors and Officers.................................................................7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................7
Section 4.1. Organization and Standing..............................................................7
Section 4.2. Capitalization.........................................................................8
Section 4.3. Authority for Agreement................................................................8
Section 4.4. No Conflict............................................................................9
Section 4.5. Required Filings and Consents.........................................................10
Section 4.6. Compliance............................................................................10
Section 4.7. SEC Filings, Financial Statements.....................................................11
Section 4.8. Absence of Certain Changes or Events..................................................12
Section 4.9. Taxes.................................................................................12
Section 4.10. Title to Assets.......................................................................13
Section 4.11. Change of Control Agreements..........................................................13
Section 4.12. Litigation............................................................................14
Section 4.13. Contracts and Commitments.............................................................14
Section 4.14. Information Supplied..................................................................14
Section 4.15. ERISA and Related Matters.............................................................15
Section 4.16. Labor and Employment Matters..........................................................18
Section 4.17. Environmental Compliance and Disclosure...............................................19
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Section 4.18. Intellectual Property.................................................................21
Section 4.19. Year 2000 Compliance..................................................................23
Section 4.20. Brokers...............................................................................25
Section 4.21. Insurance Policies....................................................................25
Section 4.22. Notes and Accounts Receivable.........................................................25
Section 4.23. Transactions with Affiliates..........................................................25
Section 4.24. No Existing Discussions...............................................................26
Section 4.25. Pooling; Tax Matters..................................................................26
Section 4.26. Disclosure............................................................................26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB............................................................................27
Section 5.1. Organization and Standing.............................................................27
Section 5.2. Capitalization........................................................................27
Section 5.3. Authority for Agreement...............................................................28
Section 5.4. No Conflict...........................................................................29
Section 5.5. Required Filings and Consents.........................................................30
Section 5.6. Compliance............................................................................30
Section 5.7. SEC Filings, Financial Statements.....................................................30
Section 5.8. Absence of Certain Changes or Events..................................................31
Section 5.9. Taxes.................................................................................31
Section 5.10. Title to Assets.......................................................................32
Section 5.11. Litigation............................................................................32
Section 5.12. Information Supplied..................................................................33
Section 5.13. Environmental Compliance and Disclosure...............................................33
Section 5.14. Year 2000 Compliance..................................................................34
Section 5.15. Insurance Policies....................................................................35
Section 5.16. ERISA and Related Matters.............................................................35
Section 5.17. Transactions with Affiliates..........................................................38
Section 5.18. No Existing Discussions...............................................................38
Section 5.19. Brokers...............................................................................38
Section 5.20. Pooling; Tax Matters..................................................................38
Section 5.21. Disclosure............................................................................38
ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS....................................................39
Section 6.1. Covenants of the Company..............................................................39
Section 6.2. Covenants of Parent...................................................................40
ARTICLE VII ADDITIONAL AGREEMENTS.......................................................................42
Section 7.1. Preparation of the Form S-4 and the Joint Proxy Statement/Prospectus;
Stockholders Meetings.................................................................42
Section 7.2. Access to Information.................................................................44
Section 7.3. Best Efforts..........................................................................44
Section 7.4. No Solicitation by the Company........................................................46
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Section 7.5. No Solicitation by Parent.............................................................48
Section 7.6. Company Options.......................................................................49
Section 7.7. Fees and Expenses.....................................................................51
Section 7.8. Indemnification, Exculpation and Insurance............................................53
Section 7.9. Public Announcements..................................................................54
Section 7.10. Listing...............................................................................54
Section 7.11. Affiliate Letter......................................................................54
Section 7.12. Tax Treatment.........................................................................54
Section 7.13. Further Assurances....................................................................55
Section 7.14. Notices of Certain Events.............................................................55
Section 7.15. Shareholder Litigation................................................................55
ARTICLE VIII CONDITIONS.................................................................................56
Section 8.1. Conditions to the Obligation of Each Party............................................56
Section 8.2. Conditions to Obligations of Parent and Merger Sub to Effect
the Merger............................................................................57
Section 8.3. Conditions to Obligations of the Company to Effect the Merger.........................57
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER............................................................58
Section 9.1. Termination...........................................................................58
Section 9.2. Effect of Termination.................................................................59
Section 9.3. Amendments............................................................................59
Section 9.4. Waiver................................................................................59
ARTICLE X GENERAL PROVISIONS............................................................................60
Section 10.1. No Third Party Beneficiaries..........................................................60
Section 10.2. Entire Agreement......................................................................60
Section 10.3. Succession and Assignment.............................................................60
Section 10.4. Counterparts..........................................................................60
Section 10.5. Headings..............................................................................60
Section 10.6. Governing Law.........................................................................60
Section 10.7. Severability..........................................................................61
Section 10.8. Specific Performance..................................................................61
Section 10.9. Construction..........................................................................61
Section 10.10. Non-Survival of Representations, Warranties and Agreements............................61
Section 10.11. Certain Definitions...................................................................61
Section 10.12. Notices...............................................................................62
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EXHIBITS:
Exhibit A -- Persons to be Nominated For Parent's Board of Directors
Exhibit B -- Persons to Resign from Parent's Board of Directors
Following Effective Time
Exhibit C -- Persons to Be Elected to Parent's Board of Directors
Following Effective Time
Exhibit D -- Affiliates Letter -- Parent
Exhibit E -- Affiliates Letter -- Company
Exhibit F -- Tax Opinion
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
February 14, 2000, by and among CHOICEPOINT INC., a Georgia corporation
("Parent"), CHOICEPOINT ACQUISITION CORPORATION, a Pennsylvania corporation
("Merger Sub") and wholly owned subsidiary of Parent, and DBT ONLINE, INC., a
Pennsylvania corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of each of Parent, Merger
Sub and the Company deem it advisable and in the best interests of each
corporation and its respective shareholders, that Parent and the Company
combine in order to advance the long-term business strategies of Parent and the
Company;
WHEREAS, the Board of Directors of the Company has unanimously
determined that the merger of Merger Sub with and into the Company (the
"Merger") and this Agreement are fair to, and in the best interests of, the
Company and the holders of the common stock of the Company, par value $.10 per
share (the "Company Common Stock");
WHEREAS, the Board of Directors of Parent has unanimously determined
that the Merger and this Agreement are fair to, and in the best interests of,
Parent and the holders of the common stock of Parent, par value $.10 per share
(the "Parent Common Stock");
WHEREAS, the respective Boards of Directors of each of Parent, Merger
Sub and the Company have approved this Agreement and the merger on the terms
and conditions contained in this Agreement;
WHEREAS, Parent, as the sole shareholder of Merger Sub, has approved
this Agreement, the Merger and the transactions contemplated by this Agreement
pursuant to action taken by unanimous written consent in accordance with the
requirements of the Business Corporation Law of 1988 of the Commonwealth of
Pennsylvania (the "PBCL") and the Articles of Incorporation and Bylaws of
Merger Sub;
WHEREAS, for federal income tax purposes, it is intended by the
parties hereto that the Merger shall qualify as a "reorganization" within the
meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall
qualify for "pooling-of-interests" treatment.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
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ARTICLE I
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the
conditions of this Agreement, and in accordance with the PBCL, at the Effective
Time (as hereinafter defined), Merger Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of Merger
Sub shall cease and the Company shall continue as the surviving corporation
following the Merger (the "Surviving Corporation"). The corporate existence of
the Company, with all its purposes, rights, privileges, franchises, powers and
objects, shall continue unaffected and unimpaired by the Merger and, as the
Surviving Corporation, it shall be governed by the laws of the Commonwealth of
Pennsylvania.
Section 1.2. Effective Time; Closing. As promptly as practicable
(and in any event within five (5) business days) after the satisfaction or
waiver of the conditions set forth in Article VIII hereof, the parties hereto
shall cause the Merger to be consummated by filing articles of merger, if
applicable (the "Articles of Merger"), with the Department of State of the
Commonwealth of Pennsylvania and by making all other filings or recordings
required under the PBCL in connection with the Merger, in such form as is
required by, and executed in accordance with the relevant provisions of, the
PBCL. The Merger shall become effective at such time as the Articles of Merger
are duly filed with the Department of State of the Commonwealth of
Pennsylvania, or at such other time as the parties hereto agree shall be
specified in the Articles of Merger (the date and time the Merger becomes
effective, the "Effective Time"). On the date of such filing, a closing (the
"Closing") shall be held at 10:00 a.m., Atlanta Time, at the offices of King &
Spalding, 191 Peachtree Street, Atlanta, Georgia 30303, or at such other time
and location as the parties hereto shall otherwise agree.
Section 1.3. Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of the PBCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of the
Company and Merger Sub shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
Section 1.4. Conversion of Company Common Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of any holder
thereof:
(a) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares canceled
pursuant to Section 1.4(b), if any) shall be canceled and shall by virtue of
the Merger and without any action on the part of the holder thereof be
converted automatically into the right to receive 0.525 (five hundred
twenty-five thousandths) of a fully paid and nonassessable share (the "Exchange
Ratio") of Parent Common Stock upon surrender of the certificate that formerly
evidenced such share of Company
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Common Stock in the manner provided in Section 2.2. The fraction of a share of
Parent Common Stock that each share of Company Common Stock will be converted
into is referred to herein as the "Merger Consideration". Certificates
previously representing shares of Company Common Stock shall be exchanged for
certificates representing whole shares of Parent Common Stock, and cash in lieu
of any fractional share, issued in consideration therefor upon the surrender of
such certificates in accordance with Section 2.2, without interest. Each share
of Parent Common Stock issued pursuant to this Section 1.4(a) will include any
related rights issuable in accordance with the terms of the Parent's Rights
Agreement.
(b) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time that is owned by Parent or
Merger Sub and each share of Company Common Stock and Company Preferred Stock
(as hereinafter defined) (collectively, "Company Stock") that is owned by the
Company as treasury stock shall be canceled and retired and cease to exist, and
no payment or distribution shall be made with respect thereto.
(c) At the Effective Time, all shares of the Company Common
Stock converted pursuant to Section 1.4(a) shall no longer be outstanding and
shall automatically be canceled and retired and cease to exist, and each holder
of a certificate ("Certificate") representing any such shares of Company Common
Stock shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration in accordance with Section 1.4(a).
(d) Each share of common stock, no par value per share, of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted into and become one validly issued, fully paid and nonassessable
share of common stock, par value $.10 per share, of the Surviving Corporation
and shall constitute the only outstanding shares of capital stock of the
Surviving Corporation.
Section 1.5. Tax-Free Reorganization. The Merger is intended to be a
reorganization within the meaning of Section 368(a) of the Code, and this
Agreement is intended to be a "plan of reorganization" within the meaning of
the regulations promulgated under Section 368(a) of the Code and for the
purpose of qualifying as a tax-free transaction for federal income tax
purposes. The parties hereto will agree to report the Merger as a tax-free
reorganization under the provisions of Section 368(a). None of the parties
hereto will take or cause to be taken any action which would prevent the
transactions contemplated by this Agreement from qualifying as a reorganization
under Section 368(a).
ARTICLE II
EXCHANGE OF CERTIFICATES
Section 2.1. Exchange Agent. Prior to the Effective Time, Parent
shall appoint a commercial bank or trust company reasonably satisfactory to the
Company to act as exchange agent hereunder for the purpose of exchanging
Certificates for the Merger Consideration (the
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"Exchange Agent"). At or prior to the Effective Time, Parent shall deposit with
the Exchange Agent, in trust for the benefit of holders of shares of the
Company Common Stock, certificates representing the Parent Common Stock
issuable pursuant to Section 1.4 in exchange for outstanding shares of Company
Common Stock in the Merger pursuant to Section 1.4. Parent agrees to make
available to the Exchange Agent from time to time as needed, cash sufficient to
pay cash in lieu of fractional shares pursuant to Section 2.5 and any dividends
and other distributions pursuant to Section 2.3.
Section 2.2. Exchange Procedures. As soon as reasonably practicable
after the Effective Time, Parent and the Surviving Corporation shall cause the
Exchange Agent to mail to each holder of a Certificate (i) a letter of
transmittal which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent, and which letter shall be in such form and
have such other provisions as the Company may reasonably specify and (ii)
instructions for effecting the surrender of such Certificates in exchange for
the applicable Merger Consideration. Upon surrender of a Certificate to the
Exchange Agent together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, and such other documents
as may reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor (A) shares of
Parent Common Stock representing, in the aggregate, the whole number of shares
that such holder has the right to receive pursuant to Section 1.4 and (B) a
check in the amount equal to the cash that such holder has the right to receive
pursuant to the provisions of this Article II including cash in lieu of any
fractional shares of applicable Parent Common Stock pursuant to Section 2.5 and
any dividends or other distributions pursuant to Section 2.3 (after giving
effect to any required tax withholdings from cash payments), and in each case
the Certificate so surrendered shall forthwith be canceled. No interest will be
paid or will accrue on any cash payable pursuant to Section 2.3 or Section 2.5.
Section 2.3. Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made with respect to shares of
Parent Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the shares of
Parent Common Stock that such holder would be entitled to receive upon
surrender of such Certificate and no cash payment in lieu of fractional shares
of Parent Common Stock shall be paid to any such holder pursuant to Section 2.5
until such holder shall surrender such Certificate in accordance with Section
2.2. Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to such holder of shares of Parent Common
Stock issuable in exchange therefor, without interest, (a) promptly after the
time of such surrender, the amount of any cash payable in lieu of fractional
shares of Parent Common Stock to which such holder is entitled pursuant to
Section 2.5 and the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole
shares of Parent Common Stock and (b) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and a payment date subsequent to
such surrender payable with respect to such shares of Parent Common Stock.
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Section 2.4. No Further Ownership Rights in the Company Common
Stock. All shares of Parent Common Stock issued and cash paid upon conversion
of shares of Company Common Stock in accordance with the terms of this Article
II (including any cash paid pursuant to Section 2.3 or 2.5) shall be deemed to
have been issued or paid in full satisfaction of all rights pertaining to the
shares of Company Common Stock, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which may have been declared or
made by the Company on such shares of Company Common Stock which remain unpaid
at the Effective Time, and there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the shares of
Company Common Stock which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent for any reason, they shall be canceled and
exchanged as provided in this Article II.
Section 2.5. No Fractional Shares of Parent Common Stock.
(a) No certificates or scrip or shares of Parent Common
Stock representing fractional shares of Parent Common Stock shall be issued
upon the surrender for exchange of Certificates, and such fractional share
interests will not entitle the owner thereof to vote or to have any rights of a
shareholder of Parent or a holder of shares of Parent Common Stock.
(b) Notwithstanding any other provision of this Agreement,
each holder of shares of Company Common Stock exchanged pursuant to the Merger
who would otherwise have been entitled to receive a fraction of a share of
Parent Common Stock (after taking into account all Certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to the product of (i) such fractional part of a share of
applicable Parent Common Stock multiplied by (ii) the per share closing price
of Parent Common Stock quoted on the New York Stock Exchange ("NYSE") on the
Closing Date. The fractional share interests of Parent Common Stock will be
aggregated, and no holder of record of Company Common Stock will receive cash
in an amount equal to or greater than the value of one full share of Company
Common Stock.
Section 2.6. No Liability. None of Parent, Merger Sub, the Company,
the Surviving Corporation or the Exchange Agent shall be liable to any Person
(as hereinafter defined) in respect of any Merger Consideration, any dividends
or distributions with respect thereto or any cash in lieu of fractional shares
of applicable Parent Common Stock, in each case delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificate shall not have been surrendered prior to three years after the
Effective Time (or immediately prior to such earlier date on which any Merger
Consideration, any dividends or distributions payable to the holder of such
Certificate or any cash payable in lieu of fractional shares of Parent Common
Stock pursuant to this Article II, would otherwise escheat to or become the
property of any Governmental Entity (as hereinafter defined)), any such Merger
Consideration, dividends or distributions in respect thereof or such cash
shall, to the extent permitted by applicable law, be delivered to Parent, upon
demand, and any holders of Company
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Common Stock who have not theretofore complied with the provisions of this
Article II shall thereafter look only to Parent for satisfaction of their
claims for such Merger Consideration, dividends or distributions in respect
thereof or such cash.
Section 2.7. Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration with respect to the shares of
Company Common Stock formerly represented thereby, any cash in lieu of
fractional shares of Parent Common Stock, and unpaid dividends and
distributions on shares of Parent Common Stock deliverable in respect thereof,
pursuant to this Agreement.
Section 2.8. Withholding Rights. The Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Code and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation 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 Surviving Corporation.
Section 2.9. Stock Transfer Books. At the close of business, Atlanta
time, on the day the Effective Time occurs (the "Closing Date"), the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company. From and after the Effective Time, the holders of
Certificates shall cease to have any rights with respect to such shares of
Company Common Stock formerly represented thereby, except as otherwise provided
herein or by law. On or after the Effective Time, any Certificates presented to
the Exchange Agent or Parent for any reason shall be converted into the Merger
Consideration with respect to the shares of Company Common Stock formerly
represented thereby, any cash in lieu of fractional shares of Parent Common
Stock to which the holders thereof are entitled pursuant to Section 2.5 and any
dividends or other distributions to which the holders thereof are entitled
pursuant to Section 2.3.
Section 2.10. Shares held by the Company Affiliates. Anything to the
contrary in this Agreement notwithstanding, no shares of Parent Common Stock
(or certificates therefor) shall be issued in exchange for any certificate to
any Person who may be an "affiliate" of the Company (identified pursuant to
Section 7.11) until the Person shall have delivered to Parent and the Company a
duly executed letter as contemplated by Section 7.11.
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ARTICLE III
THE SURVIVING CORPORATION
Section 3.1. Certificate of Incorporation. The Articles of
Incorporation of the Company as in effect immediately prior to the Effective
Time shall be the Articles of Incorporation of the Surviving Corporation, until
the same shall thereafter be altered, amended or repealed in accordance with
applicable law or such Articles of Incorporation.
Section 3.2. Bylaws. The Bylaws of the Company as in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation, until the same shall thereafter be altered, amended or repealed in
accordance with applicable law, the Certificate of Incorporation of the
Surviving Corporation or such Bylaws.
Section 3.3. Directors and Officers. From and after the Effective
Time, until the earlier of their resignation or removal or until their
respective successors are duly elected or appointed and qualified in accordance
with applicable law, (i) the directors of Merger Sub at the Effective Time
shall be the directors of the Surviving Corporation, and (ii) the officers of
Merger Sub at the Effective Time shall be the officers of the Surviving
Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the other parties
hereto as follows:
Section 4.1. Organization and Standing. Each of the Company and each
Subsidiary (as hereinafter defined) of the Company (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has full corporate power and authority
and all necessary government approvals to own, lease and operate its properties
and assets and to conduct its business as presently conducted and (iii) is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except where failure to be so qualified or licensed
would not, individually or in the aggregate, have a Company Material Adverse
Effect (as hereinafter defined). The Company has furnished or made available to
Parent correct and complete copies of its articles of incorporation (including
any certificates of designations attached thereto, the "Company Articles of
Incorporation") and bylaws (the "Company Bylaws") and the articles of
incorporation and bylaws (or equivalent organizational documents) of each of
its Subsidiaries, each as amended to date. Such articles of incorporation,
bylaws or equivalent organizational documents are in full force and effect, and
neither the Company nor any such Subsidiary is in violation of any provision of
its articles of incorporation, bylaws or equivalent organizational documents.
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Section 4.2. Capitalization. The authorized capital stock of the
Company consists of 100,000,000 shares of Company Common Stock and 5,000,000
shares of preferred stock, $.10 par value per share ("Company Preferred
Stock"). As of the date hereof, (i) 20,144,446 shares of Company Common Stock
are issued and outstanding, all of which are validly issued, fully paid and
nonassessable and free of preemptive rights, (ii) no shares of Company Common
Stock are held in the treasury of the Company, (iii) 3,399,034 options are
outstanding pursuant to the Company Stock Option Plans (the "Company Options"),
each such option entitling the holder thereof to purchase one share of Company
Common Stock, and 2,600,966 shares of Company Common Stock are authorized and
reserved for future issuance pursuant to the exercise of such Company Options,
and (iv) no shares of Company Preferred Stock are issued and outstanding.
Section 4.2 of the Company Disclosure Letter delivered by the Company to the
other parties hereto concurrently with the execution of this Agreement (the
"Company Disclosure Letter") sets forth a correct and complete list of the
outstanding Company Options with the exercise price. Except as set forth above
or in Section 4.2 of the Company Disclosure Letter, there are no options,
warrants, convertible securities, subscriptions, stock appreciation rights,
phantom stock plans or stock equivalents or other rights, agreements,
arrangements or commitments (contingent or otherwise) of any character issued
or authorized by the Company relating to the issued or unissued capital stock
of the Company or any Subsidiary of the Company or obligating the Company or
any Subsidiary of the Company to issue or sell any shares of capital stock of,
or options, warrants, convertible securities, subscriptions or other equity
interests in, the Company or any Subsidiary of the Company. All shares of
Company Common Stock subject to issuance as aforesaid, 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. There are no outstanding contractual obligations of the Company
or any Subsidiary of the Company to repurchase, redeem or otherwise acquire any
shares of Company Common Stock or any capital stock of any Subsidiary of the
Company or to pay any dividend or make any other distribution in respect
thereof or to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any Person. The Company owns
beneficially and of record all of the issued and outstanding capital stock of
each Subsidiary of the Company and does not own an equity interest in any other
corporation, partnership or entity, other than in such Subsidiaries. Each
outstanding share of capital stock of each Subsidiary of the Company is duly
authorized, validly issued, fully paid and nonassessable and each such share
owned by the Company or another Subsidiary of the Company is free and clear of
all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on the Company's or such other Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever.
Section 4.3. Authority for Agreement.
(a) The Company has all necessary power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and,
subject to obtaining necessary shareholder approval, to consummate the Merger
and the other transactions contemplated by this Agreement. The execution,
delivery and performance by the Company of this Agreement, and the consummation
by the Company of the Merger and the other transactions contemplated by
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this Agreement, have been duly authorized by all necessary corporate action
(including, without limitation, the unanimous approval of the Board of
Directors of the Company) and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the Merger
or the other transactions contemplated by this Agreement (other than, with
respect to the Merger, the approval and adoption of this Agreement by the
affirmative vote of a majority of the then outstanding shares of Company Common
Stock and the filing and recordation of appropriate merger documents as
required by the PBCL). This Agreement has been duly executed and delivered by
the Company and, assuming the due authorization, execution and delivery by
Parent and Merger Sub, constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms. The
affirmative vote of holders of the outstanding shares of Company Common Stock
entitled to vote at a duly called and held meeting of shareholders is the only
vote of the holders of any capital stock of the Company necessary to approve
this Agreement, the Merger and the other transactions contemplated by this
Agreement.
(b) At a meeting duly called and held on February 14, 2000,
the Board of Directors of the Company unanimously (i) determined that this
Agreement and the other transactions contemplated hereby, including the Merger,
are fair to and in the best interests of the Company and the holders of the
Company Common Stock, (ii) approved, authorized and adopted this Agreement, the
Merger and the other transactions contemplated hereby, and (iii) resolved to
recommend approval and adoption of this Agreement and the Merger by the holders
of the Company Common Stock. The actions taken by the Board of Directors of the
Company constitute approval of the Merger, this Agreement and transactions
contemplated hereby by the Board of Directors of the Company under the
provisions of Sections 2541 et seq., 2551 et seq. and 2561 et seq. of the PBCL
such that Sections 2541 et seq., 2551 et seq. and 2561 et seq. of the PBCL do
not apply to this Agreement or the transactions contemplated hereby. Other than
Sections 2541 et seq., 2551 et seq. and 2561 et seq. of the PBCL, no state
antitakeover or similar statute is applicable to Parent or Merger Sub in
connection with the Merger, this Agreement or any of the transactions
contemplated hereby.
(c) Credit Suisse First Boston Corporation, the independent
financial advisor to the Board of Directors of the Company (the "Company's
Independent Advisor"), has delivered to the Board of Directors of the Company
its written opinion, dated as of the date of this Agreement, that, as of such
date and based on the assumptions, qualifications and limitations contained
therein, the Exchange Ratio in the Merger was fair, from a financial point of
view, to such holders.
Section 4.4. No Conflict. The execution and delivery of this
Agreement by the Company do not, and the performance of this Agreement by the
Company and the consummation of the Merger and the other transactions
contemplated by this Agreement will not, (i) conflict with or violate the
Company's Articles of Incorporation or the Company's Bylaws or equivalent
organizational documents of any of its Subsidiaries, (ii) subject to Section
4.5, conflict with or violate any United States federal, state or local or any
foreign statute, law, rule, regulation, ordinance, code, order, judgment,
decree or any other requirement or rule of law (a
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15
"Law") applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or
affected, or (iii) except as set forth in Section 4.4 of the Company Disclosure
Letter, result in a breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, give to others
any right of termination, amendment, acceleration or cancellation of, result in
triggering any payment or other obligations, or result in the creation of a
lien or other encumbrance on any property or asset of the Company or any of its
Subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or any property or asset of any of them is
bound or affected, except in the case of clauses (ii) and (iii) above for any
such conflicts, violations, breaches, defaults or other occurrences which could
not, individually or in the aggregate, have a Company Material Adverse Effect.
"Company Material Adverse Effect" shall mean, with respect to the Company, any
change, event or effect shall have occurred or been threatened that, when taken
together with all other adverse changes, events or effects that have occurred
or, to the Knowledge of the Company, been threatened (exclusive, however, of
(1) any such changes, events, or effects that occur as a result of conditions
affecting (A) the information services or public records database businesses as
a whole or (B) the stock markets and capital markets generally or the United
States economy as a whole and (2) any such changes, events, or effects which
have occurred prior to the date hereof and have been disclosed to Parent in
writing prior to the date hereof), is or is reasonably likely to (i) be
materially adverse to the business, results of operations, properties,
prospects, condition (financial or otherwise), assets, liabilities (including,
without limitation, contingent liabilities) of the Company and its Subsidiaries
taken as a whole or (ii) prevent or materially delay the performance by the
Company of any of its obligations under this Agreement or the consummation of
the Merger or the other transactions contemplated by this Agreement.
Section 4.5. Required Filings and Consents. The execution and
delivery of this Agreement by the Company does not, and the performance of this
Agreement by the Company will not, require any consent, approval, authorization
or permit of, or filing with or notification to, any United States federal,
state or local or any foreign government or any court, administrative or
regulatory agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), except (i) for applicable
requirements, if any, of the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder (the "Securities Act"), Securities and
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the "Exchange Act"), state securities or "blue sky" laws ("Blue Sky
Laws") and filing and recordation of appropriate merger documents as required
by the PBCL, (ii) for those required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (iii) for filings
contemplated by Section 4.14 hereof, and (iv) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, could not, individually or in the aggregate, have a Company
Material Adverse Effect.
Section 4.6. Compliance. Except as disclosed in Section 4.6 of the
Company Disclosure Letter, each of the Company and its Subsidiaries (i) has
been operated at all times in
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compliance with all laws applicable to the Company or any of its Subsidiaries
or by which any property, business or asset of the Company or any of its
Subsidiaries is bound or affected and (ii) is not in default or violation of
any notes, bonds, mortgages, indentures, contracts, agreements, leases,
licenses, permits, franchises, or other instruments or obligations to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or any property or asset of the Company or any of its
Subsidiaries is bound or affected, except in the case of clauses (i) and (ii)
which could not, individually or in the aggregate, have a Company Material
Adverse Effect.
Section 4.7. SEC Filings, Financial Statements.
(a) The Company has filed all forms, reports, statements
and documents required to be filed with the Securities and Exchange Commission
(the "SEC") since January 1, 1997 (collectively, the "Company SEC Reports"),
each of which has complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act, each as in effect on
the date so filed. None of the Company SEC Reports (including, but not limited
to, any financial statements or schedules included or incorporated by reference
therein) contained when filed any untrue statement of a material fact or
omitted or omits to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(b) All of the financial statements included in the Company
SEC Reports, in each case, including any related notes thereto, as filed with
the SEC, as well as the unaudited consolidated balance sheet of the Company as
of December 31, 1999, together with the unaudited statements of income and cash
flow of the Company for the fiscal year then ended, including any notes thereto
(as furnished to Parent by the Company (collectively, the "Company Financial
Statements"), have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto and subject,
in the case of the unaudited statements, to normal, recurring audit
adjustments) and fairly present the consolidated financial position of the
Company and its Subsidiaries at the respective date thereof and the
consolidated results of its operations and changes in cash flows for the
periods indicated. The Company does not anticipate any changes to the
accounting policies historically applied by the Company as a result of newly
adopted SAB No. 101.
(c) Except as disclosed in Section 4.7 of the Company
Disclosure Letter, there are no liabilities of the Company or any of its
Subsidiaries of any kind whatsoever, whether or not accrued and whether or not
contingent or absolute, that are material to the Company and its Subsidiaries,
taken as a whole, other than (i) liabilities disclosed or provided for in the
consolidated balance sheet of the Company and its Subsidiaries at December 31,
1999, including the notes thereto, (ii) liabilities disclosed in the Company
SEC Reports, (iii) liabilities incurred on behalf of the Company in connection
with this Agreement and the contemplated Merger, and (iv) liabilities incurred
in the ordinary course of business consistent with past practice since
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December 31, 1999, none of which are, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect.
(d) The Company has heretofore furnished or made available
to Parent a complete and correct copy of any amendments or modifications which
have not yet been filed with the SEC to agreements, documents or other
instruments which previously had been filed by the Company with the SEC as
exhibits to the Company SEC Reports pursuant to the Securities Act or the
Exchange Act.
Section 4.8. Absence of Certain Changes or Events. Except as
contemplated by this Agreement or as disclosed in Section 4.8 of the Company
Disclosure Letter, since December 31, 1998, the Company and its Subsidiaries
have conducted their respective businesses only in the ordinary course and
consistent with prior practice and there has not been (i) any event or
occurrence of any condition that has had or would reasonably be expected to
have a Company Material Adverse Effect, (ii) any declaration, setting aside or
payment of any dividend or any other distribution with respect to any of the
capital stock of the Company or any Subsidiary of the Company, (iii) any
material change in accounting methods, principles or practices employed by the
Company or any of its Subsidiaries, or (iv) any action of the type described in
Section 6.1 which, had such action been taken after the date of this Agreement,
would be in violation of any such Section.
Section 4.9. Taxes. The Company and each of its Subsidiaries have
timely filed all material Tax Returns required to be filed by any of them. All
such Tax Returns (as hereinafter defined) are correct and complete in all
material respects. All Taxes (as hereinafter defined) of the Company and its
Subsidiaries which are (i) shown as due on such Tax Returns, (ii) otherwise due
and payable or (iii) claimed or asserted by any taxing authority to be due,
have been paid, except for those Taxes being contested in good faith and for
which adequate reserves have been established in the financial statements
included in the SEC Reports in accordance with GAAP. There are no liens for any
Taxes upon the assets of the Company or any of its Subsidiaries, other than
statutory liens for Taxes not yet due and payable and liens for real estate
Taxes contested in good faith. The Company does not know of any proposed or
threatened Tax claims or assessments, which, individually or in the aggregate,
exceed $500,000. Neither the Company nor any of its Subsidiaries has made an
election under Section 341(f) of the Code. Except as set forth in Section 4.9
of the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries has waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency.
The Company and each Subsidiary has withheld and paid over to the relevant
taxing authority all Taxes required to have been withheld and paid in
connection with payments to employees, independent contractors, creditors,
shareholders or other third parties. The unpaid Taxes of the Company and its
Subsidiaries for the current taxable period did not, as of the most recent
Company Financial Statement, exceed the reserve for Tax liability (disregarding
any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the balance sheet in the
most recent Company Financial Statement (disregarding any notes thereto). For
purposes of this Agreement, (a) "Tax" (and, with correlative meaning, "Taxes")
means any federal, state,
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local or foreign income, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, premium, withholding, alternative or added
minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty or addition thereto, whether disputed or
not, imposed by any Governmental Entity, and (b) "Tax Return" means any return,
report or similar statement required to be filed with respect to any Tax
(including any attached schedules), including, without limitation, any
information return, claim for refund, amended return or declaration of
estimated Tax.
Section 4.10. Title to Assets.
(a) Except as set forth in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998 (the "10-K"), the Company
and each of its Subsidiaries have good and marketable title to, or a valid
leasehold interest in, all of their real and personal properties and assets
reflected in the 10-K or acquired after December 31, 1998 (other than assets
disposed of since December 31, 1998 in the ordinary course of business
consistent with past practice), in each case free and clear of all title
defects, liens, encumbrances and restrictions, except for (i) liens,
encumbrances or restrictions which secure indebtedness which are properly
reflected in the 10-K; (ii) liens for Taxes accrued but not yet payable; (iii)
liens arising as a matter of law in the ordinary course of business with
respect to obligations incurred after December 31, 1998, provided that the
obligations secured by such liens are not delinquent; and (iv) such title
defects, liens, encumbrances and restrictions, if any, as individually or in
the aggregate are not reasonably likely to have a Company Material Adverse
Effect. The Company Disclosure Letter sets forth a correct and complete list of
all real property (i) owned or leased by the Company or a Subsidiary, (ii) as
to which the Company or a Subsidiary of the Company has a license, easement or
right of way to use, (iii) as to which the Company or a Subsidiary of the
Company has the option to purchase, lease, license or acquire an easement or
right of way or (iv) in which the Company or a Subsidiary of the Company has
any other interest. Except as set forth in Section 4.10 of the Company
Disclosure Letter, the Company and each of its Subsidiaries either own, or have
valid leasehold interests in, all properties and assets used by them in the
conduct of their business.
(b) Except as set forth in Section 4.10 of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries has any
legal obligation, absolute or contingent, to any other person to sell or
otherwise dispose of any of its assets with an individual value of $100,000 or
an aggregate value in excess of $500,000.
Section 4.11. Change of Control Agreements. Except as set forth in
Section 4.11 of the Company Disclosure Letter, neither the execution and
delivery of this Agreement nor the consummation of the Merger or the other
transactions contemplated by this Agreement, will (either alone or in
conjunction with any other event) result in, cause the accelerated vesting or
delivery of, or increase the amount or value of, any payment or benefit to any
former or current director, officer, employee, consultant or advisor of the
Company. Without limiting the generality of the foregoing, no amount paid or
payable by the Company in connection with the
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Merger or the other transactions contemplated by this Agreement, including
accelerated vesting of options, (either solely as a result thereof or as a
result of such transactions in conjunction with any other event) will be an
"excess parachute payment" within the meaning of Section 280G of the Code.
Section 4.12. Litigation. Except for such matters disclosed in Section
4.12 of the Company Disclosure Letter which, if adversely determined, have not
resulted in, and would not reasonably be expected to result in, a loss,
individually or in the aggregate, to the Company or any of its Subsidiaries in
excess of $500,000, there are no claims, suits, actions, investigations,
indictments or information, or administrative, arbitration or other proceedings
("Litigation") pending or, to the Knowledge of the Company, threatened against
the Company or any of its Subsidiaries. Except for such matters which have not
resulted in, and would not reasonably be expected to result in, a loss,
individually or in the aggregate, to the Company or any of its Subsidiaries in
excess of $500,000, there are no judgments, orders, injunctions, decrees,
stipulations or awards (whether rendered by a court, administrative agency, or
by arbitration, pursuant to a grievance or other procedure) against or relating
to the Company or any of its Subsidiaries.
Section 4.13. Contracts and Commitments. Section 4.13 of the Company
Disclosure Letter sets forth a correct and complete list of the following
contracts to which the Company or a Subsidiary of the Company is a party
(including every amendment, modification or supplement to the foregoing): (i)
any contracts of employment, consulting or noncompete, (ii) agreements or
arrangements for the purchase or sale of any assets (otherwise than in the
ordinary course of business), (iii) agreements, contracts or indentures
relating to the borrowing of money, (iv) agreements with unions, material
independent contractor agreements and material leased or temporary employee
agreements, (v) leases of any real property involving annual rent of $100,000
or more, and (vi) other than contracts identified in the Company Disclosure
Letter pursuant to Section 4.6, all other contracts, agreements or commitments
involving payments made by or to the Company or a Subsidiary of $500,000 or
more. Except for agreements, arrangements or commitments disclosed in the
Company Disclosure Letter, neither the Company nor any of its Subsidiaries is a
party to any agreement, arrangement or commitment which is material to the
business of the Company taken as a whole. The Company has delivered or made
available correct and complete copies of all such agreements, arrangements and
commitments to Parent. Neither the Company nor any of its Subsidiaries is in
default under any such agreement, arrangement or commitment which has had, or
could reasonably be expected to have, a Company Material Adverse Effect.
Section 4.14. Information Supplied.
(a) None of the information supplied or to be supplied by
the Company for inclusion or incorporation by reference in (A) the Form S-4 (as
hereinafter defined) to be filed with the SEC by Parent in connection with the
issuance of the Parent Common Stock in the Merger will, at the time the Form
S-4 becomes effective under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein
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or necessary to make the statements therein not misleading and (B) the Joint
Proxy Statement/Prospectus included in the Form S-4 related to the Company
Shareholders Meeting and the Parent Shareholders Meeting (each as hereinafter
defined) and the Parent Common Stock to be issued in the Merger will, on the
date it is first mailed to the holders of Company Common Stock and Parent
Common Stock or at the time of the Company Shareholders Meeting or the Parent
Shareholders Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The Joint Proxy Statement/Prospectus will comply as
to form in all material respects with the requirements of the Exchange Act.
(b) Notwithstanding the foregoing provisions of this Section
4.14, no representation or warranty is made by the Company with respect to
statements made or incorporated by reference in the Form S-4 or the Joint Proxy
Statement/Prospectus based on information supplied by Parent for inclusion or
incorporation by reference therein.
Section 4.15. ERISA and Related Matters.
(a) Section 4.15 of the Company Disclosure Letter lists all
deferred compensation, pension, profit-sharing and retirement plans, and all
bonus, welfare, severance pay and other "employee benefit plans" (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), fringe benefit or stock option plans, including individual
contracts, employee agreements, programs or arrangements, providing the same or
similar benefits, whether or not written, participated in or maintained by the
Company or with respect to which contributions are made or obligations assumed
by the Company in respect of the Company (including health, life insurance and
other benefit plans maintained for former employees or retirees), at any time
between January 1, 1995 and the Closing Date. Said plans or other arrangements
are sometimes collectively referred to in this Section as "Benefit Plans."
Copies of all Benefit Plans and related documents, including those setting out
the Company's personnel policies and procedures, and including any insurance
contracts, trust agreements or other arrangements under which benefits are
provided, as currently in effect, and descriptions of any such plan which are
not written have been delivered to Parent. The Company has also delivered to
Parent a copy of the summary plan description, if any, for each Benefit Plan,
as well as copies of any other summaries or descriptions of any such Benefit
Plans which have been provided to employees or other beneficiaries during the
current and previous three (3) calendar years.
(b) Except as set forth in Section 4.15 of the Company
Disclosure Letter, the Company has fulfilled its obligations, to the extent
applicable, under the minimum funding requirements of Section 302 of ERISA and
Section 412 of the Code, with respect to each "employee benefit plan" (as
defined in Section 3(3) of ERISA) appearing in Section 4.15 of the Company
Disclosure Letter. Each Benefit Plan is in compliance with, and has been
administered in all respects consistent with, the presently applicable
provisions of ERISA, the Code and state law, including but not limited to the
satisfaction of all applicable reporting and disclosure
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21
requirements under the Code, ERISA and state law. The Company has made all
payments to all Benefit Plans as required by the terms of each such plan in
accordance, if applicable, with the actuarial and funding assumptions in effect
as for the most recent actuarial valuation of such plans. All required
actuarial valuations and reports relating to said plans have been prepared and
a copy of the most recent actuarial valuation and report for each pension plan,
as defined in Section 3(2) of ERISA, has been provided to Parent, if
applicable. The Company has filed or caused to be filed with the Internal
Revenue Service annual reports on Form 5500 for each Benefit Plan attributable
to them for all years and periods for which such reports were required and
within the time period required by ERISA and the Code, and copies of such
reports for the past five years have been provided to Parent. Except as
disclosed in Section 4.15 of the Company Disclosure Letter, the Company has
funded or will fund each Benefit Plan attributable to it in accordance with its
terms through Closing, including the payment of applicable premiums on any
insurance contract funding a Benefit Plan for coverage provided through
Closing. To the extent that any annual contribution for the current year is not
yet required for any Benefit Plan as of the Effective Time, the Company has
made a pro rata contribution to said plan for the period ended at the Effective
Time or said contribution has been accrued on the books of the Company.
(c) Except as set forth in Section 4.15 of the Company
Disclosure Letter, no "prohibited transaction," as defined in Section 406 of
ERISA and Section 4975 of the Code, has occurred in respect of any such Benefit
Plan, and no civil or criminal action brought pursuant to Part 5 of Title I or
ERISA is pending or is threatened in writing or orally against any fiduciary of
any such plan.
(d) Except as set forth in Section 4.15 of the Company
Disclosure Letter, the Internal Revenue Service has issued a letter for each
employee pension benefit plan, as defined in Section 3(2) of ERISA, listed in
Section 4.15 of the Company Disclosure Letter, determining that such plan is a
qualified plan under Section 401(a) of the Code and is exempt from United
States Federal Income Tax under Section 501(a) of the Code, and there has been
no occurrence since the date of any such determination letter which has
adversely affected such qualification. The Company does not maintain a plan or
arrangement intended to qualify under Section 501(c)(9) of the Code.
(e) Except as set forth in Section 4.15 of the Company
Disclosure Letter, each Benefit Plan that provides medical benefits has been
operated in compliance with all requirements of Section 4980B(f) of the Code
and Sections 601 through 608 of ERISA relating to continuation of coverage
under certain circumstances in which coverage would otherwise cease. All former
employees of the Company or other persons entitled to such continuation of
coverage through relationship to said former employees are listed in Section
4.15 of the Company Disclosure Letter.
(f) Neither the Company nor any entity that is treated as a
single employer with the Company pursuant to Section 414(b), (c), (m) or (o) of
the Code currently maintains or contributes to any Benefit Plan that is subject
to Title IV of ERISA, nor has previously maintained or contributed to any such
plan that has resulted in any liability or potential liability
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for the Company under said Title IV. There shall not be as of Closing any
outstanding unpaid minimum funding waiver within the meaning of Code Section
412(d).
(g) Attached as a part of Section 4.15 of the Company
Disclosure Letter is a 5-year contribution history indicating the dollar amount
contributed and the level of contribution as a percentage of compensation of
covered participants for each profit sharing plan, stock bonus plan or other
retirement plan to which the Company makes discretionary contributions.
(h) Except as disclosed on Section 4.15 of the Company
Disclosure Letter, the Company does not maintain any Benefit Plan, plans or
programs that provide post-retirement medical benefits (other than benefits
described in Section 4.15 and those which are required by law), post-employment
benefits, death benefits or other post-retirement welfare benefits. A copy of
any written description of post-retirement welfare benefits that has been
provided to employees is attached hereto as a part of Section 4.15 of the
Company Disclosure Letter. Copies of each plan document, insurance contract or
other written instrument providing for post-retirement welfare benefits,
together with a description of any advance funding arrangement that has been
established to fund post-retirement welfare benefits, are attached hereto as a
part of Section 4.15 of the Company Disclosure Letter. Section 4.15 of the
Company Disclosure Letter contains a list of those persons who are currently
retired with a right to future post-retirement welfare benefits and also
contains a list of employees who would be currently eligible for
post-retirement welfare benefits if they retired and satisfied any waiting
period provided for under the applicable plan. Except as otherwise disclosed in
Section 4.15 of the Company Disclosure Letter, all plans or programs for
providing post-retirement medical, death or other welfare benefits could be
terminated by the Company as of Closing without liability for such benefits to
any employee who has not retired on or before the Effective Time.
(i) Neither the Company nor any employer referred to in
Section 4.15(f) above, maintains, nor has contributed within the past five
years to, any multiemployer plan within the meaning of Sections 3(37) or
4001(a)(3) of ERISA. No such employer currently has any liability to make
withdrawal liability payments to any multiemployer plan. There is no pending
dispute between any such employer and any multiemployer plan concerning payment
of contributions or payment of withdrawal liability payments.
(j) All Benefit Plans have been operated and administered in
accordance with their respective terms and no inconsistent representation or
interpretation has been made to any plan participant. Except as set forth in
Section 4.15 of the Company Disclosure Letter, no lawsuit or complaint
(including any dispute that might result in a lawsuit or complaint against, by,
or relating to any Benefit Plan or any fiduciary, as defined in Section 3(21)
of ERISA) of a Benefit Plan has been filed or is pending.
(k) Any reference to Company in this Section 4.15 shall be
deemed to refer to each Subsidiary of Company, where relevant.
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Section 4.16. Labor and Employment Matters. Except as set forth in
Section 4.16 of the Company Disclosure Letter:
(a) There are no agreements or arrangements on behalf of any
officer, director or employee providing for payment or other benefits to such
person contingent upon the execution of this Agreement, the Closing or a
transaction involving a change of control of the Company.
(b) Neither the Company nor any of its Subsidiaries is a
party to, or bound by, any collective bargaining agreement or other contracts,
arrangements, agreements or understandings with a labor union or labor
organization that was certified by the National Labor Relations Board ("NLRB").
There is no existing, pending or threatened (i) unfair labor practice charge or
complaint, labor dispute, labor arbitration proceeding or any other matter
before the NLRB or any other comparable state agency against or involving the
Company or any of its Subsidiaries, (ii) activity or proceeding by a labor
union or representative thereof to organize any employees of the Company or any
of its Subsidiaries, (iii) certification or decertification question relating
to collective bargaining units at the premises of the Company or any of its
Subsidiaries or (iv) lockout, strike, organized slowdown, work stoppage or work
interruption with respect to such employees.
(c) Neither the Company nor any of its Subsidiaries has
taken any action that would constitute a "Mass Layoff" or "Plant Closing"
within the meaning of the Worker Adjustment and Retraining Notification
("WARN") Act or would otherwise trigger notice requirements or liability under
any state or local plant closing notice law. No agreement, arbitration or court
decision or governmental order in any way limits or restricts any of the
Company, any of its Subsidiaries or Parent from relocating or closing any of
the operations of the Company or any of its Subsidiaries.
(d) Neither the Company nor any of its Subsidiaries has
failed to pay when due any wages, bonuses, commissions, benefits, taxes,
penalties or assessments or other monies, owed to, or arising out of the
employment of or any relationship or arrangement with, any officer, director,
employee, sales representative, contractor, consultant or other agent. There
are no citations, investigations, administrative proceedings or formal
complaints of violations of any federal or state wage and hour laws pending or
threatened before the Department of Labor or any federal, state or
administrative agency or court against or involving the Company or any of its
Subsidiaries.
(e) The Company and each of its Subsidiaries are in
compliance with all immigration laws relating to employment and have properly
completed and maintained all applicable forms (including but not limited to I-9
forms) and, to the Knowledge of the Company, there are no citations,
investigations, administrative proceedings or formal complaints of violations
of the immigration laws pending or threatened before the Immigration and
Naturalization Service or any federal, state or administrative agency or court
against or involving the Company or any of its Subsidiaries.
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(f) There are no investigations, administrative proceedings,
charges or formal complaints of discrimination (including discrimination based
upon sex, age, marital status, race, national origin, sexual preference,
disability, handicap or veteran status) pending or threatened before the Equal
Employment Opportunity Commission or any federal, state or local agency or
court against or involving the Company or any of its Subsidiaries. No
discrimination and/or retaliation claim is pending or, to the Knowledge of the
Company, threatened against the Company or any of its Subsidiaries under the
1866, 1877, 1964 or 1991 Civil Rights Acts, the Equal Pay Act, the Age
Discrimination in Employment Act, as amended, the Americans with Disabilities
Act, the Family and Medical Leave Act, the Fair Labor Standards Act, ERISA, or
any other federal law relating to employment or any comparable state or local
fair employment practices act regulating discrimination in the workplace, and
no wrongful discharge, libel, slander, invasion of privacy or other claim
(including but not limited to violations of the Fair Credit Reporting Act, as
amended, and any applicable whistleblower statutes) under any state or federal
law is pending or threatened against the Company or any of its Subsidiaries.
(g) If the Company or any of its Subsidiaries is a Federal,
State or local contractor obligated to develop and maintain an affirmative
action plan, no discrimination claim, show-cause notice, conciliation
proceeding, sanctions or debarment proceedings is pending or has been
threatened against the Company or any of it Subsidiaries with the Office of
Federal Contract Compliance Programs or any other Federal agency or any
comparable state or local agency or court and no desk audit or on-site review
is in progress.
(h) There are no citations, investigations, administrative
proceedings or formal complaints of violations of local, state or federal
occupational safety and health laws pending or threatened before the
Occupational Safety and Health Review Commission or any federal, state or local
agency or court against or involving the Company or any of its Subsidiaries.
(i) No workers' compensation or retaliation claim is pending
against the Company or any of its Subsidiaries in excess of $250,000 in the
aggregate, and the Company maintains adequate insurance with respect to
workers' compensation claims pursuant to insurance policies that are currently
in force, or has accrued an adequate liability for such obligations, including,
without limitation, adequate accruals with respect to accrued but unreported
claims and retroactive insurance premiums.
Section 4.17. Environmental Compliance and Disclosure. Except as set
forth in Section 4.17 of the Company Disclosure Letter:
(a) The Company and each of its Subsidiaries possess, and
are in compliance with, all permits, licenses and government authorizations and
have filed all notices that are required under local, state and federal Laws
and regulations relating to protection of the environment, pollution control,
product registration and hazardous materials ("Environmental Laws") applicable
to the Company and each of its Subsidiaries, and the Company and each of its
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Subsidiaries are in compliance with all applicable limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in those laws or contained in any Law, regulation, code,
plan, order, decree, judgment, notice, permit or demand letter issued, entered,
promulgated or approved thereunder;
(b) Neither the Company nor any of its Subsidiaries has
received notice of actual or threatened liability under the Federal
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA")
or any similar state or local statute or ordinance from any governmental agency
or any third party, and there are no facts or circumstances which could form
the basis for the assertion of any claim against the Company or any of its
Subsidiaries under any Environmental Laws including, without limitation, CERCLA
or any similar local, state or foreign Law with respect to any on-site or
off-site location;
(c) Neither the Company nor any of its Subsidiaries has
entered into or agreed to, nor does the Company or any of its Subsidiaries
contemplate entering into any consent decree or order, and are not subject to
any judgment, decree or judicial or administrative order relating to compliance
with, or the cleanup of hazardous materials under, any applicable Environmental
Laws;
(d) Neither the Company nor any of its Subsidiaries has been
subject to any administrative or judicial proceeding pursuant to and, to the
Knowledge of the Company, has not been alleged to be in violation of,
applicable Environmental Laws or regulations either now or any time during the
past five years;
(e) Neither the Company nor any of its Subsidiaries has
received notice that it is subject to any claim, obligation, liability, loss,
damage or expense of whatever kind or nature, contingent or otherwise, incurred
or imposed or based upon any provision of any Environmental Law and arising out
of any act or omission of the Company or any of its Subsidiaries, its
employees, agents or representatives or, to the Knowledge of the Company,
arising out of the ownership, use, control or operation by the Company or any
of its Subsidiaries of any plant, facility, site, area or property (including,
without limitation, any plant, facility, site, area or property currently or
previously owned or leased by the Company or any of its Subsidiaries) from
which any hazardous materials were released into the environment (the term
"release" meaning any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing into the
environment, and the term "environment" meaning any surface or ground water,
drinking water supply, soil, surface or subsurface strata or medium, or the
ambient air);
(f) The Company has heretofore provided Parent with correct
and complete copies of all files of the Company and its Subsidiaries relating
to environmental matters (or an opportunity to review such files). Neither the
Company nor any of its Subsidiaries has paid any fines, penalties or
assessments within the last five years with respect to environmental matters;
and
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(g) None of the assets owned by the Company or any of its
Subsidiaries or any real property leased by the Company or any of its
Subsidiaries contain any friable asbestos, regulated PCBs or underground
storage tanks.
As used in this Agreement, the term "hazardous materials" means any
waste, pollutant, hazardous substance, toxic, ignitable, reactive or corrosive
substance, hazardous waste, special waste, industrial substance, by-product,
process intermediate product or waste, petroleum or petroleum-derived substance
or waste, chemical liquids or solids, liquid or gaseous products, or any
constituent of any such substance or waste, the use, handling or disposal of
which by the Company or any of its Subsidiaries (or, as used in Section 5.13,
Parent or any of its Subsidiaries) is in any way governed by or subject to any
applicable Law, rule or regulation of any Governmental Entity.
Section 4.18. Intellectual Property.
(a) Section 4.18(a) of the Company Disclosure Letter sets
forth a true and complete list of all Registered Intellectual Property (as
hereinafter described) owned by or licensed to the Company, with an indication
as to which of such items are owned by the Company (the "Owned Registered
Intellectual Property") and which are licensed to the Company (the "Licensed
Registered Intellectual Property").
For purposes of this Agreement, "Intellectual Property" means
copyrights (both registered and unregistered), mask works, trademarks (both
registered and unregistered), trade names, service marks, service names,
patents, patent applications, proprietary information, trade secrets, technical
information and data, computer programs and program rights and other similar
intangible property rights and interests (and any goodwill associated with any
of the foregoing) arising under the laws of any applicable jurisdiction.
"Registered Intellectual Property" means Intellectual Property that is the
subject of a patent registration, copyright registration or trademark
registration or an application for any of the foregoing.
(b) All of the Owned Registered Intellectual Property has
been duly issued and not canceled, abandoned or otherwise terminated.
(c) The Company uses no Intellectual Property in its
business except for (i) the Registered Intellectual Property, (ii) those other
items of Intellectual Property disclosed in Section 4.18(c)(ii) of the Company
Disclosure Letter, (iii) those other items of Intellectual Property that, if
the Company were deprived of the use thereof, such deprivation would not have a
materially adverse impact on the business and operations of the Company and
(iv) COTS Software (as hereinafter defined). Section 4.18(c)(ii) of the Company
Disclosure Letter indicates the nature of the applicable Intellectual Property
and whether such Intellectual Property is owned by the Company or licensed to
the Company (and, if licensed, the name of the applicable licensor and a
reference to the applicable license agreement).
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For purposes of this Agreement, "COTS Software" means software
that is licensed by third parties to willing licensees on an indiscriminate,
off-the-shelf basis, pursuant to license terms that are non-negotiable at a
price of not more than $2,000 per copy.
For purposes of this Agreement, "Owned Intellectual Property"
means, collectively, the Owned Registered Intellectual Property and the
Intellectual Property indicated in Section 4.18(c)(ii) of the Company
Disclosure Letter as being owned by the Company.
For purposes of this Agreement, "Licensed Intellectual
Property" means, collectively, the Licensed Registered Intellectual Property
and the Intellectual Property indicated in Section 4.18(c)(ii) of the Company
Disclosure Letter as being licensed to the Company, with respect to which the
Company or its Subsidiaries makes annual license payments in excess of
$100,000.
(d) The Company has taken reasonable measures to protect and
maintain the rights of the Company in the Owned Intellectual Property and the
Licensed Intellectual Property.
(e) Except as set forth in Section 4.18(e) of the Company
Disclosure Letter, the Company has not sent or otherwise communicated to any
other person any notice, charge, claim or assertion of, or has any Knowledge
of, any present, impending or threatened infringement by any other person of
any of the Owned Intellectual Property, and to the Knowledge of the Company, no
third party has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any of the Owned Intellectual Property.
(f) The Company has not received notice alleging that (i)
the Company has violated or is violating any Intellectual Property of any other
person, or (ii) any other person or entity claims any interest in any Owned
Intellectual Property.
(g) The Company is not infringing upon or otherwise acting
adversely to any Intellectual Property owned by any other person, and there is
no claim or action pending or overtly threatened with respect thereto.
(h) Section 4.18(h)(i) of the Company Disclosure Letter sets
forth a true and complete list of all software, computer programs and databases
owned or licensed by the Company excluding any COTS Software (the "Software"),
making reference to the other Sections of the Company Disclosure Letter to this
Agreement where such Software may already be listed, with an indication as to
which items are owned by the Company (the "Owned Software") and which are
licensed to the Company (the "Licensed Software"). Except for licenses of the
Owned Software granted by the Company to others in the ordinary course of
business, the Company has not licensed any of the Owned Intellectual Property
to any other person, nor does any other person have any option or other right
to acquire any of the Owned Intellectual Property except as otherwise set forth
in Section 4.18(h)(ii) of the Company Disclosure Letter. The Company has not
disclosed or granted any right of access to the source
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code of any of the Owned Software except to (i) employees of the Company and
(ii) as set forth in Section 4.18(h)(iii) of the Company Disclosure Letter.
(i) Except as disclosed in Section 4.18(i) of the Company
Disclosure Letter: (i) the Company will upon Closing deliver to Parent
complete, current copies of all user and technical documentation related to the
Software and access to all source code for the Software to which the Company
has the rights to such source code; (ii) the Software performs in all material
respects in accordance with the documentation and other written material used
in connection with the Software and is free from any material defects in
programming and operation, contains all current revisions of such Software, and
includes all computer programs, materials, tapes, know-how, object and source
codes related to the Software; (iii) no employee, contractor or agent (directly
or through employees or subcontractors or sub-agents) of the Company has
developed or assisted in the enhancement of any of the Owned Software or the
development of any program or product based on any of the Owned Software or any
part thereof without assigning all of such person's rights and interest in the
same to the Company pursuant to an agreement included in the contracts set
forth in Section 4.13 of the Company Disclosure Letter; and (iv) except as
provided in such contracts, the Company has no obligation to compensate any
person for the development, enhancement, creation of derivative works, use,
license or exploitation of any of the Software.
(j) Except as disclosed in Section 4.18(j) of the Company
Disclosure Letter, no shareholder or director, officer, employee (including
both current and former employees), consultant (including both current and
former consultants) or independent contractor (including both current and
former contractors) of the Company owns, directly or indirectly, in whole or in
part, any Owned Intellectual Property.
Section 4.19. Year 2000 Compliance.
(a) The Company has reviewed its operations and the
operations of each Subsidiary of the Company with a view to assessing whether
its business was adversely affected by not being Year 2000 Compliant (as
hereinafter defined) and has taken such actions as it deems necessary or
advisable to address Year 2000 Compliance. All of the product(s) and/or
service(s) offered and/or used by the Company or its Subsidiaries, including
each item of hardware, software, and firmware; any system, equipment, or
products consisting of or containing one or more thereof; and any and all
enhancements, upgrades, customizations, modifications, maintenance and the
like, currently and at any time in the past are, to the Company's Knowledge, as
of the date of this Agreement, Year 2000 Compliant. In those instances where
the Company or any of its Subsidiaries is under an obligation to repair or
replace product(s) or service(s) previously provided by the Company or such
Subsidiary to meet the Company's or such Subsidiary's contractual obligations,
to avoid personal injury, to avoid misrepresentation claims, or due to other
obligations, the Company or such Subsidiary has repaired or replaced those
product(s) and service(s).
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(b) To the Company's Knowledge, neither the Company nor any
of its Subsidiaries is subject to any pending or threatened regulatory action,
proceeding or investigation concerning the Year 2000 Compliance of the
Company's or any of its Subsidiaries' products, services or operations, and
there is no basis for any such regulatory action, investigation or proceeding.
The Company and its Subsidiaries are in material compliance with all applicable
regulatory rules, regulations and requirements in regards to the Year 2000
Compliance of their products, services and operations. No claim that any of the
Company's or any of its Subsidiaries' products or services are not Year 2000
Compliant, including but not limited to product liability claims, has been
asserted or threatened, and there is no basis for any such claim or action. The
Company and its Subsidiaries have furnished Parent with correct and complete
copies of any customer agreements or other materials in which the Company or
any Subsidiary has furnished (or could be deemed to have furnished) assurances
as to the Year 2000 Compliance of the Company's or such Subsidiary's products
or services, including any responses to surveys or requests for certification
of Year 2000 Compliance and letters of assurance to customers.
(c) All vendors of products or services material to the
Company and its Subsidiaries, and their respective products, services and
operations, are, to the Company's Knowledge, Year 2000 Compliant, and each such
vendor has continued to furnish its products or services to the Company and
such Subsidiary, without interruption or delay, on and after January 1, 2000.
(d) "Year 2000 Compliant" means that (a) the products,
services, or other item(s) at issue accurately process, provide and/or receive
date/time data (including but not limited to calculating, comparing, and
sequencing), within, from, into, and between centuries (including the twentieth
and twenty-first centuries and the years 1999 and 2000), including but not
limited to leap year calculations, and (b) neither the performance nor the
functionality nor the supply of the products, services, and other item(s) at
issue will be or has been affected by dates/times prior to, on, after, or
spanning January 1, 2000. The design of the products, services, and other
item(s) at issue to ensure compliance with the foregoing warranties and
representations includes proper date/time data century recognition and
recognition of 1999 and 2000, calculations that accommodate same century and
multi-century formulae and date/time values before, on, after, and spanning
January 1, 2000, and date/time data interface values that reflect the century,
1999, and 2000. In particular, but without limitation, (i) no value for current
date/time will cause or has caused any error, interruption, or decreased
performance in or for such product(s), service(s), and other item(s), (ii) all
manipulations of date and time related data (including but not limited to
calculating, comparing, sequencing, processing, and outputting) produces
correct results for all valid dates and times, including when used in
combination with Year 2000 Compliant products, services, or items, (iii) all
date/time elements in interfaces and data storage specifies the century to
eliminate date ambiguity without human intervention, including leap year
calculations, (iv) where any date/time element is represented without a
century, the correct century is unambiguous for all manipulations involving
that element, (v) authorization codes, passwords, and zaps (purge functions)
function normally and in the same manner during prior to, on, and after January
1, 2000, including the manner in which they
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function with respect to expiration dates and CPU serial numbers, and (vi) the
Company's and its Subsidiaries' (or, as used in Section 5.14, Parent's and its
Subsidiaries') supply of the product(s), service(s), and other item(s) was not
interrupted, delayed, decreased, or otherwise affected by the advent of the
year 2000.
Section 4.20. Brokers. Except for the Company's Independent Advisor,
no broker, finder or investment banker is entitled to any brokerage, finder's
or other fee or commission in connection with this Agreement, the Merger or the
other transactions contemplated by this Agreement based upon arrangements made
by or on behalf of the Company. Section 4.20 of the Company Disclosure Letter
includes a complete and correct copy of all agreements between the Company and
the Company's Independent Advisor pursuant to which such firm would be entitled
to any payment relating to this Agreement, the Merger or the other transactions
contemplated by this Agreement.
Section 4.21. Insurance Policies. The Company has delivered to Parent
prior to the date hereof a complete and accurate list of all insurance policies
in force naming the Company, any of its Subsidiaries or employees thereof as an
insured or beneficiary or as a loss payable payee or for which the Company or
any Subsidiary of the Company has paid or is obligated to pay all or part of
the premiums. Neither the Company nor any Subsidiary of the Company has
received notice of any pending or threatened cancellation or premium increase
(retroactive or otherwise) with respect thereto, and each of the Company and
such Subsidiaries is in compliance in all material respects with all conditions
contained therein. Except as set forth in Section 4.21 of the Company
Disclosure Letter, there are no material pending claims against such insurance
policies by the Company or any Subsidiary of the Company as to which insurers
are defending under reservation of rights or have denied liability, and there
exists no material claim under such insurance policies that has not been
properly filed by the Company or any Subsidiary.
Section 4.22. Notes and Accounts Receivable.
(a) Except as disclosed in Section 4.22 of the Company
Disclosure Letter, there are no notes receivable of the Company or any
Subsidiary of the Company owing by any director, officer, stockholder or
employee of the Company or any Subsidiary of the Company.
(b) Except as disclosed in Section 4.22 of the Company
Disclosure Letter, all accounts receivable of the Company and any Subsidiary of
the Company are current or covered by adequate reserves for uncollectability,
and there are no material disputes regarding the collectability of any such
accounts receivable that would reasonably be expected to have a Company
Material Adverse Effect.
Section 4.23. Transactions with Affiliates. Except as set forth in
Section 4.23 of the Company Disclosure Letter or in the Company SEC Reports
filed since January 1, 1999 (other than compensation and benefits received in
the ordinary course of business as an employee or director of the Company or
its Subsidiaries), no director, officer or other "affiliate" or "associate" (as
hereinafter defined) of the Company or any Subsidiary of the Company or any
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entity in which, to the Knowledge of the Company, any such director, officer or
other affiliate or associate, owns any beneficial interest (other than a
publicly held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market and less than 1% of the stock of
which is beneficially owned by any such persons) has any interest in: (i) any
contract, arrangement or understanding with, or relating to the business or
operations of Company or any Subsidiary of the Company; (ii) any loan,
arrangement, understanding, agreement or contract for or relating to
indebtedness of the Company or any Subsidiary of the Company; or (iii) any
property (real, personal or mixed), tangible, or intangible, used or currently
intended to be used in, the business or operations of the Company or any
Subsidiary of the Company.
Section 4.24. No Existing Discussions. As of the date hereof, the
Company is not engaged, directly or indirectly, in any negotiations or
discussions with any other party with respect to an Company Competing Proposal
(as hereinafter defined).
Section 4.25. Pooling; Tax Matters.
(a) The Company intends that the Merger be accounted for
under the "pooling-of-interests" method under the requirements of Opinion No.
16 (Business Combinations) of the Accounting Principles Board of the American
Institute of Certified Public Accountants, the Financial Accounting Standards
Board, and the Regulations of the SEC. To the Knowledge of the Company, neither
the Company nor any of its affiliates has taken or agreed to take any action,
failed to take any action or is aware of any fact or circumstance that would
prevent (i) the Merger from being treated for financial accounting purposes as
a "pooling-of-interests" in accordance with GAAP and the rules and regulations
of the SEC or (ii) the Merger from constituting a reorganization within the
meaning of Section 368(a) of the Code.
(b) The Company has no Knowledge of any reason why it may
not receive a letter from Deloitte & Touche LLP (the "Company's Accountants")
dated as of the Closing Date and addressed to the Company in which the
Company's accountants will concur with the Company's management's conclusion
that no conditions exist related to the Company that would preclude Parent from
accounting for the Merger as a "pooling-of-interests."
Section 4.26. Disclosure. No representation, warranty or covenant made
by the Company in this Agreement or in the Company Disclosure Letter contains
an untrue statement of a material fact or omits to state a material fact
required to be stated herein or therein or necessary to make the statements
contained herein or therein not misleading.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Each of Parent and Merger Sub represents and warrants to the Company as
follows:
Section 5.1. Organization and Standing. Each of Parent and each
Subsidiary of Parent (a) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation, (b) has
full corporate power and authority to own, lease and operate it properties and
assets and to conduct its business as presently conducted and (c) is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except where the failure to be so qualified or licensed
would not, individually or in the aggregate, have a Parent Material Adverse
Effect (as hereinafter defined). Parent has furnished or made available to the
Company correct and complete copies of its articles of incorporation (including
any certificates of designations attached thereto, the "Parent Articles of
Incorporation") and bylaws (the "Parent Bylaws") and the articles of
incorporation and bylaws (or equivalent organizational documents) of each of its
Subsidiaries, each as amended to date. Such articles of incorporation, bylaws or
equivalent organizational documents are in full force and effect, and neither
Parent nor any such Subsidiary is in violation of any provision of its
certificate of incorporation, bylaws or equivalent organizational documents.
Section 5.2. Capitalization. The authorized capital stock of Parent
consists of 100,000,000 shares of Parent Common Stock and 10,000,000 shares of
preferred stock, $.10 par value per share ("Parent Preferred Stock"). As of the
date hereof, (i) 29,519,116 shares of Parent Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable and
free of preemptive rights, (ii) 467,600 (included in outstanding amount) shares
of Parent Common Stock are held in the treasury of Parent, (iii) 5,901,742
(restricted stock included herein are included in the outstanding stock number)
awards are outstanding pursuant to the ChoicePoint, Inc. 1997 Omnibus Stock
Incentive Plan ("Parent Awards"), each such option entitling the holder thereof
to purchase one share of Parent Common Stock, and 1,662,484 shares of Parent
Common Stock are authorized and reserved for future issuance pursuant to the
ChoicePoint, Inc. 1997 Omnibus Stock Incentive Plan, and (iv) no shares of
Parent Preferred Stock are issued and outstanding. Section 5.2 of the Parent
Disclosure Letter delivered by Parent to the Company concurrently with the
execution of this Agreement (the "Parent Disclosure Letter") sets forth a
correct and complete list of the outstanding Parent Options with the exercise
price. Except as set forth above or in Section 5.2 of the Parent Disclosure
Letter, there are no options, warrants, convertible securities, subscriptions,
stock appreciation rights, phantom stock plans or stock equivalents or other
rights, agreements, arrangements or commitments (contingent or otherwise) of any
character issued or authorized by the Parent relating to the issued or unissued
capital stock of Parent or obligating Parent to issue or sell any shares of
capital stock of, or options, warrants, convertible securities, subscriptions or
other equity interests in, Parent. All
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shares of Parent Common Stock subject to issuance as aforesaid, 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.
There are no outstanding contractual obligations of Parent to repurchase, redeem
or otherwise acquire any shares of Parent Common Stock or to pay any dividend or
make any other distribution in respect thereof or to provide funds to, or make
any investment (in the form of a loan, capital contribution or otherwise) in,
any person. Parent owns beneficially and of record all of the issued and
outstanding capital stock of each Subsidiary of Parent and, except as otherwise
set forth in Section 5.2 of Parent Disclosure Letter, does not own an equity
interest in any other corporation, partnership or entity, other than in such
Subsidiaries. Each outstanding share of capital stock of each Subsidiary of
Parent is duly authorized, validly issued, fully paid and nonassessable and each
such share owned by Parent or another Subsidiary of Parent is free and clear of
all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on Parent's or such other Subsidiary's voting
rights, charges and other encumbrances of any nature whatsoever.
Section 5.3. Authority for Agreement.
(a) Each of Parent and Merger Sub has all necessary power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and, subject to obtaining necessary shareholder approval of Parent, to
consummate the Merger and the other transactions contemplated by this Agreement.
The execution, delivery and performance by each of Parent and Merger Sub of this
Agreement, and the consummation by each of Parent and Merger Sub of the Merger
and the other transactions contemplated by this Agreement, have been duly
authorized by all necessary corporate action (including, without limitation, the
unanimous approval of the Board of Directors of each of Parent and Merger Sub
and the sole shareholder of Merger Sub), and no other corporate proceedings on
the part of either Parent or Merger Sub are necessary to authorize this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement (other than, with respect to the Merger, the approval and
adoption of this Agreement by the affirmative vote of the then outstanding
shares of Parent Common Stock and the filing and recordation of appropriate
merger documents as required by the PBCL). This Agreement has been duly executed
and delivered by each of Parent and Merger Sub and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of each of Parent and Merger Sub enforceable against each
of Parent and Merger Sub in accordance with its terms. The Board of Directors of
Parent has taken all action to the extent necessary (including, if required,
amending the Parent Rights Agreement) in order to render the Parent Rights
inapplicable to the Merger and the other transactions contemplated by this
Agreement to the extent provided herein. The affirmative vote of holders of the
outstanding shares of Parent Common Stock entitled to vote at a duly called and
held meeting of shareholders is the only vote of the holders of any capital
stock of Parent necessary to approve this Agreement, the Merger and the other
transactions contemplated by this Agreement.
(b) At a meeting duly called and held on February 14, 2000,
the Board of Directors of each of Parent and Merger Sub unanimously (i)
determined that this Agreement and the other transactions contemplated hereby,
including the Merger, are fair to and in the best
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interests of each of Parent and Merger Sub and the holders of Parent Common
Stock, (ii) approved, authorized and adopted this Agreement, the Merger and the
other transactions contemplated hereby, and (iii) resolved to recommend approval
and adoption of this Agreement and the Merger by the holders of Parent Common
Stock. The actions taken by the Board of Directors of Parent constitute approval
of the Merger, this Agreement and transactions contemplated hereby by the Board
of Directors of Parent under the provisions of Sections 14-2-1110 et seq. and
14-2-1131 of the Georgia Business Corporate Code such that Sections 14-2-1110 et
seq. and 14-2-1131 of the Georgia Business Corporate Code do not apply to this
Agreement or the transactions contemplated hereby. Other than Sections 14-2-1110
et seq. and 14-2-1131 of the Georgia Business Corporate Code, no state
antitakeover or similar statute is applicable to the Company in connection with
the Merger, this Agreement or any of the transactions contemplated hereby.
(c) The Robinson-Humphrey Company LLC, the independent
financial advisor to the Board of Directors of Parent ("Parent's Independent
Advisor"), has delivered to the Board of Directors of Parent its written opinion
dated as of the date of this Agreement, that, as of such date and based on the
assumptions, qualifications and limitations contained therein, the Exchange
Ratio in the Merger was fair, from a financial point of view, to the
shareholders of Parent.
Section 5.4. No Conflict. The execution and delivery of this Agreement
by each of Parent and Merger Sub do not, and the performance of this Agreement
by each of Parent and Merger Sub and the consummation of the Merger and the
other transactions contemplated by this Agreement will not, (i) conflict with or
violate Parent's or Merger Sub's Articles of Incorporation or Parent's or Merger
Sub's Bylaws or equivalent organizational documents of any of Parent's
Subsidiaries, (ii) subject to Section 5.5, conflict with or violate any law
applicable to each of Parent and Merger Sub or any of Parent's Subsidiaries or
by which any property or asset of Parent or its Subsidiaries is bound or
affected, or (iii) except as set forth in Section 5.4 of the Parent Disclosure
Letter, result in a breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, give to others
any right of termination, amendment, acceleration or cancellation of, result in
triggering any payment or other obligations, or result in the creation of a lien
or other encumbrance on any property or asset of Parent or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or any of its Subsidiaries is a party or by which Parent or any
of its Subsidiaries or any property or asset of any of them is bound or
affected, except in the case of clauses (ii) and (iii) above for any such
conflicts, violations, breaches, defaults or other occurrences which could not,
individually or in the aggregate, have a Parent Material Adverse Effect. "Parent
Material Adverse Effect" shall mean, with respect to Parent, any change, event
or effect shall have occurred or, to the Knowledge of Parent, been threatened
that, when taken together with all other adverse changes, events or effects that
have occurred or been threatened (exclusive, however, of (1) any such changes,
events, or effects that occur as a result of conditions affecting (A) the
information services or public records database businesses as a whole or (B) the
stock markets and capital markets generally or the United States economy as a
whole and (2) any such changes, events, or
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effects which have occurred prior to the date hereof and have been disclosed to
the Company in writing prior to the date hereof), is or is reasonably likely to
(i) be materially adverse to the business, results of operations, properties,
prospects, condition (financial or otherwise), assets, liabilities (including,
without limitation, contingent liabilities) of Parent and its Subsidiaries taken
as a whole or (ii) prevent or materially delay the performance by either Parent
or Merger Sub of any of its obligations under this Agreement or the consummation
of the Merger or the other transactions contemplated by this Agreement.
Section 5.5. Required Filings and Consents. The execution and delivery
of this Agreement by such person do not, and the performance of this Agreement
by such person will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Entity, except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act, Blue
Sky Laws and filing and recordation of appropriate merger documents as required
by the PBCL, (ii) for those required by the HSR Act, (iii) for filings
contemplated by Section 5.12 and (iv) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
could not, individually or in the aggregate, have a Parent Material Adverse
Effect.
Section 5.6. Compliance. Except as disclosed in Section 5.6 of the
Parent Disclosure Letter, each of Parent and its Subsidiaries (i) has been
operated at all times in compliance with all laws applicable to Parent or any of
its Subsidiaries or by which any property, business or asset of Parent or any of
its Subsidiaries is bound or affected and (ii) is not in default or violation of
any notes, bonds, mortgages, indentures, contracts, agreements, leases,
licenses, permits, franchises, or other instruments or obligations to which
Parent or any of its subsidiaries is a party or by which Parent or any of its
Subsidiaries or any property or asset of Parent or any of its Subsidiaries is
bound or affected, except in the case of clauses (i) and (ii) which could not,
individually or in the aggregate, have a Parent Material Adverse Effect.
Section 5.7. SEC Filings, Financial Statements.
(a) Parent has filed all forms, reports, statements and
documents required to be filed with the SEC since June 9, 1997 (collectively,
the "Parent SEC Reports"), each of which has complied in all material respects
with the applicable requirements of the Securities Act or the Exchange Act, each
as in effect on the date so filed. None of the Parent SEC Reports (including,
but not limited to, any financial statements or schedules included or
incorporated by reference therein) contained when filed any untrue statement of
a material fact or omitted or omits to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) All of the financial statements included in the Parent SEC
Reports, in each case, including any related notes thereto, as filed with the
SEC, as well as the unaudited consolidated balance sheet of Parent as of
December 31, 1999, together with the unaudited statements of income and cash
flows of Parent for the fiscal year then ended, including any notes
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thereto (as furnished to the Company by Parent) (collectively, the "Parent
Financial Statements"), have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto and subject, in the case of the unaudited statements, to
normal, recurring audit adjustments) and fairly present the consolidated
financial position of Parent and its subsidiaries at the respective date thereof
and the consolidated results of its operations and changes in cash flows for the
periods indicated. Parent does not anticipate any changes to the accounting
policies historically applied by Parent as a result of newly adopted SAB No.
101.
(c) Except as disclosed in Section 5.7 of the Parent
Disclosure Letter, there are no liabilities of Parent or any of its subsidiaries
of any kind whatsoever, whether or not accrued and whether or not contingent or
absolute, that are material to Parent and its subsidiaries, taken as a whole,
other than (i) liabilities disclosed or provided for in the consolidated balance
sheet of Parent and its Subsidiaries at December 31, 1999, including the notes
thereto, (ii) liabilities disclosed in the Parent SEC Reports, (iii) liabilities
incurred on behalf of the Company in connection with this Agreement and the
contemplated Merger, and (iv) liabilities incurred in the ordinary course of
business consistent with past practice since December 31, 1999, none of which
are, individually or in the aggregate, reasonably likely to have a Parent
Material Adverse Effect.
(d) Parent has heretofore furnished or made available to the
Company a complete and correct copy of any amendments or modifications which
have not yet been filed with the SEC to agreements, documents or other
instruments which previously had been filed by Parent with the SEC as exhibits
to the Parent SEC Reports pursuant to the Securities Act or the Exchange Act.
Section 5.8. Absence of Certain Changes or Events. Except as
contemplated by this Agreement or as disclosed in Section 5.8 of the Parent
Disclosure Letter, since December 31, 1998, Parent and its Subsidiaries have
conducted their respective businesses only in the ordinary course and consistent
with prior practice and there has not been (i) any event or occurrence of any
condition that has had or would reasonably be expected to have a Parent Material
Adverse Effect, (ii) any declaration, setting aside or payment of any dividend
or any other distribution with respect to any of the capital stock of Parent or
any Subsidiary, (iii) any material change in accounting methods, principles or
practices employed by Parent, or (iv) any action of the type described in
Section 6.2 which had such action been taken after the date of this Agreement
would be in violation of any such Section.
Section 5.9. Taxes. Parent and each of its Subsidiaries have timely
filed all material Tax Returns required to be filed by any of them. All such Tax
Returns are correct and complete in all material respects. All Taxes of Parent
and its Subsidiaries which are (i) shown as due on such Tax Returns, (ii)
otherwise due and payable or (iii) claimed or asserted by any taxing authority
to be due, have been paid, except for those Taxes being contested in good faith
and for which adequate reserves have been established in the financial
statements included in the Parent SEC Reports in accordance with GAAP. There are
no liens for any Taxes upon the assets of
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Parent or any of its Subsidiaries, other than statutory liens for Taxes not yet
due and payable and liens for real estate Taxes contested in good faith. Parent
does not know of any proposed or threatened Tax claims or assessments which,
individually or in the aggregate, exceed $500,000. Except as set forth in
Section 5.9 of the Parent Disclosure Letter, neither the Parent nor any of its
Subsidiaries has waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a Tax assessment or deficiency. Neither
Parent nor any of its Subsidiaries has made an election under Section 341(f) of
the Code. Parent and each Subsidiary has withheld and paid over to the relevant
taxing authority all Taxes required to have been withheld and paid in connection
with payments to employees, independent contractors, creditors, shareholders or
other third parties, except for such Taxes which individually or in the
aggregate could not have a Parent Material Adverse Effect. The unpaid Taxes of
Parent and its Subsidiaries for the current taxable period did not, as of the
most recent Parent Financial Statement, exceed the reserve for Tax liability
(disregarding any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of the balance
sheet in the most recent Parent Financial Statement (disregarding any notes
thereto).
Section 5.10. Title to Assets.
(a) Except as set forth in the Parent's Annual Report on Form
10-K for the fiscal year ended December 31, 1998 (the "Parent 10-K") or except
as set forth in Section 5.10 of Parent Disclosure Letter, Parent and each of its
Subsidiaries have good and marketable title to, or a valid leasehold interest
in, all of their real and personal properties and assets reflected in the Parent
10-K or acquired after December 31, 1998 (other than assets disposed of since
December 31, 1998 in the ordinary course of business consistent with past
practice), in each case free and clear of all title defects, liens, encumbrances
and restrictions, except for (i) liens, encumbrances or restrictions which
secure indebtedness which are properly reflected in the Parent 10-K; (ii) liens
for Taxes accrued but not yet payable; (iii) liens arising as a matter of law in
the ordinary course of business with respect to obligations incurred after
December 31, 1998, provided that the obligations secured by such liens are not
delinquent; and (iv) such title defects, liens, encumbrances and restrictions,
if any, as, individually or in the aggregate, are not reasonably likely to have
a Parent Material Adverse Effect. Except as set forth in Section 5.10 of the
Parent Disclosure Letter, Parent and each of its Subsidiaries either own, or
have valid leasehold interests in, all properties and assets used by them in the
conduct of their business.
(b) Except as set forth in Section 5.10 of Parent Disclosure
Letter, neither Parent nor any of its Subsidiaries has any legal obligation,
absolute or contingent, to any other person to sell or otherwise dispose of any
of its assets with an individual value of $100,000 or an aggregate value in
excess of $500,000.
Section 5.11. Litigation. Except for such matters disclosed in Section
5.11 of the Parent Disclosure Letter which, if adversely determined, have not
resulted in, and would not reasonably be expected to result in, a loss,
individually or in the aggregate, to Parent or any of its Subsidiaries in excess
of $500,000, there is no Litigation pending or, to the Knowledge of Parent,
threatened against Parent or any of its Subsidiaries. Except for such matters
which have
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not resulted in, and would not reasonably be expected to result in, a loss,
individually or in the aggregate, to Parent or any of its Subsidiaries in excess
of $500,000, there are no judgments, orders, injunctions, decrees, stipulations
or awards (whether rendered by a court, administrative agency, or by
arbitration, pursuant to a grievance or other procedure) against or relating to
Parent or any of its Subsidiaries.
Section 5.12. Information Supplied.
(a) None of the information supplied or to be supplied by
Parent for inclusion or incorporation by reference in (A) the Form S-4 will, at
the time the Form S-4 becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
and (B) the Joint Proxy Statement/Prospectus will, on the date it is first
mailed to the Company's shareholders or Parent's shareholders or at the time of
the Company Shareholders Meeting or the Parent Shareholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The Form
S-4 and the Joint Proxy Statement/Prospectus will comply as to form in all
material respects with the requirements of the Exchange Act and the Securities
Act.
(b) Notwithstanding the foregoing provisions of this Section
5.12, no representation or warranty is made by Parent or Merger Sub with respect
to statements made or incorporated by reference in the Form S-4 or the Joint
Proxy Statement/Prospectus based on information supplied by the Company for
inclusion or incorporation by reference therein.
Section 5.13. Environmental Compliance and Disclosure. Except as set
forth in Section 5.13 of the Parent Disclosure Letter:
(a) Parent and each of its Subsidiaries possess, and are in
compliance with, all permits, licenses and government authorizations and has
filed all notices that are required under Environmental Laws applicable to
Parent and each of its Subsidiaries, and Parent and each of its Subsidiaries are
in compliance with all applicable limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in those laws or contained in any Law, regulation, code, plan, order,
decree, judgment, notice, permit or demand letter issued, entered, promulgated
or approved thereunder;
(b) Neither Parent nor any of its Subsidiaries has received
notice of actual or threatened liability under CERCLA or any similar state or
local statute or ordinance from any governmental agency or any third party, and
there are no facts or circumstances which could form the basis for the assertion
of any claim against Parent or any of its Subsidiaries under any Environmental
Laws including, without limitation, CERCLA or any similar local, state or
foreign Law with respect to any on-site or off-site location;
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(c) Neither Parent nor any of its Subsidiaries has entered
into or agreed to, nor does Parent or any of its Subsidiaries contemplate
entering into any consent decree or order, and are not subject to any judgment,
decree or judicial or administrative order relating to compliance with, or the
cleanup of hazardous materials under, any applicable Environmental Laws;
(d) Neither Parent nor any of its Subsidiaries has been
subject to any administrative or judicial proceeding pursuant to and, to the
Knowledge of Parent, has not been alleged to be in violation of, applicable
Environmental Laws or regulations either now or any time during the past five
years;
(e) Neither Parent nor any of its Subsidiaries has received
notice that it is subject to any claim, obligation, liability, loss, damage or
expense of whatever kind or nature, contingent or otherwise, incurred or imposed
or based upon any provision of any Environmental Law and arising out of any act
or omission of Parent or any of its Subsidiaries, its employees, agents or
representatives or, to the Knowledge of Parent, arising out of the ownership,
use, control or operation by Parent or any of its Subsidiaries of any plant,
facility, site, area or property (including, without limitation, any plant,
facility, site, area or property currently or previously owned or leased by
Parent or any of its Subsidiaries) from which any hazardous materials were
released into the environment (the term "release" meaning any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing into the environment, and the term "environment"
meaning any surface or ground water, drinking water supply, soil, surface or
subsurface strata or medium, or the ambient air);
(f) Parent has heretofore provided the Company with correct
and complete copies of all files of Parent and its Subsidiaries relating to
environmental matters (or an opportunity to review such files). Neither Parent
nor any of its Subsidiaries has paid any fines, penalties or assessments within
the last five years with respect to environmental matters; and
(g) None of the assets owned by Parent or any of its Subsidiaries or
any real property leased by Parent or any of its Subsidiaries contain any
friable asbestos, regulated PCBs or underground storage tanks.
Section 5.14. Year 2000 Compliance.
(a) Parent has reviewed its operations and the operations of
each Subsidiary of Parent with a view to assessing whether its business was
adversely affected by not being Year 2000 Compliant and has taken such actions
as it deems necessary or advisable to address Year 2000 Compliance. All of the
product(s) and/or service(s) offered and/or used by Parent or its Subsidiaries,
including each item of hardware, software, and firmware; any system, equipment,
or products consisting of or containing one or more thereof; and any and all
enhancements, upgrades, customizations, modifications, maintenance and the like,
currently and at any time in the past are, to the Knowledge of Parent, as of the
date of this Agreement, Year 2000 Compliant. In those instances where Parent or
any of its Subsidiaries is under an obligation to repair or replace product(s)
or service(s) previously provided by Parent or such Subsidiary to
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meet Parent's or such Subsidiary's contractual obligations, to avoid personal
injury, to avoid misrepresentation claims, or due to other obligations, Parent
or such Subsidiary has repaired or replaced those product(s) and service(s).
(b) To the Knowledge of Parent, neither Parent nor any of its
Subsidiaries is subject to any pending or threatened regulatory action,
proceeding or investigation concerning the Year 2000 Compliance of the Parent's
or any of its Subsidiaries' products, services or operations, and there is no
basis for any such regulatory action, investigation or proceeding. Parent and
its Subsidiaries are in material compliance with all applicable regulatory
rules, regulations and requirements in regards to the Year 2000 Compliance of
their products, services and operations. No claim that any of Parent's or any of
its Subsidiaries' products or services are not Year 2000 Compliant, including
but not limited to product liability claims, has been asserted or threatened,
and there is no basis for any such claim or action.
(c) All vendors of products or services material to Parent and
its Subsidiaries, and their respective products, services and operations, are,
to the Knowledge of Parent, Year 2000 Compliant, and each such vendor has
continued to furnish its products or services to the Parent and such Subsidiary,
without interruption or delay, on and after January 1, 2000.
Section 5.15. Insurance Policies. Neither Parent nor any Subsidiary of
Parent has received notice of any pending or threatened cancellation or premium
increase (retroactive or otherwise) with respect to any of the insurance
policies in force naming Parent, any of its Subsidiaries or employees thereof as
an insured or beneficiary or as a loss payable payee or for which Parent or any
Subsidiary of Parent has paid or is obligated to pay all or part of the
premiums, and each of Parent and such Subsidiaries is in compliance in all
material respects with all conditions contained therein. There are no material
pending claims against such insurance policies by Parent or any Subsidiary of
Parent as to which insurers are defending under reservation of rights or have
denied liability, and there exists no material claim under such insurance
policies that has not been properly filed by Parent or any Subsidiary.
Section 5.16. ERISA and Related Matters.
(a) As used in this Section 5.16, the term "Parent Benefit
Plans" shall mean all deferred compensation, pension, profit-sharing and
retirement plans, and all bonus, welfare, severance pay and other "employee
benefit plans" (as defined in Section 3(3) of ERISA), fringe benefit or stock
option plans, including individual contracts, employee agreements, programs or
arrangements, providing the same or similar benefits, whether or not written,
participated in or maintained by Parent or with respect to which contributions
are made or obligations assumed by Parent in respect of Parent (including
health, life insurance and other benefit plans maintained for former employees
or retirees), at any time between September 1, 1997 and the Closing Date. Copies
of all Parent Benefit Plans and related documents, including those setting out
Parent's personnel policies and procedures, and including any insurance
contracts, trust agreements or other arrangements under which benefits are
provided, as currently in effect, and descriptions of any such plan which are
not written have been made available for inspection by the Company.
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Parent has also made available for inspection by the Company a copy of the
summary plan description, if any, for each Parent Benefit Plan, as well as
copies of any other summaries or descriptions of any such Parent Benefit Plans
which have been provided to employees or other beneficiaries during the current
and previous three (3) calendar years.
(b) Except as set forth in Section 5.16 of the Parent
Disclosure Letter, Parent has fulfilled its obligations, to the extent
applicable, under the minimum funding requirements of Section 302 of ERISA and
Section 412 of the Code, with respect to each "employee benefit plan" (as
defined in Section 3(3) of ERISA) appearing in Section 5.16 of the Parent
Disclosure Letter. Each Parent Benefit Plan is in compliance with, and has been
administered in all respects consistent with, the presently applicable
provisions of ERISA, the Code and state law, including but not limited to the
satisfaction of all applicable reporting and disclosure requirements under the
Code, ERISA and state law. Parent has made all payments to all Parent Benefit
Plans as required by the terms of each such plan in accordance, if applicable,
with the actuarial and funding assumptions in effect as for the most recent
actuarial valuation of such plans. All required actuarial valuations and reports
relating to said plans have been prepared and a copy of the most recent
actuarial valuation and report for each pension plan, as defined in Section 3(2)
of ERISA, has been made available for inspection by the Company, if applicable.
Parent has filed or caused to be filed with the Internal Revenue Service annual
reports on Form 5500 for each Parent Benefit Plan attributable to them for all
years and periods for which such reports were required and within the time
period required by ERISA and the Code, and copies of such reports for the past
three years have been made available for inspection by the Company. Except as
disclosed in Section 5.16 of the Parent Disclosure Letter, Parent has funded or
will fund each Parent Benefit Plan attributable to it in accordance with its
terms through Closing, including the payment of applicable premiums on any
insurance contract funding a Parent Benefit Plan for coverage provided through
Closing. To the extent that any annual contribution for the current year is not
yet required for any Parent Benefit Plan as of the Effective Time, Parent has
made a pro rata contribution to said plan for the period ended at the Effective
Time or said contribution has been accrued on the books of Parent.
(c) Except as set forth in Section 5.16 of the Parent
Disclosure Letter, no "prohibited transaction," as defined in Section 406 of
ERISA and Section 4975 of the Code, has occurred in respect of any such Parent
Benefit Plan, and no civil or criminal action brought pursuant to Part 5 of
Title I or ERISA is pending or is threatened in writing or orally against any
fiduciary of any such plan.
(d) Except as set forth in Section 5.16 of the Parent
Disclosure Letter, the Internal Revenue Service has issued a letter for each
employee pension benefit plan, as defined in Section 3(2) of ERISA, listed in
Section 5.16 of the Parent Disclosure Letter, determining that such plan is a
qualified plan under Section 401(a) of the Code and is exempt from United States
Federal Income Tax under Section 501(a) of the Code, and there has been no
occurrence since the date of any such determination letter which has adversely
affected such qualification. Parent does not maintain a plan or arrangement
intended to qualify under Section 501(c)(9) of the Code.
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(e) Except as set forth in Section 5.16 of the Parent
Disclosure Letter, each Parent Benefit Plan that provides medical benefits has
been operated in compliance with all requirements of Section 4980B(f) of the
Code and Sections 601 through 608 of ERISA relating to continuation of coverage
under certain circumstances in which coverage would otherwise cease.
(f) Neither Parent nor any entity that is treated as a single
employer with Parent pursuant to Section 414(b), (c), (m) or (o) of the Code
currently maintains or contributes to any Parent Benefit Plan that is subject to
Title IV of ERISA, nor has previously maintained or contributed to any such plan
that has resulted in any liability or potential liability for Parent under said
Title IV. There shall not be as of Closing any outstanding unpaid minimum
funding waiver within the meaning of Code Section 412(d).
(g) Except as disclosed in Section 5.16 of the Parent
Disclosure Letter, Parent does not maintain any Parent Benefit Plan, plans or
programs that provide post-retirement medical benefits (other than benefits
described in Section 5.16 and those which are required by law), post-employment
benefits, death benefits or other post-retirement welfare benefits. A copy of
any written description of post-retirement welfare benefits that has been
provided to employees has been made available for inspection by the Company.
Copies of each plan document, insurance contract or other written instrument
providing for post-retirement welfare benefits, together with a description of
any advance funding arrangement that has been established to fund
post-retirement welfare benefits, have been made available for inspection by the
Company. Except as otherwise disclosed in Section 5.16 of the Parent Disclosure
Letter, all plans or programs for providing post-retirement medical, death or
other welfare benefits could be terminated by Parent as of Closing without
liability for such benefits to any employee who has not retired on or before the
Effective Time.
(h) Neither Parent nor any employer referred to in Section
5.16 (f) above, maintains, nor has contributed within the past five years to,
any multiemployer plan within the meaning of Sections 3(37) or 4001(a)(3) of
ERISA. No such employer currently has any liability to make withdrawal liability
payments to any multiemployer plan. There is no pending dispute between any such
employer and any multiemployer plan concerning payment of contributions or
payment of withdrawal liability payments.
(i) All Parent Benefit Plans have been operated and
administered in accordance with their respective terms and no inconsistent
representation or interpretation has been made to any plan participant. Except
as set forth in Section 5.16 of the Parent Disclosure Letter, no lawsuit or
complaint (including any dispute that might result in a lawsuit or complaint
against, by, or relating to any Parent Benefit Plan or any fiduciary, as defined
in Section 3(21) of ERISA) of a Parent Benefit Plan has been filed or is
pending.
(j) Any reference to Parent in this Section 5.16 shall be
deemed to refer to each Subsidiary of Parent, where relevant.
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Section 5.17. Transactions with Affiliates. Except as set forth in
Section 5.17 of the Parent Disclosure Letter or in the Parent SEC Reports filed
since January 1, 1999 (other than compensation and benefits received in the
ordinary course of business as an employee or director of Parent or its
Subsidiaries), no director, officer or other "affiliate" or "associate" (as
hereinafter defined) of Parent or any Subsidiary of Parent or any entity in
which, to the Knowledge of Parent, any such director, officer or other affiliate
or associate, owns any beneficial interest (other than a publicly held
corporation whose stock is traded on a national securities exchange or in the
over-the-counter market and less than 1% of the stock of which is beneficially
owned by any such persons) has any interest in: (i) any contract, arrangement or
understanding with, or relating to the business or operations of Parent or any
Subsidiary of Parent; (ii) any loan, arrangement, understanding, agreement or
contract for or relating to indebtedness of Parent or any Subsidiary of Parent;
or (iii) any property (real, personal or mixed), tangible, or intangible, used
or currently intended to be used in, the business or operations of Parent or any
Subsidiary of Parent.
Section 5.18. No Existing Discussions. As of the date hereof, Parent is
not engaged, directly or indirectly, in any negotiations or discussions with any
other party with respect to a Parent Competing Proposal (as hereinafter
defined).
Section 5.19. Brokers. No broker, finder or investment banker (other
than Parent's Independent Advisor) is entitled to any brokerage, finder's or
other fee or commission payable by such person in connection with this
Agreement, the Merger or the other transactions contemplated by this Agreement
based upon arrangements made by or on behalf of such person.
Section 5.20. Pooling; Tax Matters.
(a) Parent intends that the Merger be accounted for under the
"pooling-of-interests" method under the requirements of Opinion No. 16 (Business
Combinations) of the Accounting Principles Board of the American Institute of
Certified Public Accountants, the Financial Accounting Standards Board, and the
Regulations of the SEC. To the Knowledge of Parent, neither Parent nor any of
its affiliates has taken or agreed to take any action, failed to take any action
or is aware of any fact or circumstance that would prevent (i) the Merger from
being treated for financial accounting purposes as a "pooling-of-interests" in
accordance with GAAP and the rules and regulations of the SEC or (ii) the Merger
from constituting a reorganization within the meaning of Section 368(a) of the
Code.
(b) To the Knowledge of Parent, there is no reason why it may
not receive a letter from Arthur Andersen LLP (the "Parent's Accountants") dated
as of the Closing Date and addressed to Parent in which Parent's Accountants
will concur with Parent's management's conclusion that no conditions exist
related to Parent that would preclude Parent from accounting for the Merger as a
"pooling-of-interests."
Section 5.21. Disclosure. No representation, warranty or covenant made
by Parent in this Agreement or in the Parent Disclosure Letter contains an
untrue statement of a material fact
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or omits to state a material fact required to be stated herein or therein or
necessary to make the statements contained herein or therein not misleading.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.1. Covenants of the Company. During the period from the date
of this Agreement and continuing until the Effective Time, the Company agrees as
to itself and its Subsidiaries that (except as expressly contemplated or
permitted by this Agreement or as otherwise indicated on the Company Disclosure
Letter or to the extent that Parent shall otherwise consent in writing, which
consent shall not be unreasonably withheld or delayed):
(a) Ordinary Course. The Company shall, and shall cause its
Subsidiaries to, carry on its business in the usual, regular and ordinary
course, in substantially the same manner as heretofore conducted, and shall use
all reasonable efforts to maintain its rights and franchises and preserve its
relationships with customers, suppliers and others having business dealings with
it; provided, however, that no action by the Company or its Subsidiaries with
respect to matters specifically addressed by any other provisions of this
Section 6.1 or the Company Disclosure Letter shall be deemed a breach of this
Section 6.1(a) unless such action would constitute a breach of one or more of
such other provisions.
(b) Dividends; Changes in Share Capital. The Company shall
not, and shall not permit any of its Subsidiaries to, and shall not propose to,
(i) declare or pay any dividends on or make other distributions in respect of
any of its capital stock, (ii) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for, shares of its capital stock,
except for any such transaction by a wholly owned Subsidiary of the Company
which remains a wholly owned Subsidiary after consummation of such transaction,
or (iii) repurchase, redeem or otherwise acquire any shares of its capital stock
or any securities convertible into or exercisable for any shares of its capital
stock.
(c) Issuance of Securities. The Company shall not, and shall
not permit any of its Subsidiaries to, issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock of
any class or any securities convertible into or exercisable for, or any rights,
warrants or options to acquire, any such shares, or enter into any agreement
with respect to any of the foregoing, other than (i) the issuance of Company
Common Stock upon the exercise of stock options or warrants or in connection
with rights under other stock-based benefits plans, to the extent such options
or rights are outstanding on the date hereof in accordance with their present
terms or (ii) issuances by a wholly owned Subsidiary of the Company of capital
stock to such Subsidiary's parent.
(d) Governing Documents. Except to the extent required to
comply with their respective obligations hereunder, required by law or required
by the rules and regulations of the
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NYSE, the Company shall not, and shall cause its Subsidiaries not to, amend the
Company Articles of Incorporation or the Company Bylaws or other governing
documents.
(e) No Acquisitions. The Company shall not, and shall not
permit any of its Subsidiaries to, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of a material amount of assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to acquire any
assets, other than in the ordinary course of business consistent with past
practice.
(f) No Dispositions. The Company shall not, and shall not
permit any of its Subsidiaries to, sell, lease, encumber or otherwise dispose
of, or agree to sell, lease, encumber or otherwise dispose of (including by way
of a spin-off or similar transaction), any material amount of assets.
(g) Capital Expenditures. The Company shall not, and shall not
permit any of its Subsidiaries to, incur or commit to any capital expenditures
other than capital expenditures incurred or committed to in the ordinary course
of business consistent with past practice and which, in the aggregate, are not
in excess of $1,000,000.
(h) Tax-Free Qualification; Pooling. The Company shall not,
and shall not permit any of its Subsidiaries to, take any action that would
prevent or impede the Merger from qualifying as a reorganization under Section
368 of the Code or which would disqualify the Merger as a "pooling-of-interests"
for accounting purposes.
(i) Other Actions. The Company shall not, and shall not permit
any of its Subsidiaries to, take any action that would, or that could reasonably
be expected to, result in (i) any of the conditions to the Merger set forth in
Article VIII not being satisfied or (ii) a material delay in the satisfaction of
such conditions.
(j) Accounting Methods. Except as required by a Governmental
Entity, the Company shall not make any material change to its methods of
accounting in effect at December 31, 1998, except as required by changes in GAAP
as concurred with by the Company's Accountants. The Company shall not change its
fiscal year.
(k) Representations and Warranties. The Company shall not take
any action that would cause any of its representations and warranties set forth
in this Agreement to no longer be true and correct.
(l) Authorization of the Foregoing. The Company shall not, and
shall not permit any of its Subsidiaries to, authorize, commit or agree to take
any of the foregoing actions.
Section 6.2. Covenants of Parent. During the period from the date of
this Agreement and continuing until the Effective Time, Parent agrees as to
itself and its Subsidiaries that (except
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as expressly contemplated or permitted or required by this Agreement or as
otherwise indicated on the Parent Disclosure Letter or to the extent that the
Company shall otherwise consent in writing, which consent shall not be
unreasonably withheld or delayed):
(a) Ordinary Course. Parent shall, and shall cause its
Subsidiaries to, carry on its business in the usual, regular and ordinary course
in all material respects, in substantially the same manner as heretofore
conducted, and shall use all reasonable efforts to maintain its material rights
and material franchises and preserve its material relationships with customers,
suppliers and others having business dealings with it; provided, however, that
no action by Parent or its Subsidiaries with respect to matters specifically
addressed by any other provisions of this Section 6.2 shall be deemed a breach
of this Section 6.2(a) unless such action would constitute a breach of one or
more of such other provisions.
(b) Dividends; Changes in Share Capital. Parent shall not, and
shall not permit any of its subsidiaries to, and shall not propose to, (i)
declare or pay any dividends on or make other distributions in respect of any of
its capital stock, (ii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its capital stock, except for
any such transaction by a wholly owned subsidiary of Parent which remains a
wholly owned subsidiary after consummation of such transaction, or (iii)
repurchase, redeem or otherwise acquire any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital stock
except for the purchase from time to time by Parent of Parent Common Stock in
the ordinary course of business consistent with past practice.
(c) Issuance of Securities. Parent shall not, and shall not
permit any of its subsidiaries to, issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock of
any class or any securities convertible into or exercisable for, or any rights,
warrants or options to acquire, any such shares or enter into any agreement with
respect to any of the foregoing, other than (i) the issuance of Parent Common
Stock upon the exercise of stock options or in connection with rights under
other stock-based benefits plans, to the extent such options or rights are
outstanding on the date hereof in accordance with their present terms or upon
the exercise of the stock options issued pursuant to clause (iv) below, (ii)
issuances by a wholly owned subsidiary of Parent of capital stock to such
Subsidiary's parent, (iii) issuances in accordance with the Parent Rights
Agreement, (iv) issuances of stock options in connection with annual option
grants by Parent or for new hires in the ordinary course of business and
consistent with past practice pursuant to Parent's benefit plans not to exceed
the aggregate amounts set forth on Section 6.2(c)(iv) of the Parent Disclosure
Schedule, or (v) the issuance of Parent Common Stock pursuant to acquisitions.
(d) Governing Documents. Except to the extent required to
comply with their respective obligations hereunder, required by law or required
by the rules and regulations of the NYSE, Parent shall not, and shall cause its
Subsidiaries not to, amend the Parent Articles of Incorporation or the Parent
Bylaws, or other governing documents.
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(e) Tax-Free Qualification; Pooling. Parent shall not, and
shall not permit any of its subsidiaries to, take any action that would prevent
or impede the Merger from qualifying as a reorganization under Section 368 of
the Code or which would disqualify the Merger as a "pooling-of-interests" for
accounting purposes.
(f) Other Actions. Parent shall not, and shall not permit any
of its subsidiaries to, take any action that would, or that could reasonably be
expected to, result in (i) any of the conditions to the Merger set forth in
Article VIII not being satisfied or (ii) a material delay in the satisfaction of
such conditions.
(g) Accounting Methods. Except as required by a Governmental
Entity, Parent shall not make any material change to its methods of accounting
in effect at December 31, 1999, except as required by changes in GAAP as
concurred with by Parent's independent auditors. Parent shall not change its
fiscal year.
(h) Representations and Warranties. Parent shall not take any
action that would cause any of its representations and warranties set forth in
this Agreement to no longer be true and correct.
(i) Authorization of the Foregoing. Parent shall not, and
shall not permit any of its subsidiaries to, authorize, commit or agree to take
any of the foregoing actions.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1. Preparation of the Form S-4 and the Joint Proxy
Statement/Prospectus; Stockholders Meetings.
(a) As promptly as practicable following the date hereof,
Parent and the Company shall jointly prepare and file with the SEC preliminary
proxy materials and any amendments or supplements thereof which shall constitute
the joint proxy statement/prospectus (such proxy statement/prospectus, and any
amendments or supplements thereto, the "Joint Proxy Statement/Prospectus") and
Parent shall prepare and file with the SEC the Registration Statement on Form
S-4 with respect to the issuance of Parent Common Stock in the Merger (the "Form
S-4") in which the Joint Proxy Statement/Prospectus will be included as a
prospectus. The Form S-4 and the Joint Proxy Statement/Prospectus shall comply
as to form in all material respects with the applicable provisions of the
Securities Act and the Exchange Act. Each of Parent and the Company shall use
all reasonable efforts to have the Form S-4 declared effective under the
Securities Act as promptly as practicable after filing it with the SEC and to
keep the Form S-4 effective as long as is necessary to consummate the Merger.
The parties shall promptly provide copies, consult with each other and prepare
written responses with respect to any written comments received from the SEC
with respect to the Form S-4 and the Joint Proxy
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Statement/Prospectus and promptly advise the other party of any oral comments
received from the SEC. Parent agrees that none of the information supplied or to
be supplied by Parent for inclusion or incorporation by reference in the Joint
Proxy Statement/Prospectus and each amendment or supplement thereto, at the time
of mailing thereof and at the time of the Company Shareholders Meeting or the
Parent Shareholders Meeting, will contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Company agrees that none of the information supplied
or to be supplied by the Company for inclusion or incorporation by reference in
the Joint Proxy Statement/Prospectus and each amendment or supplement thereto,
at the time of mailing thereof and at the time of the Company Shareholders
Meeting or the Parent Shareholders Meeting, will contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. For purposes of the foregoing, it is
understood and agreed that information concerning or related to Parent and the
Parent Shareholders Meeting will be deemed to have been supplied by Parent and
information concerning or related to the Company and the Company Shareholders
Meeting shall be deemed to have been supplied by the Company.
(b) As of the date of this Agreement, the Board of Directors
of Parent is composed of three classes with a total of nine directors. The Joint
Proxy Statement/Prospectus shall nominate for election to the Board of Directors
of Parent, as of the date of the Parent Shareholders Meeting (as hereinafter
defined), the two persons listed in Exhibit A hereto. Promptly following the
Effective Time, the three directors listed in Exhibit B shall resign from the
Board of Directors of Parent, and the Board of Directors of Parent shall take
action to fill the vacancies created by such resignations by appointing the four
individuals listed in Part I of Exhibit C ("Company Nominees"). In addition,
promptly following the Effective Time, the Board of Directors of Parent will
take action to increase their size to ten and shall appoint the individual
listed in Part II of Exhibit C to fill the seat created by such expansion.
(c) The Company shall, as promptly as practicable following
the execution of this Agreement, duly call, give notice of, convene and hold a
meeting of its shareholders (the "Company Shareholders Meeting") for the purpose
of obtaining the required Company shareholder vote with respect to the
transactions contemplated by this Agreement, and, subject to Section 7.4, shall
use its reasonable efforts to solicit the adoption of this Agreement by the
required Company shareholder vote.
(d) Parent shall, as promptly as practicable following the
execution of this Agreement, duly call, give notice of, convene and hold a
meeting of its shareholders (the "Parent Shareholders Meeting") for the purpose
of obtaining the required Parent shareholder vote with respect to the
transactions contemplated by this Agreement and, subject to Section 7.5, shall
use its reasonable efforts to solicit the approval of this Agreement by the
required Parent shareholder vote.
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(e) The Company Shareholders Meeting and the Parent
Shareholders Meeting shall take place on the same date to the extent
practicable.
Section 7.2. Access to Information. Upon reasonable notice, each of
Parent and the Company shall, and shall cause its Subsidiaries to, afford to the
other party and to the officers, employees, accountants, counsel, financial
advisors and other representatives of such other party reasonable access during
normal business hours, during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records and, during such period,
each of Parent and the Company shall, and shall cause its Subsidiaries to,
furnish promptly to the other party consistent with its legal obligations all
other information concerning its business, properties and personnel as such
other party may reasonably request; provided, however, that each of Parent and
the Company may restrict the foregoing access to the extent that (i) a
Governmental Entity requires either party or any of its Subsidiaries to restrict
access to any properties or information reasonably related to any such contract
on the basis of applicable laws and regulations with respect to national
security matters or (ii) in the reasonable judgment of such party any law,
treaty, rule or regulation of any Governmental Entity applicable to such party
requires it or its Subsidiaries to restrict access to any properties or
information. The parties will hold any such information in confidence to the
extent required by, and in accordance with, the provisions of the letter dated
January 17, 2000, between Parent and the Company (the "Confidentiality
Agreement"). Any investigation by Parent or the Company shall not affect the
representations and warranties of Parent or the Company, as the case may be.
Section 7.3. Best Efforts.
(a) Subject to the terms and conditions of this Agreement,
each party hereto will use its best efforts to (i) take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate the Merger and the
other transactions contemplated by this Agreement as soon as practicable after
the date hereof and (ii) obtain and maintain all approvals, consents, waivers,
registrations, permits, authorizations, clearances and other confirmations
required to be obtained from any third party and/or any Governmental Entity that
are necessary, proper or advisable to consummate the Merger and the transactions
contemplated hereby (each a "Required Approval"). In furtherance and not in
limitation of the foregoing, each party hereto agrees to make as promptly as
practicable, to the extent it has not already done so, (i) an appropriate filing
of a Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby (which filing shall be made in any event within
five business days of the date hereof), (ii) all necessary filings with other
Governmental Entities relating to the Merger, and, in each case, to supply as
promptly as practicable any additional information and documentary material that
may be requested pursuant to the such laws and to use its best efforts to cause
the expiration or termination of the applicable waiting periods under the HSR
Act and the receipt of Required Approvals under such other laws as soon as
practicable.
(b) Each of Parent and the Company shall, in connection with
the efforts referenced in Section 7.3(a) to obtain all Required Approvals, use
its best efforts to (i) cooperate
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in all respects with each other in connection with any filing or submission and
in connection with any investigation or other inquiry, including any proceeding
initiated by a private party, (ii) promptly inform the other party of any
communication received by such party from, or given by such party to, the
Antitrust Division of the Department of Justice (the "DOJ") or any other
Governmental Entity and of any material communication received or given in
connection with any proceeding by a private party, in each case regarding any of
the transactions contemplated hereby, and (iii) promptly inform the other party
of the timing and content of any communications with the DOJ or any such other
Governmental Entity or, in connection with any proceeding by a private party,
with any other Person, and to the extent permitted by the DOJ or such other
applicable Governmental Entity or other Person, give the other party the
opportunity to attend and participate in such meetings and conferences.
(c) In furtherance and not in limitation of the covenants of
the parties contained in Sections 7.3(a) and 7.3(b), if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Regulatory Law (as
hereinafter defined), or if any statute, rule, regulation, executive order,
decree, injunction or administrative order is enacted, entered, promulgated or
enforced by a Governmental Entity which would make the Merger or the
transactions contemplated hereby illegal or would otherwise prohibit or
materially impair or delay the consummation of the Merger or the transactions
contemplated hereby, each of Parent and the Company shall cooperate in all
respects with each other and use its respective commercially reasonable efforts
to contest and resist any such action or proceeding and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other action or
order, whether temporary, preliminary or permanent, that is in effect and that
prohibits, prevents or restricts consummation of the Merger or the transactions
contemplated by this Agreement and to have such statute, rule, regulation,
executive order, decree, injunction or administrative order repealed, rescinded
or made inapplicable. Notwithstanding any provision of this Agreement to the
contrary, Parent and Merger Sub shall not be required under the terms of this
Agreement to dispose of or hold separate all or any portion of the businesses or
assets of Parent or any of its Subsidiaries or of the Company or any of its
Subsidiaries in order to remedy or otherwise address the concerns (whether or
not formally expressed) of any Governmental Entity under the HSR Act or any
other antitrust statute or regulation. For purposes of this Agreement,
"Regulatory Law" means the Sherman Act, as amended, the Clayton Act, as amended,
the HSR Act, the Federal Trade Commission Act, as amended, and all other
Federal, state and foreign, if any, statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other laws that are designed
or intended to regulate mergers, acquisitions or other business combinations.
(d) The Company and its Board of Directors shall, if any state
takeover statute or similar statute becomes applicable to this Agreement, the
Merger or any other transactions contemplated hereby, to the extent legally
permissible take all action reasonably necessary to ensure that the Merger and
the other transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise to
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minimize the effect of such statute or regulation on this Agreement, the Merger
and the other transactions contemplated hereby.
(e) Parent and its Board of Directors shall, if any state
takeover statute or similar statute becomes applicable to this Agreement, the
Merger or any other transactions contemplated hereby, to the extent legally
permissible take all action reasonably necessary to ensure that the Merger and
the other transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise to
minimize the effect of such statute or regulation on this Agreement, the Merger
and the other transactions contemplated hereby.
Section 7.4. No Solicitation by the Company.
(a) The Company shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any of its directors, officers
or employees or any investment banker, financial advisor, attorney, accountant
or other representative retained by it or any of its Subsidiaries to, directly
or indirectly through another Person, (i) solicit, initiate or knowingly
encourage (including by way of furnishing information) the making of any
proposal that constitutes a Company Competing Proposal (as hereinafter defined)
or (ii) participate in any discussions or negotiations regarding any Company
Competing Proposal; provided, however, that if, at any time prior to the date of
the Company Shareholders Meeting (the "Company Applicable Period"), the Board of
Directors of Company determines in good faith, after consultation with outside
counsel, that to do otherwise would not be in the best interests of the
Company's shareholders, the Company and its representatives may, in response to
a Company Competing Proposal which did not result from a breach of this Section
7.4(a) and which could reasonably be expected to constitute, if consummated, a
Company Superior Proposal (as hereinafter defined), (x) furnish information with
respect to the Company and its Subsidiaries to any Person making such Company
Competing Proposal pursuant to a customary confidentiality agreement (as
determined by the Company after consultation with its outside counsel) and (y)
participate in discussions or negotiations regarding such Company Competing
Proposal. For purposes of this Agreement, "Company Competing Proposal" means any
bona fide inquiry, proposal or offer from any Person relating to any direct or
indirect acquisition or purchase of 30% or more of the assets of the Company and
its Subsidiaries, taken as a whole, or 30% or more of the combined voting power
of the shares of Company Common Stock, any tender offer or exchange offer that
if consummated would result in any Person beneficially owning 30% or more of the
combined voting power of the shares of Company Common Stock or any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its Subsidiaries in which
the other party thereto or its stockholders will own 30% or more of the combined
voting power of the parent entity resulting from any such transaction, other
than the transactions contemplated by this Agreement. For purposes of this
Agreement, a "Company Superior Proposal" means any proposal made by a third
party relating to any direct or indirect acquisition or purchase of 50% or more
of the assets of the Company and its Subsidiaries, taken as a whole, or 50% or
more of the combined voting power of the shares of Company Common Stock, any
tender offer or exchange offer that if
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consummated would result in any Person beneficially owning 50% or more of the
combined voting power of the shares of Company Common Stock or any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its Subsidiaries in which
the other party thereto or its stockholders will own 40% or more of the combined
voting power of the parent entity resulting from any such transaction, and
otherwise on terms which the Board of Directors of the Company determines in its
good faith judgment (based on the advice of a financial advisor of nationally
recognized reputation), taking into account legal, financial, regulatory and
other aspects of the proposal deemed appropriate by the Board of Directors of
the Company, (i) to be more favorable from a financial point of view than the
Merger to the Company's shareholders taken as a whole, (ii) is reasonably
capable of being completed and (iii) for which financing, to the extent
required, is then committed or is reasonably capable of being obtained by such
third party.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw or modify, or propose publicly to withdraw
or modify, in a manner adverse to Parent, the approval or recommendation by such
Board of Directors or such committee of the Merger or this Agreement, (ii)
approve or recommend, or propose publicly to approve or recommend, any Company
Competing Proposal or (iii) approve or recommend, or propose to approve or
recommend, or execute or enter into, any letter of intent, agreement in
principle, merger agreement, acquisition agreement, option agreement or other
similar agreement or propose publicly or agree to do any of the foregoing (each,
a "Company Acquisition Agreement") related to any Company Competing Proposal,
other than pursuant to the next sentence in order to facilitate such action.
Notwithstanding the foregoing, during the Company Applicable Period, in response
to a Company Superior Proposal which did not result from a breach of Section
7.4(a), if the Board of Directors of the Company determines in good faith, after
consultation with outside counsel, that to do otherwise would not be in the best
interests of the Company's shareholders, the Board of Directors of the Company
may take any action specified in clauses (i), (ii) or (iii) of the preceding
sentence, but only at a time that is during the Company Applicable Period and is
after the fifth Business Day following Parent's receipt of notice advising
Parent that the Board of Directors of the Company is prepared to accept a
Company Superior Proposal (or any material amendment thereto), specifying the
material terms and conditions of such the Company Superior Proposal (or any
material amendment thereto).
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 7.4, the Company shall promptly advise
Parent of any request for information or of any Company Competing Proposal and
the material terms and conditions of such request or Company Competing Proposal,
and will keep Parent reasonably informed of the status of any such request or
proposal. The Company will promptly inform Parent of amendments to any such
request or Company Competing Proposal.
(d) Nothing contained in this Section 7.4 shall prohibit the
Company from taking and disclosing to its shareholders a position contemplated
by Rule 14d-9 or 14e-2 promulgated under the Exchange Act or from making any
disclosure to the Company's shareholders if, in the good faith judgment of the
Company, after consultation with outside
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counsel, failure so to disclose would be inconsistent with its obligations
under applicable law; provided, however, that, subject to Section 7.4(b),
neither the Company nor its Board of Directors nor any committee thereof
shall approve or recommend, or propose publicly to approve or recommend, a
Company Competing Proposal.
Section 7.5. No Solicitation by Parent.
(a) Parent shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any of its directors, officers
or employees or any investment banker, financial advisor, attorney, accountant
or other representative retained by it or any of its Subsidiaries to, directly
or indirectly through another Person, (i) solicit, initiate or knowingly
encourage (including by way of furnishing information), the making of any
proposal that constitutes, a Parent Competing Proposal (as hereinafter defined)
or (ii) participate in any discussions or negotiations regarding any Parent
Competing Proposal; provided, however, that if, at any time prior to the Parent
Shareholders Meeting (the "Parent Applicable Period"), the Board of Directors of
Parent determines in good faith, after consultation with outside counsel, that
to do otherwise would not be in the best interests of Parent's shareholders,
Parent and its representatives may, in response to a Parent Competing Proposal
which did not result from a breach of this Section 7.5(a) and which could
reasonably be expected to constitute, if consummated, a Parent Superior Proposal
(as hereinafter defined), (x) furnish information with respect to Parent and its
Subsidiaries to any Person making such Parent Competing Proposal pursuant to a
customary confidentiality agreement (as determined by Parent after consultation
with its outside counsel) and (y) participate in discussions or negotiations
regarding such Parent Competing Proposal. For purposes of this Agreement,
"Parent Competing Proposal" means any bona fide inquiry, proposal or offer from
any Person relating to any direct or indirect acquisition or purchase of 30% or
more of the assets of Parent and its Subsidiaries, taken as a whole, or 30% or
more of any class or series of equity securities of Parent or any of its
Subsidiaries, any tender offer or exchange offer that if consummated would
result in any Person beneficially owning 30% or more of any class or series of
equity securities of Parent or any of its Subsidiaries, or any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving Parent or any of its Subsidiaries in which the
other party thereto or its shareholders will own 30% or more of any class or
series of equity securities of the entity resulting from any such transaction,
other than the transactions contemplated by this Agreement. For purposes of this
Agreement, a "Parent Superior Proposal" means any proposal made by a third party
to any direct or indirect acquisition or purchase of 50% or more of the assets
of Parent and its Subsidiaries, taken as a whole, or 50% or more of any class or
series of equity securities of Parent or any of its Subsidiaries, any tender
offer or exchange offer that if consummated would result in any Person
beneficially owning 50% or more of any class or series of equity securities of
Parent or any of its Subsidiaries, or any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving Parent or any of its Subsidiaries in which the other party thereto or
its shareholders will own 40% or more of any class or series of equity
securities of the parent entity resulting from any such transaction, and
otherwise on terms which the Board of Directors of Parent determines in its good
faith judgment (based on the advice of a financial advisor of nationally
recognized reputation), taking
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into account legal, financial, regulatory and other aspects of the proposal
deemed appropriate by the Board of Directors of Parent, (i) to be more favorable
from a financial point of view than the Merger to Parent 's shareholders taken
as a whole, (ii) is reasonably capable of being completed and (iii) for which
financing, to the extent required, is then committed or is reasonably capable of
being obtained by such third party.
(b) Neither the Board of Directors of Parent nor any committee
thereof shall (i) withdraw or modify, or propose publicly to withdraw or modify,
in a manner adverse to the Company, the approval or recommendation by such Board
of Directors or such committee of the Merger or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any Parent Competing
Proposal or (iii) approve or recommend, or propose to approve or recommend, or
execute or enter into, any letter of intent, agreement in principle, merger
agreement, acquisition agreement, option agreement or other similar agreement or
propose publicly or agree to do any of the foregoing (each, a "Parent
Acquisition Agreement") related to any Parent Competing Proposal, other than
pursuant to the next sentence in order to facilitate such action.
Notwithstanding the foregoing, during the Parent Applicable Period, in response
to a Parent Superior Proposal which did not result from a breach of Section
7.5(a), if the Board of Directors of Parent determines in good faith, after
consultation with outside counsel, that to do otherwise would not be in the best
interests of Parent shareholders, the Board of Directors of Parent may take any
action specified in clauses (i), (ii) or (iii) of the preceding sentence, but
only at a time that is during the Parent Applicable Period and is after the
fifth Business Day following the Company's receipt of notice advising the
Company that the Board of Directors of Parent is prepared to accept a Parent
Superior Proposal (or any material amendment thereto), specifying the material
terms and conditions of such Parent Superior Proposal (or any material amendment
thereto).
(c) In addition to the obligations of Parent set forth in
paragraphs (a) and (b) of this Section 7.5, Parent shall promptly advise the
Company of any request for information or of any Parent Competing Proposal and
the material terms and conditions of such request or Parent Competing Proposal.
Parent will promptly inform the Company of amendments to any such request or
Parent Competing Proposal, and will keep the Company reasonably informed of the
status of any such request or proposal.
(d) Nothing contained in this Section 7.5 shall prohibit
Parent from taking and disclosing to its shareholders a position contemplated by
Rule 14d-9 or 14e-2 promulgated under the Exchange Act or from making any
disclosure to Parent 's shareholders if, in the good faith judgment of Parent,
after consultation with outside counsel, failure so to disclose would be
inconsistent with its obligations under applicable law; provided, however, that
subject to Section 5.5(b), neither Parent nor its Board of Directors nor any
committee thereof shall withdraw or modify, or propose publicly to withdraw or
modify, its position with respect to this Agreement or the Merger or approve or
recommend, or propose publicly to approve or recommend, a Parent Competing
Proposal.
Section 7.6. Company Options.
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(a) As soon as practicable following the date of this
Agreement, the Board of Directors of the Company (or, if appropriate, any
committee administering the Company Stock Option Plans) shall adopt such
resolutions or take such other actions as may be required to adjust the terms of
all outstanding Company Stock Options (each, as so adjusted, an "Adjusted
Option"), whether vested or unvested, as necessary to provide that, at the
Effective Time, each Company Stock Option outstanding immediately prior to the
Effective Time shall be amended and converted, on the same terms and conditions
as were applicable under such Company Stock Option as such that each Company
Stock Option to acquire shares of any class of the Company Common Stock will be
converted into an option to acquire the number of shares of Parent Common Stock
determined by multiplying the number of shares of Company Common Stock subject
to such Company Stock Option by the Exchange Ratio (rounded down to the nearest
whole share), at an exercise price determined by dividing the exercise price set
forth in the Company Stock Option by the Exchange Ratio (rounded up to the
nearest whole cent).
(b) The adjustments provided in this Section 7.6 with respect
to any Company Stock Options to which Section 421(a) of the Code applies shall
be and are intended to be effected in a manner which is consistent with Section
424(a) of the Code.
(c) Prior to the Effective Time, Parent shall take all
necessary actions (including, if required to comply with Section 162(m) of the
Code (and the regulations thereunder) or applicable law or rule of the NYSE,
obtaining the approval of its shareholders at the Parent Shareholders Meeting)
to assume at the Effective Time all obligations undertaken by, or on behalf of,
the Company under Section 7.6(a) and to adopt at the Effective Time the Company
Stock Option Plans and each Adjusted Option and to take all other action called
for in this Section 7.6, including the reservation, issuance and listing of
Parent Common Stock in a number at least equal to the number of shares of Parent
Common Stock that will be subject to the Adjusted Options.
(d) As soon as practicable following the Effective Time,
Parent shall prepare and file with the SEC a registration statement on Form S-8
(or another appropriate form) registering a number of shares of Parent Common
Stock equal to the number of shares subject to the Adjusted Options. Such
registration statement shall be kept effective (and the current status of the
prospectus or prospectuses required thereby shall be maintained) at least for so
long as any Adjusted Options or any unsettled awards granted under the Company
Stock Option Plans after the Effective Time may remain outstanding.
(e) As soon as practicable after the Effective Time, Parent
shall deliver to the holders of the Company Stock Options appropriate notices
setting forth such holders' rights pursuant to the respective Company Stock
Option Plans and the agreements evidencing the grants of such Company Stock
Options and that such the Company Stock Options and agreements shall be assumed
by Parent and shall continue in effect on the same terms and conditions (subject
to the adjustments required by this Section 7.6 after giving effect to the
Merger).
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(f) Except as otherwise expressly provided in this Section 7.6
and except to the extent required under the respective terms of the Company
Stock Options, all restrictions or limitations on transfer and vesting with
respect to the Company Stock Options awarded under the Company Stock Option
Plans or any other plan, program or arrangement of the Company or any Subsidiary
of the Company to the extent that such restrictions or limitations shall not
have already lapsed, and all other terms thereof, shall remain in full force and
effect with respect to such options after giving effect to the Merger and the
assumption by Parent as set forth in the Section 7.6.
Section 7.7. Fees and Expenses.
(a) Whether or not the Merger is consummated, all Expenses (as
hereinafter defined) incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
Expenses, except Expenses incurred in connection with the filing, printing and
mailing of the Form S-4 and the Joint Proxy Statement/Prospectus (including SEC
filing fees) and the filing fees for the premerger notification and report forms
under the HSR Act, which shall be shared equally by Parent and the Company. As
used in this Agreement, "Expenses" includes all out-of-pocket expenses
(including all fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its affiliates) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement and the
transactions contemplated hereby, including the preparation, printing, filing
and mailing of the Form S-4 and the Joint Proxy Statement/Prospectus and the
solicitation of shareholder approvals and all other matters related to the
transactions contemplated hereby.
(b) (1) If a Company Competing Proposal shall have been made
to the Company or any of its Subsidiaries or shall have been made directly to
the shareholders of the Company generally or any Person shall have publicly
announced an intention (whether or not conditional) to make a Company Competing
Proposal and thereafter this Agreement is terminated by either Parent or the
Company pursuant to Section 9.1(d)(i) and within 12 months of such termination
the Company or any of its Subsidiaries enters into any Company Acquisition
Agreement with respect to, or approves or consummates, any Company Competing
Proposal, then the Company shall promptly, but in no event later than the date
of the earliest of such entry, approval or consummation, pay Parent a fee equal
to Twelve Million Dollars ($12,000,000) (the "Company Termination Fee"), payable
by wire transfer of same day funds. For the purposes of this Section 7.7(b) the
term "Company Competing Proposal" shall have the meaning assigned to such term
in Section 7.4 except that references to "30%" in the definition of "Company
Competing Proposal" in Section 7.4 shall be deemed to be references to "50%."
(2) If this Agreement is terminated by the Company or
Parent pursuant to Section 9.1(e)(i) and within 12 months of such termination
the Company or any of its Subsidiaries enters into any Company Acquisition
Agreement with respect to, or approves or consummates, any Company Competing
Proposal, then the Company shall promptly, but in no
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event later than the date of the earliest of such entry, approval or
consummation, pay Parent the Company Termination Fee, payable by wire transfer
of same day funds.
(3) If this Agreement is terminated by the Company or
Parent pursuant to Section 9.1(e)(ii) or Section 9.1(e)(iii), then the Company
shall promptly, but in no event later than the date of such termination, pay
Parent the Company Termination Fee, payable by wire transfer of same day funds.
(4) If the Company becomes obligated to pay the
Company Termination Fee to Parent pursuant to this Section 7.7(b), then, in
addition to the Company Termination Fee, the Company shall reimburse Parent (not
later than five Business Days after submission of a statement therefore) for all
out-of-pocket fees and expenses actually incurred by or own behalf of Parent in
connection with this Agreement and the transactions contemplated herein
(including fees and disbursements payable to investment bankers, legal counsel
and accountants for Parent) up to a maximum amount of Two Million Dollars
($2,000,000).
(5) The Company acknowledges that the agreements
contained in this Section 7.7(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent would
not enter into this Agreement; accordingly, if the Company fails promptly to pay
any amount due pursuant to this Section 7.7(b), and, in order to obtain such
payment, Parent commences a suit which results in a judgment against the Company
for any amount set forth in this Section 7.7(b), the Company shall pay to Parent
its costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on such amount at the prime rate of
Citibank, N.A. in effect on the date such payment was required to be made.
(c) (1) If a Parent Competing Proposal shall have been made to
Parent or any of its Subsidiaries or shall have been made directly to the
shareholders of Parent generally or any person shall have publicly announced an
intention (whether or not conditional) to make a Parent Competing Proposal and
thereafter this Agreement is terminated by either Parent or the Company pursuant
to Section 9.1(d)(ii) and within 12 months of such termination Parent or any of
its Subsidiaries enters into any Parent Acquisition Agreement with respect to,
or approves or consummates, any Parent Competing Proposal then Parent shall
promptly, but in no event later than the date of such termination, pay the
Company a fee equal to Eighteen Million Dollars ($18,000,000) (the "Parent
Termination Fee"), payable by wire transfer of same day funds. For the purposes
of this Section 7.7(c) the term "Parent Competing Proposal" shall have the
meaning assigned to such term in Section 7.5, except those references to "30%"
in the definition of "Parent Competing Proposal" in Section 7.5 shall be deemed
to be references to "50%."
(2) If this Agreement is terminated by Parent or the
Company pursuant to Section 9.1(f)(i), and within 12 months of such termination
Parent enters into any Parent Acquisition Agreement with respect to, or approves
or consummates, any Parent Competing Proposal, then Parent shall promptly, but
in no event later than the date of the earliest of such
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entry, approval or consummation, pay the Company the Parent Termination Fee,
payable by wire transfer of same day funds.
(3) If this Agreement is terminated by the Company
or Parent pursuant to Section 9.1(f)(ii) or Section 9.1(f)(iii), then Parent
shall promptly, but in no event later than the date of such termination, pay the
Company the Parent Termination Fee, payable by wire transfer of same day funds.
(4) If Parent becomes obligated to pay the Parent
Termination Fee to the Company pursuant to this Section 7.7(c), then, in
addition to the Parent Termination Fee, Parent shall reimburse the Company (not
later than five Business Days after submission of a statement therefor) for all
out-of-pocket fees and expenses actually incurred by or own behalf of the
Company in connection with this Agreement and the transactions contemplated
herein (including fees and disbursements payable to investment bankers, legal
counsel and accountants for the Company) up to a maximum amount of Two Million
Dollars ($2,000,000).
(5) Parent acknowledges that the agreements contained
in this Section 7.7(c) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, the Company would not enter
into this Agreement; accordingly, if Parent fails promptly to pay any amount due
pursuant to this Section 7.7(c), and, in order to obtain such payment, the
Company commences a suit which results in a judgment against Parent for any
amount set forth in this Section 7.7(c), Parent shall pay to the Company its
costs and expenses (including attorneys' fees and expenses) in connection with
such suit, together with interest on such amount at the prime rate of Citibank,
N.A. in effect on the date such payment was required to be made.
Section 7.8. Indemnification, Exculpation and Insurance.
(a) Parent agrees that all rights to indemnification and
exculpation from liabilities for acts or omissions occurring at or prior to the
Effective Time now existing in favor of the current or former directors or
officers of the Company and its Subsidiaries as provided in their respective
articles of incorporation or bylaws (or comparable organizational documents) and
any indemnification agreements of the Company, the existence of which does not
constitute a breach of this Agreement, shall be assumed by Parent, without
further action, as of the Effective Time and shall survive the Merger and shall
continue in full force and effect in accordance with their terms.
(b) In the event that Parent or any of its successors or
assigns (i) consolidates with or merges into any other Person and is not the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any Person, then, and in each such case, proper provision will be made so
that the successors and assigns of Parent assume the obligations set forth in
this Section 7.8.
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(c) For five years after the Effective Time, Parent shall
maintain in effect the Company's current directors' and officers' liability
insurance covering acts or omissions occurring prior to the Effective Time with
respect to those Persons who are currently covered by the Company's directors'
and officers' liability insurance policy on terms with respect to such coverage
and amounts no less favorable than those of such policy in effect on the date
hereof; provided, however, in no event shall Parent be required to expend in any
one year an amount in excess of 150% of the annual premiums currently paid by
the Company for such insurance; and provided, further, that if the annual
premiums of such insurance coverage exceed such amount, Parent shall be
obligated to obtain a policy with the greatest coverage available for a cost not
exceeding such amount.
Section 7.9. Public Announcements. The Company and Parent shall develop
a joint communications plan and each party shall use all reasonable efforts (i)
to ensure that all press releases and other public statements with respect to
the transactions contemplated hereby shall be consistent with such joint
communications plan, and (ii) unless otherwise required by applicable law or by
obligations pursuant to any listing agreement with or rules of any securities
exchange, the Company and Parent shall not issue any press release or otherwise
make any public statement with respect to this Agreement or the transactions
contemplated hereby that is inconsistent with such joint communications plan.
Section 7.10. Listing. Parent shall cause the shares of Parent Common
Stock to be issued in connection with the Merger to be listed on the NYSE,
subject to official notice of issuance.
Section 7.11. Affiliate Letter.
(a) Prior to the Effective Time, each of Parent and the
Company shall identify to the other all persons who were, at the time of the
Parent Shareholders Meeting and the Company Shareholders Meeting, as the case
may be, "affiliates" of such party as that term is used in paragraphs (c) and
(d) of Rule 145 under the Securities Act (including at a minimum, all those
persons subject to the reporting requirements of Rule 16(a) under the Exchange
Act) and for purposes of qualifying for "pooling-of-interests" accounting
treatment (for purposes of this Section 7.11, "Affiliates").
(b) Each of Parent and the Company shall obtain a written
agreement in the form of Exhibit D and Exhibit E, respectively, from each person
who is identified as an Affiliate of such party pursuant to clause (a) above.
Each of Parent and the Company shall deliver such written agreements to the
other party on or prior to the date of the Parent Shareholders Meeting and the
Company Shareholders Meeting, respectively.
Section 7.12. Tax Treatment. Each of Parent and the Company and their
respective Subsidiaries shall cause the Merger to qualify as a "reorganization"
under the provisions of Section 368(a) of the Code and to obtain the opinion of
counsel referred to in Section 8.1(g), including the execution of the letters of
representation referred to therein updated as necessary.
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The Company and Parent (and their Subsidiaries) shall treat the Parent Common
Stock received in the Merger by holders of Company Common Stock as property
permitted to be received by Section 354 of the Code without the recognition of
gain. Each of the Company and Parent covenants and agrees to, and agrees to
cause its affiliates to, vigorously and in good faith defend all challenges to
the treatment of the reorganization as described in this Section 7.12. Each of
the Company and Parent agree that if it becomes aware of any such fact or
circumstance that is reasonably likely to prevent the Merger from qualifying as
a reorganization described in Section 368(a) of the Code, it will promptly
notify the other party in writing.
Section 7.13. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company, any deeds, bills
of sale, assignments or assurances and to take any other actions and do any
other things, in the name and on behalf of the Company, reasonably necessary to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets of the Company acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger.
Section 7.14. Notices of Certain Events. Each of the Company and Parent
shall promptly notify the other party of:
(a) the occurrence of any event whose occurrence would be
likely to cause either (i) any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material respect
at any time from the date hereof to the Effective Time, (ii) any
condition set forth in Article VIII to not be satisfied, or (iii) any
Material Adverse Effect on such party.
(b) any material failure of such party, to comply with in any
material respect any covenant or agreement to be complied with by it
hereunder;
(c) any facts relating to such party which would make it
necessary or advisable to amend the Joint Proxy Statement/Prospectus
or the Form S-4 in order to make the statements therein not
misleading or to comply with applicable law; provided, however, that
the delivery of any notice pursuant to this Section 7.14 shall not
limit or otherwise affect the remedies available hereunder to the
party receiving such notice; and
(d) any notice or other communication from any Person alleging
that a material consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement.
Section 7.15. Shareholder Litigation. Each of Parent and the Company
shall give the other the reasonable opportunity to consult in the defense of any
shareholder litigation against
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Parent or the Company, as applicable, and its directors relating to the
transactions contemplated by this Agreement.
ARTICLE VIII
CONDITIONS
Section 8.1. Conditions to the Obligation of Each Party. The respective
obligations of Parent, Merger Sub and the Company to effect the Merger are
subject to the satisfaction of the following conditions, unless waived in
writing by all parties:
(a) This Agreement and the Merger shall have been approved and
adopted by the requisite vote of the holders of the Parent Common Stock and
Company Common Stock;
(b) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition (including, any statute, rule, regulation,
injunction, order or decree proposed, enacted, enforced, promulgated, issued or
deemed applicable to, or any consent or approval withheld with respect to, the
Merger, by any Governmental Entity) preventing the consummation of the Merger
shall be in effect; provided, however, that the parties invoking this condition
shall use all commercially reasonable efforts to have any such order or
injunction vacated;
(c) All actions by or in respect of or filings with any
Governmental Entity required to permit the consummation of the Merger shall have
been obtained or made (including the expiration or termination of any applicable
waiting period under the HSR Act).
(d) The shares of Parent Common Stock to be issued in the
Merger shall have been approved for listing on the NYSE, subject to official
notice of issuance;
(e) The Form S-4 shall have been declared effective by the SEC
under the Securities Act and no stop order suspending the effectiveness of the
Form S-4 shall have been issued by the SEC and no proceedings for that purpose
shall have been initiated or threatened by the SEC;
(f) Parent and the Company shall have received a letter, as of
the Effective Time, by Arthur Andersen LLP that, in accordance with GAAP, the
Merger qualifies to be treated as a "pooling of interests" for accounting
purposes, and shall have been advised in writing, as of the Effective Time, by
Deloitte & Touche LLP that based upon inquiries and their examination of the
financial statements of the Company they are not aware of any conditions
relating to the Company that would preclude the use of "pooling of interests"
accounting in connection with the Merger; and
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(g) Parent and the Company shall have each received from King
& Spalding, counsel to Parent, on the date on which the Form S-4 is declared
effective by the SEC and on the Closing Date, a written opinion dated as of such
date substantially in the form attached hereto as Exhibit F. In rendering such
opinion, counsel to Parent shall be entitled to rely upon representations of
officers of Parent and the Company and others reasonably satisfactory in form
and substance to such counsel.
Section 8.2. Conditions to Obligations of Parent and Merger Sub to
Effect the Merger. The obligations of Parent and Merger Sub to effect the Merger
are further subject to satisfaction or waiver at or prior to the Effective Time
of the following conditions:
(a) (i) the representations and warranties of the Company in
this Agreement that are qualified by materiality shall be true and correct in
all respects as of the date of the Agreement and as of the Effective Time; (ii)
the representations and warranties of the Company in the Agreement that are not
qualified by materiality shall be true and correct in all material respects as
of the date of this Agreement and as of the Effective Time; (iii) the Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement; and (v) an officer of the Company shall
have delivered to Parent and Merger Sub a certificate to the effect that each of
the foregoing conditions is satisfied in all respects;
(b) There shall not have occurred any change, condition, event
or development that has resulted in, or would reasonably be expected to result
in, a Company Material Adverse Effect; and
(c) The Company shall not have entered into or amended any
employment, consulting or severance agreement or arrangement with any present,
former or new director, officer or other employee (whose annual compensation is
in excess of $75,000) of the Company or any of its Subsidiaries, without the
prior written consent of Parent, and Ron Fournet shall have continued to serve,
on a full-business time basis, as the Chief Executive Officer of the Company
throughout the period commencing as of the date hereof and continuing until the
Effective Time.
Section 8.3. Conditions to Obligations of the Company to Effect the
Merger. The obligations of the Company to effect the Merger are further subject
to satisfaction or waiver at or prior to the Effective Time of the following
conditions:
(a) (i) The representations and warranties of Parent and
Merger Sub in this Agreement that are qualified by materiality shall be true and
correct in all respects as of the date of the Agreement and as of the Effective
Time; (ii) the representations and warranties of Parent and Merger Sub in the
Agreement that are not qualified by materiality shall be true and correct in all
material respects as of the date of this Agreement and as of the Effective Time;
(iii) each of Parent and Merger Sub shall have performed in all material
respects all obligations required to be performed by it under this Agreement;
and (v) an officer of each of Parent and Merger Sub shall have delivered to
Parent and Merger Sub a certificate to the effect that each of the foregoing
conditions is satisfied in all respects.
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(b) There shall not have occurred any change, condition, event
or development that has resulted in, or would reasonably be expected to result
in, a Parent Material Adverse Effect.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after approval of matters presented in connection with the Merger by the
Company Shareholders:
(a) By mutual written consent of Parent and the Company, by
action of their respective Boards of Directors;
(b) By either the Company or Parent if the Effective Time
shall not have occurred on or before September 1, 2000 (the "Termination Date");
(c) By either the Company or Parent if any Governmental Entity
(i) shall have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling or other action
shall have become final and nonappealable or (ii) shall have failed to issue an
order, decree or ruling or to take any other action, in each case (i) and (ii)
which is necessary to fulfill the conditions set forth in Section 8.1(c) and
such denial of a request to issue such order, decree, ruling or take such other
action shall have become final and nonappealable; provided, however, that the
right to terminate this Agreement under this Section 9.1(c) shall not be
available to any party whose failure to comply with Section 7.3 has caused or
resulted in such action or inaction;
(d) By either the Company or Parent if (i) the approval by the
shareholders of the Company required for the consummation of the Merger shall
not have been obtained by reason of the failure to obtain the required vote of
the holders of the Company Common Stock at the Company Shareholders Meeting or
at any adjournment or postponement thereof or (ii) the approval by the
shareholders of Parent required for the consummation of the Merger shall not
have been obtained by reason of the failure to obtain the required vote of the
holders of Parent Common Stock at the Parent Shareholders Meeting or at any
adjournment or postponement thereof;
(e) By the Company or Parent, if pursuant to Section 7.4 the
Company (i) withdraws or modifies, or proposes publicly to withdraw or modify,
in a manner adverse to Parent, the approval or recommendation by the Company's
Board of Directors of the Merger or this Agreement, (ii) approves or recommends,
or proposes publicly to approve or recommend,
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any Company Competing Proposal or (iii) approves or recommends, or proposes to
approve or recommend, or execute or enter into, any Company Acquisition
Agreement;
(f) By the Company or Parent, if pursuant to Section 7.5
Parent (i) withdraws or modifies, or proposes publicly to withdraw or modify, in
a manner adverse to the Company, the approval or recommendation by Parent's
Board of Directors of the Merger or this Agreement, (ii) approves or recommends,
or proposes publicly to approve or recommend, any Parent Competing Proposal or
(iii) approves or recommends, or proposes to approve or recommend, or execute or
enter into, any Parent Acquisition Agreement;
(g) By the Company, if Parent shall have breached or failed to
perform any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform (A) would give
rise to the failure of a condition set forth in Section 8.3(a) or (b) and (B)
has not been or is incapable of being cured by Parent within 30 calendar days
after its receipt of written notice thereof from the Company; or
(h) By Parent, if the Company shall have breached or failed to
perform any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform (A) would give
rise to the failure of a condition set forth in Section 8.2(a), (b), or (c) and
(B) has not been or is incapable of being cured by the Company within 30
calendar days after its receipt of written notice thereof from Parent.
Notwithstanding anything else contained in this Agreement, the
right to terminate this Agreement under this Section 9.1 shall not be available
to any party (a) that is in material breach of its obligations hereunder or (b)
whose failure to fulfill its obligations or to comply with its covenants under
this Agreement has been the cause of, or resulted in, the failure to satisfy any
condition to the obligations of either party hereunder.
Section 9.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 9.1 hereof, this Agreement shall forthwith be
terminated and have no further effect except as specifically provided herein
and, except as provided in this Section 9.2 and in Sections 7.7 and 10.10, there
shall be no liability on the part of any party hereto, provided that nothing
herein shall relieve any party from liability for any willful breach hereof.
Section 9.3. Amendments. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective boards of directors,
at any time before or after approval of the matters presented in connection with
the Merger by the shareholders of the Company and Parent, but, after any such
approval, no amendment shall be made which by law or in accordance with the
rules of any relevant stock exchange requires further approval by such
shareholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 9.4. Waiver. At any time prior to the Effective Time, whether
before or after the Company Shareholders Meeting or the Parent Shareholders
Meeting, any party hereto, by
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action taken by its board of directors, may (i) extend the time for the
performance of any of the covenants, obligations or other acts of any other
party hereto or (ii) waive any inaccuracy of any representations or warranties
or compliance with any of the agreements, covenants or conditions of any other
party or with any conditions to its own obligations. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party by its duly
authorized officer. 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. The waiver of any such right with respect to particular facts and
other circumstances shall not be deemed a waiver with respect to any other facts
and circumstances and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
ARTICLE X
GENERAL PROVISIONS
Section 10.1. No Third Party Beneficiaries. Other than as specifically
provided herein, nothing in this Agreement shall confer any rights or remedies
upon any person other than the parties hereto.
Section 10.2. Entire Agreement. This Agreement constitutes the entire
Agreement among the parties with respect to the subject matter hereof and
supersedes any prior understandings, agreements, or representations by or among
the parties, written or oral, with respect to the subject matter hereof.
Section 10.3. Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties named herein and their
respective successors. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties; provided, however, that Merger Sub may freely assign its
rights to another wholly owned subsidiary of Parent without such prior written
approval but no such assignment shall relieve Merger Sub of any of its
obligations hereunder.
Section 10.4. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 10.5. Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 10.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia, without regard to
principles of conflicts of law thereof.
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Section 10.7. 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 parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of 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 after the expiration of the
time within which the judgment may be appealed.
Section 10.8. Specific Performance. Each of the parties acknowledges
and agrees that the other party would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the parties
agrees that the other party shall be entitled to seek an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the parties and the matter, in addition to any other remedy to
which it may be entitled, at law or in equity.
Section 10.9. Construction. The language used in this Agreement shall
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party. Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 10.10. Non-Survival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants and other
agreements in this Agreement or in any instrument delivered pursuant to this
Agreement, including any rights arising out of any breach of such
representations, warranties, covenants and other agreements, shall survive the
Effective Time, except for those covenants and agreements contained herein that
by their terms apply or are to be performed in whole or in part after the
Effective Time and this Article X.
Section 10.11. Certain Definitions. For purposes of this Agreement, the
terms:
(a) "associate" and "affiliate" shall have the same meaning
as set forth in Rule l2b-2 promulgated under the Exchange Act, and the term
"person" shall mean any individual, corporation, partnership (general or
limited), limited liability company, limited liability partnership, trust, joint
venture, joint-stock company, syndicate, association, entity, unincorporated
organization or government or any political subdivision, agency or
instrumentality thereof.
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(b) "Business Day" means any day on which banks are not
required or authorized to close in the City of New York.
(c) "Knowledge" of any Person that is not an individual means,
with respect to any specific matter, the actual knowledge of such Person's
executive officers and other officers having primary responsibility for such
matter.
(d) "Person" means an individual, corporation, limited
liability company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in the Exchange Act).
(e) "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interests in such partnership) or (ii) at least a majority of the securities or
other interests of which having by their terms ordinary voting power to elect a
majority of the board of directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries.
Section 10.12. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or by overnight courier service to the respective parties at the
following addresses, or at such other address for a party as shall be specified
in a notice given in accordance with this Section 10.12:
If to Parent or Merger Sub:
ChoicePoint Inc.
1000 Alderman Drive
Alpharetta, Georgia 30005
Attention: J. Michael de Janes
Telecopy: (770) 752-5939
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Russell B. Richards
Telecopy: (404) 572-5135
If to the Company:
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DBT Online, Inc.
4530 Blue Lake Drive
Boca Raton, Florida 33431
Attention: Ron Fournet
Telecopy: (561) 982-5805
with a copy to:
DBT Online, Inc.
4530 Blue Lake Drive
Boca Raton, Florida 33431
Attention: J. Henry Muetterties
Telecopy: (561) 982-5805
and a copy to:
Morgan, Lewis & Bockius
5300 First Union Financial Ctr.
200 South Biscayne Blvd.
Miami, Florida 33131-2339
Attention: John S. Fletcher
Telecopy: (305) 579-0321
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IN WITNESS WHEREOF, the Company, Parent and Merger Sub and have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
DBT ONLINE, INC.
By: /s/ Ronald A. Fournet
-------------------------------------------
Name: Ronald A. Fournet
--------------------------------------
Title: Chief Executive Officer
-------------------------------------
CHOICEPOINT INC.
By: /s/ Derek V. Smith
-------------------------------------------
Name: Derek V. Smith
--------------------------------------
Title: Chairman and Chief Executive Officer
-------------------------------------
CHOICEPOINT ACQUISITION CORPORATION
By: /s/ Derek V. Smith
-------------------------------------------
Name: Derek V. Smith
--------------------------------------
Title: Chairman and Chief Executive Officer
-------------------------------------