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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
FIRST DATA CORPORATION,
FDC MERGER CORP.
AND
FIRST FINANCIAL MANAGEMENT CORPORATION
DATED AS OF JUNE 12, 1995
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.4 Charter and By-laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.5 Conversion of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.6 Parent to Make Certificates Available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.7 Dividends; Transfer Taxes; Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.8 No Fractional Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.9 Return of Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.10 Adjustment of Conversion Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.11 No Further Ownership Rights in Company Common Stock . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.12 Closing of Company Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.13 Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.14 Restricted Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.15 Senior Convertible Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.16 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.17 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB . . . . . . . . . . . . . . . . 8
Section 2.1 Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.2 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.4 Consents and Approvals; No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.5 SEC Documents and Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.6 Registration Statement and Joint Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.8 Permits and Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.9 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.10 Actions and Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.11 Certain Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.12 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.13 Compliance with Certain Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.14 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.15 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.16 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.17 Pooling of Interests; Reorganization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.18 Required Vote of Parent Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.19 Operations of Sub. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.20 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.2 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.4 Consents and Approvals; No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.5 SEC Documents and Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.6 Registration Statement and Joint Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.8 Permits and Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.9 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.10 Actions and Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.11 Certain Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.12 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.13 Compliance with Certain Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.14 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.15 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.16 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.17 Opinion of Financial Advisor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.18 State Takeover Statutes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.19 Required Vote of Company Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.20 Pooling of Interests; Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.21 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.2 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.3 Third Party Standstill Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.4 Pooling of Interests; Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Stockholder Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.2 Preparation of the Registration Statement and the Joint Proxy Statement. . . . . . . . . . . . . 39
Section 5.3 Employee Benefits Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 5.4 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 5.5 Compliance with the Securities Act; Pooling Period . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.6 Stock Exchange Listings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.7 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.8 Company Stock Options; Stock Purchase Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.9 Reasonable Best Efforts; Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . . . . 46
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Section 5.10 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.11 Real Estate Transfer and Gains Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.12 State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.13 Indemnification; Directors and Officers Insurance . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.14 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.15 Resignation of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . . . . . . 49
Section 6.2 Conditions to Obligation of the Company to Effect the Merger . . . . . . . . . . . . . . . . . . 50
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the Merger . . . . . . . . . . . . . . . . 51
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 7.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 7.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . . 56
Section 8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 8.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 8.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 8.5 Entire Agreement; No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 8.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 8.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 8.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 8.9 Enforcement of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 12, 1995 (this
"Agreement"), among First Data Corporation, a Delaware corporation ("Parent"),
FDC Merger Corp., a Georgia corporation and a wholly-owned subsidiary of Parent
("Sub"), and First Financial Management Corporation, a Georgia corporation (the
"Company") (Sub and the Company being hereinafter collectively referred to as
the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved and declared advisable the merger of Sub and the
Company (the "Merger"), upon the terms and subject to the conditions set forth
herein, whereby each issued and outstanding share of Common Stock, par value
$.10 per share, of the Company ("Company Common Stock") not owned directly or
indirectly by Parent or the Company will be converted into shares of Parent
Common Stock, par value $.01 per share ("Parent Common Stock");
WHEREAS, the respective Boards of Directors of Parent and the
Company have determined that the Merger is in furtherance of and consistent
with their respective long-term business strategies and is in the best interest
of their respective stockholders;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a pooling of interests.
NOW, THEREFORE, in consideration of the premises,
representations, warranties and agreements herein contained, the parties agree
as follows:
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ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions hereof, and in accordance with the Georgia Business Corporation Code
(the "GBCC"), Sub shall be merged with and into the Company at the Effective
Time (as hereinafter defined). Following the Merger, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of Sub in accordance with the GBCC.
Section 1.2 Effective Time. The Merger shall become
effective when a Certificate of Merger (the "Certificate of Merger"), executed
in accordance with the relevant provisions of the GBCC, is filed with the
Secretary of State of the State of Georgia; provided, however, that, upon
mutual consent of the Constituent Corporations, the Certificate of Merger may
provide for a later date of effectiveness of the Merger not more than 30 days
after the date the Certificate of Merger is filed. When used in this
Agreement, the term "Effective Time" shall mean the later of the date and time
at which the Certificate of Merger is filed or such later time established by
the Certificate of Merger. The filing of the Certificate of Merger shall be
made on the date of the Closing (as defined in Section 1.17).
Section 1.3 Effects of the Merger. The Merger shall have the
effects set forth in Section 14-2-1106 of the GBCC.
Section 1.4 Charter and By-laws. At the Effective Time, the
Restated Articles of Incorporation of the Company, as in effect immediately
prior to the Effective Time, shall be amended so that Article V of such
Restated Articles of Incorporation reads in its entirety as follows: "The
total number of shares of all classes of capital stock which the Corporation
shall have authority to issue is 100 shares of Common Stock, par value $.01 per
share." As so amended, such Restated Articles of Incorporation shall be the
Articles of Incorporation of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law; provided, however, that in
no event shall the provisions of Article VIII of the Restated Articles of
Incorporation of the Company as in effect immediately prior to the Effective
Time be amended after the Effective Time in any manner prior to the sixth
anniversary of the Effective Time. At the Effective Time, the By-laws of the
Company, as in effect immediately prior to the Effective Time, shall be the
By-laws of the Surviving Corporation until thereafter changed or amended as
provided therein or by the Articles of Incorporation of the Surviving
Corporation or by applicable law.
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Section 1.5 Conversion of Securities. As of the Effective
Time, by virtue of the Merger and without any action on the part of Sub, the
Company or the holders of any securities of the Constituent Corporations:
(a) Each issued and outstanding share of common stock, par
value $.01 per share, of Sub shall be converted into one validly
issued, fully paid and nonassessable share of common stock of the
Surviving Corporation.
(b) All shares of Company Common Stock that are held in the
treasury of the Company or by any wholly-owned Subsidiary of the
Company and any shares of Company Common Stock owned by Parent or by
any wholly-owned Subsidiary of Parent shall be cancelled and no
capital stock of Parent or other consideration shall be delivered in
exchange therefor.
(c) Subject to the provisions of Sections 1.8 and 1.10
hereof, each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be
cancelled in accordance with Section 1.5(b)) shall be converted into
1.5859 (such number being the "Conversion Number") validly issued,
fully paid and nonassessable shares of Parent Common Stock. All such
shares of Company Common Stock, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and each
holder of a certificate representing any such shares shall cease to
have any rights with respect thereto, except the right to receive any
dividends and other distributions in accordance with Section 1.7,
certificates representing the shares of Parent Common Stock into which
such shares are converted and any cash, without interest, in lieu of
fractional shares to be issued or paid in consideration therefor upon
the surrender of such certificate in accordance with Section 1.6.
Section 1.6 Parent to Make Certificates Available. (a)
Exchange of Certificates. Parent shall authorize a commercial bank reasonably
acceptable to the Company (or such other person or persons as shall be
acceptable to Parent and the Company) to act as Exchange Agent hereunder (the
"Exchange Agent"). As soon as practicable after the Effective Time, Parent
shall deposit with the Exchange Agent, in trust for the holders of shares of
Company Common Stock converted in the Merger, certificates representing the
shares of Parent Common Stock issuable pursuant to Section 1.5(c) in exchange
for outstanding shares of Company Common Stock and cash, as required to make
payments in lieu of any fractional shares pursuant to Section 1.8 (such cash
and shares of Parent Common Stock, together with any dividends or distributions
with respect thereto, being hereinafter referred to as the "Exchange Fund").
The Exchange Agent shall, pursuant to irrevocable instructions, deliver the
Parent Common Stock contemplated to be issued pursuant to Section
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1.5(c) out of the Exchange Fund. Except as contemplated by Sections 1.8 and
1.9, the Exchange Fund shall not be used for any other purpose.
(b) Exchange Procedures. As soon as practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each record
holder of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock converted
in the Merger (the "Certificates") a letter of transmittal (which shall be in
customary form, shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon actual delivery of the
Certificates to the Exchange Agent, and shall contain instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock and cash in lieu of fractional
shares). Upon surrender for cancellation to the Exchange Agent of a
Certificate, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Parent Common Stock
into which the shares represented by the surrendered Certificate shall have
been converted at the Effective Time pursuant to this Article I, cash in lieu
of any fractional share in accordance with Section 1.8 and certain dividends
and other distributions in accordance with Section 1.7, and any Certificate so
surrendered shall forthwith be cancelled.
Section 1.7 Dividends; Transfer Taxes; Withholding. No
dividends or other distributions that are declared on or after the Effective
Time on Parent Common Stock, or are payable to the holders of record thereof on
or after the Effective Time, will be paid to any person entitled by reason of
the Merger to receive a certificate representing Parent Common Stock until such
person surrenders the related Certificate or Certificates, as provided in
Section 1.6, and no cash payment in lieu of fractional shares will be paid to
any such person pursuant to Section 1.8 until such person shall so surrender
the related Certificate or Certificates. Subject to the effect of applicable
law, there shall be paid to each record holder of a new certificate
representing such Parent Common Stock: (i) at the time of such surrender or as
promptly as practicable thereafter, the amount of any dividends or other
distributions theretofore paid with respect to the shares of Parent Common
Stock represented by such new certificate and having a record date on or after
the Effective Time and a payment date prior to such surrender; (ii) at the
appropriate payment date or as promptly as practicable thereafter, the amount
of any dividends or other distributions payable with respect to such shares of
Parent Common Stock and having a record date on or after the Effective Time but
prior to such surrender and a payment date on or subsequent to such surrender;
and (iii) at the time of such surrender or as promptly as practicable
thereafter, the amount of any cash payable with
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respect to a fractional share of Parent Common Stock to which such holder is
entitled pursuant to Section 1.8. In no event shall the person entitled to
receive such dividends or other distributions be entitled to receive interest
on such dividends or other distributions. If any cash or certificate
representing shares of Parent Common Stock is to be paid to or issued in a name
other than that in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed and otherwise in proper form for
transfer and that the person requesting such exchange shall pay to the Exchange
Agent any transfer or other taxes required by reason of the issuance of
certificates for such shares of Parent Common Stock in a name other than that
of the registered holder of the Certificate surrendered, or shall establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Parent or the Exchange Agent 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 Parent or the
Exchange Agent is required to deduct and withhold with respect to the making of
such payment under the Code or under any provision of state, local or foreign
tax law. To the extent that amounts are so withheld by Parent or the Exchange
Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock in respect of which such deduction and withholding was made by Parent or
the Exchange Agent.
Section 1.8 No Fractional Securities. No certificates or
scrip representing fractional shares of Parent Common Stock shall be issued
upon the surrender for exchange of Certificates pursuant to this Article I, and
no Parent dividend or other distribution or stock split shall relate to any
fractional share, and no fractional share shall entitle the owner thereof to
vote or to any other rights of a security holder of Parent. In lieu of any
such fractional share, each holder of Company Common Stock who would otherwise
have been entitled to a fraction of a share of Parent Common Stock upon
surrender of Certificates for exchange pursuant to this Article I will be paid
an amount in cash (without interest), rounded to the nearest cent, determined
by multiplying (i) the per share closing price on the New York Stock Exchange,
Inc. (the "NYSE") of Parent Common Stock (as reported in the NYSE Composite
Transactions) on the date of the Effective Time (or, if the shares of Parent
Common Stock do not trade on the NYSE on such date, the first date of trading
of shares of Parent Common Stock on the NYSE after the Effective Time) by (ii)
the fractional interest to which such holder would otherwise be entitled. As
promptly as practicable after the determination of the amount of cash, if any,
to be paid to holders of fractional share interests, the Exchange Agent shall
so notify the Parent, and the Parent shall deposit such amount with the
Exchange Agent and shall cause the Exchange Agent to
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forward payments to such holders of fractional share interests subject to and
in accordance with the terms of Section 1.7 and this Section 1.8.
Section 1.9 Return of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the former stockholders of the
Company for one year after the Effective Time shall be delivered to Parent,
upon demand of Parent, and any such former stockholders who have not
theretofore complied with this Article I shall thereafter look only to Parent
for payment of their claim for Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock and any dividends or distributions
with respect to Parent Common Stock. Neither Parent nor the Surviving
Corporation shall be liable to any former holder of Company Common Stock for
any such shares of Parent Common Stock, cash and dividends and distributions
held in the Exchange Fund which is delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
Section 1.10 Adjustment of Conversion Number. In the event
of any reclassification, stock split or stock dividend with respect to Parent
Common Stock, any change or conversion of Parent Common Stock into other
securities or any other dividend or distribution with respect to the Parent
Common Stock other than normal quarterly cash dividends as the same may be
adjusted from time to time pursuant to the terms of this Agreement (or if a
record date with respect to any of the foregoing should occur) prior to the
Effective Time, appropriate and proportionate adjustments, if any, shall be
made to the Conversion Number, and all references to the Conversion Number in
this Agreement shall be deemed to be to the Conversion Number as so adjusted.
Section 1.11 No Further Ownership Rights in Company Common
Stock. All shares of Parent Common Stock issued upon the surrender for
exchange of Certificates in accordance with the terms hereof (including any
cash paid pursuant to Section 1.8) shall be deemed to have been issued in full
satisfaction of all rights pertaining to the shares of Company Common Stock
represented by such Certificates.
Section 1.12 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of shares of Company Common Stock shall thereafter be made on the
records of the Company. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, the Exchange Agent or the Parent, such
Certificates shall be cancelled and exchanged as provided in this Article I.
Section 1.13 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
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Corporation, the posting by such person of a bond, in such reasonable amount as
the Surviving Corporation may direct (but consistent with the practices the
Parent applies to its own stockholders), as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the
shares of Parent Common Stock, any cash in lieu of fractional shares of Parent
Common Stock to which the holders thereof are entitled pursuant to Section 1.8
and any dividends or other distributions to which the holders thereof are
entitled pursuant to Section 1.7.
Section 1.14 Restricted Stock. Any unvested shares of
restricted stock, whether granted pursuant to the Company Stock Option Plans
(as hereinafter defined) or otherwise, shall, to the extent required in the
plan, agreement or instrument pursuant to which such shares were granted (and
without any voluntary action by the Company), vest and become free of all
restrictions immediately prior to the Effective Time and shall be convertible
into Parent Common Stock pursuant to Section 1.5.
Section 1.15 Senior Convertible Debentures. Parent
acknowledges that, at the Effective Time, by virtue of the Merger and without
any further action on the part of the Company, the 5% Senior Convertible
Debentures of the Company due 1999 (the "5% Debentures") shall be convertible
into shares of Parent Common Stock pursuant to the terms of the indenture
governing the 5% Debentures. Parent shall execute with the Trustee for the 5%
Debentures a supplemental indenture (which shall conform to the Trust Indenture
Act of 1939, as amended, as in force at the date of execution of such
supplemental indenture) providing that each 5% Debenture shall be convertible
into shares of Parent Common Stock as contemplated by the indenture governing
the 5% Debentures. Parent shall promptly cause notice of the execution of such
supplemental indenture to be mailed to each holder of the 5% Debentures in
accordance with the indenture governing the 5% Debentures and shall take such
other actions as may be appropriate or required by such indenture, or
otherwise, to implement the terms of the indenture, as currently supplemented
and as supplemented in connection with the Merger.
Section 1.16 Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets
of either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations,
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all such deeds, bills of sale, assignments and assurances and to do, in the
name and on behalf of either Constituent Corporation, all such other acts and
things as may be necessary, desirable or proper to vest, perfect or confirm the
Surviving Corporation's right, title or interest in, to or under any of the
rights, privileges, powers, franchises, properties or assets of such
Constituent Corporation and otherwise to carry out the purposes of this
Agreement.
Section 1.17 Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") and all actions specified in
this Agreement to occur at the Closing shall take place at the offices of
Sutherland, Asbill & Brennan, 999 Peachtree Street, N.E., Atlanta, Georgia at
10:00 a.m., local time, no later than the second business day following the day
on which the last of the conditions set forth in Article VI shall have been
fulfilled or waived or at such other time and place as Parent and the Company
shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to
the Company as follows:
Section 2.1 Organization, Standing and Power. Each of Parent
and Sub is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and Georgia, respectively, and has the
requisite corporate power and authority to carry on its business as now being
conducted. Each Subsidiary of Parent is duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is organized
and has the requisite corporate power and authority to carry on its business as
now being conducted, except where the failure to be so organized, existing or
in good standing or to have such power or authority would not, individually or
in the aggregate, have a Material Adverse Effect (as hereinafter defined) on
Parent. Parent and each of its Subsidiaries are duly qualified to do business,
and are in good standing, in each jurisdiction where the character of their
properties owned or held under lease or the nature of their activities makes
such qualification necessary, except where the failure to be so qualified would
not, individually or in the aggregate, have a Material Adverse Effect on
Parent. For purposes of this Agreement (a) "Material Adverse Change" or
"Material Adverse Effect" means, when used with respect to Parent or the
Company, as the case may be, any change or effect that is materially adverse to
the assets, liabilities, results of operation or financial condition of Parent
and its Subsidiaries, taken as a whole, or the Company and its Subsidiaries,
taken as a whole, as the case may be, and (b) "Subsidiary" means any
corporation,
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partnership, joint venture or other legal entity of which Parent or the
Company, as the case may be (either alone or through or together with any other
Subsidiary), owns, directly or indirectly, 50% or more of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation,
partnership, joint venture or other legal entity.
Section 2.2 Capital Structure. As of the Effective Time, the
authorized capital stock of Parent will consist of 300,000,000 shares of Parent
Common Stock and 10,000,000 shares of Preferred Stock, par value $1.00 per
share (the "Parent Preferred Stock"); provided, however, that if Parent's
stockholders, at or prior to the Parent Stockholder Meeting (as defined in
Section 5.1), approve an amendment to Parent's Restated Certificate of
Incorporation which increases the authorized capital stock of Parent, then the
authorized capital stock as of the Effective Time will be as so increased. At
the close of business on June 9, 1995, (i) 119,088,819 shares of Parent Common
Stock were issued and outstanding, all of which were validly issued, fully paid
and nonassessable and free of preemptive rights, (ii) 437,666 shares of Parent
Common Stock were held in the treasury of Parent or by the Subsidiaries of
Parent and (iii) 12,783,096 shares of Parent Common Stock were reserved for
future issuance pursuant to Parent's 1992 Long-Term Incentive Plan, the 1993
Directors Stock Option Plan and Parent's stock purchase plans. No shares of
Parent Preferred Stock are outstanding. All of the shares of Parent Common
Stock issuable in exchange for Company Common Stock at the Effective Time in
accordance with this Agreement will be, when so issued, duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights. As
of the date of this Agreement, except for (a) this Agreement, (b) the Agreement
and Plan of Reorganization and Merger dated August 16, 1994, as amended (the
"Envoy Agreement"), between Parent and Envoy Corporation, a Delaware
corporation, and (c) stock options covering not in excess of 11,100,000 shares
of Parent Common Stock (collectively, the "Parent Stock Options"), there are no
options, warrants, calls, rights or agreements to which Parent or any of its
Subsidiaries is a party or by which any of them is bound obligating Parent or
any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of Parent or any of its
Subsidiaries or obligating Parent or any of its Subsidiaries to grant, extend
or enter into any such option, warrant, call, right or agreement. Each
outstanding share of capital stock of each Subsidiary of Parent is duly
authorized, validly issued, fully paid and nonassessable and, except as
disclosed in the Parent SEC Documents (as hereinafter defined), each such share
is owned by Parent or another Subsidiary of Parent, free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on voting rights, charges
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and other encumbrances of any nature whatsoever. Except as set forth in
Section 2.2 of the Parent Letter, Exhibit 21 to Parent's Annual Report on Form
10-K for the year ended December 31, 1994, as filed with the Securities and
Exchange Commission (the "SEC") (the "Parent Annual Report"), is a true,
accurate and correct statement in all material respects of all of the
information required to be set forth therein by the regulations of the SEC.
Section 2.3 Authority. The respective Boards of Directors of
Parent and Sub have on or prior to the date of this Agreement declared the
Merger advisable and adopted this Agreement in accordance with the General
Corporation Law of the State of Delaware (the "Delaware Law") and the GBCC,
respectively. Each of Parent and Sub has all requisite corporate power and
authority to enter into this Agreement and, subject to approval by the
stockholders of Parent of this Agreement and the issuance of Parent Common
Stock in connection with the Merger (the "Share Issuance"), to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Sub and the consummation by Parent and Sub of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and Sub, subject to (x) approval by the stockholders of
Parent of the Share Issuance and (y) the filing of appropriate Merger documents
as required by the GBCC. This Agreement has been duly executed and delivered
by Parent and Sub and (assuming the valid authorization, execution and delivery
of this Agreement by the Company) this Agreement constitutes the valid and
binding obligation of Parent and Sub enforceable against each of them in
accordance with its terms. The Share Issuance and the filing of a registration
statement on Form S-4 with the SEC by Parent under the Securities Act of 1933,
as amended (together with the rules and regulations promulgated thereunder, the
"Securities Act"), for the purpose of registering the shares of Parent Common
Stock to be issued in the Merger (together with any amendments or supplements
thereto, whether prior to or after the effective date thereof, the
"Registration Statement") have been duly authorized by Parent's Board of
Directors.
Section 2.4 Consents and Approvals; No Violation.
Assuming that all consents, approvals, authorizations and other actions
described in this Section 2.4 have been obtained and all filings and
obligations described in this Section 2.4 have been made, and except as set
forth in Section 2.4 of the letter dated the date hereof and delivered on the
date hereof by Parent to the Company, which letter relates to this Agreement
and is designated therein as the "Parent Letter" (the "Parent Letter"), the
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby and compliance with the provisions hereof will
not, result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give to others a right of termination, cancellation or
acceleration of any obligation or the loss of a
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material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of Parent
or any of its Subsidiaries under, any provision of (i) the Restated Certificate
of Incorporation or By-laws of Parent, (ii) any provision of the comparable
charter or organization documents of any of Parent's Subsidiaries, (iii) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
Parent or any of its Subsidiaries or (iv) any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, other than, in
the case of clauses (ii), (iii) or (iv), any such violations, defaults, rights,
liens, security interests, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent, or prevent the
consummation of any of the transactions contemplated hereby. No filing or
registration with, or authorization, consent or approval of, any domestic
(federal and state), foreign or supranational court, commission, governmental
body, regulatory agency, authority or tribunal (a "Governmental Entity") is
required by or with respect to Parent or any of its Subsidiaries in connection
with the execution and delivery of this Agreement by Parent or Sub or is
necessary for the consummation of the Merger and the other transactions
contemplated by this Agreement, except for (i) in connection, or in compliance,
with the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the Securities Act and the Securities
Exchange Act of 1934, as amended (together with the rules and regulations
promulgated thereunder, the "Exchange Act"), (ii) the filing of the Certificate
of Merger with the Secretary of State of the State of Georgia and appropriate
documents with the relevant authorities of other states in which the Company or
any of its Subsidiaries is qualified to do business, (iii) such filings and
consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Merger or by the transactions contemplated by this Agreement,
(iv) such filings, authorizations, orders and approvals as may be required by
state takeover laws (the "State Takeover Approvals"), (v) such filings as may
be required in connection with the taxes described in Section 5.11, (vi) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under the laws of any foreign country in which the
Company or any of its Subsidiaries conducts any business or owns any property
or assets, (vii) such filings and consents as may be required under any state
or foreign laws pertaining to debt collection, the issuance of payment
instruments or money transmission, (viii) applicable requirements, if any, of
state securities or "blue sky" laws ("Blue Sky Laws") and the NYSE, (ix)
compliance with the Federal Change in Bank Control Act of 1978 and related
notification to the Federal Deposit Insurance Corporation, (x) approval by the
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Georgia Department of Banking and Finance for Parent to become a bank holding
company under applicable Georgia law by acquiring control of the Company's
special purpose bank, (xi) approval by the State of Oklahoma Department of
Insurance based on a Form A Acquisition of Control Application, (xii)
pre-acquisition approval by the State of California Department of Insurance,
(xiii) telecommunications reseller licenses, (xv) any approvals required by the
Federal Communications Commission and (xvi) such other consents, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, have a
Material Adverse Effect on Parent, or prevent the consummation of any of the
transactions contemplated hereby.
Section 2.5 SEC Documents and Other Reports. Parent has
filed all required documents with the SEC since January 1, 1993 (the "Parent
SEC Documents"). As of their respective dates, the Parent SEC Documents
complied in all material respects with the requirements of the Securities Act
or the Exchange Act, as the case may be, and, at the respective times they were
filed, none of the Parent SEC Documents contained any untrue statement of a
material fact or omitted 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. Except as set forth in Section 2.5
of the Parent Letter, the consolidated financial statements (including, in each
case, any notes thereto) of Parent included in the Parent SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles (except, in the case of the unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto) and fairly
presented in all material respects the consolidated financial position of
Parent and its consolidated Subsidiaries as at the respective dates thereof and
the consolidated results of their operations and their consolidated cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments and to any other adjustments described
therein). Except as set forth in Section 2.5 of the Parent Letter, as
disclosed in the Parent SEC Documents or as required by generally accepted
accounting principles, Parent has not, since December 31, 1994, made any change
in the accounting practices or policies applied in the preparation of financial
statements.
Section 2.6 Registration Statement and Joint Proxy Statement.
None of the information to be supplied by Parent or Sub for inclusion or
incorporation by reference in the Registration Statement or the joint proxy
statement/prospectus included therein (together with any amendments or
supplements thereto, the "Joint Proxy Statement") relating to the Stockholder
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Meetings (as defined in Section 5.1) will (i) in the case of the Registration
Statement, at the time it becomes effective, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading or (ii) in
the case of the Joint Proxy Statement, at the time of the mailing of the Joint
Proxy Statement, the time of each of the Stockholder Meetings and at the
Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the Effective Time any event
with respect to Parent, its officers and directors or any of its Subsidiaries
shall occur which is required to be described in the Joint Proxy Statement or
the Registration Statement, such event shall be so described, and an
appropriate amendment or supplement shall be promptly filed with the SEC and,
as required by law, disseminated to the stockholders of Parent and the Company.
The Registration Statement will comply (with respect to Parent) as to form in
all material respects with the provisions of the Securities Act, and the Joint
Proxy Statement will comply (with respect to Parent) as to form in all material
respects with the provisions of the Exchange Act.
Section 2.7 Absence of Certain Changes or Events. Except as
disclosed in Parent SEC Documents filed with the SEC prior to the date of this
Agreement, since December 31, 1994, (A) Parent and its Subsidiaries have not
incurred any material liability or obligation (indirect, direct or contingent),
or entered into any material oral or written agreement or other transaction,
that is not in the ordinary course of business or that would result in a
Material Adverse Effect on Parent, excluding any changes and effects resulting
from changes in economic, regulatory or political conditions or changes in
conditions generally applicable to the industries in which Parent and
Subsidiaries of Parent are involved and except for any such changes or effects
resulting from this Agreement, the transactions contemplated hereby or the
announcement thereof; (B) Parent and its Subsidiaries have not sustained any
loss or interference with their business or properties from fire, flood,
windstorm, accident or other calamity (whether or not covered by insurance)
that has had a Material Adverse Effect on Parent; (C) other than any
indebtedness incurred by Parent after the date hereof as permitted by Section
4.1(a)(vi), there has been no material change in the consolidated indebtedness
of Parent and its Subsidiaries, and no dividend or distribution of any kind
declared, paid or made by Parent on any class of its stock, except for regular
quarterly dividends of not more than $.03 per share on Parent Common Stock; and
(D) there has been no event causing a Material Adverse Effect on Parent,
excluding any changes and effects resulting from changes in economic,
regulatory or political conditions or changes in conditions generally
applicable to the industries in which Parent and
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Subsidiaries of Parent are involved and except for any such changes or effects
resulting from this Agreement, the transactions contemplated hereby or the
announcement thereof.
Section 2.8 Permits and Compliance. Each of Parent and its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for Parent or any of
its Subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Parent Permits"), except where the
failure to have any of the Parent Permits would not, individually or in the
aggregate, have a Material Adverse Effect on Parent, and, as of the date of
this Agreement, no suspension or cancellation of any of the Parent Permits is
pending or, to the Knowledge of Parent (as hereinafter defined herein),
threatened, except where the suspension or cancellation of any of the Parent
Permits would not, individually or in the aggregate, have a Material Adverse
Effect on Parent. Neither Parent nor any of its Subsidiaries is in violation
of (A) its charter, by-laws or other organizational documents, (B) any
applicable law, ordinance, administrative or governmental rule or regulation or
(C) any order, decree or judgment of any Governmental Entity having
jurisdiction over Parent or any of its Subsidiaries, except, in the case of
clauses (A), (B) and (C), for any violations that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent. Except as
disclosed in the Parent SEC Documents filed prior to the date of this Agreement
or in Section 2.8 of the Parent Letter, as of the date hereof there is no
contract or agreement that is material to the business, financial condition or
results of operations of Parent and its Subsidiaries, taken as a whole. Except
as set forth in the Parent SEC Documents or Section 2.8 of the Parent Letter,
prior to the date of this Agreement, no event of default or event that, but for
the giving of notice or the lapse of time or both, would constitute an event of
default exists or, upon the consummation by Parent of the transactions
contemplated by this Agreement, will exist under any indenture, mortgage, loan
agreement, note or other agreement or instrument for borrowed money, any
guarantee of any agreement or instrument for borrowed money or any lease,
contractual license or other agreement or instrument to which Parent or any of
its Subsidiaries is a party or by which Parent or any such Subsidiary is bound
or to which any of the properties, assets or operations of Parent or any such
Subsidiary is subject, other than any defaults that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent. Set forth in
Section 2.8 of the Parent Letter is a description of any material changes to
the amount and terms of the indebtedness of the Parent and its Subsidiaries as
described in the Parent Annual Report. "Knowledge of Parent" means the actual
knowledge of the individuals identified in Section 2.8 of the Parent Letter.
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Section 2.9 Tax Matters. (a) Each of Parent and its
Subsidiaries has filed all Tax Returns required to have been filed (or
extensions have been duly obtained) and has paid all Taxes required to have
been paid by it, except where failure to file such Tax Returns or pay such
Taxes would not, in the aggregate, have a Material Adverse Effect on Parent.
For purposes of this Agreement: (i) "Tax" (and, with correlative meaning,
"Taxes") means any federal, state, local or foreign income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
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, imposed
by any governmental authority and (ii) "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.
(b) The representations set forth in the Parent Tax
Certificate attached to the Parent Letter are true and correct.
Section 2.10 Actions and Proceedings. Except as set forth in
the Parent SEC Documents, there are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against or involving
Parent or any of its Subsidiaries, or against or involving any of the present
or former directors, officers, employees, consultants, agents or stockholders
of Parent or any of its Subsidiaries, as such, any of its or their properties,
assets or business or any Parent Plan (as hereinafter defined) that,
individually or in the aggregate, would have a Material Adverse Effect on
Parent. As of the date of this Agreement, there are no actions, suits or
claims or legal, administrative or arbitrative proceedings or investigations
pending or, to the Knowledge of Parent, threatened against or involving Parent
or any of its Subsidiaries or any of its or their present or former directors,
officers, employees, consultants, agents or stockholders, as such, any of its
or their properties, assets or business or any Parent Plan that, individually
or in the aggregate, would have a Material Adverse Effect on Parent. As of the
date hereof, there are no actions, suits, labor disputes or other litigation,
legal or administrative proceedings or governmental investigations pending or,
to the Knowledge of Parent, threatened against or affecting Parent or any of
its Subsidiaries or any of its or their present or former officers, directors,
employees, consultants, agents or stockholders, as such, or any of its or their
properties, assets or business relating to the transactions contemplated by
this Agreement.
Section 2.11 Certain Agreements. As of the date of this
Agreement, neither Parent nor any of its Subsidiaries is a party to any oral or
written agreement or plan, including any
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stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement, other than agreements and plans as to which the
value of such increases and accelerations does not exceed, in the aggregate, $5
million.
Section 2.12 ERISA. Each Parent Plan complies in all
material respects with the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), the Code and all other applicable statutes and governmental
rules and regulations, and (i) no "reportable event" (within the meaning of
Section 4043 of ERISA) has occurred with respect to any Parent Plan, (ii)
neither Parent nor any of its ERISA Affiliates (as hereinafter defined) has
withdrawn from any Parent Multiemployer Plan (as hereinafter defined) or
instituted, or is currently considering taking, any action to do so, and (iii)
no action has been taken, or is currently being considered, to terminate any
Parent Plan subject to Title IV of ERISA. No Parent Plan, nor any trust
created thereunder, has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived. With respect to the
Parent Plans, no event has occurred and, to the Knowledge of Parent, there
exists no condition or set of circumstances, in connection with which Parent or
any ERISA Affiliate could be subject to any liability under the terms of such
Parent Plans, ERISA, the Code or any other applicable law which would have a
Material Adverse Effect on Parent. All Parent Plans that are intended to be
qualified under Section 401(a) of the Code have been determined by the Internal
Revenue Service to be so qualified, and Parent is not aware of any reason why
any Parent Plan is not so qualified in operation. Neither Parent nor any of
its ERISA Affiliates has been notified by any Parent Multiemployer Plan that
such Parent Multiemployer Plan is currently in reorganization or insolvency
under and within the meaning of Section 4241 or 4245 of ERISA or that such
Parent Multiemployer Plan intends to terminate or has been terminated under
Section 4041A of ERISA. Neither Parent nor any of its ERISA Affiliates has any
liability or obligation under any welfare plan to provide benefits after
termination of employment to any employee or dependent other than as required
by ERISA or as disclosed in the Parent Annual Report. As used herein, (i)
"Parent Plan" means a "pension plan" (as defined in Section 3(2) of ERISA
(other than a Parent Multiemployer Plan)) or a "welfare plan" (as defined in
Section 3(1) of ERISA) established or maintained by Parent or any of its ERISA
Affiliates or as to which Parent or any of its ERISA Affiliates has contributed
or otherwise may have any liability, (ii) "Parent Multiemployer Plan" means a
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) to which
Parent or any of its ERISA Affiliates is or has been obligated to contribute
or otherwise
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may have any liability, and (iii) with respect to any person, "ERISA Affiliate"
means any trade or business (whether or not incorporated) which is under common
control or would be considered a single employer with such person pursuant to
Section 414(b), (c), (m) or (o) of the Code and the regulations promulgated
under those sections or pursuant to Section 4001(b) of ERISA and the
regulations promulgated thereunder.
Section 2.13 Compliance with Certain Laws. The properties,
assets and operations of Parent and its Subsidiaries are in compliance in all
material respects with all applicable federal, state, local and foreign laws,
rules and regulations, orders, decrees, judgments, permits and licenses
relating to public and worker health and safety (collectively, "Worker Safety
Laws") and the protection and clean-up of the environment and activities or
conditions related thereto, including, without limitation, those relating to
the generation, handling, disposal, transportation or release of hazardous
materials (collectively, "Environmental Laws"), except for any violations that,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent. With respect to such properties, assets and operations, including any
previously owned, leased or operated properties, assets or operations, there
are no past, present or reasonably anticipated future events, conditions,
circumstances, activities, practices, incidents, actions or plans of Parent or
any of its Subsidiaries that may interfere with or prevent compliance or
continued compliance in all material respects with applicable Worker Safety
Laws and Environmental Laws, other than any such interference or prevention as
would not, individually or in the aggregate with any such other interference or
prevention, have a Material Adverse Effect on Parent. The term "hazardous
materials" shall mean those substances that are regulated by or form the basis
for liability under any applicable Environmental Laws.
Section 2.14 Liabilities. Except as fully reflected or
reserved against in the financial statements included in the Parent Annual
Report, or disclosed in the footnotes thereto, Parent and its Subsidiaries had
no liabilities (including, without limitation, tax liabilities) at the date of
such financial statements, absolute or contingent, other than liabilities that,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent, and had no liabilities (including, without limitation, tax liabilities)
that were not incurred in the ordinary course of business. Except as so
reflected, reserved or disclosed, Parent and its Subsidiaries have no
commitments, other than any commitments which, individually or in the
aggregate, would not have a Material Adverse Effect on Parent.
Section 2.15 Labor Matters. Except as set forth in Section
2.15 of the Parent Letter, neither Parent nor any of its Subsidiaries is a
party to any collective bargaining agreement or
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labor contract. Neither Parent nor any of its Subsidiaries has engaged in any
unfair labor practice with respect to any persons employed by or otherwise
performing services primarily for Parent or any of its Subsidiaries (the
"Parent Business Personnel"), and there is no unfair labor practice complaint
or grievance against Parent or any of its Subsidiaries by the National Labor
Relations Board or any comparable state agency pending or threatened in writing
with respect to the Parent Business Personnel, except where such unfair labor
practice, complaint or grievance would not have a Material Adverse Effect on
Parent. There is no labor strike, dispute, slowdown or stoppage pending or, to
the Knowledge of Parent, threatened against or affecting Parent or any of its
Subsidiaries which may interfere with the respective business activities of
Parent or any of its Subsidiaries, except where such dispute, strike or work
stoppage would not have a Material Adverse Effect on Parent.
Section 2.16 Intellectual Property. Parent and its
Subsidiaries have all patents, trademarks, trade names, service marks, trade
secrets, copyrights and other proprietary intellectual property rights
(collectively, "Intellectual Property Rights") as are necessary in connection
with the business of Parent and its Subsidiaries, taken a whole, except where
the failure to have such Intellectual Property Rights would not have a Material
Adverse Effect on Parent. Neither Parent nor any of its Subsidiaries has
infringed any Intellectual Property Rights of any third party other than any
infringements that, individually or in the aggregate, would not have a Material
Adverse Effect on Parent.
Section 2.17 Pooling of Interests; Reorganization. To the
Knowledge of Parent, neither Parent nor any of its Subsidiaries has (i) taken
any action or failed to take any action which action or failure would
jeopardize the treatment of the Merger as a pooling of interests for accounting
purposes or (ii) taken any action or failed to take any action which action or
failure would jeopardize the qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code.
Section 2.18 Required Vote of Parent Stockholders. The
affirmative vote of a majority of the votes cast on the Share Issuance is
required to approve the Share Issuance, provided that the total votes cast on
the proposal represent a majority of the outstanding shares of Parent Common
Stock. No other vote of the stockholders of Parent is required by law, the
Restated Certificate of Incorporation or By-laws of Parent or otherwise in
order for Parent to consummate the Merger and the transactions contemplated
hereby.
Section 2.19 Operations of Sub. Sub is a direct,
wholly-owned subsidiary of Parent, was formed solely for the purpose of
engaging in the transactions contemplated hereby, has
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engaged in no other business activities and has conducted its operations only
as contemplated hereby.
Section 2.20 Brokers. No broker, investment banker or other
person, other than Smith Barney Inc., the fees and expenses of which will be
paid by Parent (and as reflected in an agreement between Smith Barney Inc. and
Parent, a copy of which has been furnished to the Company), is entitled to any
broker's, finder's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
Section 3.1 Organization, Standing and Power. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Georgia and has the requisite corporate power and
authority to carry on its business as now being conducted. Each Subsidiary of
the Company is duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized and has the requisite
corporate (in the case of a Subsidiary that is a corporation) or other power
and authority to carry on its business as now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power
or authority would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. The Company and each of its Subsidiaries are
duly qualified to do business, and are in good standing, in each jurisdiction
where the character of their properties owned or held under lease or the nature
of their activities makes such qualification necessary, except where the
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
Section 3.2 Capital Structure. As of the Effective Time, the
authorized capital stock of the Company will consist of 150,000,000 shares of
Company Common Stock and 5,000,000 shares of Preferred Stock, par value $1.00
per share ("Company Preferred Stock"). At the close of business on May 31,
1995, (i) 63,831,211 shares of Company Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable and
free of preemptive rights, (ii) 20,000 shares of Company Common Stock were held
in the treasury of the Company or by the Subsidiaries of the Company, (iii)
6,293,590 shares of Company Common Stock were reserved for future issuance
pursuant to the Company's 1988 Incentive Stock Plan, 1990 Directors Stock
Option Plan, Directors Restricted Stock Plan, 1990 Employee Stock
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Purchase Plan, 1982 Incentive Stock Plan, Employee Stock Purchase Plan or
pursuant to any plans assumed by the Company in connection with any
acquisition, business combination or similar transaction (collectively, the
"Company Stock Option Plans"), (iv) 6,480,435 shares of Company Common Stock
were reserved for issuance upon the conversion of the 5% Debentures into shares
of Company Common Stock pursuant to the terms of the 5% Debentures, (v)
1,734,600 shares of Company Common Stock were reserved for issuance upon
consummation of the EBP Merger (as hereinafter defined) and (vi) 1,350,000
shares of Company Common Stock were reserved for issuance in connection with
certain contingent payments described in Section 3.2 of the letter dated the
date hereof and delivered on the date hereof by the Company to Parent, which
letter relates to this Agreement and is designated therein as the Company
Letter (the "Company Letter"). Shares of Company Common Stock having a value
of up to $50 million are currently expected to be issued by the Company as part
of its prefunding of certain pension plan obligations. No shares of Company
Preferred Stock are outstanding. As of the date of this Agreement, except (a)
as provided in the 5% Debentures and the indenture relating thereto, (b) for
stock options covering not in excess of 1,827,492 shares of Company Common
Stock issued under the Company Stock Option Plans (collectively, the "Company
Stock Options"), (c) up to 1,734,600 shares of Company Common Stock to be
issued in connection with the EBP Merger, (d) up to 231,000 shares of Company
Common Stock issuable under the Company's Employee Stock Purchase Plan and (e)
up to 50,000 shares of Company Common Stock issuable in connection with certain
contingent payments described in Section 3.2 of the Company Letter, there are
no options, warrants, calls, rights or agreements to which the Company or any
of its Subsidiaries is a party or by which any of them is bound obligating the
Company or any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of the Company or
any of its Subsidiaries or obligating the Company or any of its Subsidiaries to
grant, extend or enter into any such option, warrant, call, right or agreement.
Each outstanding share of capital stock of each Subsidiary of the Company that
is a corporation is duly authorized, validly issued, fully paid and
nonassessable and, except as disclosed in the Company SEC Documents (as
hereinafter defined) or Section 3.2 of the Company Letter, each such share is
owned by the Company or another Subsidiary of the Company, free and clear of
all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on voting rights, charges and other
encumbrances of any nature whatsoever. Except as disclosed in Section 3.2 of
the Company Letter, Exhibit 21.1 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994, as filed with the SEC (the "Company
Annual Report"), is a true, accurate and correct statement in all material
respects of all of the information required to be set forth therein by the
regulations of the SEC.
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Section 3.3 Authority. The Board of Directors of the Company
has on or prior to the date of this Agreement (a) unanimously declared the
Merger advisable and fair to and in the best interest of the Company and its
stockholders, (b) approved this Agreement in accordance with the GBCC, (c)
resolved to recommend the approval of this Agreement by the Company's
stockholders and (d) directed that this Agreement be submitted to the Company's
stockholders for approval. The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to approval by the
stockholders of the Company of this Agreement, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Company, subject to (x) approval of this Agreement by the stockholders
of the Company and (y) the filing of appropriate Merger documents as required
by the GBCC. This Agreement has been duly executed and delivered by the
Company and (assuming the valid authorization, execution and delivery of this
Agreement by Parent and Sub) constitutes the valid and binding obligation of
the Company enforceable against the Company in accordance with its terms. The
filing of the Joint Proxy Statement with the SEC has been duly authorized by
the Company's Board of Directors.
Section 3.4 Consents and Approvals; No Violation.
Assuming that all consents, approvals, authorizations and other actions
described in this Section 3.4 have been obtained and all filings and
obligations described in this Section 3.4 have been made, and except as set
forth in Section 3.4 of the Company Letter, the execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not, result in any violation of,
or default (with or without notice or lapse of time, or both) under, or give
to others a right of termination, cancellation or acceleration of any
obligation or the loss of a material benefit under, or result in the creation
of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any of its Subsidiaries under, any
provision of (i) the Restated Articles of Incorporation or By-Laws of the
Company, (ii) any provision of the comparable charter or organization
documents of any of the Company's Subsidiaries, (iii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to the Company
or any of its Subsidiaries or (iv) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, other than, in
the case of clauses (ii), (iii) or (iv), any such violations, defaults, rights,
liens, security interests, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company, or prevent
the consummation of any of the transactions
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contemplated hereby. No filing or registration with, or authorization, consent
or approval of, any Governmental Entity is required by or with respect to the
Company or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or is necessary for the consummation
of the Merger and the other transactions contemplated by this Agreement, except
for (i) in connection, or in compliance, with the provisions of the HSR Act,
the Securities Act and the Exchange Act, (ii) the filing of the Certificate of
Merger with the Secretary of State of the State of Georgia and appropriate
documents with the relevant authorities of other states in which the Company or
any of its Subsidiaries is qualified to do business, (iii) such filings and
consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Merger or by the transactions contemplated by this Agreement,
(iv) such filings, authorizations, orders and approvals as may be required to
obtain the State Takeover Approvals, (v) such filings as may be required in
connection with the taxes described in Section 5.11, (vi) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under the laws of any foreign country in which the Company or
any of its Subsidiaries conducts any business or owns any property or assets,
(vii) such filings and consents as may be required under any state or foreign
laws pertaining to debt collection, the issuance of payment instruments or
money transmission, (viii) applicable requirements, if any, of Blue Sky Laws
and the NYSE, (ix) compliance with the Federal Change in Bank Control Act of
1978 and related notification to the Federal Deposit Insurance Corporation, (x)
approval by the Georgia Department of Banking and Finance for Parent to become
a bank holding company under applicable Georgia law by acquiring control of the
Company's special purpose bank, (xi) approval by the State of Oklahoma
Department of Insurance based on a Form A Acquisition of Control Application,
(xii) pre-acquisition approval by the State of California Department of
Insurance, (xiii) telecommunications reseller licenses, (xv) any approvals
required by the Federal Communications Commission, (xvi) as set forth in
Section 3.4 of the Company Letter, and (xvii) such other consents, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, have a
Material Adverse Effect on the Company or prevent the consummation of any of
the transactions contemplated hereby.
Section 3.5 SEC Documents and Other Reports. The Company has
filed all required documents with the SEC since January 1, 1993 (the "Company
SEC Documents"). As of their respective dates, the Company SEC Documents
complied in all material respects with the requirements of the Securities Act
or the Exchange Act, as the case may be, and, at the respective times they were
filed, none of the Company SEC Documents
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contained any untrue statement of a material fact or omitted 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 consolidated financial statements (including, in each case,
any notes thereto) of the Company included in the Company SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles (except, in the case of the unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto) and fairly
presented in all material respects the consolidated financial position of the
Company and its consolidated Subsidiaries as at the respective dates thereof
and the consolidated results of their operations and their consolidated cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments and to any other adjustments described
therein). Except as disclosed in the Company SEC Documents or as required by
generally accepted accounting principles, the Company has not, since December
31, 1994, made any change in the accounting practices or policies applied in
the preparation of financial statements.
Section 3.6 Registration Statement and Joint Proxy Statement.
None of the information to be supplied by the Company for inclusion or
incorporation by reference in the Registration Statement or the Joint Proxy
Statement will (i) in the case of the Registration Statement, at the time it
becomes effective, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading or (ii) in the case of the Joint
Proxy Statement, at the time of the mailing of the Joint Proxy Statement, the
time of each of the Stockholder Meetings and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. If at
any time prior to the Effective Time any event with respect to the Company, its
officers and directors or any of its Subsidiaries shall occur which is required
to be described in the Joint Proxy Statement or the Registration Statement,
such event shall be so described, and an appropriate amendment or supplement
shall be promptly filed with the SEC and, as required by law, disseminated to
the stockholders of Parent and the Company. The Registration Statement will
comply (with respect to the Company) as to form in all material respects with
the provisions of the Securities Act, and the Joint Proxy Statement will comply
(with respect to the Company) as to form in all material respects with the
provisions of the Exchange Act.
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Section 3.7 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents filed with the SEC prior to the date of
this Agreement or in Section 3.7 of the Company Letter, since December 31,
1994, (A) the Company and its Subsidiaries have not incurred any material
liability or obligation (indirect, direct or contingent), or entered into any
material oral or written agreement or other transaction, that is not in the
ordinary course of business or that would result in a Material Adverse Effect
on the Company, excluding any changes and effects resulting from changes in
economic, regulatory or political conditions or changes in conditions generally
applicable to the industries in which the Company and Subsidiaries of the
Company are involved and except for any such changes or effects resulting from
this Agreement, the transactions contemplated hereby or the announcement
thereof; (B) the Company and its Subsidiaries have not sustained any loss or
interference with their business or properties from fire, flood, windstorm,
accident or other calamity (whether or not covered by insurance) that has had a
Material Adverse Effect on the Company; (C) other than any indebtedness
incurred by the Company after the date hereof as permitted by Section
4.1(b)(vi), there has been no material change in the consolidated indebtedness
of the Company and its Subsidiaries, and no dividend or distribution of any
kind declared, paid or made by the Company on any class of its stock, except
for the regular semi-annual dividend of not more than $.05 per share on Company
Common Stock; and (D) there has been no event causing a Material Adverse Effect
on the Company, excluding any changes and effects resulting from changes in
economic, regulatory or political conditions or changes in conditions generally
applicable to the industries in which the Company and Subsidiaries of the
Company are involved and except for any such changes or effects resulting from
this Agreement, the transactions contemplated hereby or the announcement
thereof.
Section 3.8 Permits and Compliance. Each of the Company and
its Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Company or
any of its Subsidiaries to own, lease and operate its properties or to carry on
its business as it is now being conducted (the "Company Permits"), except where
the failure to have any of the Company Permits would not, individually or in
the aggregate, have a Material Adverse Effect on the Company, and, as of the
date of this Agreement, no suspension or cancellation of any of the Company
Permits is pending or, to the Knowledge of the Company (as hereinafter
defined), threatened, except where the suspension or cancellation of any of the
Company Permits would not, individually or in the aggregate, have a Material
Adverse Effect on Company. Neither the Company nor any of its Subsidiaries is
in violation of (A) its charter, by-laws or other organizational documents, (B)
any applicable law, ordinance, administrative or governmental rule or
regulation or (C) any order, decree or
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judgment of any Governmental Entity having jurisdiction over the Company or any
of its Subsidiaries, except, in the case of clauses (A), (B) and (C), for any
violations that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. Except as disclosed in the Company SEC
Documents filed prior to the date of this Agreement or in Section 3.8 of the
Company Letter, as of the date hereof there is no contract or agreement that is
material to the business, financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole. Except as set forth in the
Company SEC Documents, prior to the date of this Agreement, no event of default
or event that, but for the giving of notice or the lapse of time or both, would
constitute an event of default exists or, upon the consummation by the Company
of the transactions contemplated by this Agreement, will exist under any
indenture, mortgage, loan agreement, note or other agreement or instrument for
borrowed money, any guarantee of any agreement or instrument for borrowed money
or any lease, contractual license or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company or any
such Subsidiary is bound or to which any of the properties, assets or
operations of the Company or any such Subsidiary is subject, other than any
defaults that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. Set forth in Section 3.8 of the Company Letter
is a description of any material changes to the amount and terms of the
indebtedness of the Company and its Subsidiaries as described in the Company
Annual Report. "Knowledge of the Company" means the actual knowledge of the
individuals identified on Section 3.8 of the Company Letter.
Section 3.9 Tax Matters. (a) Each of the Company and its
Subsidiaries has filed all Tax Returns required to have been filed (or
extensions have been duly obtained) and has paid all Taxes required to have
been paid by it, except where failure to file such Tax Returns or pay such
Taxes would not, in the aggregate, have a Material Adverse Effect on the
Company.
(b) The representations set forth in the Company Tax
Certificate attached to the Company Letter are true and correct.
Section 3.10 Actions and Proceedings. Except as set forth
in the Company SEC Documents or in Section 3.10 of the Company Letter, there
are no outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against or involving the Company or any of its
Subsidiaries, or against or involving any of the present or former directors,
officers, employees, consultants, agents or stockholders of the Company or any
of its Subsidiaries, as such, any of its or their properties, assets or
business or any Company Plan (as hereinafter defined) that, individually or in
the aggregate, would have a Material Adverse Effect on the Company. As of the
date of this Agreement, there are no actions, suits or claims or legal,
administrative or
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arbitrative proceedings or investigations pending or, to the Knowledge of the
Company, threatened against or involving the Company or any of its Subsidiaries
or any of its or their present or former directors, officers, employees,
consultants, agents or stockholders, as such, or any of its or their
properties, assets or business or any Company Plan that, individually or in the
aggregate, would have a Material Adverse Effect on the Company. As of the date
hereof, there are no actions, suits, labor disputes or other litigation, legal
or administrative proceedings or governmental investigations pending or, to the
Knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries or any of its or their present or former officers, directors,
employees, consultants, agents or stockholders, as such, or any of its or their
properties, assets or business relating to the transactions contemplated by
this Agreement.
Section 3.11 Certain Agreements. Except as set forth in the
Company SEC Documents or in Section 3.11 of the Company Letter, as of the date
of this Agreement, neither the Company nor any of its Subsidiaries is a party
to any oral or written agreement or plan, including any stock option plan,
stock appreciation rights plan, restricted stock plan or stock purchase plan,
any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement, other than agreements and plans as to which the value of such
increases and accelerations does not exceed, in the aggregate, $5 million. No
holder of any option to purchase shares of Company Common Stock, or shares of
Company Common Stock granted in connection with the performance of services for
the Company or its Subsidiaries, is or will be entitled to receive cash from
the Company or any Subsidiary in lieu of or in exchange for such option or
shares as a result of the transactions contemplated by this Agreement.
Section 3.12 ERISA. (a) With respect to each material
Company Plan, the Company has made, or will as soon as practicable after the
date hereof make, available to Parent a true and correct copy of (i) the most
recent annual report (Form 5500) filed with the Internal Revenue Service (the
"IRS"), (ii) such Company Plan, (iii) each trust agreement, insurance contract
or administration agreement relating to such Company Plan, (iv) the most recent
summary plan description or each Company plan for which a summary plan
description is required, (v) the most recent actuarial report or valuation
relating to a Company Plan subject to Title IV of ERISA and (vi) the most
recent determination letter, if any, issued by the IRS with respect to any
Company Plan intended to be qualified under section 401(a) of the Code. Except
as disclosed in Section 3.12 of the Company Letter or as would not have a
Material Adverse Effect on the Company, each
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Company Plan complies in all material respects with ERISA, the Code and all
other applicable statutes and governmental rules and regulations, and (i) no
"reportable event" (within the meaning of Section 4043 of ERISA) has occurred
with respect to any Company Plan, (ii) neither the Company nor any of its ERISA
Affiliates has withdrawn from any Company Plan or Company Multiemployer Plan
(as hereinafter defined) or instituted, or is currently considering taking, any
action to do so, and (iii) no action has been taken, or is currently being
considered, to terminate any Company Plan subject to Title IV of ERISA. Except
with respect to the Western Union Pension Plans or as disclosed in Section 3.12
of the Company Letter, or as would not have a Material Adverse Effect on the
Company, no Company Plan, nor any trust created thereunder, has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived.
(b) Except as set forth in Section 3.12 of the Company
Letter, with respect to the Company Plans, no event has occurred and, to the
Knowledge of the Company, there exists no condition or set of circumstances in
connection with which the Company or any ERISA Affiliate could be subject to
any liability under the terms of such Company Plans, ERISA, the Code or any
other applicable law which would have a Material Adverse Effect on the Company.
All Company Plans that are intended to be qualified under Section 401(a) of the
Code have been determined by the Internal Revenue Service to be so qualified,
or a timely application for such determination is now pending, and the Company
is not aware of any reason why any Company Plan is not so qualified in
operation. Neither the Company nor any of its ERISA Affiliates has been
notified by any Company Multiemployer Plan that such Company Multiemployer Plan
is currently in reorganization or insolvency under and within the meaning of
Section 4241 or 4245 of ERISA or that such Company Multiemployer Plan intends
to terminate or has been terminated under Section 4041A of ERISA. Except as
disclosed in the Company SEC Documents, neither the Company nor any of its
ERISA Affiliates has any liability or obligation under any welfare plan to
provide benefits after termination of employment to any employee or dependent
other than as required by ERISA or as disclosed in the Company Annual Report.
As used herein, (i) "Company Plan" means a "pension plan" (as defined in
Section 3(2) of ERISA (other than a Company Multiemployer Plan)) or a "welfare
plan" (as defined in Section 3(1) of ERISA) established or maintained by the
Company or any of its ERISA Affiliates or as to which the Company or any of its
ERISA Affiliates has contributed or otherwise may have any liability, and (ii)
"Company Multiemployer Plan" means a "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA) to which the Company or any of its ERISA
Affiliates is or has been obligated to contribute or otherwise may have any
liability.
(c) The Company has made available to the Parent true and
complete (i) copies of all severance and employment
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agreements with officers of the Company and each ERISA Affiliate who in the
fiscal year ended December 31, 1994 received a base salary in excess of
$125,000, (ii) copies of all severance programs and policies of the Company
with or relating to its employees; and (iii) copies of all plans, programs,
agreements and other arrangements of the Company with or relating to its
employees who in the fiscal year ended December 31, 1994 received a base salary
in excess of $125,000 which contain change of control or similar provisions.
Section 3.13 Compliance with Certain Laws. The properties,
assets and operations of the Company and its Subsidiaries are in compliance
in all material respects with all applicable Worker Safety Laws and
Environmental Laws, except for any violations that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company. With
respect to such properties, assets and operations, including any previously
owned, leased or operated properties, assets or operations, there are no past,
present or reasonably anticipated future events, conditions, circumstances,
activities, practices, incidents, actions or plans of the Company or any of its
Subsidiaries that may interfere with or prevent compliance or continued
compliance in all material respects with applicable Worker Safety Laws and
Environmental Laws, other than any such interference or prevention as would
not, individually or in the aggregate with any such other interference or
prevention, have a Material Adverse Effect on the Company.
Section 3.14 Liabilities. Except as fully reflected or
reserved against in the financial statements included in the Company Annual
Report, or disclosed in the footnotes thereto, or as contemplated or disclosed
in Annex A, including Schedule 1 thereto, the Company and its Subsidiaries had
no liabilities (including, without limitation, tax liabilities) at the date of
such financial statements, absolute or contingent, other than liabilities that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company, and had no liabilities (including, without limitation, tax
liabilities) that were not incurred in the ordinary course of business. Except
as so reflected, reserved or disclosed, the Company and its Subsidiaries have
no commitments, other than any commitments which, individually or in the
aggregate, would not have a Material Adverse Effect on the Company.
Section 3.15 Labor Matters. Neither the Company nor any of
its Subsidiaries is a party to any collective bargaining agreement or labor
contract, except for the collective bargaining agreements between Western Union
Corporation and the Communication Workers of America. Neither the Company nor
any of its Subsidiaries has engaged in any unfair labor practice with respect
to any persons employed by or otherwise performing services primarily for the
Company or any of its Subsidiaries (the "Company Business Personnel"), and
there is no unfair labor
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practice complaint or grievance against the Company or any of its Subsidiaries
by the National Labor Relations Board or any comparable state agency pending or
threatened in writing with respect to the Company Business Personnel, except
where such unfair labor practice, complaint or grievance would not have a
Material Adverse Effect on the Company. There is no labor strike, dispute,
slowdown or stoppage pending or, to the Knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries which may interfere
with the respective business activities of the Company or any of its
Subsidiaries, except where such dispute, strike or work stoppage would not have
a Material Adverse Effect on the Company.
Section 3.16 Intellectual Property. The Company and its
Subsidiaries have all Intellectual Property Rights as are necessary in
connection with the business of the Company and its Subsidiaries, taken as a
whole, except where the failure to have such Intellectual Property Rights would
not have a Material Adverse Effect on the Company. Neither the Company nor any
of its Subsidiaries has infringed any Intellectual Property Rights of any third
party other than any infringements that, individually or in the aggregate,
would have a Material Adverse Effect on the Company.
Section 3.17 Opinion of Financial Advisor. The Company has
received the written opinion of Morgan Stanley & Co. Incorporated, dated the
date hereof, to the effect that, as of the date hereof, the Exchange Ratio (as
defined in such opinion) is fair to the Company's stockholders from a financial
point of view, a copy of which opinion will be delivered to Parent promptly
after the date of this Agreement.
Section 3.18 State Takeover Statutes. The Board of Directors
of the Company has, to the extent such statutes are applicable, (a) taken all
action necessary to exempt Parent, its Subsidiaries and Affiliates, the Merger,
this Agreement and the transactions contemplated hereby from Sections
14-2-1131, 14-2-1132 and 14-2-1133 of the GBCC and (b) taken all action
necessary to satisfy the provisions of Section 14-2-1111 of the GBCC. To the
Knowledge of the Company, no other state takeover statutes are applicable to
the Merger, this Agreement and the transactions contemplated hereby.
Section 3.19 Required Vote of Company Stockholders. The
affirmative vote of the holders of not less than a majority of the outstanding
shares of Company Common Stock is required to approve this Agreement. No other
vote of the stockholders of the Company is required by law, the Restated
Articles of Incorporation or By-laws of the Company or otherwise in order for
the Company to consummate the Merger and the transactions contemplated hereby.
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Section 3.20 Pooling of Interests; Reorganization. To the
Knowledge of the Company, neither it nor any of its Subsidiaries has (i) taken
any action or failed to take any action which action or failure would
jeopardize the treatment of the Merger as a pooling of interests for accounting
purposes or (ii) taken any action or failed to take any action which action or
failure would jeopardize the qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code.
Section 3.21 Brokers. No broker, investment banker or other
person, other than Morgan Stanley & Co. Incorporated, the fees and expenses of
which will be paid by the Company (and are reflected in an agreement between
Morgan Stanley & Co. Incorporated and the Company, a copy of which has been
furnished to Parent), is entitled to any broker's, finder's or other similar
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger.
(a) Actions by Parent. Except as expressly permitted by
clauses (i) through (ix) of this Section 4.1(a), during the period from the
date of this Agreement through the Effective Time, Parent shall, and shall
cause each of its Subsidiaries to, in all material respects carry on its
business in the ordinary course of its business as currently conducted and, to
the extent consistent therewith, use reasonable best efforts to preserve intact
its current business organizations, keep available the services of its current
officers and employees and preserve its relationships with customers, suppliers
and others having business dealings with it to the end that its goodwill and
ongoing business shall be unimpaired at the Effective Time. Without limiting
the generality of the foregoing, and except as otherwise expressly contemplated
by this Agreement, Parent shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of the Company:
(i) (w) declare, set aside or pay any dividends on, or make
any other actual, constructive or deemed distributions in respect of,
any of its capital stock, or otherwise make any payments to its
stockholders in their capacity as such (other than (A) regular
quarterly dividends of not more than $.03 per share on Parent Common
Stock declared and paid on dates consistent with past practice and (B)
dividends and other distributions by Subsidiaries), (x) other than in
the case of any Subsidiary, split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any
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other securities in respect of, in lieu of or in substitution for
shares of its capital stock or (y) subject to the limitations of
Section 4.4 and 5.9(b), purchase, redeem or otherwise acquire any
shares of capital stock of Parent or any other securities thereof or
those of any Subsidiary or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities
(other than (A) the repurchase of shares of Parent Common Stock
pursuant to any open market repurchase program;
(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock, any other voting securities
or equity equivalent or any securities convertible into, or any
rights, warrants or options to acquire any such shares, voting
securities, equity equivalent or convertible securities, other than
(A) the issuance of stock options and shares of Parent Common Stock to
employees of Parent or any of its Subsidiaries, (B) the issuance of
shares of Parent Common Stock pursuant to the Envoy Agreement, (C) the
issuance of securities in connection with the formation of any joint
venture or alliance with respect to merchant acquiring business (a
"Merchant Alliance") or in connection with any acquisition permitted
by Section 4.1(a)(iv), (D) in addition to the foregoing, the issuance
of shares of Parent Common Stock or securities convertible into or
exchangeable for shares of Parent Common Stock, provided that the
aggregate amount of such issued or issuable shares of Parent Common
Stock shall not exceed 20 million and (E) the issuance by any
wholly-owned Subsidiary of Parent of its capital stock to Parent or
another wholly-owned Subsidiary of Parent;
(iii) amend its charter or by-laws; provided, however, that Parent
may amend its Restated Certificate of Incorporation to increase its
authorized capital stock and/or to confer on the Board of Directors of
Parent the power to adopt, amend or repeal any by-laws of Parent;
(iv) other than in connection with a Merchant Alliance, acquire
or agree to acquire by merging or consolidating with, or by purchasing
a substantial portion of the assets of or equity in, 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, unless (i) in the good faith judgment
of Parent, the consummation of such acquisition, merger, consolidation
or purchase would not result in a downgrading by Moody's Investors
Service, Inc. ("Moody's") of Parent's senior unsecured long-term debt
below "Baa3", (ii) the entering into a definitive agreement relating
to or the consummation of such acquisition, merger, consolidation or
purchase would not (A) impose any material delay in the obtaining of,
or significantly increase the risk of not
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obtaining, any authorizations, consents, orders, declarations or
approvals of any Governmental Entity necessary to consummate the
Merger or the expiration or termination of any applicable waiting
period, (B) significantly increase the risk of any Governmental Entity
entering an order prohibiting the consummation of the Merger or (C)
significantly increase the risk of not being able to remove any such
order on appeal or otherwise, (iii) in the case of any individual
acquisition, merger, consolidation or purchase, the aggregate
consideration does not exceed $1.5 billion and (iv) in the case of the
acquisition, merger, consolidation or purchase of any company or
business the principal executive offices of which or a substantial
portion of the assets of which are located in the United States and
the aggregate consideration exceeds $50 million, Parent acquires
directly or indirectly all of the voting stock or equity interests or
assets of such company or business;
(v) sell, lease or otherwise dispose of, or agree to sell, lease
or otherwise dispose of, any of its assets, other than (A) as
contemplated by the Stock Purchase Agreement, dated as of May 16,
1995, among Parent, FDC Health Inc., First Data Health Systems
Corporation, HBO & Company and HBO & Company of Georgia, (B)
transactions that are in the ordinary course of business consistent
with past practice and not material to Parent and its Subsidiaries
taken as a whole, (C) as may be required by any Governmental Entity
and (D) subject to Sections 4.4 and 5.9(b), dispositions involving an
aggregate consideration not in excess of $200 million;
(vi) incur any indebtedness for borrowed money, guarantee any
such indebtedness or make any loans, advances or capital contributions
to, or other investments in, any other person, other than (A) (i) in
the ordinary course of business consistent with past practice, (ii)
indebtedness, loans, advances, capital contributions and investments
incurred with or by any Merchant Alliance and (iii) indebtedness,
loans, advances, capital contributions and investments between Parent
and any of its wholly-owned Subsidiaries or between any of such
wholly-owned Subsidiaries and (B) the incurrence of indebtedness or
guarantees which does not result in a downgrading by Moody's of
Parent's senior unsecured long-term debt below "Baa3", provided that,
prior to any such incurrence, Parent shall have met with
representatives of Moody's to discuss the principal terms of such
indebtedness or guarantee and shall have obtained a preliminary
indication that the incurrence of the indebtedness or guarantee is not
expected to result in the downgrading of Parent's senior unsecured
long-term debt below "Baa3";
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(vii) knowingly violate or knowingly fail to perform any material
obligation or duty imposed upon it or any Subsidiary by any applicable
material federal, state or local law, rule, regulation, guideline or
ordinance;
(viii) take any action, other than reasonable and usual actions in
the ordinary course of business consistent with past practice, with
respect to accounting policies or procedures (other than actions
required to be taken by generally accepted accounting principles); or
(ix) authorize, recommend or announce an intention to do any of
the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
(b) Actions by the Company. Except as expressly permitted by
clauses (i) through (xiii) of this Section 4.1(b), during the period from the
date of this Agreement through the Effective Time, the Company shall, and
shall cause each of its Subsidiaries to, in all material respects carry on its
business in, the ordinary course of its business as currently conducted and, to
the extent consistent therewith, use reasonable best efforts to preserve intact
its current business organizations, keep available the services of its current
officers and employees and preserve its relationships with customers, suppliers
and others having business dealings with it to the end that its goodwill and
ongoing business shall be unimpaired at the Effective Time. Without limiting
the generality of the foregoing, and except as otherwise expressly contemplated
by this Agreement (including, without limitation, the provisions of Annex A),
the Company shall not, and shall not permit any of its Subsidiaries to, without
the prior written consent of Parent:
(i) (w) declare, set aside or pay any dividends on, or make
any other actual, constructive or deemed distributions in respect of,
any of its capital stock, or otherwise make any payments to its
stockholders in their capacity as such (other than (A) regular
semi-annual dividends of not more than $.05 per share on Company
Common Stock declared and paid on dates consistent with past practice
and (B) dividends and other distributions by Subsidiaries), (x) other
than in the case of any Subsidiary, split, combine or reclassify any
of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock or (y) subject to the limitations set forth in
Sections 4.4 and 5.9(b), purchase, redeem or otherwise acquire any
shares of capital stock of the Company or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
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(ii) except as disclosed in Section 4.1(b)(ii) of the Company
Letter, issue, deliver, sell, pledge, dispose of or otherwise encumber
any shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants
or options to acquire any such shares, voting securities, equity
equivalent or convertible securities, other than (A) the issuance of
shares of Company Common Stock upon the exercise of Company Stock
Options outstanding on the date of this Agreement in accordance with
their current terms, (B) the issuance of shares of Company Common
Stock upon the conversion of the 5% Debentures, (C) the issuance of
shares of Company Common Stock pursuant to the terms of the Agreement
and Plan of Merger dated as of May 12, 1995 (the "EBP Merger
Agreement") among the Company, Gemini Acquisition Corp. and Employee
Benefit Plans, Inc. ("EBP") (including such shares of Company Common
Stock issued pursuant to assumed EBP options), (D) the issuance of
shares of Company Common Stock having a value of up to $50 million
which the Company expects to issue as part of its prefunding of
certain pension plan obligations; (E) the issuance of shares of
Company Common Stock pursuant to Company Stock Options or restricted
stock grants in the amounts and to the employees set forth in Section
4.1(b)(ii) of the Company Letter, and (F) the issuance, in the
aggregate, of up to 6.4 million shares of Company Common Stock in
connection with acquisitions permitted pursuant to clause (iv) of this
paragraph (b);
(iii) amend its charter or by-laws;
(iv) except as disclosed in Section 4.1(b)(iv) of the Company
Letter, acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial portion of the assets of or equity in,
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, unless (i) in the
good faith judgment of the Company, the consummation of such
acquisition, merger, consolidation or purchase would not result in a
downgrading by Moody's of the Company's senior unsecured long-term
debt below "Baa3", (ii) the entering into of a definitive agreement
relating to or the consummation of such acquisition, merger,
consolidation or purchase would not (A) impose any material delay in
the obtaining, or significantly increase the risk of not obtaining,
any authorizations, consents, orders, declarations or approvals of any
Governmental Entity necessary to consummate the Merger, or the
expiration or termination of any applicable waiting period, (B)
significantly increase the risk of any Governmental Entity entering an
order prohibiting the consummation of the Merger or (C) significantly
increase the risk of not being able to
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remove any such order on appeal or otherwise, (iii) in the case of any
individual acquisition, merger, consolidation or purchase, the
aggregate consideration does not exceed $1.0 billion and (iv) in the
case of the acquisition, merger, consolidation or purchase of any
company or business the principal executive offices of which or a
substantial portion of the assets of which are located in the United
States and the aggregate consideration exceeds $50 million, the
Company acquires, directly or indirectly, all of the outstanding
voting stock or equity interests or assets of such company or
business;
(v) except as disclosed in Section 4.1(b)(v) of the Company
Letter, sell, lease or otherwise dispose of, or agree to sell, lease
or otherwise dispose of, any of its assets, other than (A)
transactions that are in the ordinary course of business consistent
with past practice and not material to the Company and its
Subsidiaries taken as a whole, (B) as may be required by any
Governmental Entity and (C) subject to Sections 4.4 and 5.9(b),
dispositions involving an aggregate consideration not in excess of
$100 million;
(vi) incur any indebtedness for borrowed money, guarantee any
such indebtedness or make any loans, advances or capital contributions
to, or other investments in, any other person, other than (A) (i) in
the ordinary course of business consistent with past practices and
(ii) indebtedness, loans, advances, capital contributions and
investments between the Company and any of its wholly-owned
Subsidiaries or between any of such wholly-owned Subsidiaries and (B)
the incurrence of indebtedness or guarantees which does not result in
a downgrading by Moody's of the Company's senior unsecured long term
debt below "Baa3", provided that, prior to any such incurrence, the
Company shall have met with representatives of Moody's to discuss the
principal terms of such indebtedness or guarantee and shall have
obtained a preliminary indication that the incurrence of the
indebtedness or guarantee is not expected to result in the downgrading
of the Company's senior unsecured long term debt below "Baa3";
(vii) except as disclosed in Section 4.1(b)(vii) of the Company
Letter, alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or
ownership of the Company or any Subsidiary;
(viii) except as set forth on Section 4.1(b)(viii) of the Company
Letter, enter into or adopt, or amend any existing, severance plan,
agreement or arrangement or enter into or amend any Company Plan or
employment or consulting agreement, other than as required by law;
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(ix) except as set forth in Section 4.1(b)(ix) of the Company
Letter, increase the compensation payable or to become payable to its
officers or employees, except for increases in the ordinary course of
business consistent with past practice in salaries or wages of
employees of the Company or any of its Subsidiaries who are not
officers of the Company or any of its Subsidiaries, or grant any
severance or termination pay to, or enter into any employment or
severance agreement with, any director or officer of the Company or
any of its Subsidiaries (other than employment or severance agreements
with respect to any employees hired by the Company or any of its
Subsidiaries after the date of this Agreement which (A) do not contain
any provision providing benefit or severance payments based upon a
change in control of the Company or its Subsidiaries resulting from
this Agreement or the consummation of the transactions contemplated
herein, (B) do not provide for severance benefits and payments in
excess of 100% of annual base salary and (C) have a duration of no
more than two years), or establish, adopt, enter into, or, except as
may be required to comply with applicable law, amend in any material
respect or take action to enhance in any material respect or
accelerate any rights or benefits under, any labor, collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any director, officer
or employee;
(x) knowingly violate or knowingly fail to perform any material
obligation or duty imposed upon it or any Subsidiary by any applicable
material federal, state or local law, rule, regulation, guideline or
ordinance;
(xi) take any action, other than reasonable and usual actions in
the ordinary course of business consistent with past practice, with
respect to accounting policies or procedures (other than actions
required to be taken by generally accepted accounting principles);
(xii) except as set forth in Section 4.1(b)(xii) of the Company
Letter, make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability; or
(xiii) authorize, recommend, propose or announce an intention to do
any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
Section 4.2 No Solicitation. From and after the date hereof,
the Company will not, and will not permit any of its
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officers, directors, employees, attorneys, financial advisors, agents or other
representatives or those of any of its Subsidiaries to, directly or indirectly,
solicit, initiate or encourage (including by way of furnishing information) any
takeover proposal or offer from any person, or engage in or continue
discussions or negotiations relating thereto; provided, however, that the
Company may engage in discussions or negotiations with, or furnish information
concerning the Company and its Subsidiaries, business, properties or assets to,
any third party which makes a Takeover Proposal (as hereinafter defined) if the
Board of Directors of the Company concludes in good faith on the basis of the
advice of its outside counsel (who may be its regularly engaged outside
counsel) that the failure to take such action would violate the fiduciary
obligations of such Board under applicable law. The Company will promptly (but
in no case later than 24 hours) notify Parent of any Takeover Proposal,
including the material terms and conditions thereof (provided that the Company
need not disclose the identity of the person or group making such Takeover
Proposal). As used in this Agreement, "Takeover Proposal" shall mean any
proposal or offer, or any expression of interest by any third party relating to
the Company's willingness or ability to receive or discuss a proposal or offer,
other than a proposal or offer by Parent or any of its Subsidiaries or as set
forth in Section 4.1(b)(v) of the Company Letter or as permitted under this
Agreement, for a tender or exchange offer, a merger, consolidation or other
business combination involving the Company or any of its Subsidiaries or any
proposal to acquire in any manner a substantial equity interest in, or a
substantial portion of the assets of, the Company or any of its Subsidiaries.
Section 4.3 Third Party Standstill Agreements. During the
period from the date of this Agreement through the Effective Time, the Company
shall not terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement to which the Company or any of its
Subsidiaries is a party (other than any involving Parent), unless the Board of
Directors of the Company concludes in good faith on the basis of the advice of
its outside counsel (who may be its regularly engaged outside counsel), that
the failure to terminate, amend, modify or waive any such confidentiality or
standstill agreement would violate the fiduciary obligations of the Board under
applicable law. Subject to such fiduciary duties, during such period, the
Company agrees to enforce, to the fullest extent permitted under applicable
law, the provisions of any such agreements, including, but not limited to,
obtaining injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state thereof having jurisdiction.
Section 4.4 Pooling of Interests; Reorganization. During the
period from the date of this Agreement through the Effective Time, unless the
other party shall otherwise agree in
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writing, none of Parent, the Company or any of their respective Subsidiaries
shall (a) knowingly take or fail to take any action which action or failure
would jeopardize the treatment of the Merger as a pooling of interests for
accounting purposes or (b) knowingly take or fail to take any action which
action or failure would jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code. Between the
date of this Agreement and the Effective Time, Parent and the Company each
shall take all reasonable actions necessary to cause the characterization of
the Merger as a pooling of interests for accounting purposes if such a
characterization were jeopardized by action taken by Parent or the Company,
respectively, prior to the Effective Time (it being agreed that such actions
will include, if necessary, in the case of Parent, the sale or transfer for
fair value of all shares of Parent Common Stock that currently are treasury
shares). Following the Effective Time, Parent shall not knowingly take any
action, or fail to take any action, that would jeopardize the characterization
of the Merger as a "pooling of interests" for accounting purposes.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Stockholder Meetings. The Company and Parent
each shall call a meeting of its stockholders (respectively, the "Company
Stockholder Meeting" and the "Parent Stockholder Meeting" and, collectively,
the "Stockholder Meetings") to be held as promptly as practicable for the
purpose of considering the approval of this Agreement (in the case of the
Company) and the Share Issuance (in the case of Parent). The Company and
Parent will, through their respective Boards of Directors, recommend to their
respective stockholders approval of such matters and shall not withdraw such
recommendation; provided, however, that a Board of Directors shall not be
required to make, and shall be entitled to withdraw, such recommendation if
such Board concludes in good faith on the basis of the advice of its outside
counsel (who may be its regularly engaged outside counsel) that the making of,
or the failure to withdraw, such recommendation would violate the fiduciary
obligations of such Board under applicable law. The Boards of Directors of the
Company, Parent and Sub will not rescind their respective declarations that the
Merger is advisable, fair to and in the best interest of such company and its
shareholders unless, in any such case, any such Board concludes in good faith
on the basis of the advice of its outside counsel (who may be its regularly
engaged outside counsel) that the failure to rescind such determination would
violate the fiduciary obligations of such Board under applicable law. The
Company and Parent shall coordinate and cooperate with respect to the timing of
such
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meetings and shall use their reasonable best efforts to hold such meetings on
the same day.
Section 5.2 Preparation of the Registration Statement and the
Joint Proxy Statement. The Company and Parent shall promptly prepare and file
with the SEC the Joint Proxy Statement and Parent shall prepare and file with
the SEC the Registration Statement, in which the Joint Proxy Statement will be
included as a prospectus. Each of Parent and the Company shall use its
reasonable best efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after such filing. As
promptly as practicable after the Registration Statement shall have become
effective, each of Parent and the Company shall mail the Joint Proxy Statement
to its respective stockholders. Parent shall also take any action (other than
qualifying to do business in any jurisdiction in which it is now not so
qualified) required to be taken under any applicable state securities laws in
connection with the issuance of Parent Common Stock in the Merger and upon the
exercise of the Substitute Options (as defined in Section 5.8) and the
conversion of the 5% Debentures, and the Company shall furnish all information
concerning the Company and the holders of Company Common Stock as may be
reasonably requested in connection with any such action. No amendment or
supplement to the Joint Proxy Statement or the Registration Statement will be
made by Parent or the Company without the prior approval of the other party.
Parent and the Company each will advise the other, promptly after it receives
notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order, of the suspension of the qualification of the Parent Common Stock
issuable in connection with the Merger for offering or sale in any
jurisdiction, or of any request by the SEC for amendment of the Joint Proxy
Statement or the Registration Statement or comments thereon and responses
thereto or requests by the SEC for additional information.
Section 5.3 Employee Benefits Matters. Annex A hereto sets
forth certain agreements among the parties hereto with respect to employee
benefit matters and is incorporated herein by reference.
Section 5.4 Access to Information. Subject to currently
existing contractual and legal restrictions applicable to Parent or to the
Company or any of their Subsidiaries, each of Parent and the Company shall, and
shall cause each of its Subsidiaries to, afford to the accountants, counsel,
financial advisors and other representatives of the other party hereto
reasonable access to, and permit them to make such inspections as they may
reasonably require of, during normal business hours during the period from the
date of this Agreement through the Effective Time, all their respective
properties, books, contracts, commitments and records (including, without
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limitation, the work papers of independent accountants, if available and
subject to the consent of such independent accountants) and, during such
period, Parent and the Company shall, and shall cause each of its Subsidiaries
to, furnish promptly to the other (i) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of federal or state securities laws and (ii) all
other information concerning its business, properties and personnel as the
other may reasonably request. No investigation pursuant to this Section 5.4
shall affect any representation or warranty in this Agreement of any party
hereto or any condition to the obligations of the parties hereto. All
information obtained by Parent or the Company pursuant to this Section 5.4
shall be kept confidential in accordance with the Confidentiality Agreement
dated June 7, 1995 between Parent and the Company (the "Confidentiality
Agreement").
Section 5.5 Compliance with the Securities Act; Pooling
Period. (a) Prior to the Effective Time, the Company shall cause to be
prepared and delivered to Parent a list (reasonably satisfactory to counsel for
Parent) identifying all persons who, at the time of the Company Stockholder
Meeting, in the Company's reasonable judgment, may be deemed to be "affiliates"
of the Company as that term is used in paragraphs (c) and (d) of Rule 145 under
the Securities Act (the "Rule 145 Affiliates"). The Company shall use its
reasonable best efforts to cause each person who is identified as a Rule 145
Affiliate in such list to deliver to Parent on or prior to the Effective
Time a written agreement, in substantially the form of Exhibit 5.5(a) hereto.
Parent shall publish, in a manner that satisfies the "publication" requirements
under applicable SEC rules or accounting releases, financial results (including
combined sales and net income) covering at least 30 days of post-Merger
operations no later than 15 days following the first month-end that is more
than 30 days after the Effective Time. The period commencing 30 days prior to
the Effective Time and ending on the date of the publication of the post-Merger
financial results is referred to herein as the "Pooling Period."
(b) Prior to the Effective Time, Parent shall deliver to
the Company a list (reasonably satisfactory to counsel to the Company)
identifying those persons who may be, in Parent's reasonable judgment, at the
time of the Parent Stockholder Meeting, affiliates of Parent under applicable
SEC accounting releases with respect to pooling of interests accounting
treatment. Parent shall provide the Company such information and documents as
the Company shall reasonably request for purposes of reviewing such list.
Parent shall use its reasonable best efforts to deliver or cause to be
delivered to the Company, prior to the Effective Time, a written agreement in
substantially the form of Exhibit 5.5(b) hereto, executed by each of such
persons identified in the foregoing list.
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(c) At the request of the Rule 145 Affiliates, Parent agrees
to (i) at Parent's expense, take such actions reasonably necessary to register
the shares held by such Rule 145 Affiliates for resale (including pursuant to
an underwritten offering) on the Registration Statement, and (ii) register
(including pursuant to an underwritten offering) the shares held by such Rule
145 Affiliates on a registration statement on Form S-3. Parent shall maintain
the effectiveness of the Registration Statement for a period (the
"Effectiveness Period") commencing on the date (the "Commencement Date") of the
expiration of the Pooling Period and ending on the later of (i) the date which
is 30 days after the Commencement Date and (ii) the date which is 90 days after
the Effective Time; provided, however, that, subject to the provisions of the
next sentence, if Parent determines in good faith that resales of shares of
Parent Common Stock by Rule 145 Affiliates pursuant to the Registration
Statement would materially interfere with, or require premature disclosure of,
any material financing, acquisition, reorganization or business combination
involving Parent, the Surviving Corporation or any of their respective
Subsidiaries, then, upon written notice to the Rule 145 Affiliates, Parent
shall be entitled to suspend sales of shares of Parent Common Stock by Rule 145
Affiliates pursuant to the Registration Statement for a period of up to 30
days; provided, further, that the Effectiveness Period shall be extended by the
aggregate number of days of any such suspension. Notwithstanding anything to
the contrary in this paragraph (c), Parent shall take all actions necessary to
cause sales to be permitted under the Registration Statement for at least one
15 consecutive day period commencing on or after the Commencement Date and
ending on or prior to the 90th day following the Effective Time. Parent's
obligations contained in clause (c)(i) above shall be conditioned upon the
receipt from each of the Rule 145 Affiliates registering shares in the
Registration Statement of a duly executed agreement substantially in the form
of Exhibit 5.5(a). Parent's obligations contained in clause (c)(ii) above
shall terminate on the earlier of (A) the second anniversary of the Effective
Time and (B) the completion of a sale of shares pursuant to an offering
effected under the provisions of such clause (c)(ii). Upon a request to Parent
pursuant to the first sentence of this paragraph (c)(ii), the Rule 145
Affiliates and Parent shall promptly enter into a registration rights agreement
containing the principal terms set forth in Annex B and otherwise in form and
substance reasonably acceptable to Parent and the Rule 145 Affiliates.
Section 5.6 Stock Exchange Listings. Parent shall use its
reasonable best efforts to list on the NYSE, upon official notice of issuance,
the shares of Parent Common Stock to be issued in connection with the Merger,
upon the exercise of the Substitute Options or upon the conversion of the 5%
Debentures.
Section 5.7 Fees and Expenses. (a) Except as provided in
this Section 5.7 and Section 5.11, whether or not the
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Merger is consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby including, without
limitation, the fees and disbursements of counsel, financial advisors and
accountants, shall be paid by the party incurring such costs and expenses,
provided that all printing expenses and filing fees shall be divided equally
between Parent and the Company.
(b) (i) If any event referred to in clause (i) of Section
7.1(h) occurs, this Agreement is terminated thereafter by the Company or Parent
(whether or not pursuant to such clause) and prior to such termination the
stockholders of the Company did not approve this Agreement, then the Company
shall (without prejudice to any other rights of Parent against the Company
except as set forth in the provision hereto) pay to Parent a fee of $10 million
in cash, such payment to be made promptly, but in no event later than the
second business day following such termination; provided; however; that if
Parent is entitled to a payment pursuant to the immediately following paragraph
of this Section 5.7(b) Parent shall not be entitled to any payment pursuant to
this paragraph.
(ii) If:
(A) this Agreement is terminated by the
Company pursuant to clause (i) of Section 7.1(d) and within twelve months after
such a termination a Superior Company Acquisition Transaction (as hereinafter
defined) occurs;
(B) (x) this Agreement is terminated by
the Company or Parent at a time when Parent is entitled to terminate this
Agreement pursuant to Section 7.1(e), (y) prior to the Company Stockholder
Meeting but after the date of this Agreement a Company Third Party Acquisition
Event has occurred and (z) by reason thereof or otherwise the event referred to
in clause (D) of the definition of Company Third Party Acquisition Event (the
"Company Clause D Event") occurs after the date hereof but prior to the first
anniversary of such termination;
(C) this Agreement is terminated by the
Company or Parent pursuant to Section 7.1(g); or
(D) this Agreement is terminated by
Parent pursuant to clause (i) or (ii) of Section 7.1(h) following the
occurrence of a Company Third Party Acquisition Event;
then, in each case, the Company shall (without prejudice to any other rights of
Parent against the Company, except as set forth in the proviso hereto) pay to
Parent a fee of $70 million in cash, such payment to be made promptly, but in
no event later than the second business day following, in the case of clause
(A), the Superior Company Acquisition Transaction, or, in the case of clause
(B), the later of such termination and such
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Company Clause D Event or, in the case of clause (C) or (D), such termination;
provided, however, that if Parent is entitled to payment pursuant to this
paragraph (b)(ii), Parent shall not be entitled to any payment pursuant to
paragraph (b)(i).
A "Company Third Party Acquisition Event" means any of the
following events: (A) any Person other than Parent or its Affiliates, acquires
or becomes the beneficial owner of 30% or more of the outstanding shares of
Company Common Stock; (B) any new group is formed which, at the time of
formation, beneficially owns 30% or more of the outstanding shares of Company
Common Stock (other than a group which includes or may reasonably be deemed to
include Parent or any of its Affiliates); (C) any Person (other than Parent or
its Affiliates) shall have commenced a tender or exchange offer for 30% or more
of the then outstanding shares of Company Common Stock or publicly proposed any
bona fide merger, consolidation or acquisition of all or substantially all the
assets of the Company, or other similar business combination involving the
Company; (D) the Company enters into, or announces that it proposes to enter
into, an agreement, including, without limitation, an agreement in principle,
providing for a merger or other business combination involving the Company or
the acquisition of a substantial interest in, or a substantial portion of the
assets, business or operations of, the Company (other than the transactions
contemplated by this Agreement); (E) any Person (other than Parent or its
Affiliates) is granted any option or right, conditional or otherwise, to
acquire or otherwise become the beneficial owner of shares of Company Common
Stock which, together with all shares of Company Common Stock beneficially
owned by such Person, results or would result in such Person being the
beneficial owner of 30% or more of the outstanding shares of Company Common
Stock; or (F) there is a public announcement with respect to a plan or
intention by the Company or any Person, other than Parent and its Affiliates,
to effect any of the foregoing transactions. For purposes of this Section 5.7,
the terms "group" and "beneficial owner" shall be defined by reference to
Section 13(d) of the Exchange Act.
A "Superior Company Acquisition Transaction" means the event
referred to in clause (D) of Company Third Party Acquisition Event provided
that the financial and other terms of the transaction referred to therein are,
when considered in the aggregate, more favorable to the Company's stockholders
than the financial and other terms of the Merger.
(c) If the Board of Directors of Parent shall fail to
recommend to Parent's stockholders the approval of the Share Issuance or shall
withdraw such recommendation and this Agreement is terminated by Parent or the
Company at a time when the Company is entitled to terminate this Agreement
pursuant to Section 7.1(f), then Parent shall (without prejudice to any other
rights of the Company against Parent, except as set forth in the proviso
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hereto) pay to the Company a fee of $10 million in cash, such payment to be
made promptly, but in no event later than the second business day following
such termination; provided, however, that if the Company is entitled to a
payment pursuant to the immediately following paragraph of this Section 5.7(c),
the Company shall not be entitled to any payment pursuant to this paragraph.
If (A) this Agreement is terminated by the Company or Parent
when the Company is entitled to terminate this Agreement pursuant to Section
7.1(f), (B) prior to the Parent Stockholder Meeting but after the date of this
Agreement a Parent Third Party Acquisition Event (as hereinafter defined) has
occurred and (C) by reason thereof or otherwise the event referred to in clause
(D) of the definition of Parent Third Party Acquisition Event occurs after the
date hereof but prior to the first anniversary of such termination, then Parent
shall (without prejudice to any other rights of the Company against Parent,
except as set forth in the proviso hereto) pay to the Company a fee of $70
million in cash, such payment to be made promptly, but in no event later than
the second business day following the Parent Third Party Acquisition Event;
provided, however, if the Company is entitled to payment pursuant to this
paragraph, the Company shall not be entitled to any payment pursuant to the
immediately preceding paragraph of this Section 5.7(c).
A "Parent Third Party Acquisition Event" means any of the
following events: (A) any Person acquires or becomes the beneficial owner of
30% or more of the outstanding shares of Parent Common Stock (other than by
reason of an issuance of shares of Parent Common Stock permitted by Section
4.1(a)); (B) any new group is formed which, at the time of formation,
beneficially owns 30% or more of the outstanding shares of Parent Common Stock
(other than a group which includes or may reasonably be deemed to include
Parent or any of its Affiliates); (C) any Person shall have commenced a tender
or exchange offer for 30% or more of the then outstanding shares of Parent
Common Stock or publicly proposed any bona fide merger, consolidation or
acquisition of all or substantially all the assets of Parent, or other similar
business combination involving Parent; (D) Parent enters into, or announces
that it proposes to enter into, an agreement, including, without limitation, an
agreement in principle, providing for a merger or other business combination
involving Parent (other than this Agreement) or the acquisition of a
substantial interest in, or a substantial portion of the assets, business or
operations of, Parent or (E) there is a public announcement with respect to a
plan or intention by any Person to effect any of the foregoing transactions.
Section 5.8 Company Stock Options; Stock Purchase Plan. (a)
At the Effective Time, by virtue of the Merger and without any further action
on the part of the Company or the holder thereof, each unexpired and
unexercised option to purchase
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shares of Company Common Stock (a "Company Stock Option"), under the Company
Stock Option Plans, or otherwise granted by the Company outside of any Company
Stock Option Plan, will be assumed by Parent in such manner that the Parent (i)
is a corporation "assuming a stock option in a transaction to which Section
424(a) applied" within the meaning of Section 424 of the Code or (ii) to the
extent that Section 424 of the Code does not apply to any such Company Stock
Options, would be such a corporation were Section 424 of the Code applicable to
such Company Stock Options. From and after the Effective Time, all references
to the Company in the Company Stock Option Plans, the applicable stock option
or other awards agreements issued thereunder and in any other Company Stock
Options shall be deemed to refer to Parent, which shall have assumed the
Company Stock Option Plans as of the Effective Time by virtue of this Agreement
and without any further action. At the Effective Time, by virtue of the Merger
and without any further action on the part of the Company or the holder
thereof, each Company Stock Option will be automatically converted into an
option (the "Parent Stock Option") to purchase a number of shares of Parent
Common Stock equal to the number of shares of Company Common Stock that could
have been purchased (assuming full vesting) under such Company Stock Option
multiplied by the Conversion Number (rounded to the nearest whole number of
shares of Parent Common Stock) at a price per share of Parent Common Stock
equal to the per share option exercise price specified in the Company Stock
Option divided by the Conversion Number (rounded to the nearest whole cent).
Such Parent Stock Option shall otherwise be subject to the same terms and
conditions as such Company Stock Option, which in accordance with the terms
thereof shall vest and become immediately exercisable as of the Effective Time.
For Federal income tax purposes, the date of grant of the substituted Parent
Stock Option shall be the date on which the corresponding Company Stock Option
was granted. At the Effective Time, (i) all references in the Company Stock
Option Plans, the applicable stock option or other awards agreements issued
thereunder and in any other Company Stock Options to the Company shall be
deemed to refer to Parent; (ii) Parent shall assume the Company Stock Option
Plans and all of the Company's obligations with respect to the Company Stock
Options, as so amended; and (iii) Parent shall issue to each holder of an
outstanding Company Stock Option a document evidencing the foregoing assumption
by Parent. It is the intention of the parties that, subject to applicable law,
the Company Stock Options assumed by Parent qualify, following the Effective
Time, as incentive stock options, as defined in Section 422 of the Code, to the
extent that the Company Stock Options qualified as incentive stock options
prior to the Effective Time.
(b) In respect of each Company Stock Option as converted
into a Parent Stock Option pursuant to Section 5.8(a) and assumed by Parent,
and the shares of Parent Common Stock underlying such option, Parent shall file
and keep current a
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registration statement on Form S-8 or other appropriate form for as long as
such options remain outstanding.
(c) Except as provided in Section 4.1(b)(ix), the Company
agrees that it will not grant any restricted stock, stock appreciation rights
or limited stock appreciation rights and will not permit cash payments to
holders of Company Stock Options in lieu of the substitution therefor of Parent
Stock Options, as described in this Section 5.8.
Section 5.9 Reasonable Best Efforts; Pooling of Interests.
(a) Upon the terms and subject to the conditions set forth in this Agreement,
each of the parties agrees to use reasonable best efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including, but not limited to: (i) the obtaining of all necessary
actions or non-actions, waivers, consents and approvals from all Governmental
Entities and the making of all necessary registrations and filings (including
filings with Governmental Entities) and the taking of all reasonable steps as
may be necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity (including those in connection with the
HSR Act and State Takeover Approvals), (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed, and (iv)
the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by this Agreement. No party to this
Agreement shall consent to any voluntary delay of the consummation of the
Merger at the behest of any Governmental Entity without the consent of the
other parties to this Agreement, which consent shall not be unreasonably
withheld.
(b) Each of Parent and the Company agrees to take, together
with their respective accountants, all actions reasonably necessary in order to
obtain a favorable determination (if required) from the SEC that the Merger may
be accounted for as a pooling of interests in accordance with generally
accepted accounting principles.
(c) Each party shall use all reasonable best efforts to not
take any action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or
result in a breach of any covenant made by it in this Agreement.
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(d) Notwithstanding anything to the contrary contained in
this Agreement, (i) neither Parent nor the Company shall be obligated to use
its reasonable best efforts or to take any action pursuant to this Section 5.9
if the Board of Directors of Parent or the Company, as the case may be, shall
conclude in good faith on the basis of the advice of its outside counsel (who
may be its regularly engaged outside counsel) that such action would violate
the fiduciary obligations of such Board under applicable law, and (ii) in
connection with any filing or submission required or action to be taken by
either Parent or the Company to effect the Merger and to consummate the other
transactions contemplated hereby, the Company shall not, without Parent's prior
written consent, commit to any divestiture transaction, and, except as provided
in Section 5.9 of the Parent Letter, neither Parent nor any of its Affiliates
shall be required to divest or hold separate or otherwise take or commit to
take any action that limits its freedom of action with respect to, or its
ability to retain, the Company or any of the material businesses, product lines
or assets of Parent or any of its Affiliates or that otherwise would have a
Material Adverse Effect on Parent.
Section 5.10 Public Announcements. Parent and the Company
will not issue any press release with respect to the transactions contemplated
by this Agreement or otherwise issue any written public statements with respect
to such transactions without prior consultation with the other party, except as
may be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange.
Section 5.11 Real Estate Transfer and Gains Tax. Parent and
the Company agree that either the Company or the Surviving Corporation will pay
any state or local tax which is attributable to the transfer of the beneficial
ownership of the Company's or its Subsidiaries' real property, if any
(collectively, the "Gains Taxes"), and any penalties or interest with respect
to the Gains Taxes, payable in connection with the consummation of the Merger.
The Company and Parent agree to cooperate with the other in the filing of any
returns with respect to the Gains Taxes, including supplying in a timely manner
a complete list of all real property interests held by the Company and its
Subsidiaries and any information with respect to such property that is
reasonably necessary to complete such returns. The portion of the
consideration allocable to the real property of the Company and its
Subsidiaries shall be determined by Parent in its reasonable discretion. The
stockholders of the Company shall be deemed to have agreed to be bound by the
allocation established pursuant to this Section 5.11 in the preparation of any
return with respect to the Gains Taxes.
Section 5.12 State Takeover Laws. If any "fair price,"
"business combination" or "control share acquisition" statute or other similar
statute or regulation shall become applicable to the transactions contemplated
hereby, Parent and
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the Company and their respective Boards of Directors shall use their reasonable
best efforts to grant such approvals and take such actions as are necessary so
that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to minimize the
effects of any such statute or regulation on the transactions contemplated
hereby.
Section 5.13 Indemnification; Directors and Officers
Insurance. For six years from and after the Effective Time, Parent agrees to,
and to cause the Surviving Corporation to, indemnify and hold harmless all past
and present officers and directors of the Company and of its Subsidiaries to
the same extent such persons are indemnified as of the date of this Agreement
by the Company pursuant to the Company's Restated Articles of Incorporation and
By-Laws and indemnification agreements in existence on the date hereof with any
officers and directors of the Company and its Subsidiaries for acts or
omissions occurring at or prior to the Effective Time. Parent shall cause the
Surviving Corporation to provide, for an aggregate period of not less than six
years from the Effective Time, the Company's current directors and officers an
insurance and indemnification policy that provides coverage for events
occurring prior to the Effective Time (the "D&O Insurance") that is no less
favorable than the Company's existing policy or, if substantially equivalent
insurance coverage is unavailable, the best available coverage; provided,
however, that the Surviving Corporation shall not be required to pay an annual
premium for the D&O Insurance in excess of 300 percent of the last annual
premiums paid prior to the date hereof (which premiums the Company represents
and warrants to be approximately $267,500), but in such case shall purchase as
much coverage as possible for such amount.
Section 5.14 Notification of Certain Matters. Parent shall
use its reasonable best efforts to give prompt notice to the Company, and the
Company shall use its reasonable best efforts to give prompt notice to Parent,
of: (i) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which it is aware and which would be reasonably likely to
cause (x) any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied in
all material respects, (ii) any failure of Parent or the Company, as the case
may be, to comply in a timely manner with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder or (iii) any change
or event which would be reasonably likely to have a Material Adverse Effect on
Parent or the Company, as the case may be; provided, however, that the delivery
of any notice pursuant to this Section 5.14 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
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Section 5.15 Resignation of Directors. The Company shall use
its reasonable best efforts to cause each director of the Company to resign as
a director of the Company immediately after the Effective Time.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Time of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been
duly approved by the requisite vote of stockholders of the Company in
accordance with applicable law and the Restated Articles of Incorporation and
By-laws of the Company, and the Share Issuance shall have been approved by the
requisite vote of the stockholders of Parent in accordance with applicable
rules of the NYSE, applicable law and the Restated Certificate of Incorporation
and By-laws of Parent.
(b) Stock Exchange Listings. The Parent Common Stock
issuable in the Merger, upon conversion of the 5% Debentures, and pursuant to
Substitute Options, shall have been authorized for listing on the NYSE, subject
to official notice of issuance.
(c) HSR and Other Approvals. (i) The waiting period (and any
extension thereof) applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated.
(ii) All authorizations, consents, orders, declarations or
approvals of, or filings with, or terminations or expirations of waiting
periods imposed by, any Governmental Entity, which the failure to obtain, make
or occur would have the effect of making the Merger or any of the transactions
contemplated hereby illegal or would have a Material Adverse Effect on Parent
(assuming the Merger had taken place), shall have been obtained, shall have
been made or shall have occurred.
(d) Accounting. Parent shall have received an opinion of
Ernst & Young LLP, dated as of the Effective Time, in form and substance
reasonably satisfactory to Parent and the Company, that the Merger will qualify
for pooling of interests accounting treatment under Accounting Principles Board
Opinion No. 16 if closed and consummated in accordance with this Agreement.
(e) Registration Statement. The Registration Statement shall
have become effective in accordance with the provisions of the Securities Act.
No stop order suspending the effectiveness of the Registration Statement shall
have been
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issued by the SEC and no proceedings for that purpose shall have been initiated
or, to the Knowledge of Parent or the Company, threatened by the SEC. All
necessary state securities or blue sky authorizations (including State Takeover
Approvals) shall have been received.
(f) No Order. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of making the Merger or any of the transactions contemplated hereby
illegal.
Section 6.2 Conditions to Obligation of the Company to Effect
the Merger. The obligation of the Company to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
additional conditions:
(a) Performance of Obligations; Representations and
Warranties. Each of Parent and Sub shall have performed in all material
respects each of its agreements contained in this Agreement required to be
performed on or prior to the Effective Time, each of the representations and
warranties of Parent and Sub contained in this Agreement that is qualified by
materiality shall be true and correct on and as of the Effective Time as if
made on and as of such date (other than representations and warranties which
address matters only as of a certain date which shall be true and correct as of
such certain date) and each of the representations and warranties that is not
so qualified shall be true and correct in all material respects on and as of
the Effective Time as if made on and as of such date (other than
representations and warranties which address matters only as of a certain date
which shall be true and correct in all material respects as of such certain
date), in each case except as contemplated or permitted by this Agreement, and
the Company shall have received a certificate signed on behalf of each of
Parent and Sub by its Chief Executive Officer and its Chief Financial Officer
to such effect.
(b) Tax Opinion. The Company shall have received an
opinion of Sutherland, Asbill & Brennan, in form and substance reasonably
satisfactory to the Company, dated the Effective Time, substantially to the
effect that on the basis of facts, representations and assumptions set forth in
such opinion which are consistent with the state of facts existing as of the
Effective Time, for federal income tax purposes:
(i) the Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and the Company, Sub and Parent
will each be a party to that
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reorganization within the meaning of Section 368(b) of the Code;
(ii) no gain or loss will be recognized by Parent or the Company
as a result of the Merger;
(iii) no gain or loss will be recognized by the stockholders of
the Company upon the conversion of their shares of Company Common
Stock into shares of Parent Common Stock pursuant to the Merger,
except with respect to cash, if any, received in lieu of fractional
shares of Parent Common Stock;
(iv) the aggregate tax basis of the shares of Parent Common Stock
received in exchange for shares of Company Common Stock pursuant to
the Merger (including fractional shares of Parent Common Stock for
which cash is received) will be the same as the aggregate tax basis of
such shares of Company Common Stock;
(v) the holding period for shares of Parent Common Stock
received in exchange for shares of Company Common Stock pursuant to
the Merger will include the holder's holding period for such shares of
Company Common Stock, provided such shares of Company Common Stock
were held as capital assets by the holder at the Effective Time; and
(vi) a stockholder of the Company who receives cash in lieu of a
fractional share of Parent Common Stock will recognize gain or loss
equal to the difference, if any, between such stockholder's basis in
the fractional share (as described in clause (iv) above) and the amount
of cash received.
In rendering such opinion, Sutherland, Asbill & Brennan may receive and rely
upon representations from Parent, the Company, and others, including
representations from Parent substantially similar to the representations in the
Parent Tax Certificate attached to the Parent Letter and representations from
the Company substantially similar to the representations in the Company Tax
Certificate attached to the Company Letter.
Section 6.3 Conditions to Obligations of Parent and Sub to
Effect the Merger. The obligations of Parent and Sub to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Time of the
following additional conditions:
(a) Performance of Obligations; Representations and
Warranties. The Company shall have performed in all material respects each of
its agreements contained in this Agreement required to be performed on or prior
to the Effective Time, each of the representations and warranties of the
Company contained in this Agreement that is qualified by materiality shall be
true and
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correct on and as of the Effective Time as if made on and as of such date
(other than representations and warranties which address matters only as of a
certain date which shall be true and correct as of such certain date) and each
of the representations and warranties that is not so qualified shall be true
and correct in all material respects on and as of the Effective Time as if made
on and as of such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct in all
material respects as of such certain date), in each case except as contemplated
or permitted by this Agreement, and Parent shall have received a certificate
signed on behalf of the Company by its Chief Executive Officer and its Chief
Financial Officer to such effect.
(b) Non-Solicitation Agreement. A non-solicitation agreement
in the form attached to Section 6.3(c) of the Parent Letter shall have been
entered into by Mr. Patrick H. Thomas, the Chairman of the Board, President and
Chief Executive Officer of the Company, and such agreement shall have remained
in full force and effect without breach thereof by such individual.
(c) Litigation. There shall not be instituted or pending any
suit, action or proceeding by a Governmental Entity as a result of this
Agreement or any of the transactions contemplated herein which would have a
Material Adverse Effect on Parent (assuming for purposes of this paragraph (c)
that the Merger shall have occurred).
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after any approval of
the matters presented in connection with the Merger by the stockholders of the
Company or Parent:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the other party shall
have failed to comply in any material respect with any of its
covenants or agreements contained in this Agreement required to be
complied with prior to the date of such termination, which failure to
comply has not been cured within five business days following receipt
by such other party of written notice of such failure to comply;
provided, however, that if any such breach is curable by the breaching
party through the exercise of the breaching party's best efforts and
for so long as the breaching party shall be so using its best efforts
to cure such breach, the non-
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breaching party may not terminate this Agreement pursuant to this
paragraph;
(c) by either Parent or the Company if there has been (i)
a breach by the other party (in the case of Parent, including any
material breach by Sub) of any representation or warranty that is not
qualified as to materiality which has the effect of making such
representation or warranty not true and correct in all material
respects or (ii) a breach by the other party (in the case of Parent,
including any material breach by Sub) of any representation or
warranty that is qualified as to materiality, in each case which
breach has not been cured within five business days following receipt
by the breaching party of written notice of the breach; provided,
however, that if any such breach is curable by the breaching party
through the exercise of the breaching party's best efforts and for so
long as the breaching party shall be so using its best efforts to cure
such breach, the non-breaching party may not terminate this Agreement
pursuant to this paragraph;
(d) by Parent or the Company if: (i) the Merger has not been
effected on or prior to the close of business on December 31, 1995
(the "Termination Date"); provided, however, that (A) the right to
terminate this Agreement pursuant to this Section 7.1(d) shall not be
available to any party whose failure to fulfill any of its obligations
contained in this Agreement has been the cause of, or resulted in, the
failure of the Merger to have occurred on or prior to the aforesaid
date; (B) the Termination Date may be extended prior to the
termination hereof by written notice of either Parent or the Company
to the other to a date not later than March 31, 1996, if the Merger
shall not have been consummated as a result of the Company or Parent
having failed by December 31, 1995 to receive all required regulatory
approvals or consents (other than those relating to or arising under
applicable federal antitrust laws) with respect to the Merger
necessary to satisfy the condition set forth in Section 6.1(c); (C)
the Termination Date may be extended prior to the termination hereof
by written notice of either Parent or the Company to the other to the
later of (x) the date that is 50 days following the date on which the
parties fully complied with a request by the applicable federal
antitrust authority for additional information under the HSR Act and
(y) if the parties shall have agreed with the applicable federal
antitrust authority to not consummate the Merger until a certain date,
the date that is 30 days following such agreed date; (D) if the
applicable federal antitrust authority shall seek an order with
respect to the legality of the Merger under applicable federal
antitrust laws, the Termination Date may be extended prior to the
termination hereof by written notice of either Parent or the Company
to the other to the date that is 30 days following
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the date on which a ruling with respect to such an order is entered by
a trial court or administrative body; and (E) if such order shall have
been entered which had the effect of enjoining the consummation of the
Merger and any party hereto shall have commenced an appeal thereof,
the Termination Date may be extended prior to the termination hereof
by written notice of either Parent or the Company to the other to the
date which is 30 days following the issuance of a decision by the
applicable appeals court with respect to such an appeal; provided,
further, that, notwithstanding anything to the contrary in this clause
(i), in no event shall the Termination Date be extended beyond May 31,
1996; or (ii) any court or other Governmental Entity having
jurisdiction over a party hereto shall have issued an order, decree or
ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the transactions contemplated by this Agreement
and such order, decree, ruling or other action shall have become final
and nonappealable; provided, that a preliminary injunction preventing
the consummation of the Merger that has been entered and affirmed on
appeal by a United States Court of Appeals shall be deemed an order
which is final and non-appealable for the purpose of this clause (ii);
(e) by Parent or the Company if the stockholders of the
Company do not approve this Agreement at the Company Stockholder
Meeting or any adjournment or postponement thereof;
(f) by Parent or the Company if the stockholders of Parent
do not approve the Share Issuance at the Parent Stockholder Meeting or
any adjournment or postponement thereof;
(g) by Parent or the Company if the Board of Directors of the
Company reasonably determines that a Takeover Proposal constitutes a
Superior Proposal (as hereinafter defined); provided, however, that the
Company may not terminate this Agreement pursuant to this Section
7.1(g) unless and until three business days have elapsed following
delivery to Parent of a written notice of such determination by the
Board of Directors of the Company (which written notice shall inform
Parent of the material terms and conditions of the Takeover Proposal
but need not include the identity of such third party);
(h) by Parent if (i) the Board of Directors of the Company
shall not have recommended, or shall have resolved not to recommend, or
shall have modified or withdrawn its recommendation of the Merger or
declaration that the Merger is advisable and fair to and in the best
interest of the Company and its stockholders, or shall have resolved to
do so (ii) the Board of Directors of the Company shall have
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recommended to the stockholders of the Company any Takeover Proposal
or shall have resolved to do so or (iii) a tender offer or exchange
offer for 30% or more of the outstanding shares of capital stock of
the Company is commenced, and the Board of Directors of the Company
fails to recommend against acceptance of such tender offer or exchange
offer by its stockholders (including by taking no position with
respect to the acceptance of such tender offer or exchange offer by
its stockholders).
The right of any party hereto to terminate this Agreement
pursuant to this Section 7.1 shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any party
hereto, any person controlling any such party or any of their respective
officers or directors, whether prior to or after the execution of this
Agreement.
"Superior Proposal" shall mean a bona fide proposal or offer
made by a third party to acquire the Company pursuant to a tender or exchange
offer, a merger, consolidation or other business combination or a sale of all
or substantially all of the assets of the Company and its Subsidiaries on terms
which a majority of the members of the Board of Directors of the Company
determines in their good faith reasonable judgment (based on the advice of
independent financial advisors) to be more favorable to the Company and to its
stockholders than the transactions contemplated hereby, provided that in making
such determination the Board considers the likelihood that such third party is
able to consummate such proposed transaction.
Section 7.2 Effect of Termination. In the event of
termination of this Agreement by either Parent or the Company, as provided in
Section 7.1, this Agreement shall forthwith become void and there shall be no
liability hereunder on the part of the Company, Parent, Sub or their respective
officers or directors (except for the last sentence of Section 5.4 and the
entirety of Section 5.7, which shall survive the termination); provided,
however, that nothing contained in this Section 7.2 shall relieve any party
hereto from any liability for any willful breach of a representation or
warranty contained in this Agreement or the breach of any covenant contained in
this Agreement.
Section 7.3 Amendment. This Agreement may be amended by the
parties hereto, by or pursuant to action taken by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Parent and the Company, but,
after any such approval, no amendment shall be made which by law requires
further approval by such stockholders 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.
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Section 7.4 Waiver. At any time prior to the Effective Time,
the parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. 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.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
or in any instrument delivered pursuant to this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to
Section 7.1, as the case may be, except that the agreements set forth in
Article I and Sections 4.4 and 5.13 and this Article VIII shall survive the
Effective Time, and those set forth in Sections 5.7 and 7.2 and this Article
VIII and the Confidentiality Agreement shall survive termination.
Section 8.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, one day after being delivered to an overnight courier or when
telecopied (with a confirmatory copy sent by overnight courier) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent or Sub, to
First Data Corporation
401 Hackensack Avenue
Hackensack, New Jersey 07601
Attention: Henry C. Duques
Chairman and Chief
Executive Officer
Facsimile No.: (201) 342-0401
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with copies to:
First Data Corporation
2121 North 117th Avenue
IMS-30
Omaha, Nebraska 68164
Attention: David P. Bailis
Senior Vice President,
Secretary and General Counsel
Facsimile No.: (402) 498-4120
and
Frederick C. Lowinger, Esq.
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Facsimile No.: (312) 853-7036
(b) if to the Company, to
First Financial Management Corporation
3 Corporate Square
Suite 700
Atlanta, Georgia 30329
Attention: Randolph L. M. Hutto
Senior Executive Vice
President and General Counsel
Facsimile No.: (404) 636-7632
with copies to:
George L. Cohen, Esq.
Sutherland, Asbill & Brennan
999 Peachtree Street, N.E.
Atlanta, Georgia 30309-3996
Facsimile No.: (404) 853-8806
and
Peter D. Lyons, Esq.
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Facsimile No.: (212) 848-7179/80/81/82
Section 8.3 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement,
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they shall be deemed to be followed by the words "without limitation."
Section 8.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
Section 8.5 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, except as provided in the last sentence of Section 5.4,
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. This Agreement, except for the provisions of Section
5.13 and Sections 2, 3 and 4 of Annex A, is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 8.6 Governing Law. Except to the extent that the
laws of the State of Georgia are mandatorily applicable to the Merger, this
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF
PARENT, THE COMPANY, OR SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT THEREOF.
Section 8.7 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties.
Section 8.8 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule
of law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this Agreement
may be consummated as originally contemplated to the fullest extent possible.
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Section 8.9 Enforcement of this Agreement. The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions hereof
in any court of the United States or any state having jurisdiction, such remedy
being in addition to any other remedy to which any party is entitled at law or
in equity.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized all as of the date first written above.
FIRST DATA CORPORATION
By: /s/ Henry C. Duques
----------------------
Name: Henry C. Duques
Title: Chairman and Chief
Executive Officer
Attest:
/s/ David P. Bailis
- ---------------------------
Name: David P. Bailis
Title: Secretary
FDC MERGER CORP.
By: /s/ Walter M. Hoff
-----------------------
Name: Walter M. Hoff
Title: President
Attest:
/s/ David P. Bailis
- ---------------------------
Name: David P. Bailis
Title: Secretary
FIRST FINANCIAL MANAGEMENT
CORPORATION
By: /s/ Patrick H. Thomas
---------------------
Name: Patrick H. Thomas
Title: Chairman, Chief
Executive Officer
and President
Attest:
/s/ Randolph L. M. Hutto
- -----------------------------
Name: Randolph L. M. Hutto
Title: Senior Executive Vice
President
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