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EXHIBIT 2.01
AGREEMENT AND PLAN OF MERGER
among
QUINTILES TRANSNATIONAL CORP.,
QELS CORP.
and
ENVOY CORPORATION
Dated as of December 15, 1998
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and dated
as of December 15, 1998 by and among Quintiles Transnational Corp., a North
Carolina corporation ("Parent"), QELS Corp., a Tennessee corporation and newly
formed, wholly owned subsidiary of Parent ("Merger Sub"), and Envoy Corporation,
a Tennessee corporation (the "Company"). Capitalized terms used in this
Agreement and not otherwise defined are defined in Section 9.1 below. Except as
otherwise specifically stated, references in this Agreement to exhibits are
references to the documents attached as exhibits to this Agreement, all of which
form a part hereof.
Background
(a) The respective Boards of Directors of Parent, Merger Sub and the
Company have approved and deem it advisable and in the best interests of their
respective shareholders for Parent to acquire the Company upon the terms and
subject to the conditions set forth in this Agreement;
(b) The parties intend that the acquisition be accomplished by a merger
of the Merger Sub with and into the Company, with the Company continuing as the
surviving corporation (the "Merger");
(c) The respective Boards of Directors of Parent and the Company have
determined that the Merger and the other transactions contemplated by this
Agreement are consistent with, and in furtherance of, their respective business
strategies and goals;
(d) The parties intend that the Merger will qualify as a nontaxable
reorganization under Section 368(a) of the Code, and that this Agreement shall
be, and is hereby, adopted as a plan of reorganization for purposes of Section
368 of the Code;
(e) The parties intend that the transactions contemplated herein
qualify for treatment as a pooling of interests pursuant to APB Opinion No. 16;
and
(f) As a condition and an inducement to Parent and Merger Sub entering
into this Agreement and incurring the obligations set forth herein, concurrently
with the execution and delivery of this Agreement, Parent is entering into a
Stock Voting Agreement with certain shareholders of the Company in the form of
Exhibit A hereto (the "Stock Voting Agreement" and, together with this
Agreement, the "Transaction Agreements").
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NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions
contained in this Agreement, and in accordance with the TBCA, at the Effective
Time (as defined in Section 1.3 below), Merger Sub shall be merged with and into
the Company, the separate corporate existence of Merger Sub shall thereupon
cease, and the Company shall continue as the surviving corporation (sometimes
referred to in this Agreement as the "Surviving Corporation") and shall continue
its corporate existence under the laws of the State of Tennessee; and in
accordance with Section ▇▇-▇▇-▇▇▇ of the TBCA, all of the rights, privileges,
powers, immunities, purposes and franchises of Merger Sub and the Company shall
vest in the Surviving Corporation, and all of the debts, liabilities,
obligations and duties of Merger Sub and the Company shall become the debts,
liabilities, obligations and duties of the Surviving Corporation.
Section 1.2 CLOSING. Subject to the terms and conditions of this
Agreement, the closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Smith, Anderson, Blount, Dorsett,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P., ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., local
time, as promptly as practicable (but not later than the second business day)
after all of the conditions set forth in Article VII are satisfied or waived, or
on such other date and at such other time and place as Parent and the Company
shall agree in writing (the date on which the Closing actually occurs being
referred to in this Agreement as the "Closing Date").
Section 1.3 EFFECTIVE TIME. The Merger shall become effective at the
time of filing of, or at such later time as is specified in, properly executed
articles of merger (the "Articles of Merger"), in the form required by and
executed in accordance with the TBCA, filed with the Secretary of State of the
State of Tennessee in accordance with the TBCA. Such filing shall be made
contemporaneously with, or immediately after, the Closing. When used in this
Agreement, the term "Effective Time" shall mean the date and time at which the
Merger shall become effective.
Section 1.4 CHARTER AND BYLAWS. The Charter of the Company as in effect
immediately prior to the Effective Time shall be amended at the Effective Time
so that Article 5 of such Charter reads in its entirety as follows: "The total
number of all classes of stock which the corporation shall have the authority to
issue is 1,000 shares of Common Stock, par value $0.01 per share.", and so that
Article 7 of such Charter shall be deleted in its entirety; and as so amended,
such
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Charter shall be the Charter of the Surviving Corporation until thereafter
amended in accordance with applicable Law. From and after the Effective Time,
the Bylaws of the Company in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation until thereafter amended in
accordance with applicable Law.
Section 1.5 DIRECTORS AND OFFICERS. From and after the Effective Time,
the directors of Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation and shall hold office from the Effective
Time until their respective successors are duly elected or appointed and
qualified in the manner provided in the Charter or Bylaws of the Surviving
Corporation or as otherwise provided by applicable Law. From and after the
Effective Time, the officers of Merger Sub immediately prior to the Effective
Time shall be the officers of the Surviving Corporation and shall hold office
from the Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the Charter or Bylaws of the
Surviving Corporation or as otherwise provided by applicable Law.
ARTICLE II
CONVERSION OF SHARES
Section 2.1 CONVERSION OF SHARES. At the Effective Time, by virtue of
the Merger and without any action on the part of any holder of any shares of
Company Common Stock (as defined below) or any shares of capital stock of Merger
Sub:
(a) Each share of Common Stock of the Company, no par value per share
("Company Common Stock"), issued and outstanding immediately prior to the
Effective Time (other than shares of Company Common Stock to be canceled
pursuant to Section 2.1(d) hereof) shall be converted into the right to receive
1.166 validly issued, fully paid and nonassessable shares of Common Stock of
Parent, par value $0.01 per share ("Parent Common Stock").
(b) Each share of Series B Convertible Preferred Stock, liquidation
preference $10.75 per share ("Company Series B Preferred Stock," and together
with the Company Common Stock and the Company's Series A Convertible Preferred
Stock, no par value per share, the "Company Capital Stock"), issued and
outstanding immediately prior to the Effective Time (other than any shares of
Company Series B Preferred Stock to be canceled pursuant to Section 2.1(d)
hereof) shall be converted into the right to receive 1.166 validly issued, fully
paid and nonassessable shares of Parent Common Stock (together with the
consideration per share of Company Common Stock specified in Section 2.1(a)
above, the "Merger Consideration," and as applied to any single share of Company
Capital Stock on the basis and in the
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amount specified in Section 2.1(a) above and this Section 2.1(b), as the case
requires, the "Per Share Merger Consideration").
(c) Each share of Common Stock of Merger Sub, no par value per share
("Merger Sub Common Stock"), issued and outstanding immediately prior to the
Effective Time shall be converted into one duly issued, validly authorized,
fully paid and nonassessable share of Common Stock, no par value per share, of
the Surviving Corporation.
(d) All shares of Company Capital Stock that are owned by the Company
as treasury stock and any shares of Company Capital Stock that are owned by
Parent or Merger Sub shall automatically be canceled and retired and shall cease
to exist, and no consideration shall be delivered or deliverable in exchange
therefor.
(e) Shares of Company Capital Stock converted pursuant to Section
2.1(a) or Section 2.1(b) shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate which immediately prior to the Effective Time represented such
outstanding shares (the "Certificates") shall cease to have any rights as
shareholders of the Company, except the right to receive the corresponding Per
Share Merger Consideration specified therein for each such share.
(f) If between the date of this Agreement and the Effective Time, the
outstanding shares of Parent Common Stock shall have been changed into a
different number of shares or a different class by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or similar
transaction, or if Parent pays an extraordinary dividend or distribution, the
number of shares of Parent Common Stock to be issued in the Merger shall be
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination, or similar transaction
or extraordinary dividend or distribution.
Section 2.2 EXCHANGE PROCEDURES.
(a) Parent shall designate a bank or trust company to act as exchange
agent hereunder (the "Exchange Agent"). From time to time as necessary after the
Effective Time, Parent shall deliver, in trust, to the Exchange Agent, for the
benefit of the holders of Certificates, for exchange in accordance with this
Article II through the Exchange Agent, certificates evidencing the shares of
Parent Common Stock issuable pursuant to Sections 2.1(a) and 2.1(b) above in
exchange for outstanding Certificates.
(b) As soon as practicable after the Effective Time, Parent shall cause
the Exchange Agent to mail to each holder of record of Certificates (i) a form
of letter of transmittal (in customary form) specifying that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent and (ii) instructions
for use in surrendering such Certificates in exchange for the corresponding Per
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Share Merger Consideration. Upon surrender of a Certificate for cancellation to
the Exchange Agent, together with such letter of transmittal, duly executed, and
such other documents as may be reasonably required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor (A)
that number of shares of Parent Common Stock equal to the product of the
corresponding Per Share Merger Consideration multiplied by the number of shares
of Company Common Stock or Company Series B Preferred Stock (as the case
requires) represented by the surrendered Certificate, and (B) any amounts to
which the holder is entitled pursuant to Section 2.3 hereof after giving effect
to any required tax withholdings, and the Certificate so surrendered shall
forthwith be canceled. Until surrendered as contemplated by this Section 2.2(b),
each Certificate (other than certificates representing shares to be canceled
pursuant to Section 2.1(d) above) shall be deemed from and after the Effective
Time to represent only the right to receive the corresponding Per Share Merger
Consideration upon such surrender. In no event will the holder of any such
surrendered Certificate be entitled to receive interest on any cash to be
received in the Merger. Neither the Exchange Agent nor any party hereto shall be
liable to a holder of shares of Company Capital Stock for any amount paid to a
public official pursuant to any applicable abandoned property, escheat or
similar Law.
(c) 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 Parent, the posting by such
Person of a bond, in such reasonable and customary amount as Parent may direct,
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue the corresponding Per Share Merger
Consideration in exchange for such lost, stolen or destroyed Certificate.
Section 2.3 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 who became such on
or after the Effective Time, shall be paid to any Person entitled by reason of
the Merger to receive certificates representing shares of Parent Common Stock,
until such Person shall have surrendered its Certificate(s) as provided in
Section 2.2 above. Subject to applicable Law, there shall be paid to each Person
receiving a certificate representing such shares of Parent Common Stock, 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 Certificate 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. 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
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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 such certificate representing shares
of Parent Common Stock and the distribution of such cash payment in a name other
than that of the registered holder of the Certificate so 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 a Certificate such amounts as Parent or the Exchange Agent are
required to deduct and withhold under the Code or any provision of state, local
or foreign tax law with respect to the making of such payment. 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 Certificate in respect of whom such deduction and
withholding were made by Parent or the Exchange Agent.
Section 2.4 FRACTIONAL SHARES.
(a) No certificates or scrip representing fractional shares of
Parent Common Stock shall be issued upon the surrender for exchange of
Certificates; no dividend or distribution with respect to shares shall be
payable on or with respect to any fractional share; and such fractional share
interests shall not entitle the owner thereof to vote or to any other rights of
a shareholder of Parent.
(b) In lieu of any such fractional shares, each holder of
record of Company Capital Stock who would otherwise be entitled to such
fractional shares shall be entitled to an amount in cash, without interest,
rounded to the nearest cent, equal to the product of (i) the amount of the
fractional share interest in a share of Parent Common Stock to which such holder
is entitled under Sections 2.1(a) or 2.1(b) (or would be entitled but for this
Section 2.4) and (ii) the average of the closing sale prices for the Parent
Common Stock on the Nasdaq National Market, as reported in The Wall Street
Journal, Northeast edition, for each of the ten consecutive trading days ending
on the fifth complete trading day prior to the Closing Date (not counting the
Closing Date).
(c) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Company Capital Stock in lieu
of any fractional share interests in Parent Common Stock, the Exchange Agent
shall make available such amounts, without interest, to the holders of Company
Capital Stock entitled to receive such cash.
Section 2.5 UNDISTRIBUTED PARENT COMMON STOCK. Any portion of the
certificates representing shares of Parent Common Stock issuable upon conversion
of Company Capital Stock pursuant to Section 2.1(a) or 2.1(b) hereof, together
with any dividends or distributions payable in respect thereof pursuant to
Section 2.3 hereof, which remains
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undistributed to the former holders of Company Capital Stock for six months
after the Effective Time shall be delivered to Parent, upon its request, and any
such former holders who have not theretofore surrendered their Certificates to
the Exchange Agent in compliance with this Article II shall thereafter look only
to Parent for payment of their claims for such shares of Parent Common Stock and
any dividends or distributions with respect to such shares of Parent Common
Stock (in each case, without interest thereon).
Section 2.6 OPTIONS.
(a) As soon as practicable following the date of this Agreement, the
Company's Board of Directors (or, if appropriate, any committee administering
the Option Plans (as defined below)) shall adopt such resolutions or take such
other actions as may be required to effect the following: (i) cause all options
to purchase shares of Company Common Stock (collectively "Options") granted by
the Company under the Company's stock option plans listed in Section 2.6 of the
Company Disclosure Schedule (collectively, the "Option Plans") that remain
outstanding immediately prior to the Effective Time to be assumed automatically
by Parent and converted automatically to entitle the holder thereof to subscribe
to, purchase or acquire from Parent, on the same terms and conditions as applied
under such Option immediately prior to the Effective Time (subject to the
acceleration of vesting to the extent provided under the corresponding Option
Agreements and/or employment agreements), the number of shares of Parent Common
Stock which equals the product of the corresponding Per Share Merger
Consideration times the number of shares of Company Common Stock subject to such
Option immediately prior to the Effective Time (rounded to the nearest whole
share), at an exercise price per share of Parent Common Stock equal to the
exercise price per share of Company Common Stock then specified with respect to
such Option divided by the corresponding Per Share Merger Consideration (rounded
to the nearest whole cent); provided, however, in the event of any Option which
is an incentive stock option as defined in Section 422 of the Code, the
aggregate adjusted exercise price of such Option and the number of shares to
which such Option is exercisable shall be computed in compliance in all respects
with the requirements of Section 424(a) of the Code, including the requirements
that such adjustments not confer on the holder of any Option any additional
benefits not currently provided under the corresponding Option Plan; (ii) make
such other changes to the Option Plans as it deems appropriate to give effect to
the Merger (subject to the approval of Parent, which shall not be unreasonably
withheld); (iii) ensure that no action is taken to cash out or redeem Options
prior to the Effective Time; and (iv) ensure that, after the Effective Time, no
Options may be granted under any Option Plan. As promptly as practicable after
the Effective Time, Parent shall issue to each holder of an Option a written
instrument evidencing its assumption by Parent.
(b) Parent and the Company shall take all corporate action necessary to
effectuate the assumption of the Options as set forth in Section 2.6(a) above,
and Parent shall take all corporate actions
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necessary to reserve for issuance a sufficient number of shares of Parent Common
Stock for delivery thereunder. Promptly (and in no event later than 20 calendar
days) after the Effective Time, Parent shall file a Registration Statement on
Form S-8 (or any successor form) under the Securities Act with respect to all
shares of Parent Common Stock subject to Options that may be registered on a
Form S-8.
Section 2.7 NO FURTHER RIGHTS; CLOSING OF TRANSFER BOOKS. All shares of
Parent Common Stock issued pursuant to this Article II shall be deemed to have
been issued and paid in full satisfaction of all rights pertaining to the
corresponding shares of Company Capital Stock, subject, however, to the
Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have been
declared or made by the Company on such shares of Company Capital Stock in
accordance with the terms of this Agreement or prior to the date of this
Agreement and which remain unpaid at the Effective Time. At the Effective Time,
the stock transfer books of the Company shall be closed, and no transfer of
shares of Company Capital Stock shall thereafter be made. None of Parent, Merger
Sub, the Company or the Exchange Agent shall be liable to any Person in respect
of any Merger Consideration (or dividends or distributions in respect thereof
pursuant to Section 2.3 hereof) delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law. If any Certificate has
not been surrendered prior to five years after the Effective Time (or
immediately prior to such earlier date on which Merger Consideration or any
dividends or distributions with respect to Parent Common Stock as contemplated
by Section 2.3 in respect of such Certificate would otherwise escheat to or
become the property of any Government Entity), any such shares, cash, dividends
or distributions in respect of such Certificate shall, to the extent permitted
by applicable Law, become the property of the Surviving Corporation, free and
clear of all claims or interest of any Person previously entitled thereto.
Section 2.8 FURTHER ASSURANCES. If, at any time after the Effective
Time, Parent shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable 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,
properties or assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or otherwise to
carry out this Agreement, the officers of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of the Company or
otherwise, all such deeds, bills of sale, assignments and assurances and to take
and do all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to or under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out the purposes of this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as
follows, subject to the exceptions and qualifications set forth in the Company
Disclosure Schedule dated as of the date of this Agreement and delivered as a
separate document (the "Company Disclosure Schedule"), each section of which
qualifies only the corresponding numbered representation(s) and warranty(ies)
and no others:
Section 3.1 ORGANIZATION AND GOOD STANDING. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Tennessee and has the corporate power and authority to carry on
its business as it is now being conducted. The Company is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified or in good standing would not have, individually
or in the aggregate, a Company Material Adverse Effect.
Section 3.2 CHARTER AND BYLAWS. True, correct and complete copies of
the Charter, Bylaws and equivalent Organizational Documents, all as amended to
date, of the Company and each of its Subsidiaries have been made available to
Parent. The Charter, Bylaws and equivalent Organizational Documents of the
Company and each of its Subsidiaries are in full force and effect. Neither the
Company nor any of its Subsidiaries is in violation of any provision of its
Organizational Documents.
Section 3.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 48,000,000
shares of Company Common Stock and 12,000,000 shares of Preferred Stock, no par
value (the "Company Preferred Stock"). As of December 14, 1998, (i) 21,574,795
shares of Company Common Stock were issued and outstanding and no shares were
held in the treasury of the Company, (ii) 2,800,000 shares of Company Series B
Preferred Stock were issued and outstanding, (iii) 4,800,000 shares of Series A
Preferred Stock were reserved for issuance in connection with the rights (the
"Company Rights") issued pursuant to the Rights Agreement dated as of June 1,
1995 (as amended from time to time, the "Company Rights Agreement"), and (iv)
3,524,776 shares of Company Common Stock were reserved for issuance upon the
exercise of outstanding Options. All of the issued and outstanding shares of
Company Capital Stock have been validly issued and are fully paid and
nonassessable, and none are subject to preemptive rights.
(b) Except as described in Section 3.3(a): (i) no shares of capital
stock or other equity securities of the Company are authorized, issued or
outstanding, or reserved for issuance, and there are no options, warrants or
other rights (including registration
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rights) or Contracts to which the Company or any of its Subsidiaries is a party
relating to the issued or unissued capital stock or other equity interests of
the Company or any of its Subsidiaries, requiring the Company or any of its
Subsidiaries to grant, issue or sell any shares of the capital stock or other
equity interests of the Company or any of its Subsidiaries by sale, lease,
license or otherwise; (ii) neither the Company nor any of its Subsidiaries has
any obligation, contingent or otherwise, to repurchase, redeem or otherwise
acquire any shares of the capital stock or other equity interests of the Company
or its Subsidiaries; (iii) neither the Company nor any of its Subsidiaries,
directly or indirectly, owns, or has agreed to purchase or otherwise acquire,
the capital stock or other equity interests of, or any interest convertible into
or exchangeable or exercisable for such capital stock or such equity interests,
of any Person which would be material in value to the Company; and (iv) there
are no voting trusts, proxies or other agreements or understandings to or by
which the Company or any of its Subsidiaries is a party or is bound with respect
to the voting of any shares of capital stock or other equity interests of the
Company or any of its Subsidiaries.
Section 3.4 COMPANY SUBSIDIARIES. Section 3.4 of the Company Disclosure
Schedule sets forth a list of each Subsidiary of the Company. Each Subsidiary of
the Company is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization.
Each Subsidiary of the Company has the corporate power and authority to carry on
its business as it is now being conducted. Each Subsidiary of the Company is
duly qualified as a foreign corporation authorized to do business, and is in
good standing, in each jurisdiction where the character of its properties owned
or held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified or in good standing would
not, individually or in the aggregate, have a Company Material Adverse Effect.
All of the outstanding shares of capital stock or other equity interests in each
of the Company's Subsidiaries have been validly issued, are fully paid and
nonassessable, and are owned by the Company or another Subsidiary of the Company
free and clear of all Encumbrances, and none are subject to preemptive rights.
Neither the Company nor any of its Subsidiaries has any equity or similar
interest in any other Person (other than the Company's investments in its
Subsidiaries).
Section 3.5 CORPORATE AUTHORITY.
(a) The Company has the requisite corporate power and authority to
execute and deliver this Agreement and, subject to the approval of the Merger by
the Company's shareholders, 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 its Board of Directors and, subject to the approval of the Merger by the
Company's shareholders, no other corporate action on the part of the Company is
necessary to authorize the execution and delivery by the
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Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company, constitutes a valid and binding agreement of the
Company and is enforceable against the Company in accordance with its terms. The
preparation and filing of the Proxy Statement (as defined in Section 3.16 below)
to be filed with the SEC has been duly authorized by the Board of Directors of
the Company. The Board of Directors of the Company has approved and adopted this
Agreement and the Stock Voting Agreement and the transactions contemplated
hereby and thereby pursuant to the TBCA, and recommended approval thereof by the
Company's shareholders.
(b) The affirmative vote of the holders of a majority of the shares of
Company Common Stock and Company Series B Preferred Stock outstanding on the
record date for the Company Shareholder Meeting, voting together as a class, and
the affirmative vote of a majority of the shares of Company Series B Preferred
Stock outstanding on the record date for the Company Shareholder Meeting, voting
separately as a class, are the only votes of the holders of any class or series
of the Company's capital stock necessary to approve the Merger. No vote of the
holders of any class or series of the Company's capital stock is necessary to
approve this Agreement or consummate any transaction contemplated hereby other
than the Merger. The Company has taken all steps necessary to exempt the
transactions contemplated by the Transaction Agreements irrevocably from any
applicable "fair price," "moratorium," "control share acquisition," "interested
shareholder" or other anti-takeover Law (however styled), including without
limitation the Tennessee Investor Protection Act, the Tennessee Business
Combination Act, the Tennessee Control Share Acquisition Act and the Tennessee
Authorized Corporate Protection Act, and from any applicable Organizational
Document or Contract to which the Company is a party containing any change of
control, "anti-takeover" or similar provision.
(c) The Company and the Board of Directors of the Company have taken
all action necessary to amend, and have amended, the Rights Plan in the form
attached as Exhibit B.
Section 3.6 COMPLIANCE WITH APPLICABLE LAW. (i) Each of the Company and
its Subsidiaries holds, and is in compliance with the terms of, all permits,
licenses, exemptions, orders and approvals of all Governmental Entities
necessary for the conduct of their respective businesses as currently conducted
("Company Permits"), except for failures to hold or to comply with such Company
Permits which could not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect; (ii) with respect to the
Company Permits, no action or proceeding is pending or, to the knowledge of the
Company, threatened in writing, and no fact exists or event has occurred that is
expected, individually or in the aggregate, to have a Company Material Adverse
Effect; (iii) the business of the Company and its Subsidiaries has been and is
being conducted in compliance with all applicable Laws, including without
limitation all Laws concerning privacy and/or data protection, except for
violations
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or failures to so comply that could not reasonably be expected, individually or
in the aggregate, to have a Company Material Adverse Effect; (iv) no
investigation or review by any Governmental Entity with respect to the Company
or its Subsidiaries is pending or, to the knowledge of the Company, threatened
in writing, other than, in each case, those which could not reasonably be
expected, individually or in the aggregate, to have a Company Material Adverse
Effect; and (v) neither the Company nor any of its Subsidiaries have received
any written communication in the past two years from a Governmental Entity that
alleges that the Company or any of its Subsidiaries is not in compliance in any
material respect with any applicable Law.
Section 3.7 NON-CONTRAVENTION. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated by
this Agreement and compliance with the provisions hereof will not, (i) result in
any violation of, or default (with or without notice or lapse of time, or both)
under, require any notice or consent under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the loss of a
material benefit under any Contract binding upon the Company or any of its
Subsidiaries, or result in the creation of any Encumbrance upon any of the
properties or assets of the Company or any of its Subsidiaries, (ii) conflict
with or result in any violation of any provision of the Organizational Documents
of the Company or any of its Subsidiaries, or (iii) conflict with or violate any
Law applicable to the Company or any of its Subsidiaries or any of their
respective properties or assets, other than, in the case of clauses (i) and
(iii), any such violation, conflict, default, right, loss or Encumbrance that if
occurring, or any such notice or consent if not given or obtained, could not
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect.
Section 3.8 GOVERNMENT APPROVALS; REQUIRED CONSENTS. No filing or
registration with, or authorization, consent or approval of, any Governmental
Entity or any other third party is required by or with respect to the Company or
any of its Subsidiaries in connection with the execution and delivery of this
Agreement or is necessary for the consummation of the transactions contemplated
hereby (including, without limitation, the Merger) except: (i) approval of this
Agreement by the Company's shareholders pursuant to the TBCA, (ii) the filing
with the SEC of the Proxy Statement (as defined in Section 3.16 below) and such
reports under the Exchange Act and any applicable state securities or "blue sky"
Laws as may be required in connection with this Agreement and the transactions
contemplated by this Agreement, (iii) the filing of a notification under the HSR
Act, (iv) the filing of Articles of Merger with the Secretary of State of the
State of Tennessee, (v) the consents, approvals, authorizations, permits,
filings and notifications listed in Section 3.8 of the Company Disclosure
Schedule and (vi) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to obtain or make could not
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect.
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Section 3.9 SEC DOCUMENTS AND OTHER REPORTS. The Company has filed
various reports, schedules, forms, statements and other documents (which are
publicly available) with the SEC pursuant to applicable federal securities Laws
from January 1, 1997 to the date of this Agreement (the "Company SEC
Documents"), and the Company SEC Documents constitute all of the documents
required to have been filed by the Company pursuant to such Laws for such
period. As of their respective dates, or if amended, as of the date of the last
such amendment, the Company SEC Documents complied, and all documents required
to be filed by the Company with the SEC after the date hereof and prior to the
Effective Time (the "Subsequent Company SEC Documents") will comply, in all
material respects, with the requirements of the Securities Act or the Exchange
Act, as the case may be, and none of the Company SEC Documents contained when
filed, and the Subsequent Company SEC Documents will not contain, any untrue
statement of a material fact or omitted, or will omit, to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, or are to be made, not
misleading. Except to the extent information contained in any Company SEC
Document has been revised or superseded by a later filed Company SEC Document,
none of the Company SEC Documents (including any and all financial statements
included therein) contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. The consolidated financial statements of the Company
included in the Company SEC Documents when filed fairly presented, and those
included in the Subsequent Company SEC Documents when filed will fairly present,
and the Company's unaudited consolidated financial statements for the eleven
(11) month period ended November 30, 1998 (the "Company Interim Balance Sheet
Date") which are included in the Company Disclosure Schedule (the "Company
Interim Financial Statements") fairly present, 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 respective periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments and to any
other adjustments described therein) and have been prepared in conformity with
GAAP (except, in the case of unaudited statements, (i) as permitted by Form 10-Q
of the SEC, and (ii) with respect to those for October and November 1998, as
specified in Section 3.9 of the Company Disclosure Schedule) applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto). Since December 31, 1997, the Company has not made any
change in the accounting practices or policies applied in the preparation of its
financial statements, except as have been required by GAAP.
Section 3.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in the Company SEC Documents, from December 31, 1997 (the "Company Balance Sheet
Date") to the date of this Agreement, the
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Company and its Subsidiaries have conducted their respective businesses and
operations in the ordinary and usual course consistent with past practice,
except for such business and operations as have not resulted and could not
reasonably be expected to result in a Company Material Adverse Effect, and there
has not occurred (i) any event, condition or occurrence having or that could
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect; (ii) any damage, destruction or loss (whether or not
covered by insurance) having or which reasonably could be expected to have,
individually or in the aggregate, a Company Material Adverse Effect; (iii) any
declaration, setting aside or payment of any dividend or distribution of any
kind by the Company on any class of its capital stock or any repurchase for
value by the Company of any of its capital stock (except upon the cashless
exercise of Options); (iv) any split, combination or reclassification of any
Company Capital Stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for shares of
Company Capital Stock; (v) any material increase in the compensation payable or
to become payable by the Company or any Subsidiary to any of its directors,
officers or key employees or the creation of or any material increase in any
bonus, insurance, pension, severance or other employee benefit plan, payment or
arrangement made to, for or with any such director, officer or key employee,
other than in the ordinary course of business consistent with past practice;
(vi) any labor dispute, other than routine matters none of which has had, or
reasonably could be expected to have, a Company Material Adverse Effect; (vii)
any entry by the Company or any of its Subsidiaries into any commitment or
transaction (including, without limitation, any borrowing or capital
expenditure) material (individually or in the aggregate) to the Company or its
Subsidiaries other than in the ordinary course of business; (viii) any material
elections with respect to Taxes by the Company or any of its Subsidiaries or
settlement or compromise by the Company or any of its Subsidiaries of any
material Tax liability or refund; (ix) any change by the Company or its
Subsidiaries in accounting methods, principles or practices except as required
by concurrent changes in GAAP; (x) any Contract to take any action described in
this Section 3.10; or (xi) any event during the period from the Company Balance
Sheet Date through the date of this Agreement that, if taken during the period
from the date of this Agreement through the Effective Time, would constitute a
breach of Section 5.1 hereof.
Section 3.11 ACTIONS AND PROCEEDINGS. Except as set forth in the
Company SEC Documents, there are no outstanding orders, judgments, injunctions,
awards or decrees of any Governmental Entity against the Company or any of its
Subsidiaries, any of their properties, assets or business, or, to the knowledge
of the Company, any of the Company's or its Subsidiaries' current or former
directors or officers (during the period served as such) or any other person
whom the Company or any of its Subsidiaries has agreed to indemnify, as such.
Except as set forth in the Company SEC Documents, there are no material
(individually or in the aggregate) actions, suits or legal, administrative,
regulatory or arbitration proceedings pending or, to
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the knowledge of the Company, threatened in writing against the Company or any
of its Subsidiaries, any of their properties, assets or business, or, to the
knowledge of the Company, any of the Company's or its Subsidiaries' current or
former directors or officers or any other person whom the Company or any of its
Subsidiaries has agreed to indemnify, as such; nor is there any reasonable basis
for any such action, suit or proceeding that, individually or in the aggregate,
could reasonably be expected to have a Company Material Adverse Effect.
Section 3.12 ABSENCE OF UNDISCLOSED LIABILITIES. Except for liabilities
or obligations which are accrued or reserved against on the balance sheet (or
reflected in the notes thereto) included in the Company Interim Financial
Statements, neither the Company nor any of its Subsidiaries has any material
(individually or in the aggregate) liabilities or obligations (whether absolute,
accrued, contingent or otherwise), other than liabilities or obligations
incurred in the ordinary course of business since the Company Interim Balance
Sheet Date or liabilities under this Agreement.
Section 3.13 CERTAIN CONTRACTS AND ARRANGEMENTS. Except for agreements
listed as exhibits to any Company SEC Document deposited for filing and filed
with the SEC in 1998, none of the Company or any of its Subsidiaries is a party
to any: (a) employment agreement; (b) collective bargaining agreement; (c)
Contract relating to the borrowing of money in excess of $5,000,000 by the
Company or any Subsidiary or the guaranty of any obligation for the borrowing of
money by the Company or any Subsidiary; (d) Contract which purports to limit in
any material respect the manner in which, or the localities in which, the
Company or any of its Subsidiaries is entitled to conduct all or any material
portion of the business of the Company or any of its Subsidiaries; or (e)
Contract of any sort, other than in the ordinary course of business, which (i)
is not terminable by the Company or a Subsidiary, as applicable, on ninety (90)
or fewer days' notice at any time without penalty and contemplates the receipt
or payment by the Company or a subsidiary of more than $1,000,000, (ii)
contemplates any joint venture, partnership or similar arrangement extending
beyond six (6) months or involving equity or investments of more than $500,000,
or (iii) is otherwise material to the Company and its Subsidiaries taken as a
whole. There is not, under any of the aforesaid obligations, any default or
event of default by the Company or other event which (with or without notice,
lapse of time or both) would constitute a default or event of default by the
Company or any of its Subsidiaries except for defaults or other events which,
individually or in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect.
Section 3.14 TAXES. (i) The Company and each of its Subsidiaries has
filed all federal, and all material state, local, foreign and provincial tax
returns, declarations, statements, reports, schedules, bonus and information
returns and any amendments to any of the preceding ("Tax Returns") required to
have been filed on or prior to the date hereof, or appropriate extensions
therefor have been
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properly obtained, and such Tax Returns are in all material respects true,
correct and complete; (ii) all federal, state, local, foreign and provincial
taxes of any kind and other assessments of a similar nature (whether imposed
directly or through withholding) including any interest, additions to tax or
penalties applicable thereto ("Taxes") shown to be due on such Tax Returns
either (x) have been timely paid or (y) extensions for payment have been
properly obtained or such Taxes are being timely and properly contested and, in
either case, adequate reserves pursuant to GAAP have been established on the
Company's consolidated financial statements with respect thereto; (iii) the
Company and each of its Subsidiaries have complied in all material respects with
all rules and regulations relating to the withholding of Taxes; (iv) neither the
Company nor any of its Subsidiaries has waived any statute of limitations in
respect of its Taxes or Tax Returns; (v) any Tax Returns of the Company and its
Subsidiaries covering periods through the Company's fiscal year ended December
31, 1994 relating to federal income Taxes have been examined by the Internal
Revenue Service ("IRS"), and Section 3.14 of the Company Disclosure Schedule
sets forth all pending audits, examinations or claims by any taxing authority of
any Tax Returns; (vi) except as have been advanced in pending audits or
examinations listed in Section 3.14 of the Company Disclosure Schedule, no
claims that have been communicated in writing to the Company by a taxing
authority in connection with the examination of any federal or material state
Tax Returns of the Company and its Subsidiaries are currently pending; (vii) all
deficiencies asserted or assessments made as a result of any examination of such
Tax Returns by any taxing authority have been paid in full or are being timely
and properly contested and proper accruals pursuant to GAAP have been
established on the Company's consolidated financial statements with respect
thereto; (viii) except for the potential liability for Taxes of the affiliated
groups listed in Section 3.14 of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries has any liability for Taxes of any Person
other than the Company and its Subsidiaries (a) under Treasury Regulations
Section 1.1502-6 (or any similar provision of applicable Law), (b) as a
transferee or successor, or (c) by virtue of any express or implied agreement or
otherwise; (ix) neither the Company nor any of its Subsidiaries has been a
member of any affiliated group within the meaning of Section 1504(a) of the Code
other than the affiliated group of which the Company is the common parent
corporation; (x) none of the property owned or used by the Company or its
Subsidiaries is subject to a tax benefit transfer lease executed in accordance
with Section 168(f)(8) of the Internal Revenue Code of 1954, as amended by the
Economic Recovery Act of 1981; (xi) none of the property owned by the Company or
its Subsidiaries is "tax exempt use property" within the meaning of Section
168(h) of the Code; (xii) none of the Company or its Subsidiaries has made any
payments, is obligated to make any payments, or is a party to any agreement that
under any circumstances could obligate any of the Company or its Subsidiaries to
make any payments that will not be deductible under either Section 162(m) or
Section 280G of the Code (or cause the Company or any of its Subsidiaries to
incur a payment to reimburse a person for a tax imposed under Code
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Section 4999); (xiii) none of the Company or its Subsidiaries is a party to any
Tax allocation agreement, any Tax sharing agreement, or any Tax indemnity
agreement; and (xiv) the Company has no reason to believe that any conditions
exist that could reasonably be expected to prevent the Merger from qualifying as
a reorganization within the meaning of Section 368(a) of the Code.
Section 3.15 INTELLECTUAL PROPERTY.
(a) The Company or one of its Subsidiaries owns or has the right to use
all Intellectual Property (as defined in Section 3.15(f) below) material to the
operation of the business of the Company and its Subsidiaries as currently
conducted or to products or services currently under development by the Company
or any of its Subsidiaries (collectively, "Material Intellectual Property"), and
has the right to use, license, sublicense or assign the same without material
liability to, or any requirement of consent from, any other person or party. All
Material Intellectual Property is either owned by the Company or its
Subsidiaries free and clear of all Encumbrances or is used pursuant to a license
agreement; each such license agreement is valid and enforceable and in full
force and effect; neither the Company nor any of its Subsidiaries is in material
default thereunder; and to the knowledge of the Company, no corresponding
licensor is in material default thereunder. None of the Material Intellectual
Property infringes or otherwise conflicts with any Intellectual Property or
other right of any Person; there is no pending or, to the knowledge of the
Company, threatened (in writing) litigation, adversarial proceeding,
administrative action or other challenge or claim relating to any Material
Intellectual Property; there is no outstanding judgment, order, writ, injunction
or decree relating to any Material Intellectual Property; to the knowledge of
the Company, there is currently no infringement by any Person of any Material
Intellectual Property; and the Material Intellectual Property owned, used or
possessed by the Company or its Subsidiaries is sufficient and adequate to
conduct the business of the Company and its Subsidiaries to the full extent as
such business is currently conducted.
(b) The Company and each of its Subsidiaries has taken reasonable steps
to protect, maintain and safeguard its respective Material Intellectual
Property, including any Material Intellectual Property for which improper or
unauthorized disclosure would impair its value or validity materially, and has
executed and required appropriate nondisclosure agreements and made appropriate
filings and registrations in connection with the foregoing.
(c) The Company or one of its Subsidiaries is the sole and exclusive
owner of all Owned Software (as defined in Section 3.15(f) below) that is
required to conduct the businesses of the Company and its Subsidiaries to the
extent such businesses are currently conducted, including, without limitation,
the products and services currently under development by the Company or any of
it Subsidiaries. Set forth in Section 3.15(c) of the Company Disclosure Schedule
is a true and complete list of all material Owned Software of the Company
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or any of its Subsidiaries. All of the Owned Software of the Company and any of
its Subsidiaries is Year 2000 Compliant (as defined in Section 3.15(f) below).
Set forth in Section 3.15(c) of the Company Disclosure Schedule is a true and
complete list of all material Third Party Software (as defined in Section
3.15(f) below) used by the Company or any of its Subsidiaries. To the Company's
knowledge, all material Third Party Software currently used by the Company or
any of its Subsidiaries is Year 2000 Compliant.
(d) The Company or one of its Subsidiaries is the sole and exclusive
owner of all Owned Databases (as defined in Section 3.15(f) below) that are
required to conduct the businesses of the Company and its Subsidiaries to the
extent such businesses are currently conducted, including, without limitation,
the products and services currently under development by the Company or any of
its Subsidiaries. Set forth in Section 3.15(d) of the Company Disclosure
Schedule is a true and complete list of all material Owned Databases of the
Company or any of its Subsidiaries. All of the Owned Databases of the Company or
any of its Subsidiaries are Year 2000 Compliant. Set forth in Section 3.15(d) of
the Company Disclosure Schedule is a true and complete list of all material
Third Party Databases (as defined in Section 3.15(f) below) used by the Company
or any of its Subsidiaries. To the Company's knowledge, all material Third Party
Databases currently used by the Company or any of its Subsidiaries are Year 2000
Compliant.
(e) No material confidential or trade secret information of the Company
or any of its Subsidiaries has been provided to any Person except subject to
written confidentiality agreements, except for any such disclosure which has not
resulted and could not reasonably be expected to result in a Company Material
Adverse Effect.
(f) As used in this Section 3.15:
(i) "Databases" means and includes all compilations of data
and all related documentation and written narratives of all procedures used in
connection with the collection, processing and distribution of data contained
therein, together with information that describes the attributes of certain data
and such data's relationship to other data, including, without limitation, (A)
whether the data must be numerical, alphabetic, or alphanumeric, (B) range or
type limitations of the data, (C) one-to-one, one-to-many, or many-to-many
relationships with other data, (D) file layouts, and (E) data formats.
(ii) "Intellectual Property" means all rights, privileges and
priorities provided under applicable Law relating to intellectual property,
whether registered or unregistered, including without limitation all (i) (a)
inventions, discoveries, processes, formulae, designs, methods, techniques,
procedures, concepts, developments, technology, mask works, and confidential
information, new and useful improvements thereof and know-how relating thereto,
whether or not patented or eligible for patent protection; (b) copyrights and
copyrightable works, including computer applications, programs,
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Software, Databases and related items; (c) trademarks, service marks, trade
names, brand names, product names, corporate names, logos and trade dress, the
goodwill of any business symbolized thereby, and all common-law rights relating
thereto; and (d) trade secrets, data and other confidential information; and
(ii) all registrations, applications, recordings, and licenses or other similar
agreements related to the foregoing;
(iii) "Owned Databases" means all Databases other than Third
Party Databases.
(iv) "Owned Software" means all Software other than Third
Party Software.
(v) "Software" means and includes all computer programs,
whether in source code, object code or other form (including without limitation
any embedded in or otherwise constituting part of a computer hardware device),
algorithms, edit controls, methodologies, applications, flow charts and any and
all systems documentation (including, but not limited to, data entry and data
processing procedures, report generation and quality control procedures), logic
and designs for all programs, and file layouts and written narratives of all
procedures used in the coding or maintenance of the foregoing.
(vi) "Third Party Databases" means Databases licensed or
leased to the Company or any of its Subsidiaries by third parties.
(vii) "Third Party Software" means Software licensed or leased
to the Company or its Subsidiaries by third parties, including commonly
available "shrink wrap" software copyrighted by third parties.
(viii) "Year 2000 Compliant" means, when used with respect to
any Software or Database, that such Software or Database will accept, receive,
input, calculate, compare, sort, store, extract, sequence, and otherwise process
data inputs and date values, and return and display date values, in a correct
and accurate manner, without interruption or abnormal end of process, regardless
of the dates used, whether before, on, or after January 1, 2000, for any date
value or values in the twentieth or twenty-first centuries.
Section 3.16 INFORMATION IN DISCLOSURE DOCUMENTS AND REGISTRATION
STATEMENT. None of the information supplied or to be supplied by the Company for
inclusion in (i) the Registration Statement on Form S-4 to be filed with the SEC
under the Securities Act for the purpose of registering the shares of Parent
Common Stock to be issued in connection with the Merger (the "Registration
Statement") or (ii) the joint proxy statement/prospectus to be distributed in
connection with the Company's meeting of shareholders to vote upon this
Agreement and the Parent's meeting of shareholders to vote upon the issuance of
shares of Parent Common Stock in the Merger (pursuant to the applicable rules of
the Nasdaq Stock Market)
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(the "Proxy Statement") will, in the case of the Registration Statement, at the
time it is filed with the SEC, at any time it is amended or supplemented and at
the time it becomes effective under the Securities Act or, in the case of the
Proxy Statement or any amendments thereof or supplements thereto, at the time of
the initial mailing of the Proxy Statement and any amendments or supplements
thereto, and at the time of each of the Company Shareholder Meeting and the
Parent Shareholder Meeting (as defined in Section 6.5 below), 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. As of the date of
its initial mailing and as of the date of each of the Company Shareholder
Meeting and the Parent Shareholder Meeting, the Proxy Statement will comply as
to form in all material respects with the applicable requirements of the
Exchange Act. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any statement made or incorporated by reference in
the Proxy Statement based upon information supplied by or on behalf of Parent or
Merger Sub for inclusion or incorporation by reference therein.
Section 3.17 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Section 3.17 of the Company Disclosure Schedule sets forth the name
of each Company Plan (as defined below) and of each bonus, deferred compensation
(together with a list of participants therein), incentive compensation, profit
sharing, salary continuation (together with a list of participants therein),
employee benefit, fringe benefit, stock purchase, stock option, employment,
severance, termination, golden parachute, consulting or supplemental retirement
plan or agreement (collectively, the "Benefit Plans"), true copies of which have
heretofore been made available to Parent. The Company has also delivered to
Parent true, complete and correct copies of (1) each Benefit Plan (or, in the
case of any unwritten Benefit Plans, descriptions thereof), (2) the two most
recent annual reports on Form 5500 (including all schedules and attachments
thereto) filed with the IRS with respect to each Benefit Plan (if any such
report was required by applicable Law), (3) the most recent summary plan
description (or similar document) for each Benefit Plan for which such a summary
plan description is required by applicable Law or was otherwise provided to plan
participants or beneficiaries and (4) each trust agreement and insurance or
annuity contract or other funding or financing arrangement relating to any
Benefit Plan. Each Company Plan and Benefit Plan has been administered in all
material respects in accordance with its terms and complies in all material
respects with ERISA, the Code and all other applicable Laws. All contributions
to, and payments from, the Benefit Plans that may have been required to be made
in accordance with the terms of the Benefit Plans, any applicable collective
bargaining agreement and, when applicable, Section 302 of ERISA or Section 412
of the Code, have been timely made. All such contributions to, and payments
from, the Benefit Plans, except those payments to be made from a trust qualified
under Section 401(a) of the Code, for any period ending before the Effective
Time that are not
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yet, but will be, required to be made, will be properly accrued and reflected in
the balance sheet included in the Company Interim Financial Statements. No
"reportable event" (within the meaning of Section 4043 of ERISA) has occurred
with respect to any Company Plan for which the 30-day notice requirement has not
been waived (other than with respect to the transactions contemplated by this
Agreement); neither the Company nor any of its ERISA Affiliates has withdrawn
from any Company Plan under Section 4063 of ERISA or Company Multiemployer Plan
(as defined below) under Section 4203 or 4205 of ERISA or has taken, or is
currently considering taking, any action to do so; and no action has been taken,
or is currently being considered, to terminate any Company Plan subject to Title
IV of ERISA. 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. As of the most recent valuation date for each Company Plan that
is a "defined benefit plan" (as defined in Section 3(35) of ERISA (hereinafter a
"Defined Benefit Plan")), there was not any amount of "unfunded benefit
liabilities" (as defined in Section 4001(a)(18) of ERISA) under such Defined
Benefit Plan, and the Company is not aware of any facts or circumstances that
would materially change the funded status of any such Defined Benefit Plan. The
Company has furnished to Parent the most recent actuarial report or valuation
with respect to each Defined Benefit Plan. The information supplied to the plan
actuary by the Company and any ERISA Affiliate (as defined below) for use in
preparing those reports or valuations was complete and accurate in all material
respects and the Company has no reason to believe that the conclusions expressed
in those reports or valuations are incorrect. Neither the Company nor any ERISA
Affiliate has (a) engaged in a transaction described in Section 4069 of ERISA
that could subject the Company to liability at any time after the date hereof or
(b) acted in a manner that could, or failed to act so as to, result in material
fines, penalties, taxes or related charges under (x) Section 502(c)(i)(1) of
ERISA, (y) Section 4071 of ERISA or (z) Chapter 43 of the Code. There are no
material (individually or in the aggregate) actions, suits or claims pending or,
to the knowledge of the Company, threatened in writing (other than routine
claims for benefits) with respect to any Company Plan or Benefit Plan. Neither
the Company nor any of its ERISA Affiliates has incurred or could reasonably be
expected to incur any material liability under or pursuant to Title IV of ERISA
that has not been satisfied in full. To the knowledge of the Company, no
material non-exempt prohibited transactions described in Section 406 of ERISA or
Section 4975 of the Code have occurred. All Company Plans that are intended to
be qualified under Section 401(a) of the Code have received a favorable
determination letter as to such qualification from the IRS, and no event has
occurred, either by reason of any action or failure to act, which could be
expected to cause the loss of any such qualification, and the Company is not
aware of any reason why any Company Plan and Benefit Plan is not so qualified in
operation. The Company has delivered to Parent (i) a copy of the most recent
determination letter received with respect to each Company Plan for which such a
letter has been issued, as well as a copy of any pending application for a
determination letter and (ii) a list of all Company Plan amendments as to which
a favorable
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determination letter has not yet been received. None of the Company, any of its
ERISA Affiliates or, to the knowledge of the Company, any trustee, administrator
or other fiduciary of any Benefit Plan or any agent of any of the foregoing has
engaged in any transaction or acted in a manner that could, or has failed to act
so as to, subject the Company, any such ERISA Affiliate or any trustee,
administrator or other fiduciary to any material liability for breach of
fiduciary duty under ERISA or any other applicable law. Neither the Company nor
any of its ERISA Affiliates knows or 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. As used herein: (i) "Company
Plan" means (x) 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(l) of ERISA) established or maintained by the Company or any Person that,
together with the Company, is treated as a single employer under Section 414(b),
(c), (m) or (o) of the Code (each, an "ERISA Affiliate") or to which the Company
or any of its ERISA Affiliates has contributed in the last six years 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.
(b) The consummation of the transactions contemplated by the
Transaction Agreements will not, either alone or in combination with any other
event that is reasonably likely to occur, (A) entitle any current or former
director, officer or employee of the Company or any of its ERISA Affiliates to
severance pay, golden parachute payments, unemployment compensation or any other
payment, except as expressly provided in this Agreement, or (B) accelerate the
time of payment or vesting, or increase the amount of compensation due any such
director, officer or employee.
(c) The list of welfare plans in Section 3.17 of the Company Disclosure
Schedule discloses whether each welfare plan is (i) unfunded, (ii) funded
through a "welfare benefit fund", as such term is defined in Section 419(e) of
the Code, or other funding mechanism or (iii) insured. Each such welfare plan
may be amended or terminated without material liability to the Company at any
time after the Effective Time. The Company and its ERISA Affiliates comply in
all material respects with the applicable requirements of Section 4980B(f) of
the Code with respect to each Benefit Plan that is a group health plan, as such
term is defined in Section 5000(b)(1) of the Code.
Section 3.18 ENVIRONMENTAL MATTERS.
(a) No Person (including any Governmental Entity) has asserted against
the Company or any of its Subsidiaries any written requests, claims or demands
for damages, costs, expenses or causes of action
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arising out of (i) the emission, disposal, discharge or other release or
threatened release of any hazardous substance, pollutant or contaminant (in each
case, as defined in or governed by any applicable Law) or any other substance
the release, disposal, treatment or storage of which is regulated under
applicable Law (all of the foregoing, collectively, "Hazardous Substances") in
connection with or related to any past or present facilities, properties or
assets owned, leased or operated by the Company or any of its Subsidiaries
currently or in the past (collectively, the "Company Facilities"), or (ii) any
actual or alleged injury to human health or the environment by reason of the
current condition or operation of the Company Facilities, or past conditions and
operations or activities on the Company Facilities.
(b) Neither the Company nor any Subsidiary is subject to any pending,
or to the knowledge of the Company, threatened (in writing) actions for damages,
costs or expenses or to any demands, claims, losses, administrative proceedings,
enforcement actions, or investigations in any case relating to or arising from
the generation, emission, disposal, discharge, release or threatened release,
treatment, or storage of any Hazardous Substance associated with the Company
Facilities or the Company's or any of its Subsidiaries' operations.
(c) The Company and its Subsidiaries hold, and are in material
compliance with, all permits and approvals of Government Entities required under
applicable Law to operate all Company Facilities, except when the failure to
hold such permits and approvals would not result in a Company Material Adverse
Effect.
(d) There is no environmental condition, situation or incident on, at
or concerning any Company Facility or the Company's or any of its Subsidiaries'
operations that has resulted in or could reasonably be expected to result in a
Material Adverse Effect on the Company.
Section 3.19 AFFILIATE TRANSACTIONS. Except as set forth in the Company
SEC Documents, there are no material Contracts or other material transactions
between the Company or any of its Subsidiaries, on the one hand, and any (i)
officer or director of the Company or of any of its Subsidiaries, (ii) record or
beneficial owner of five percent or more of any class of the voting securities
of the Company or (iii) affiliate (as such term is defined in Rule 12b-2
promulgated under the Exchange Act) of any such officer, director or beneficial
owner, on the other hand.
Section 3.20 OPINION OF FINANCIAL ADVISOR. The Company has received the
written opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") to the
effect that the consideration to be received in the Merger by the holders of
Company Capital Stock is fair to such holders from a financial point of view. A
true, correct and complete copy of the written opinion delivered by ▇▇▇▇▇▇
▇▇▇▇▇▇▇, which opinion shall be included in the Proxy Statement, as well as a
true and
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correct copy of the Company's engagement of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, have been delivered
to Parent by the Company.
Section 3.21 BROKERS. Other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, no broker, finder or
financial advisor retained by the Company is entitled to any brokerage, finder's
or other fee or commission from the Company in connection with the transactions
contemplated by this Agreement.
Section 3.22 POOLING. The Company does not know of any reason why the
Merger will not qualify as a pooling of interests transaction under APB Opinion
No. 16. Neither the Company nor any of its Subsidiaries nor, to its knowledge,
any of its affiliates has taken or agreed to take any action that (without
giving effect to any action taken or agreed to be taken by Parent or any of its
affiliates) would prevent Parent from accounting for the business combination to
be effected by the Merger as a pooling of interests transaction under APB 16.
Section 3.23 ACCOUNTS RECEIVABLE. All accounts receivable of the
Company and its Subsidiaries, whether or not reflected in the Company's
consolidated financial statements, represent in all material respects sales made
in the ordinary course of business, and the reserves shown on the Company's
consolidated financial statements have been established in accordance with GAAP,
consistently applied, and are considered by management of the Company to be
adequate.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to
the Company as follows, subject to the exceptions and qualifications set forth
in the Parent Disclosure Schedule dated as of the date of this Agreement and
delivered as a separate document (the "Parent Disclosure Schedule"), each
section of which qualifies only the corresponding numbered representation(s) and
warranty(ies) and no others:
Section 4.1 ORGANIZATION AND GOOD STANDING. (i) Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of North Carolina, (ii) Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Tennessee,
and (iii) each of Parent and Merger Sub has the corporate power and authority to
carry on its business as it is now being conducted. Parent is duly qualified as
a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified or in good standing would not have, individually
or in the aggregate a Parent Material Adverse Effect.
Section 4.2 ARTICLES OF INCORPORATION AND BYLAWS. True, correct and
complete copies of the Articles of Incorporation and Charter, respectively, and
Bylaws, each as amended to date, of Parent and Merger Sub have been made
available to the Company. The Articles of Incorporation and Charter,
respectively, and Bylaws of Parent and Merger Sub are in full force and effect.
Neither Parent nor Merger Sub is in violation of any provision of its
Organizational Documents.
Section 4.3 CAPITALIZATION.
(a) The authorized capital stock of Parent consists of (i) 200,000,000
shares of Common Stock, par value $0.01 per share, and (ii) 25,000,000 shares of
Preferred Stock, $0.01 par value per share ("Parent Preferred Stock"). As of the
date of this Agreement, (w) 77,952,919 shares of Parent Common Stock were issued
and outstanding, (x) no shares of Parent Preferred Stock were issued or
outstanding, (y) 5,006,106 shares of Parent Common Stock were reserved for
issuance upon the exercise of outstanding stock options, and (z) 3,474,250
shares of Parent Common Stock issuable upon conversion of Parent's outstanding 4
1/4% Convertible Subordinated Notes due May 31, 2000. The authorized capital
stock of Merger Sub consists of 1,000 shares of Common Stock, no par value per
share. As of the date of this Agreement, 100 shares of Merger Sub Common Stock
were issued and outstanding, all of which are owned by Parent. All of the issued
and outstanding shares of Parent Common Stock and Merger Sub Common Stock have
been validly issued and are fully paid and nonassessable, and
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none are subject to preemptive rights. The shares of Parent Common Stock to be
issued in connection with the Merger have been duly authorized and, when so
issued, will be fully paid and nonassessable, and will not be subject to
preemptive rights.
(b) Except as described in subsection (a) above, (i) no shares of
capital stock or other equity securities of Parent or Merger Sub are authorized,
issued or outstanding, or reserved for issuance, and there are no options,
warrants or other Contracts to which Parent is a party requiring Parent to
grant, issue or sell any shares of the capital stock or other equity interests
of Parent by sale, lease, license or otherwise; and (ii) Parent has no
obligation, contingent or otherwise, to repurchase, redeem or otherwise acquire
any shares of the capital stock or other equity interests of Parent.
Section 4.4 CORPORATE AUTHORITY.
(a) Each of Parent and Merger Sub has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated hereby have been duly authorized by their respective
Boards of Directors, and no other corporate action on the part of Parent or
Merger Sub (other than the approval of the issuance of shares of Parent Common
Stock in the Merger by the holders of not less than a majority of Parent's
Common Stock voted in accordance with the Nasdaq Stock Market rules) is
necessary to authorize the execution and delivery by Parent and Merger Sub of
this Agreement and the consummation by them of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Parent and Merger
Sub, constitutes a valid and binding agreement of Parent and Merger Sub and is
enforceable against Parent and Merger Sub in accordance with its terms. The
preparation and filing of the Registration Statement to be filed with the SEC
has been duly authorized by the Board of Directors of Parent. The respective
Boards of Directors of Parent and Merger Sub have approved and adopted this
Agreement and the transactions contemplated hereby pursuant to the North
Carolina Business Corporations Act and the TBCA, respectively, and the Board of
Directors of Merger Sub recommended approval thereof by its sole shareholder.
(b) Prior to execution and delivery of this Agreement, the Board of
Directors of Parent (at a meeting duly called and held) determined to recommend
to the Company's shareholders that they approve the issuance of shares of Parent
Common Stock in the Merger, as required by the applicable rules of the Nasdaq
Stock Market. Such approval is the only vote of the holders of any class or
series of Parent's capital stock necessary to approve the Merger or the
transactions contemplated by this Agreement.
Section 4.5 NON-CONTRAVENTION. The execution and delivery by Parent and
Merger Sub of this Agreement do not, and the consummation
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of the transactions contemplated hereby and compliance with the provisions
hereof will not, (i) result in any violation of, or default (with or without
notice or lapse of time, or both) under, require any notice or consent under, or
give rise to a right of termination, cancellation or acceleration of any
obligation or to the loss of a material benefit under any Contract binding upon
Parent or Merger Sub, or result in the creation of any Encumbrance upon any of
the properties or assets of Parent or Merger Sub, (ii) conflict with or result
in any violation of any provision of the Organizational Documents of Parent or
Merger Sub, or (iii) conflict with or violate any Law applicable to Parent or
Merger Sub or any of their respective properties or assets, other than, in the
case of clauses (i) and (iii), any such violation, conflict, default, right,
loss or Encumbrance that if occurring, or any such notice or consent that if not
given or obtained, could not reasonably be expected, individually or in the
aggregate, to have a Parent Material Adverse Effect.
Section 4.6 GOVERNMENT APPROVALS; REQUIRED CONSENTS. No filing or
registration with, or authorization, consent or approval of, any Governmental
Entity or any other third party is required by or with respect to Parent or
Merger Sub in connection with the execution and delivery of this Agreement by
Parent or Merger Sub or is necessary for the consummation of the transactions
contemplated hereby (including, without limitation, the Merger) except: (i)
approval by Parent's shareholders pursuant to the applicable rules of the Nasdaq
Stock Market, (ii) the filing with the SEC of the Registration Statement and
such reports under the Exchange Act, and any applicable state securities or
"blue sky" Laws as may be required in connection with this Agreement and the
transactions contemplated by this Agreement, (iii) the filing of a notification
under the HSR Act, (iv) the filing of Articles of Merger with the Secretary of
State of the State of Tennessee, (v) the consents, approvals, authorizations,
permits, filings and notifications listed in Section 4.6 of the Parent
Disclosure Schedule and (vi) such other consents, orders, authorizations,
registrations, declarations and filings the failure of which to obtain or make
could not reasonably be expected, individually or in the aggregate, to have a
Parent Material Adverse Effect.
Section 4.7 SEC DOCUMENTS AND OTHER REPORTS. Parent has filed various
reports, schedules, forms, statements and other documents (which are publicly
available) with the SEC pursuant to applicable federal securities Laws from
January 1, 1997 to the date of this Agreement (the "Parent SEC Documents"), and
the Parent SEC Documents constitute all of the documents required to have been
filed by Parent pursuant to such Laws for such period. As of their respective
dates, or if amended, as of the date of the last such amendment, the Parent SEC
Documents complied, and all documents required to be filed by Parent with the
SEC after the date hereof and prior to the Effective Time ("Subsequent Parent
SEC Documents") will comply, in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and none of the
Parent SEC Documents contained when filed, and the Subsequent Parent SEC
Documents will not contain when filed, any untrue statement of a material fact
or
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omitted, or will omit, to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, or are to be made, not misleading. Except to the extent
information contained in any Parent SEC Document has been revised or superseded
by a later filed Parent SEC Document, none of the Parent SEC Documents
(including any and all financial statements included therein) contains any
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
consolidated financial statements of Parent included in the Parent SEC Documents
when filed fairly presented, and those included in the Subsequent Parent SEC
Documents when filed will fairly present, 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 respective periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and to any other adjustments
described therein) and have been prepared in conformity with GAAP (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto). Since December 31, 1997, Parent has not made
any change in the accounting practices or policies applied in the preparation of
its financial statements, except as have been required by GAAP.
Section 4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in the Parent SEC Documents, since December 31, 1997, Parent has conducted its
business and operations in the ordinary and usual course consistent with past
practice, and there has not occurred (i) any event, condition or occurrence
having or that could reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect; or (ii) any declaration, setting
aside or payment of any dividend or distribution of any kind by Parent or Merger
Sub on any class of its capital stock.
Section 4.9 INFORMATION IN DISCLOSURE DOCUMENTS AND REGISTRATION
STATEMENT. None of the information supplied or to be supplied by Parent or
Merger Sub for inclusion in (i) the Registration Statement or (ii) the Proxy
Statement will, in the case of the Registration Statement, at the time it is
filed with the SEC, at any time it is amended or supplemented and at the time it
becomes effective under the Securities Act or, in the case of the Proxy
Statement or any amendments thereof or supplements thereto, at the time of the
initial mailing of the Proxy Statement and any amendments or supplements
thereto, and at the time of each of the Company Shareholder Meeting and the
Parent Shareholder Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Registration Statement, as of its effective
date, will comply as to form in all material respects with the requirements of
the Securities
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Act. Notwithstanding the foregoing, neither Parent nor Merger Sub makes any
representation or warranty with respect to any statement made or incorporated by
reference in the Registration Statement based upon information supplied by or in
behalf of the Company for inclusion or incorporation by reference therein.
Section 4.10 INTERIM OPERATIONS OF THE MERGER SUBSIDIARY. Merger Sub
was formed solely for the purpose of engaging in the transactions contemplated
by this Agreement, has engaged in no other business activities and has conducted
its operations only as contemplated hereby.
Section 4.11 COMPLIANCE WITH LAWS. The business of Parent and Merger
Sub has been and is being conducted in compliance with all applicable Laws,
except for violations or failures to so comply that could not reasonably be
expected, individually or in the aggregate, to have a Parent Material Adverse
Effect; and no investigation or review by any Governmental Entity with respect
to Parent or Merger Sub is pending or, to the knowledge of Parent, threatened in
writing, other than, in each case, those which could not reasonably be expected,
individually or in the aggregate, to have a Parent Material Adverse Effect.
Section 4.12 ACTIONS AND PROCEEDINGS. Except as set forth in the Parent
SEC Documents, there are no outstanding orders, judgments, injunctions, awards
or decrees of any Government Entity against Parent or any of its Subsidiaries,
any of their properties, assets or business, or, to the knowledge of Parent, any
of Parent's or its Subsidiaries' current or former directors or officers (during
the period served as such) or any other person whom the Company or any of its
Subsidiaries has agreed to indemnify, as such. Except as set forth in the Parent
SEC Documents, there are no material (individually or in the aggregate) actions,
suits or legal, administrative, regulatory or arbitration proceedings pending
or, to the knowledge of Parent, threatened in writing against Parent or any of
its Subsidiaries, any of their properties, assets or business, or, to the
knowledge of Parent, any of Parent's or its Subsidiaries' current or former
directors or officers or any other person whom Parent or any of its Subsidiaries
has agreed to indemnify, as such; nor is there any reasonable basis for any such
action, suit or proceeding that, individually or in the aggregate, could
reasonably be expected to have a Parent Material Adverse Effect.
Section 4.13 ABSENCE OF UNDISCLOSED LIABILITIES. Except for liabilities
or obligations which are accrued or reserved against on the most recent balance
sheet (or reflected in the notes thereto) included in the Parent SEC Documents,
neither Parent nor any of its Subsidiaries has any material (individually or in
the aggregate) liabilities or obligations (whether absolute, accrued, contingent
or otherwise), other than liabilities or obligations incurred in the ordinary
course of business since the date of such balance sheet or liabilities under
this Agreement.
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Section 4.14 BROKERS. Other than ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. ("Goldman"), the
fees and expenses of which will be paid by Parent, no broker, finder or
financial advisor retained by the Parent is entitled to any brokerage, finder's
or other fee or commission from Parent in connection with the transactions
contemplated by this Agreement. A true and correct copy of Parent's engagement
letter with Goldman has been delivered to the Company by Parent.
Section 4.15 POOLING. Parent does not know of any reason why the Merger
will not qualify as a pooling of interests transaction under APB Opinion No. 16.
Neither Parent nor any of its Subsidiaries nor, to its knowledge, any of its
affiliates has taken or agreed to take any action that (without giving effect to
any action taken or agreed to be taken by the Company or any of its affiliates)
would prevent Parent from accounting for the business combination to be effected
by the Merger as a pooling of interests transaction under APB 16.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. From
the date of this Agreement to the Effective Time, unless Parent shall otherwise
agree in writing (which agreement shall not be unreasonably withheld or
delayed), or as set forth in Section 5.1 of the Company Disclosure Schedule or
as expressly contemplated by this Agreement, the Company shall conduct, and
shall cause each of its Subsidiaries to conduct, its business only in the
ordinary and usual course consistent with past practice, and the Company shall
use, and shall cause each of its Subsidiaries to use, reasonable efforts to
preserve intact the present business organization, keep available the services
of its present officers and key employees, and preserve its existing
relationships with customers, suppliers, licensors, licensees, distributors and
other having business dealings with them. In addition, without limiting the
generality of the foregoing, unless Parent shall otherwise agree in writing
(which agreement shall not be unreasonably withheld or delayed), as set forth in
Section 5.1 of the Company Disclosure Schedule or as otherwise contemplated by
this Agreement, from the date of this Agreement to the Effective Time the
Company shall not, nor shall it permit any of its Subsidiaries to:
(a) (i) amend its Organizational Documents, (ii) split, combine or
reclassify any shares of its outstanding 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 outstanding capital stock, (iii) declare, set aside or pay any
dividend or other distribution payable in cash, stock or property on any class
of its capital stock, or (iv) directly or indirectly redeem or otherwise acquire
(except for deemed acquisitions upon cashless exercises of Options) any shares
of its capital stock, including without limitation the Series B Preferred
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Stock, or shares of the capital stock of any of its Subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such shares
or other securities;
(b) authorize for issuance, issue (except upon (i) the exercise of
stock options or warrants outstanding on the date of this Agreement and in
accordance with their present terms, or (ii) conversion of shares of Company
Series B Preferred Stock outstanding on the date of this Agreement and in
accordance with the Company's Charter, as amended), deliver, grant or sell or
agree to issue or sell any shares of, or rights to acquire or convertible into
any shares of, its capital stock or shares of the capital stock of any of its
Subsidiaries (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise);
(c) (i) merge, combine or consolidate with another Person, (ii) acquire
or purchase an equity interest in or a substantial portion of the assets of
another Person or otherwise acquire any material assets outside the ordinary
course of business and consistent with past practice or otherwise enter into any
material Contract, commitment or transaction outside the ordinary course of
business and consistent with past practice or (iii) sell, lease, license, waive,
release, transfer, encumber or otherwise dispose of any of its material assets
outside the ordinary course of business consistent with past practice;
(d) (i) other than in connection with existing credit facilities or
replacements thereof, incur, assume or prepay any indebtedness, obligations or
liabilities in excess of $500,000 (individually or in the aggregate) other than
in each case in the ordinary course of business consistent with past practice,
(ii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any person
other than a Subsidiary of the Company, in each case other than in the ordinary
course of business consistent with past practice, (iii) make any loans, advances
or capital contributions to, or investments in, any other Person, other than to
any Subsidiary of the Company, or (iv) issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or any of
its Subsidiaries;
(e) except as set forth in Section 5.1(e) of the Company Disclosure
Schedule, pay, satisfy, discharge or settle any material claim, liability or
obligation (absolute, accrued, contingent or otherwise), other than in the
ordinary course of business consistent with past practice or pursuant to
mandatory terms of any Company Contract in effect on the date hereof;
(f) modify or amend, or waive any benefit of, any non-competition
agreement to which the Company or any of its Subsidiaries is a party;
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(g) authorize or make capital expenditures in excess of $200,000
individually, or in excess of $1,000,000 in the aggregate except for those
projects set forth in Section 5.1 of the Company Disclosure Schedule;
(h) permit any insurance policy naming the Company or any Subsidiary of
the Company as a beneficiary or a loss payee to be cancelled (other than due to
circumstances beyond the Company's control) or terminated other than in the
ordinary course of business;
(i) (i) adopt, enter into, terminate or amend (except as may be
required by applicable Law) any employee plan, Contract or other Company Plan
for the current or future benefit or welfare of any director, officer or
employee of the Company or any of its Subsidiaries, (ii) except in the ordinary
course of business consistent with past practice, increase in any manner the
compensation, fringe benefits, severance or termination pay of, or pay any bonus
to, any director, officer or employee of the Company or any of its Subsidiaries;
or (iii) other than pursuant to Section 2.6 hereof, take any action to fund or
in any other way secure, or to accelerate or otherwise remove restrictions with
respect to, the payment of compensation or benefits under any employee plan,
agreement, contract, arrangement or other Company Plan;
(j) make any material change in its accounting or tax policies or
procedures, except as required by applicable Law or to comply with GAAP;
(k) take any action that (without giving effect to any action taken or
agreed to be taken by Parent or any of its affiliates) would prevent Parent from
accounting for the business combination to be effected by the Merger as a
pooling of interests;
(l) amend the Company Rights Agreement, redeem the Company Rights or
take any action with respect to, or make any determination under, the Company
Rights Agreement; or
(m) enter into any Contract with respect to any of the foregoing or
authorize any of, or commit or agree to take any of, the foregoing actions.
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ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 ACCESS AND INFORMATION. Each party hereto shall (and shall
cause its Subsidiaries and its and their respective officers, directors,
employees, auditors and agents to) afford to the other party and to such other
party's officers, employees, financial advisors, legal counsel, accountants,
consultants and other representatives (except to the extent not permitted under
applicable Law as advised by counsel) reasonable access during normal business
hours throughout the period prior to the Effective Time to all of its books and
records and its properties, plants and personnel and, during such period, shall
furnish promptly to the other party a copy of each report, schedule and other
document filed or received by it pursuant to the requirements of federal or
state securities Laws and all other information concerning its business,
properties and personnel as such other party may reasonably request. Unless
otherwise required by applicable Law, each party hereto agrees that it shall,
and it shall cause its Subsidiaries and its and their respective officers,
directors, employees, auditors and agents to, hold in confidence all non-public
information so acquired and to use such information solely for purposes of
effecting the transactions contemplated by this Agreement as set forth in the
Confidentiality Agreement executed by Parent and Company dated December 1998
(the "Confidentiality Agreement"). Without limiting the generality of the
foregoing, the Company shall, within two business days of request therefor,
provide to Parent the information described in Rule 14a-7(a)(2)(ii) under the
Exchange Act and any information to which a holder of Company Common Stock would
be entitled under Section ▇▇-▇▇-▇▇▇ of the TBCA (assuming such holder met the
requirements of such section).
Section 6.2 NO SOLICITATION.
(a) Prior to the Effective Time, the Company agrees that it shall not,
nor shall it authorize and permit its Subsidiaries or affiliates to, nor shall
it authorize or permit any director, officer, employee or agent of, or any
investment banker, attorney or other advisor or, representative of, the Company
or any of its Subsidiaries to, directly or indirectly, (i) solicit, initiate or
encourage (including by way of furnishing or disclosing non-public information)
any inquiries or the making of any proposal with respect to any merger,
consolidation or other business combination involving the Company or any
Subsidiary of the Company or the acquisition of all or any significant part of
the assets or capital stock of the Company or any Subsidiary of the Company (an
"Acquisition Transaction") or (ii) negotiate, explore or otherwise engage in
discussions with any Person (other than Parent and its representatives) with
respect to any Acquisition Transaction, or which may reasonably be expected to
lead to a proposal for an Acquisition Transaction or enter into any Contract or
understanding with respect to any such Acquisition Transaction or which would
require it to abandon, terminate or fail to
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consummate the Merger or any other transaction contemplated by this Agreement;
provided, however, that prior to receipt of the approval of this Agreement and
the transactions contemplated hereby by the shareholders of the Company, the
Company may, to the extent required by the fiduciary obligations of the
Company's Board of Directors, as determined in good faith by it based on the
advice of outside counsel, in response to any such proposal for an Acquisition
Transaction that was not solicited by the Company and that did not otherwise
result from a breach or a deemed breach of this Section 6.2(a), and subject to
compliance with Section 6.2(c), (x) furnish information with respect to the
Company to the Person making such proposal pursuant to a confidentiality
agreement not less restrictive of the other party than the Confidentiality
Agreement and (y) participate in negotiations regarding such proposal. Without
limiting the foregoing, it is agreed that any violation of the restrictions set
forth in the preceding sentence by any executive officer of the Company or any
of its Subsidiaries or any affiliate, director or investment banker, attorney or
other advisor or representative of the Company or any of its Subsidiaries,
whether or not such person is purporting to act on behalf of the Company or any
of its Subsidiaries or otherwise, shall be deemed to be a breach of this Section
6.2(a) by the Company.
(b) Neither the Company's Board of Directors nor any committee thereof
shall (i) withdraw or modify, in a manner adverse to Parent or Merger Sub, the
approval or recommendation by the Company's Board of Directors or any such
committee of this Agreement or the Merger, (ii) approve any letter of intent,
agreement in principle, acquisition agreement or similar agreement relating to
any Acquisition Transaction or (iii) approve or recommend any Acquisition
Transaction; provided, however, that the Company's Board of Directors may take
any action specified in (i), (ii) or (iii) in the event that prior to the
approval of this Agreement and the transactions contemplated hereby by the
shareholders of the Company, (x) the Company's Board of Directors determines in
good faith, after it has received a Superior Proposal as defined below and after
it has received advice from outside counsel that the failure to do so would
result in a reasonable possibility that the Company's Board of Directors would
breach its fiduciary duty under applicable law, (y) the Company has notified the
Parent in writing of the determination set forth in clause (x) above, and (z) at
least five calendar days following receipt by Parent of any notice referred to
in clause (y) such Superior Proposal remains a Superior Proposal and the
Company's Board of Directors has again made the determination in clause (x)
above; and further provided that neither the Company, its Board of Directors,
nor any committee thereof shall take any action specified in clause (i), (ii) or
(iii) above without first terminating this Agreement pursuant to Section 8.1(e).
As used herein, "Superior Proposal" means a bona fide, written and unsolicited
proposal or offer (including a new or unsolicited proposal received by the
Company after the execution of this Agreement from a Person whose initial
contact with the Company may have been solicited by the Company or its
representatives prior to the execution of this Agreement) made by any Person or
group (other than Parent or any of its Subsidiaries) with respect to an
Acquisition Transaction on terms
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which the Board of Directors of the Company determines in good faith, and in the
exercise of reasonable judgement (based on the advice of independent financial
advisors and outside legal counsel), to be reasonably capable of being
consummated and to be superior from a financial point of view to the holders of
Company Common Stock than the transactions contemplated hereby, taking into
consideration all elements of the transactions contemplated hereby including,
without limitation, the non-taxable element of said transactions (based on the
written opinion, with only customary qualifications, of the Company's financial
advisor).
(c) The Company agrees that, as of the date hereof, it, its
Subsidiaries and affiliates, and the respective directors, officers, employees,
agents and representatives of the foregoing, shall immediately cease and cause
to be terminated any existing activities, discussions and negotiations with any
Person (other than Parent and its representatives) conducted heretofore with
respect to any Acquisition Transaction. The Company agrees to advise Parent
promptly orally and in writing of any inquiries or proposals received by, any
such information requested from, and any requests for negotiations or
discussions sought to be initiated or continued with, the Company, its
Subsidiaries or affiliates, or any of the respective directors, officers,
employees, agents or representatives of the foregoing, in each case from a
Person (other than Parent and its representatives) with respect to an
Acquisition Transaction or that reasonably could be expected to lead to any
Acquisition Transaction, and the identity of the Person making such proposal for
an Acquisition Transaction or inquiry. The Company shall keep Parent reasonably
informed of the status including any change to the material terms of any such
proposal for an Acquisition Transaction or inquiry.
Section 6.3 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 it or any of its Subsidiaries is a party.
Section 6.4 REGISTRATION STATEMENT AND PROXY STATEMENT.
(a) As promptly as practicable, Parent and the Company shall in
consultation with each other prepare and file with the SEC the joint Proxy
Statement and Registration Statement in preliminary form. Each of the Company
and Parent shall use reasonable efforts to have the Proxy Statement cleared by
the SEC and the Registration Statement declared effective as soon as
practicable. The Company shall furnish Parent with all information concerning
the Company and the holders of its capital stock and shall take such other
action Parent may reasonably request in connection with the Registration
Statement and the issuance of shares of Parent Common Stock in connection with
the Merger. If, at any time prior to the Effective Time, any event or
circumstance relating to the Company, any Subsidiary of the Company, Parent or
any Subsidiary of Parent, or their respective officers or directors, should be
discovered by such party which should be set
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forth in an amendment or a supplement to the Registration Statement or Proxy
Statement, such party promptly shall inform the other thereof and take
appropriate action in respect thereof.
(b) The Company shall use reasonable efforts to cause to be delivered
to Parent a letter from Ernst & Young LLP, the Company's independent public
accountants, dated a date within two business days before the date on which the
Registration Statement shall become effective (and thereafter brought down to a
date within two business days of the Closing Date) and addressed to Parent, in
form and substance reasonably satisfactory to Parent and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement.
(c) Parent shall use reasonable efforts to cause to be delivered to the
Company a letter from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, Parent's independent public
accountants, dated a date within two business days before the date on which the
Registration Statement shall become effective (and thereafter brought down to a
date within two business days of the Closing Date) and addressed to the Company,
in form and substance reasonably satisfactory to the Company and customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement.
Section 6.5 SHAREHOLDER APPROVAL.
(a) Subject to Section 6.2, the Company, acting through its Board of
Directors, shall (i) promptly and duly call, give notice of, convene and hold as
soon as practicable following the date upon which the Registration Statement
becomes effective a meeting of the holders of Company Common Stock for the
purpose of voting to approve this Agreement and the transactions contemplated
hereby (the "Company Shareholder Meeting"), and, (ii) recommend approval and
adoption of this Agreement and the transactions contemplated hereby to the
shareholders of the Company and include in the Proxy Statement such
recommendation and (iii) take all reasonable action to solicit and obtain such
approval.
(b) Parent, acting through its Board of Directors, shall promptly and
duly call, give notice of, convene and hold as soon as practicable following the
date upon which the Registration Statement becomes effective a meeting of the
holders of Parent Common Stock for the purpose of voting to approve the issuance
of shares of Parent Common Stock in the Merger, as required by the applicable
rules of the Nasdaq Stock Market (the "Parent Shareholder Meeting"), and
recommend approval for that purpose, include such recommendation in the Proxy
Statement, and take all reasonable action to solicit and obtain such approval.
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(c) Each of Parent and the Company shall cause the definitive Proxy
Statement to be mailed to its respective shareholders as soon as practicable
following the date on which the Proxy Statement is cleared by the SEC and the
Registration Statement is declared effective; provided, however, that all
mailings to either party's shareholders in connection with the Merger, including
without limitation the Proxy Statement, shall be subject to the prior review,
comment and written approval of the other party, which such other party shall
not withheld or delay unreasonably.
Section 6.6 AFFILIATES. Prior to the mailing date of the Proxy
Statement, the Company shall cause to be prepared and delivered to Parent a list
(reasonably satisfactory to counsel for Parent) identifying each Person who, at
the time of the Company Shareholder Meeting, may be deemed to be an "affiliate"
of the Company, as such term is used in paragraphs (c) and (d) of Rule 145 under
the Securities Act (the "Company Rule 145 Affiliates"). The Company shall use
reasonable efforts to cause each Person who is identified as a Company Rule 145
Affiliate in such list to deliver to Parent as soon as possible, and not later
than the mailing date for the Proxy Statement, a written agreement,
substantially in the form of Exhibit C hereto.
Section 6.7 COMBINED COMPANY FINANCIAL STATEMENTS. Parent shall use
reasonable efforts to file a Form 8-K with the SEC within thirty (30) days after
the end of the first full calendar month after the Effective Time to publish
financial results covering at least thirty (30) days of combined operations of
Parent and the Surviving Corporation.
Section 6.8 REASONABLE EFFORTS.
(a) Upon the terms and subject to the conditions herein provided and
applicable legal requirements, each of the parties hereto agrees to use
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, and to assist and cooperate with the other parties hereto in
doing, as promptly as practicable, all things necessary, proper or advisable
under applicable Laws to ensure that the conditions set forth in Article VII are
satisfied and to consummate and make effective the transactions contemplated by
this Agreement; provided, however, that the Company shall not, without Parent's
prior written consent, and Parent shall not be required to, divest or hold
separate or otherwise take or commit to take any other similar action with
respect to any assets, businesses or product lines of Parent, the Company or any
of their respective Subsidiaries.
(b) Subject to the proviso to Section 6.8(a) hereof, each of the
parties shall use reasonable efforts to obtain as promptly as practicable all
consents, waivers, approvals, authorizations or permits of, or registration or
filing with or notification to (any of the foregoing being a "Consent"), of any
Governmental Entity or any other Person required in connection with, and waivers
of any violations, defaults or breaches that may be caused by, the
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consummation of the transactions contemplated by the Transaction Agreements. In
connection with and without limiting the foregoing, the Company and the
Company's Board of Directors shall (i) take all action necessary to ensure that
no state takeover statute or similar Law is or becomes applicable to any
Transaction Agreement or any transaction contemplated thereby and (ii) if state
takeover statute or similar Law becomes applicable to any Transaction Agreement
or any transaction contemplated thereby, take all action necessary to ensure
that the Merger and such other transaction may be consummated as promptly as
practicable on the terms contemplated by the Transaction Agreements.
(c) Each party hereto shall inform the other promptly of any material
communication from the SEC, the United States Federal Trade Commission, the
United States Department of Justice or any other Governmental Entity regarding
any of the transactions contemplated by the Transaction Agreements. If any party
hereto or any affiliate thereof receives a request for additional information or
documentary material from any such Governmental Entity with respect to the
transactions contemplated by the Transaction Agreements, then such party shall
use reasonable efforts to cause to be made, as soon as reasonably practicable
and after consultation with the other party, an appropriate response in
compliance with such request.
(d) Without limiting the generality of the foregoing and subject to the
proviso to Section 6.8(a) hereof, Parent and the Company will use their
respective reasonable efforts to obtain all authorizations or waivers required
under the HSR Act to consummate the transactions contemplated by the Transaction
Agreements, including, without limitation, making all filings with the Antitrust
Division of the Department of Justice ("DOJ") and the Federal Trade Commission
("FTC") required in connection therewith (the initial filing to occur no later
than ten business days following the execution and delivery of this Agreement)
and responding as promptly as practicable to all inquiries received from the DOJ
or FTC for additional information or documentation. Each of Parent and the
Company shall furnish to the other such necessary information and reasonable
assistance as the other may request in connection with its preparation of any
filing or submission which is necessary under the HSR Act. Parent and the
Company shall keep each other apprised of the status of any communications with,
and any inquiries or requests for additional information from, the FTC and the
DOJ.
(e) The parties hereto intend the Merger to qualify as a reorganization
under Section 368(a) of the Code. Each of the parties hereto shall, and shall
cause its respective Subsidiaries to, and shall use reasonable efforts to cause
its respective affiliates to, use its and their respective reasonable efforts to
cause the Merger to so qualify. No party hereto nor any affiliate thereof shall
take any action prior to or after the Effective Time that would cause the Merger
not to qualify under these Sections of the Code, and the parties hereto shall
take the position for all purposes that the Merger qualifies as a reorganization
under such Sections of the Code.
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Section 6.9 PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult
with each other before issuing any press releases or making any public statement
with respect to the transactions contemplated by the Transaction Agreements and
shall not issue any such press release or such public statement prior to such
consultation and without the approval of the other (which approval shall not
unreasonably be withheld), except as may be required by applicable law or
obligations pursuant to any listing agreement with any national securities
exchange.
Section 6.10 DIRECTORS' AND OFFICERS' INDEMNIFICATION; INSURANCE.
(a) Parent and the Company agree that all rights to indemnification and
exculpation now existing in favor of any employee, agent, director or officer of
the Company and its Subsidiaries (the "Indemnified Parties"), as provided in
their respective Charters or Bylaws and their respective Indemnification
Agreements, shall survive the Merger and shall continue in full force and effect
for a period of four (4) years after the Effective Time; provided that in the
event any claim or claims are asserted or made within such four (4) year period,
all rights to indemnification in respect of any such claim shall continue until
final disposition of such claim. Parent hereby agrees, effective as of the
Effective Time, to guarantee the Company's indemnification and exculpation
obligations existing in favor of the Indemnified Parties, as provided in the
Company's and its Subsidiaries' respective applicable Charters or Bylaws and
their respective Indemnification Agreements, for the period of time set forth
under this Section 6.10(a).
(b) Parent agrees that from and after the Effective Time, the Surviving
Corporation shall cause the policies of director and officer liability insurance
maintained by the Company on the date hereof and listed in Section 6.10 of the
Company Disclosure Schedule to be maintained in effect for the period of time
directors and officers are entitled to indemnification under Section 6.10(a)
above; provided that the Surviving Corporation may substitute therefor policies
of at least the same coverage containing terms and conditions which are no less
advantageous to the Indemnified Parties, provided that such substitution shall
not result in any gaps or lapses in coverage with respect to matters occurring
prior to the Effective Time; and provided, further, that that the Surviving
Corporation shall not be required to pay an annual premium in excess of 150% of
the last annual premium paid by the Company prior to the date hereof (the
"Maximum Amount") (which premium is set forth in Section 6.10 of the Company
Disclosure Schedule), and if the Surviving Corporation is unable to obtain the
insurance required by this Section 6.10 for the Maximum Amount, it shall obtain
as much comparable insurance as possible for an annual premium equal to the
Maximum Amount.
(c) In the event Parent merges or is acquired in a transaction in which
it is not the surviving corporation, or if Parent sells substantially all of its
assets, Parent will cause proper provision to
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be made in such transaction so that Parent's successor or acquiror will assume
the obligations set forth in Sections 6.10(a) and (b) above. The parties agree
that the Company's directors and officers are the third party beneficiaries of,
and entitled to enforce, the provisions of this Section 6.10.
Section 6.11 EXPENSES. Except as otherwise set forth in Sections 8.2(b)
and 8.2(c), each party hereto shall bear its own costs and expenses in
connection with this Agreement and the transactions contemplated hereby.
Section 6.12 LISTING APPLICATION. Parent shall use reasonable efforts
to cause the shares of Parent Common Stock to be issued pursuant to this
Agreement in the Merger to be listed for trading on the Nasdaq National Market.
Section 6.13 SUPPLEMENTAL DISCLOSURE. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i) the
occurrence, or non-occurrence, of any event the occurrence, or non-occurrence,
of which would be likely to cause (x) any representation or warranty contained
in this Agreement to be untrue or inaccurate or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied and
(ii) any failure of the Company or Parent, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 6.13 shall not have any effect for the purpose of determining the
satisfaction of the conditions set forth in Article VII of this Agreement or
otherwise limit or affect the remedies available hereunder to any party.
Section 6.14 POOLING OF INTERESTS. Each of the Company and Parent will
use reasonable efforts to cause the transactions contemplated by this Agreement,
including the Merger, to be accounted for as a pooling of interests under
Opinion 16 of the Accounting Principles Board and applicable SEC rules and
regulations, and such accounting treatment to be accepted by each of the
Company's and Parent's independent public accountants, and by the SEC,
respectively, and each of the Company and Parent agrees that it will not
voluntarily take any action that would cause such accounting treatment not to be
obtained.
Section 6.15 TRANSFER TAXES. All stock transfer, real estate transfer,
documentary, stamp, recording and other similar taxes (including interest,
penalties and additions to any such Taxes) ("Transfer Taxes") incurred in
connection with the transactions contemplated by this Agreement shall be paid by
the Surviving Corporation, and the Company shall cooperate with Merger Sub and
Parent in preparing, executing and filing any returns with respect to such
Transfer Taxes.
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Section 6.16 BOARD OF DIRECTORS. As soon as practicable after the
Effective Time, Parent shall cause ▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇ to be designated as members of Parent's Board of Directors, such
designations to be effective as of the first meeting of Parent's Board of
Directors subsequent to the Effective Time. Parent also shall cause ▇▇▇▇ ▇.
▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ to be nominated for positions on Parent's
Board of Directors at the first meeting of Parent's shareholders subsequent to
the Effective Time, with at least one such nomination to be for a three-year
term and at least one for a two-year term. Parent shall take any and all action
necessary to cause seats to be available on its Board of Directors to enable
Parent to satisfy its commitments under this Section 6.16.
Section 6.17 CONTINUING EMPLOYEES.
(a) For a period of one (1) year following the Effective Time, Parent
shall, or shall cause the Surviving Corporation to, provide benefits to
continuing employees of the Company and its Subsidiaries ("Continuing
Employees") that, in the aggregate, are no less favorable than the benefits
provided, in the aggregate, to similarly situated employees of Parent.
Notwithstanding the foregoing, nothing in this Section 6.17 shall require (i)
the continuation of any benefit plan of any variety or prevent the amendment or
termination thereof (subject to the provision, in the aggregate, of the benefits
as provided in the preceding sentence) or (ii) Parent or the Surviving
Corporation to continue or maintain the employment of any Continuing Employee.
(b) With respect to any benefits plans of Parent or its Subsidiaries in
which the Continuing Employees participate after the Effective Time, Parent
shall, or shall cause the Surviving Corporation to, use reasonable efforts to:
(i) waive any limitations as to pre-existing conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable to
the Continuing Employees under any welfare benefit plan in which such employees
may be eligible to participate after the Effective Time (provided, however, that
no such waiver shall apply to a pre-existing condition of any Continuing
Employee who was, as of the Effective Time, excluded from participation in a
Company benefit plan by nature of such pre-existing condition), (ii) provide
each Continuing Employee with credit for any co-payments and deductibles paid
prior to the Effective Time during the year in which the Effective Time occurs
in satisfying any applicable deductible or out-of-pocket requirements under any
welfare benefit plan in which such employees may be eligible to participate
after the Effective Time, and (iii) recognize all service of the Continuing
Employees with the Company for all purposes (including without limitation
purposes of eligibility to participate, vesting credit, entitlement for
benefits, and benefit accrual) in any benefit plan in which such employees may
be eligible to participate after the Effective Time, except to the extent such
treatment would result in duplicative accrual of benefits for the same period of
service. For one (1) year from the Effective Time, Parent either shall (i) cause
the Company's health and dental insurance plan to remain in effect in
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substantially its form as of the Effective Time (which maintenance shall be
deemed to satisfy Parent's obligation pursuant to the preceding sentence with
respect to benefits of the character covered by such plan) or (ii) hold each
Continuing Employee covered by such plan as of the Effective Time harmless
against any increase in standard monthly premium expenses for family, dependent
or employee coverage (as applicable immediately prior to the Effective Time)
incurred by such Continuing Employee on account of Parent's substitution of a
different plan providing benefits of substantially the same character.
(c) Except (i) for cause or (ii) upon the approval of a majority of the
members of a committee of Parent's Board of Directors comprised of the three
Company representatives named in Section 6.16 above and two other members of
Parent's Board of Directors designated by its Chairman, Parent shall not
terminate the employment of any Continuing Employee listed on Section 6.17 of
the Company Disclosure Schedule prior to the corresponding date specified
adjacent to such Continuing Employee's name thereon. In the event that one of
the Company representatives is unable to serve, the two remaining Company
representatives may either (a) choose the fifth member of the committee from
Parent's Board of Directors, or (b) reduce the size of the committee to three
members, comprised of the two remaining Company representatives and one other
member of Parent's Board of Directors designated by its Chairman.
6.18 RESIGNATIONS. The Company has caused each officer and director of
the Company or any of its Subsidiaries requested by Parent to do so to resign
from each such position on or prior, and effective not later than, the Effective
Time.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1 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 satisfaction or waiver at or prior to the Closing Date of the following
conditions:
(a) SHAREHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by (i) the requisite
vote (as described in Section 3.5(b)) of the shareholders of the Company in
accordance with applicable Law, and (ii) the requisite vote of the shareholders
of Parent in accordance with the applicable rules of the Nasdaq Stock Market.
(b) GOVERNMENT APPROVALS. All authorizations, consents, orders,
declarations or approvals of, or filings with, or terminations or expirations of
waiting periods imposed by, any Government Entity, which the failure to obtain,
make or occur would have the effect of
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making the Merger or any of the transactions contemplated hereby illegal or
would have a Material Adverse Effect on Parent or the Surviving Corporation or
would materially impair the operations of the Surviving Corporation, assuming
the Merger had taken place, shall have been obtained, shall have been made or
shall have occurred.
(c) HSR ACT. The waiting period under the HSR Act shall have expired or
been terminated.
(d) 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 issued by the SEC, and no proceedings for that purpose shall have been
initiated by the SEC.
(e) POOLING OF INTERESTS. Parent and the Company shall have received
letters from each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and Ernst & Young LLP, each dated the
date of the Proxy Statement and addressed to Parent and the Company, stating
that the Merger should be treated as a pooling of interests transaction under
Opinion 16 of the Accounting Principles Board.
(f) NO INJUNCTION. No Governmental Entity having jurisdiction over the
Company or Parent, or any of their respective Subsidiaries, shall have enacted,
issued, promulgated, enforced, entered, or initiated proceedings to secure any
Law (whether temporary, preliminary or permanent, (collectively, "Restraints"))
which has or reasonably could be expected to have the effect of making any of
the Transaction Agreements illegal or otherwise prohibiting or impairing
consummation of the Merger materially; provided, however, that each of the
parties hereto shall have used its respective reasonable efforts to prevent the
entry of any such Restraints and to appeal as promptly as possible any such
Restraints that may be entered.
(g) NASDAQ. The Parent Company Stock to be issued in connection with
the Merger shall have been approved for listing on the Nasdaq National Market,
subject to official notice of issuance.
Section 7.2 CONDITIONS TO OBLIGATION OF PARENT AND MERGER SUB TO EFFECT
THE MERGER. The obligation of Parent and Merger Sub to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following additional conditions, unless waived in writing by Parent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company that are qualified with reference to materiality shall be true
and correct, and the representations and warranties that are not so qualified
shall be true and correct in all material respects, in each case as of the date
hereof, and, except to the extent such representations and warranties speak as
of an earlier date, as of the Effective Time as though made at and as of the
Effective Time, and Parent shall have received a certificate signed on
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behalf of the Company by the Chief Executive Officer or the Chief Financial
Officer of the Company to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and Parent shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer or the Chief Financial Officer of the Company to such effect.
(c) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall have been no event or occurrence which has had or reasonably could be
expected to have a Company Material Adverse Effect, and Parent shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer or the Chief Financial Officer of the Company to such effect.
(d) COMPANY AFFILIATE AGREEMENTS. Parent shall have received the
written agreements, substantially in the form of Exhibit C hereto, from the
Company Rule 145 Affiliates described in Section 6.6 above.
(e) CONSENTS UNDER AGREEMENTS. The Company shall have obtained the
consent or approval of each Person (other than the Governmental Entities
referred to in Section 7.1(b)) whose consent or approval shall be required in
connection with the transactions contemplated hereby under any Contract, as
reflected (or required to be reflected) in Section 3.7 of the Company Disclosure
Schedule, except where the failure to obtain the same would not reasonably be
expected, individually or in the aggregate, to have a Parent Material Adverse
Effect or Company Material Adverse Effect (as the Surviving Corporation).
(f) TAX OPINION. Parent shall have received an opinion of Smith,
Anderson, Blount, Dorsett, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P. ("▇▇▇▇▇ ▇▇▇▇▇▇▇▇"),
counsel to Parent, to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368 of the Code. The issuance of
such opinion shall be conditioned on the receipt by such tax counsel of
representation letters from each of Parent and Merger Sub, the Company and
certain shareholders of the Company, in each case, in form and substance
reasonably satisfactory to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇. The specific provisions of each such
representation letter shall be in form and substance reasonably satisfactory to
such tax counsel, and each such representation letter shall be dated on or
before the date of such opinion and shall not have been withdrawn or modified in
any material respect.
(g) EMPLOYMENT AGREEMENTS. Each of ▇▇▇ ▇. ▇▇▇▇▇ and N. ▇▇▇▇▇▇▇ ▇▇▇▇
shall have executed and delivered to Parent an amendment to his respective
employment agreement with the Company as in effect on the date of this Agreement
to reflect and embody the changes described on Exhibits D-1 and D-2,
respectively, in a mutually satisfactory form.
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(h) RESIGNATIONS. Each officer and director of the Company or any of
its Subsidiaries requested by Parent to do so shall have resigned from each such
position on or prior to, and effective not later than, the Effective Time.
(i) AMENDMENT TO EMPLOYMENT AGREEMENTS. Each employee of the Company
listed in Section 7.2(i) of the Parent Disclosure Schedule shall have executed
and delivered to Parent an amendment to his or her respective employment
agreement with the Company as in effect on the date of this Agreement such that
(i) such employee shall be entitled from the date of such amendment until the
Effective Time, at his election, to terminate such employment agreement and his
employment thereunder by written notice to the Company, and thereupon to receive
all benefits to which he would have been entitled had he been terminated by the
Company without cause immediately following a "Change of Control" (as defined
therein), and (ii) his entire right to receive compensation, benefits or other
value in connection with a Change of Control (as so defined) shall be terminated
and eliminated as of the Effective Time, unless exercised before the Effective
Time pursuant to clause (i) above. Notwithstanding the above, in no event is
this paragraph (i) intended in any manner to adversely impact the employee's
right, title and interest in the accelerated vesting of such Employee's stock
options.
(j) 401(K) PLAN. If requested by Parent to do so, the Company shall
have taken all action necessary to cause the termination of the Company's 401(k)
plan and to direct (i) the distribution of such plan's assets in lump sum form
to the plan's participants, or (ii) the plan administrator to effect a direct
roll over of the plan's assets.
Section 7.3 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following additional
conditions, unless waived in writing by the Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Parent and Merger Sub that are qualified with reference to materiality shall
be true and correct, and the representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case as of
the date hereof, and, except to the extent such representations and warranties
speak as of an earlier date, as of the Effective Time as though made on and as
of the Effective Time, and the Company shall have received a certificate signed
on behalf of Parent by the Chief Financial Officer of Parent to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND MERGER SUB. Each of Parent
and Merger Sub shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Effective
Time, and the Company shall have received a
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certificate signed on behalf of Parent by the Chief Financial Officer of Parent
to such effect.
(c) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall have been no event or occurrence which has had or reasonably could be
expected to have a Parent Material Adverse Effect, and the Company shall have
received a certificate signed on behalf of Parent by the Chief Financial Officer
of Parent to such effect.
(d) TAX OPINION. The Company shall have received an opinion of Bass,
▇▇▇▇▇ & ▇▇▇▇ PLC ("BB&S"), counsel to the Company, to the effect that the Merger
will qualify as a reorganization within the meaning of Section 368 of the Code.
The issuance of such opinion shall be conditioned on the receipt by such tax
counsel of representation letters from each of Parent and Merger Sub, the
Company and certain shareholders of the Company, in each case, in form and
substance reasonably satisfactory to BB&S. The specific provisions of each such
representation letter shall be in form and substance reasonably satisfactory to
such tax counsel, and each such representation letter shall be dated on or
before the date of such opinion and shall not have been withdrawn or modified in
any material respect.
(e) PARENT AFFILIATE AGREEMENTS. The Company shall have received the
written agreement, in advance of the date as of which the risk sharing
provisions pursuant to pooling of interests accounting shall apply,
substantially in the form of the third paragraph of the letter attached as
Exhibit C hereto (as applied to shares of Parent Common Stock owned thereby),
from Parent's Rule 145 Affiliates (as defined in Section 6.6 above as to the
Company).
(f) DISPOSITION OF SIGNIFICANT ASSETS. Parent shall not have disposed
of or entered into a Contract to dispose of a significant amount of its assets
(within the meaning of Instruction 4 to Item 2 of SEC Form 8-K) other than (i)
in the ordinary course of business or (ii) with the Company's prior written
consent (which shall not be unreasonably withheld or delayed).
(g) ACTIONS OTHER THAN IN ORDINARY COURSE. Parent shall not have taken
without the Company's prior written consent (which shall not be unreasonably
withheld or delayed) any extraordinary action which (i) is outside the ordinary
course of Parent's business and (ii) requires the Company to postpone the
Company Shareholder Meeting for more than forty-five (45) days.
ARTICLE VIII
TERMINATION
Section 8.1 TERMINATION. This Agreement may be terminated, and the
Merger and the other transactions contemplated hereby may be
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abandoned, at any time prior to the Effective Time, whether before or after
approval by the shareholders of Parent or the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company, if (i) the Merger shall not have
been consummated on or before June 30, 1999, unless the failure to consummate
the Merger is the result of a willful and material breach of this Agreement by
the party seeking to terminate this Agreement; (ii) subsequent to any public
disclosure of a proposal for or interest in an Acquisition Transaction, the
shareholders of the Company do not approve this Agreement and the Merger by the
requisite vote at a meeting duly convened therefor or any adjournment thereof,
or (iii) the shareholders of the Parent do not approve the issuance of shares of
Parent Common Stock in the Merger by the requisite vote at a meeting duly
convened therefor or any adjournment thereof;
(c) by either Parent or the Company, if any permanent injunction,
order, decree or ruling by any Governmental Entity of competent jurisdiction
preventing the consummation of the Merger shall have become final and
nonappealable; provided, however, subject to the proviso to Section 6.8(a)
hereof, that the party seeking to terminate this Agreement pursuant to this
Section 8.1(c) shall have used reasonable efforts to remove such injunction or
overturn such action;
(d) by Parent, if (i) there has been a material breach of any of the
representations or warranties, covenants or agreements of the Company set forth
in this Agreement, which breach is not curable or, if curable, is not cured
within thirty (30) days after written notice of such breach is given by Parent
to the Company, or (ii) the Board of Directors of the Company or any committee
thereof (x) fails to convene a meeting of the Company's shareholders to approve
the Merger on or before 150 days following the date hereof (provided the
Registration Statement has been declared effective within 120 days after the
date hereof) (the "Meeting Date"), or postpones the date scheduled for the
meeting of the shareholders of the Company to approve this Agreement beyond the
Meeting Date, except with the written consent of Parent, (y) fails to recommend
the approval of this Agreement and the Merger to the Company's shareholders in
accordance with Section 6.5(a) hereof or withdraws or amends or modifies in a
manner adverse to Parent its recommendation or approval in respect of this
Agreement or the Merger or takes any other action specified in clause (i), (ii)
or (iii) of Section 6.2(b) hereof or (z) fails, upon the written request of
Parent (which request may be made at any time following public disclosure of a
proposal for an Acquisition Transaction) to reaffirm publicly and
unconditionally its recommendation to the Company's shareholders that they give
the approval of this Agreement and the Merger, which public reaffirmation must
also include the unconditional rejection of such proposal for an Acquisition
Transaction. Such reaffirmation shall be made at least ten (10) trading days
prior to the Company Shareholder Meeting, and Company shall delay the Company
Shareholder Meeting to provide ten (10) trading days if the Parent so requests
in writing (in which case Parent shall be deemed to have consented for purposes
of
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clause (x) above if such delay extends the Meeting Date beyond the period
specified therein);
(e) by the Company, if (1) the Board of Directors of the Company shall,
after the compliance with the provisions of Section 6.2(b), take one of the
actions specified in subsections (b)(i), (ii) or (iii) thereof and (2) the
Company pays the fee due under Section 8.2(b) as a condition precedent to such
termination;
(f) by the Company, if (i) there has been a breach of any of the
representations or warranties, covenants or agreements of Parent or Merger Sub
set forth in this Agreement, which breach is not curable or, if curable, is not
cured within 30 days after written notice of such breach is given by the Company
to Parent, or (ii) the Board of Directors of Parent (x) fails to convene a
meeting of Parent's shareholders to approve the issuance of shares of Parent
Common Stock in the Merger (as required by the applicable rules of the Nasdaq
Stock Market) on or before 150 days following the date hereof (provided the
Registration Statement has been declared effective within 120 days after the
date hereof) (the "Parent Meeting Date"), or postpones the date scheduled for
the meeting of the shareholders of Parent for such purpose beyond the Parent
Meeting Date, except with the written consent of the Company, (y) fails to
recommend approval to Parent's shareholders in accordance with Section 6.5(b)
hereof, or (z) withdraws or amends or modifies in a manner adverse to Company
its recommendation or approval or fails to reconfirm such recommendation within
two business days of a written request for such confirmation by Parent;
(g) by Parent, if the Company or any of its officers, directors,
employees, representatives or agents takes any of the actions that would be
proscribed by Section 6.2(a); and
(h) by the Company, if the average closing price per share of Parent
Common Stock on the Nasdaq National Market, as reported by the Wall Street
Journal, Northeast edition, for the ten (10) trading days immediately preceding
the day one full trading day before the Closing Date (the "Parent Average
Trading Price") is less than Forty Dollars ($40.00); or by Parent if the Parent
Average Trading Price is greater than Seventy-One Dollars and Fifty Cents
($71.50).
Section 8.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement as provided in
Section 8.1, the Merger shall be deemed abandoned and this Agreement shall
forthwith become void, except that the penultimate sentence of Section 6.1,
Section 6.9, Section 6.11, this Section 8.2 and Article IX shall survive any
termination of this Agreement; provided, however, that, except as otherwise
provided in this Section 8.2, nothing in this Agreement shall relieve any party
from liability for any breach of this Agreement.
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(b) If (A) Parent shall have terminated this Agreement pursuant to
Section 8.1(d)(ii), or (B) the Company shall have terminated this Agreement
pursuant to Section 8.1(e), then, in any such case, the Company shall pay Parent
on or before such termination (or as otherwise provided in Section 8.1(e)), a
termination fee of $50,000,000, payable by wire transfer of immediately
available funds to an account designated by Parent.
(c) If Parent shall have terminated this Agreement pursuant to Section
8.1(b)(ii) or if Parent shall have terminated this Agreement pursuant to Section
8.1(g), or as a result of the Company's breach of Section 6.14 and either before
such termination or within twelve (12) months after the date of such termination
the Company (i) consummates an Acquisition Transaction, or (ii) enters into a
definitive agreement to do so, then, in any such case, the Company shall pay
Parent, within one (1) business day following consummation of such Acquisition
Transaction or entry into such definitive agreement, a termination fee of
$50,000,000 payable by wire transfer of immediately available funds to an
account designated by Parent.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 DEFINITIONS OF CERTAIN TERMS.
(a) As used in this Agreement, the following capitalized terms shall
have the respective meanings set forth below:
(1) "Code" means the United States Internal Revenue Code of
1986 and all rules and regulations promulgated thereunder from time to time, in
each case as amended.
(2) "Contract" means any contract, agreement, indenture,
instrument or other binding commitment or arrangement of any kind.
(3) "Encumbrance" means any pledge, claim, option, lease,
lien, security interest, mortgage, restriction under any Contract, encumbrance
or other charge or restriction of any kind or nature whatsoever.
(4) "ERISA" means the United States Employee Retirement Income
Security Act of 1974 and all rules and regulations promulgated thereunder from
time to time, in each case as amended.
(5) "Exchange Act" means the United States Securities Exchange
Act of 1934 and all rules and regulations promulgated thereunder from time to
time, in each case as amended.
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(6) "GAAP" means United States generally accepted accounting
principles, consistently applied throughout the period(s) indicated.
(7) "Government Entity" means any federal, state, local,
foreign or multinational court, arbitral tribunal, administrative agency or
commission or other governmental or regulatory authority or administrative
agency or commission.
(8) "HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976 and all rules and regulations promulgated thereunder
from time to time, in each case as amended.
(9) "Knowledge" (whether or not capitalized) means, with
respect to the Company or Parent, the knowledge of the directors, executive
officers and senior management of the Company or Parent, respectively, and of
their respective material Subsidiaries and material divisions.
(10) "Law" means any national, federal, state, local, foreign
or multinational law, rule, regulation, statute, ordinance, order, judgment,
decree, permit, franchise, license or other governmental restriction or
requirement of any kind.
(11) "Material Adverse Effect" means, with respect to the
Company or Parent, any material adverse effect on the business, assets,
liabilities, condition (financial or otherwise), or results of operations of the
Company or Parent, respectively, and its respective Subsidiaries, taken as a
whole, including without limitation any effect which prevents or impairs
materially such party's performance of its obligations under, this Agreement or
the consummation of the transactions contemplated hereby.
(12) "Organizational Document" means any charter, certificate
or articles of incorporation, bylaw, board of directors' or shareholders'
resolution, or other corporate document or action comparable to any of the
foregoing currently in effect.
(13) "Person" means any individual, partnership, joint
venture, corporation, trust, limited liability company, unincorporated
organization, government (or subdivision thereof) or other entity.
(14) "SEC" means the United States Securities and Exchange
Commission.
(15) "Securities Act" means the United States Securities Act
of 1933 and all rules and regulations promulgated thereunder from time to time,
in each case as amended.
(16) "Subsidiary" means, as to any Person, another Person
owned directly or indirectly by such Person by reason of such Person owning or
controlling an amount of its voting securities, other voting
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ownership or voting partnership interests which is sufficient to elect at least
a majority of its board of directors or other governing body or, if there are no
such voting interests, 50% or more of its equity interests.
(17) "TBCA" means the Tennessee Business Corporation Act, as
amended.
(b) For purposes of this Agreement, the following additional
capitalized terms shall have the respective meanings set forth in the
corresponding sections of this Agreement indicated below:
Defined Term Section
------------ -------
Acquisition Transaction 6.2(a)
Agreement Introductory Paragraph
Articles of Merger 1.3
BB&S 7.3(d)
Benefit Plans 3.17(a)
Certificates 2.1(e)
Closing 1.2
Closing Date 1.2
Company Introductory Paragraph
Company Balance Sheet Date 3.10
Company Capital Stock 2.1(b)
Company Common Stock 2.1(a)
Company Disclosure Schedule Article III
Company Facilities 3.18(a)
Company Interim Balance Sheet Date 3.9
Company Interim Financial Statements 3.9
Company Multiemployer Plan 3.17(a)
Company Permits 3.6
Company Plan 3.17(a)
Company Preferred Stock 3.3(a)
Company Rights 3.3(a)
Company Rights Agreement 3.3(a)
Company Rule 145 Affiliates 6.6
Company SEC Documents 3.9
Company Series B Preferred Stock 2.1(b)
Company Shareholder Meeting 6.5(a)
Confidentiality Agreement 6.1
Continuing Employees 6.17(a)
Consent 6.8(b)
DOJ 6.8(d)
Databases 3.15(f)(i)
Defined Benefit Plan 3.17(a)
Effective Time 1.3
ERISA Affiliate 3.17(a)
Exchange Agent 2.2(a)
FTC 6.8(d)
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Defined Term Section
------------ -------
▇▇▇▇▇▇▇ 4.14
Hazardous Substances 3.18(a)
IRS 3.14
Indemnified Parties 6.10(a)
Intellectual Property 3.15(f)(ii)
Material Intellectual Property 3.15(a)
Maximum Amount 6.10(b)
Meeting Date 8.1(d)
Merger Background (b)
Merger Consideration 2.1(b)
Merger Sub Introductory Paragraph
Merger Sub Common Stock 2.1(c)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 3.20
Options 2.6(a)
Option Plans 2.6(a)
Owned Databases 3.15(f)(iii)
Owned Software 3.15(f)(iv)
Parent Introductory Paragraph
Parent Average Trading Price 8.1(h)
Parent Common Stock 2.1(a)
Parent Disclosure Schedule Article IV
Parent Meeting Date 8.1(f)
Parent Preferred Stock 4.3(a)
Parent Shareholder Meeting 6.5(b)
Parent SEC Documents 4.7
Per Share Merger Consideration 2.1(b)
Proxy Statement 3.16
Registration Statement 3.16
Restraints 7.1(f)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 7.2(f)
Software 3.15(f)(v)
Stock Voting Agreement Background (f)
Subsequent Company SEC Documents 3.9
Subsequent Parent SEC Documents 4.7
Superior Proposal 6.2(b)
Surviving Corporation 1.1
Tax Returns 3.14
Taxes 3.14
Third Party Databases 3.15(f)(vi)
Third Party Software 3.15(f)(vii)
Transaction Agreements Background (f)
Transfer Taxes 6.15
Year 2000 Compliant 3.15(f)(viii)
Section 9.2 AMENDMENT AND MODIFICATION. At any time prior to the
Effective Time, this Agreement may be amended, modified or supplemented only by
written agreement (referring specifically to this Agreement) of Parent and the
Company with respect to any of the terms
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contained herein; provided, however, that after any approval and adoption of
this Agreement by the shareholders of Parent or the Company, no such amendment,
modification or supplementation shall be made which under applicable Law
requires the approval of such shareholders, without the further approval of such
shareholders.
Section 9.3 WAIVER. At any time prior to the Effective Time, Parent, on
the one hand, and the Company, on the other hand, may (i) extend the time for
the performance of any of the obligations or other acts of the other, (ii) waive
any inaccuracies in the representations and warranties of the other contained
herein or in any documents delivered pursuant hereto and (iii) subject to the
provisions of Section 9.2, waive compliance by the other with any of the
agreements or conditions contained herein which may legally be waived. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
specifically referring to this Agreement and signed on behalf of such party. The
failure of any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights.
Section 9.4 SURVIVABILITY; INVESTIGATIONS. The respective
representations and warranties of Parent and Merger Sub, on the one hand, and
the Company, on the other hand, contained herein or in any certificates or other
documents delivered prior to or as of the Effective Time (i) shall not be deemed
waived or otherwise affected by any investigation made by any party hereto and
(ii) shall not survive beyond the Effective Time. The covenants and agreements
of the parties hereto (including the Surviving Corporation after the Merger)
shall survive the Effective Time, without limitation (except for those which, by
their terms, contemplate a shorter survival period).
Section 9.5 NOTICES. All notices and other communications hereunder
shall be in writing and shall be delivered personally or by next-day courier or
telecopied with confirmation of receipt, to the parties at the addresses
specified below (or at such other address for a party as shall be specified by
like notice; provided that notices of a change of address shall be effective
only upon receipt thereof). Any such notice shall be effective upon receipt, if
personally delivered or telecopied, or one day after delivery to a courier for
next-day delivery.
If to Parent or Merger Sub, to:
Quintiles Transnational Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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with copies to:
Smith, Anderson, Blount,
Dorsett, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, to:
Envoy Corporation
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.6 DESCRIPTIVE HEADINGS. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 9.7 ENTIRE AGREEMENT. This Agreement (including the Exhibits,
the Company Disclosure Schedule, the Parent Disclosure Schedule, and the Stock
Voting Agreement) constitutes the entire agreement and supersedes all other
prior agreements and understandings, both written and oral, among the parties or
any of them, with respect to the subject matter hereof.
Section 9.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina, without
giving effect to the provisions thereof relating to conflicts of law.
Section 9.9 ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the
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State of North Carolina or in North Carolina state court, this being in addition
to any other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto (a) consents to submit itself to the personal
jurisdiction of any federal court located in the State of North Carolina or any
North Carolina state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a federal or state court sitting in the
State of North Carolina.
Section 9.10 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same agreement.
Section 9.11 ASSIGNMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
and the rights, interests and obligations hereunder shall be binding upon, inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns; provided, however, that no party hereto may
assign or otherwise transfer its rights, interests or obligations hereunder
without the prior written consent of the other parties hereto. Except as
provided in Section 6.10 and Section 6.17 above, nothing in this Agreement is
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
* * * * * * * * * * * *
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[signature page to Agreement and Plan of Merger]
IN WITNESS WHEREFORE, each of Parent, Merger Sub and the Company has
caused this Agreement and Plan of Merger to be executed on its behalf by its
respective officers thereunto duly authorized, all as of the date first above
written.
Quintiles Transnational Corp.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Its: Chairman and Chief Executive Officer
QELS Corp.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Its: Vice President and Secretary
Envoy Corporation
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Its: President and Co-Chief Executive Officer
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58
List of Omitted Schedules and Exhibits to Agreement and Plan of Merger
Company Disclosure Schedule
Section 2.6 Options
Section 3.4 Company Subsidiaries
Section 3.7 Non-Contravention
Section 3.9 SEC Documents and Other Reports
Section 3.10 Absence of Certain Changes or Events
Section 3.11 Actions and Proceedings
Section 3.12 Absence of Undisclosed Liabilities
Section 3.13 Certain Contracts and Arrangements
Section 3.14 Taxes
Section 3.15 Intellectual Property
Section 3.17 Employee Benefit Plans, ERISA
Parent Disclosure Schedule
Section 4.3 Capitalization
Section 4.5 Non-Contravention
Section 4.6 Government Approvals; Required Consents
Section 4.7 SEC Documents and Other Reports
Section 4.11 Compliance with Laws
Section 4.12 Actions and Proceedings
Section 7.2 Amendment to Employment Agreements
Exhibit B Amendment No. 1 to Rights Plan
Exhibit C Form of Rule 145 Affiliate's Agreement
Exhibit D-1 Changes to ▇▇▇ ▇. ▇▇▇▇▇'▇ Employment Agreement
Exhibit D-2 Changes to N. ▇▇▇▇▇▇▇ ▇▇▇▇'▇ Employment Agreement
The Company hereby agrees to furnish supplementally a copy of any Omitted
Schedules and Exhibits to the Commission upon request.