EXHIBIT 10.2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TRIPLE CROWN MEDIA, INC.,
BR ACQUISITION CORP.,
AND
BULL RUN CORPORATION,
DATED AS OF AUGUST 2, 2005
TABLE OF CONTENTS
Page
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AGREEMENT AND PLAN OF MERGER............................................. 1
RECITALS................................................................. 1
ARTICLE I. CERTAIN DEFINITIONS........................................... 1
SECTION 1.01 Certain Definitions..................................... 1
ARTICLE II. THE MERGER................................................... 10
SECTION 2.01 The Merger.............................................. 10
SECTION 2.02 Effective Time.......................................... 10
SECTION 2.03 Effect of the Merger.................................... 10
SECTION 2.04 Articles of Incorporation; By-Laws...................... 10
SECTION 2.05 Directors and Officers.................................. 10
SECTION 2.06 Effect on Capital Stock................................. 11
SECTION 2.07 Exchange of Certificates................................ 12
SECTION 2.08 Dissenters' Rights...................................... 15
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............... 15
SECTION 3.01 Organization and Qualification; Subsidiaries............ 15
SECTION 3.02 Articles of Incorporation and By-Laws................... 16
SECTION 3.03 Capitalization.......................................... 16
SECTION 3.04 Authority Relative to This Agreement.................... 17
SECTION 3.05 No Conflict; Required Filings and Consents.............. 18
SECTION 3.06 SEC Filings; Financial Statements....................... 19
SECTION 3.07 Proxy Statement......................................... 20
SECTION 3.08 Compliance, Permits..................................... 20
SECTION 3.09 Absence of Certain Changes or Events.................... 21
SECTION 3.10 No Undisclosed Liabilities.............................. 21
SECTION 3.11 Litigation.............................................. 22
SECTION 3.12 Employee Benefit Plans; Employment Agreements........... 22
SECTION 3.13 Employees; Labor Matters................................ 24
SECTION 3.14 Taxes................................................... 24
SECTION 3.15 Environmental Matters................................... 26
SECTION 3.16 Brokers................................................. 27
SECTION 3.17 Material Contracts...................................... 27
SECTION 3.18 Title to Properties; Absence of Encumbrances............ 27
SECTION 3.19 Insurance............................................... 27
SECTION 3.20 Tax Matters............................................. 28
SECTION 3.21 Vote Required........................................... 28
SECTION 3.22 State Takeover Statutes................................. 28
SECTION 3.23 Fairness Opinion........................................ 28
SECTION 3.24 No Other Representations and Warranties................. 29
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF TCM........................ 29
SECTION 4.01 Organization and Qualification.......................... 29
SECTION 4.02 Organizational Documents................................ 30
SECTION 4.03 Capitalization.......................................... 30
SECTION 4.04 Issuance of Merger Consideration........................ 31
SECTION 4.05 Authority Relative to this Agreement.................... 31
SECTION 4.06 No Conflict; Required Filings and Consents.............. 31
SECTION 4.07 Financial Statements.................................... 32
SECTION 4.08 Registration Statement.................................. 33
SECTION 4.09 Compliance, Permits..................................... 33
SECTION 4.10 Absence of Certain Changes or Events.................... 34
SECTION 4.11 No Undisclosed Liabilities.............................. 34
SECTION 4.12 Litigation.............................................. 34
SECTION 4.13 Employees; Labor Matters................................ 34
SECTION 4.14 Taxes................................................... 35
SECTION 4.15 Environmental Matters................................... 36
SECTION 4.16 Brokers................................................. 37
SECTION 4.17 Material Contracts...................................... 37
SECTION 4.18 Title to Properties; Absence of Encumbrances............ 39
SECTION 4.19 Interim Operations of Merger Sub........................ 40
SECTION 4.20 Tax Matters............................................. 40
SECTION 4.21 Employee Benefits....................................... 40
SECTION 4.22 Fairness Opinions....................................... 40
SECTION 4.23 No Other Representations and Warranties................. 40
ARTICLE V. COVENANTS..................................................... 41
SECTION 5.01 Conduct of Business by the Company...................... 41
SECTION 5.02 Form S-4; Company Stockholder Approval.................. 44
SECTION 5.03 Exclusivity; Superior Proposal.......................... 45
SECTION 5.04 Access to Information; Confidentiality.................. 48
SECTION 5.05 Consents and Approvals.................................. 49
SECTION 5.06 Stock Options........................................... 49
SECTION 5.07 Notification of Certain Matters......................... 50
SECTION 5.08 Public Announcements.................................... 51
SECTION 5.09 Expenses................................................ 51
SECTION 5.10 Tax Treatment........................................... 51
SECTION 5.11 Continuing Director and Officer Indemnification......... 51
SECTION 5.12 Certain Tax Matters..................................... 52
SECTION 5.13 Employees and Employee Benefit Matters.................. 53
SECTION 5.14 Listing of TCM Common Stock............................. 53
SECTION 5.15 Necessary Actions....................................... 53
ARTICLE VI. CONDITIONS TO THE MERGER..................................... 53
SECTION 6.01 Conditions to Obligation of Each Party to
Effect the Merger.................................... 53
SECTION 6.02 Additional Conditions to Obligations of TCM and
Merger Sub........................................... 54
SECTION 6.03 Additional Conditions to Obligation of the Company...... 56
SECTION 6.04 Rule 145 Affiliates..................................... 57
ARTICLE VII. TERMINATION................................................. 57
SECTION 7.01 Termination............................................. 57
SECTION 7.02 Effect of Termination................................... 59
ARTICLE VIII. GENERAL PROVISIONS......................................... 59
SECTION 8.01 Survival of Representations and Warranties.............. 59
SECTION 8.01 Notices................................................. 59
SECTION 8.03 Waiver.................................................. 60
SECTION 8.04 Headings................................................ 60
SECTION 8.05 Limited Liability....................................... 61
SECTION 8.06 Severability............................................ 61
SECTION 8.07 Entire Agreement; Amendment............................. 61
SECTION 8.08 Assignment.............................................. 61
SECTION 8.09 Parties in Interest..................................... 61
SECTION 8.10 Failure or Indulgence Not Waiver; Remedies Cumulative... 62
SECTION 8.11 Governing Law........................................... 62
SECTION 8.12 Counterparts............................................ 62
SECTION 8.13 Waiver of Jury Trial.................................... 62
SECTION 8.14 Jurisdiction; Forum..................................... 62
SECTION 8.15 General Interpretative Provisions; Defination of
Knowledge............................................ 62
SECTION 8.16 Specific Performance and Injunctive Relief.............. 63
SECTION 8.17 Attorneys' Fees......................................... 63
SECTION 8.18 Limitation of Liability................................. 63
EXHIBIT 10.2
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 2, 2005 (this
"Agreement"), by and among Triple Crown Media, Inc., a Delaware corporation
("TCM"), BR Acquisition Corp., a Georgia corporation and a direct, wholly-owned
subsidiary of TCM ("Merger Sub"), and Bull Run Corporation, a Georgia
corporation (the "Company").
RECITALS
Each of TCM, Merger Sub and the Company has determined that it is advisable
and in the best interests of its stockholders for the parties to enter into a
business combination upon the terms and subject to the conditions set forth
herein;
In furtherance of such combination, each of (i) the special committee of
the board of directors of TCM (the "TCM Special Committee"), (ii) the board of
directors of TCM (the "TCM Board"), (iii) the special committee of the board of
directors of the Company (the "Company Special Committee"), (iv) the board of
directors of the Company (the "Company Board"), (v) the board of directors of
Merger Sub, (vi) the sole stockholder of TCM and (vii) the sole stockholder of
Merger Sub has approved the merger (the "Merger") of the Company with and into
Merger Sub in accordance with the applicable provisions of the Georgia Business
Corporation Code ("Georgia Law") and upon the terms and subject to the
conditions set forth herein;
The Company Special Committee and the Company Board have unanimously
determined that this Agreement, the Merger and the other transactions
contemplated hereby (other than the Spin-off (as defined herein)) are fair to
the stockholders of the Company and has unanimously recommended that the
stockholders of the Company approve and adopt this Agreement, the Merger and the
other transactions contemplated hereby (other than the Spin-off); and
For U.S. federal income tax purposes, it is intended that (a) the Merger
will qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), (b) this Agreement shall
be, and hereby is, adopted as a plan of reorganization for purposes of Section
368 of the Code and (c) TCM, Merger Sub and the Company will each be a party to
such reorganization within the meaning of Section 368(b) of the Code;
THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I.
CERTAIN DEFINITIONS
SECTION 1.01 Certain Definitions. For purposes of this Agreement, the term:
(a) "1994 Directors' Plan" shall have the meaning specified in Section
2.06(d).
(b) "1994 Plan" shall have the meaning specified in Section 2.06(d).
(c) "affiliate" of a person means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person.
(d) "Agreement" shall mean this Agreement and Plan of Merger, together with
all exhibits attached hereto, the Company Disclosure Letter and the TCM
Disclosure Letter.
(e) "Ancillary Agreements" means any certificates or supporting documents
contemplated or delivered pursuant thereto and pursuant to this Agreement.
(f) "Articles of Merger" shall have the meaning specified in Section 2.02.
(g) "Assets" means all the properties, assets and contract rights
(including, without limitation, cash, cash equivalents, accounts receivable,
inventory, equipment, office furniture and furnishings, trade names, trademarks
and patents, contracts, agreements, licenses and real estate) of the Company and
its subsidiaries, whether tangible or intangible, real, personal or mixed.
(h) "books and records" means, with respect to any person, all books and
records, including, without limitation, corporate records (such as minute books,
seals, stock ledgers and similar items), manuals, price lists, mailing lists,
lists of customers, slides and promotional materials, purchasing materials,
personnel records, quality control records and procedures, research and
development files, financial and accounting records (exclusive of records
maintained by the Company's independent accountants), environmental records and
litigation files (regardless of the media in which stated), in each case
principally relating to or used by such person.
(i) "Blue Sky Laws" shall have the meaning specified in Section 3.05(b).
(j) "business day" means any day other than a day on which banks in
Atlanta, Georgia are required or authorized to be closed.
(k) "Cash Advance" means the cash advances in the aggregate of $6,050,000
made by J. Xxxx Xxxxxxxx to the Company.
(l) "CERCLA" shall have the meaning specified in Section 3.15(b).
(m) "Certificate" shall have the meaning specified in Section 2.06(c).
(n) "Closing" shall have the meaning specified in Section 2.01.
(o) "Closing Date" shall have the meaning specified in Section 2.01.
(p) "Code" shall have the meaning specified in the Recitals.
(q) "Common Stock Exchange Ratio" shall have the meaning specified in
Section 2.06(c)(i).
(r) "Company" shall mean Bull Run Corporation, a Georgia corporation.
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(s) "Company Articles of Incorporation" means the Articles of Incorporation
of the Company, as amended, in effect as of the date of this Agreement.
(t) "Company Board" shall have the meaning specified in the Recitals.
(u) "Company By-Laws" shall have the meaning specified in Section 3.02.
(v) "Company Capital Stock" means collectively, the Company Common Stock
and the Company Preferred Stock.
(w) "Company Common Stock" shall have the meaning specified in Section
2.06(a).
(x) "Company Disclosure Letter" shall have the meaning specified in Article
III.
(y) "Company ERISA Affiliate" shall have the meaning specified in Section
3.12(a).
(z) "Company Financial Advisor" means SunTrust Xxxxxxxx Xxxxxxxx.
(aa) "Company Material Adverse Effect" means a material and adverse effect
on the operation of the Company taken as a whole; provided, however, that the
following shall not be taken into account in determining whether there has been
or would be a "Material Adverse Effect": (i) any adverse changes or developments
resulting from conditions affecting the United States economy generally; (ii)
any acts of war, insurrection, sabotage or terrorism; (iii) any adverse change
or developments that are primarily caused by conditions affecting the media and
advertising industries generally; and (iv) any adverse changes or developments
arising primarily out of, or resulting primarily from, actions taken by any
party in connection with (but not in breach of) this Agreement and the
transactions contemplated hereunder, or which are primarily attributable to the
announcement of this Agreement and the transactions contemplated hereby or the
identity of TCM.
(bb) "Company Option Plans" shall have the meaning specified in Section
2.06(d).
(cc) "Company Permits" shall have the meaning specified in Section 3.08(b).
(dd) "Company Plan" shall have the meaning specified in Section 3.12(a).
(ee) "Company Preferred Stock" means collectively, the Series D Preferred,
the Series E Preferred and the Series F Preferred.
(ff) "Company Proxy Statement" shall have the meaning specified in Section
3.07.
(gg) "Company Real Property" shall have the meaning set forth in Section
3.15(a).
(hh) "Company Representatives" shall have the meaning specified in Section
5.03(a).
(ii) "Company SEC Reports" shall have the meaning specified in Section
3.06(a).
(jj) "Company Special Committee" shall have the meaning specified in the
Recitals.
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(kk) "Company Stockholder" means each holder of record (as of the Effective
Time) of the Company Capital Stock.
(ll) "Company Stockholders' Action" shall have the meaning specified in
Section 3.04(a).
(mm) "Company Stockholders' Meeting" shall have the meaning specified in
Section 5.02(c).
(nn) "Company Stockholders' Vote Condition" shall have the meaning
specified in Section 3.21.
(oo) "Company Terminating Breach" shall have the meaning specified in
Section 7.01(c).
(pp) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a person, whether
through the ownership of voting securities or debt which is convertible into
voting securities, by contract, credit arrangement or otherwise; provided,
however, that the ownership, either alone or through or together with any
subsidiary, directly or indirectly, of more than 10% of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of a corporation or
other legal entity shall be deemed to constitute "control" of such corporation
or other legal entity.
(qq) "D&O Insurance" shall have the meaning specified in Section 5.11(b).
(rr) "Dissenting Stockholder" means any Company Stockholder exercising
dissenters' rights pursuant to Article 13 of Georgia Law.
(ss) "Effective Time" shall have the meaning specified in Section 2.02.
(tt) "Encumbrances" means any lien, pledge, hypothecation, claim,
infringement, charge, mortgage, security interest, encumbrance, prior
assignment, infringement, interference, option, right of first refusal,
preemptive right, community property interest or restriction of any nature
whatsoever (including any restriction on the voting of any security, any
restriction on the transfer of any security or other asset, any restriction on
the receipt of any income derived from any asset, any restriction on the use of
any asset and any restriction on the possession, exercise or transfer of any
other attribute of ownership of any asset).
(uu) "Environment" means any surface or subsurface physical medium or
natural resource, including, air, land, soil, surface waters, ground waters,
stream and river sediments, and biota.
(vv) "Environmental Laws" means any federal, state, local or common law,
rule, regulation, ordinance, code, order or judgment (including the common law
and any judicial or
4
administrative interpretations, guidances, directives, policy statements or
opinions) relating to the injury to, or the pollution or protection of human
health and safety or the Environment.
(ww) "Environmental Liabilities" means any liability or obligation arising
under Environmental Laws to the extent arising from any condition existing or
any act or omission occurring prior to the Effective Time, including, without
limitation, any claims, demands, assessments, judgments, orders, causes of
action, notices of actual or alleged violations or liability (including such
notices regarding the disposal or release of Hazardous Substances on the Real
Property or elsewhere), proceedings and any associated costs, assessments,
investigations, losses, damages (including punitive damages), obligations,
liabilities, awards, fines, sanctions, penalties, or amounts paid in settlement
(including reasonable costs, fees and expenses of attorneys, accountants,
consultants and other agents of such person).
(xx) "ERISA" shall have the meaning specified in Section 3.12(a).
(yy) "Exchange Act" shall have the meaning specified in Section 3.05(b).
(zz) "Exchange Agent" shall have the meaning specified in Section 2.07(a).
(aaa) "Existing Stockholder Agreement" means that certain Stockholders'
Agreement dated as of December 17, 1999 by and among Hilton X. Xxxxxx, Xx.,
Xxxxxxx X. Xxxxxx, Xxxxxxxx-Xxxxxxx Partnership, X. Xxxxx Host and Xxxxxxx X.
Xxxxxx.
(bbb) "Form S-4" shall have the meaning specified in Section 5.02(a).
(ccc) "GAAP" means generally accepted accounting principles.
(ddd) "Georgia Law" shall have the meaning specified in the Recitals.
(eee) "Governmental Entity" means any foreign governmental or United States
federal, state or local governmental, administrative or regulatory authority,
commission, body, agency, court or any judicial body or other authority.
(fff) "Xxxx" means Xxxx Television, Inc., a Georgia corporation.
(ggg) "Xxxx Side Letter" means the letter agreement dated August 2, 2005
between Xxxx and the Company.
(hhh) "Hazardous Substances" means any materials or substances, pollutants,
contaminants, contaminants or wastes regulated by or defined under any
Environmental Law, including, without limitation, petroleum, petroleum products,
petroleum derived substances, radioactive materials, asbestos, polychlorinated
biphenyls, radon and lead based paint.
(iii) "Indebtedness for Borrowed Money" means with respect to any person,
all indebtedness in respect of money borrowed, including without limitation all
capital leases, and the deferred purchase price of any property or asset,
evidenced by a promissory note, bond,
5
indenture or similar written obligation for the payment of money, other than
trade payables and accrued expenses incurred in the ordinary course of business.
(jjj) information "made available" shall be limited to that information to
which access has been granted by the applicable party for review by another
party to this Agreement, by placing such information in a data room or
otherwise, and shall not include information obtained or discovered through
channels other than the providing party such as the Internet or public filings.
(kkk) "IRS" shall have the meaning specified in Section 3.12(c).
(lll) "Laws" shall have the meaning specified in Section 3.08(a).
(mmm) "Merger" shall have the meaning specified in the Recitals.
(nnn) "Merger Consideration" means, collectively, (i) the aggregate number
of shares of TCM Common Stock to be issued in exchange for the Company Common
Stock and to be reserved for Options in accordance with Section 5.06, (ii) the
aggregate number of shares of TCM Series A Preferred Stock to be issued in
exchange for the Series D Preferred and the Series E Preferred held by the
Series E Affiliated Stockholders, (iii) the aggregate amount of cash to be paid
in exchange for the Series E Preferred held by Series E Preferred stockholders
(other than Series E Affiliated Stockholders); (iv) the aggregate number of
shares of TCM Series A Preferred Stock to be issued in exchange for the accrued
and unpaid dividends (through July 1, 2005) on the Series D Preferred and Series
E Preferred held by Series E Affiliated Stockholders; (v) the repayment of the
Cash Advance; and (vi) the aggregate number of shares of TCM Common Stock to be
issued in exchange for the Series F Preferred Stock and all accrued and unpaid
dividends thereon (through July 1, 2005).
(ooo) "Merger Sub" shall have the meaning specified in the Introduction.
(ppp) "Nasdaq" means the Nasdaq National Market.
(qqq) "Option" shall have the meaning specified in Section 2.06(d).
(rrr) "ordinary course of business" means any action taken by a person
that: (i) is consistent in nature, scope and magnitude with the past practices
of such person and is taken in the ordinary course of the normal, day-to-day
operations of such person; and (ii) does not require authorization by the board
of directors or stockholders of such person (or by any person or group of
persons exercising similar authority).
(sss) "Permitted Encumbrance" shall have the meaning specified in Section
3.18.
(ttt) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization or other entity or group (as defined in
Section 13(d)(3) of the Exchange Act).
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(uuu) "Refinancing" means a financing in which TCM receives funded debt of
at least $120.0 million.
(vvv) "Rule 145 Affiliate" shall have the meaning specified in Section
6.04.
(www) "Rule 145 Affiliate Agreement" shall have the meaning specified in
Section 6.04.
(xxx) "SEC" shall have the meaning specified in Section 3.06(a).
(yyy) "Securities Act" shall have the meaning specified in Section 3.05(b).
(zzz) "Separation and Distribution Agreement" means that certain Separation
and Distribution Agreement dated as of August 2, 2005 by and among Xxxx and TCM
attached hereto as Exhibit A.
(aaaa) "Series D Preferred" means the Series D Convertible Preferred Stock,
par value $0.01 per share, of the Company.
(bbbb) "Series E Affiliated Stockholder" means J. Xxxx Xxxxxxxx and any
transferee of J. Xxxx Xxxxxxxx.
(cccc) "Series E Preferred" means the Series E Convertible Preferred Stock,
par value $0.01 per share, of the Company.
(dddd) "Series E Preferred Stockholder" mean a holder of Series E
Preferred.
(eeee) "Series F Dividend Amount" means the aggregate of $290,000.
(ffff) "Series F Preferred" means the Series F Convertible Preferred Stock,
par value $0.01 per share, of the Company.
(gggg) "Solvency Opinion" shall have the meaning specified in Section
6.02(g).
(hhhh) "Spin-off" means the separation of Xxxx'x newspaper publishing
business and Graylink Wireless business from its other businesses, which result
will be accomplished by: (i) Xxxx contributing all of the membership interests
of Xxxx Publishing, LLC to TCM; and (ii) Xxxx subsequently distributing all of
the shares of TCM Common Stock to its stockholders, in each case in accordance
with the Separation and Distribution Agreement.
(iiii) "subsidiary" or "subsidiaries" of any person means any corporation,
partnership, joint venture or other legal entity of which such person (either
alone or through or together with any other subsidiary) owns, directly or
indirectly, more than 50% of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board of directors
or other governing body of such corporation or other legal entity.
(jjjj) "Superior Proposal" shall have the meaning specified in Section
5.03(b).
(kkkk) "Surviving Corporation" shall have the meaning specified in Section
2.01.
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(llll) "Surviving Corporation Common Stock" shall have the meaning
specified in Section 2.06(b).
(mmmm) "Takeover Proposal" shall have the meaning specified in Section
5.03(b).
(nnnn) "Takeover Proposal Interest" shall have the meaning specified in
Section 5.03(a).
(oooo) "Tax" or "Taxes" shall mean taxes, fees, levies, duties, tariffs,
imposts and governmental impositions or charges of any kind in the nature of (or
similar to) taxes, payable to any federal, state, provincial, local or foreign
taxing authority, including, without limitation, (i) income, franchise, profits,
gross receipts, ad valorem, net worth, value added, sales, use, service, real or
personal property, special assessments, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes and (ii) interest,
penalties, additional taxes and additions to tax imposed with respect thereto.
(pppp) "Tax Sharing Agreement" means that certain Tax Sharing Agreement
dated as of August 2, 2005 by and among Xxxx and TCM attached hereto as Exhibit
B.
(qqqq) "Tax Returns" shall mean returns, reports and information statements
with respect to Taxes required to be filed with the IRS or any other taxing
authority, domestic or foreign, including, without limitation, consolidated,
combined and unitary tax returns.
(rrrr) "TCM" means Triple Crown Media, Inc., a Delaware corporation.
(ssss) "TCM Audited Financial Statements" shall have the meaning specified
in Section 4.07.
(tttt) "TCM Board" shall have the meaning specified in the Recitals.
(uuuu) "TCM Capital Stock" means the TCM Common Stock and the TCM Preferred
Stock.
(vvvv) "TCM Common Stock" means the common stock of TCM, par value $0.001
per share.
(wwww) "TCM Confidentiality Agreement" shall mean the confidentiality
agreement dated June 1, 2005 between TCM, Xxxx and the Company.
(xxxx) "TCM Disclosure Letter" shall have the meaning specified in Article
IV.
(yyyy) "TCM Financial Advisor" means Xxxxxxxx Xxxxx Xxxxxx & Xxxxx
Financial Advisors, Inc. and its affiliates.
(zzzz) "TCM Financial Statements" shall have the meaning specified in
Section 4.07.
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(aaaaa) "TCM Interim Financial Statements" shall have the meaning specified
in Section 4.07.
(bbbbb) "TCM Material Adverse Effect" means a material and adverse effect
on the operation of TCM taken as a whole; provided, however, that the following
shall not be taken into account in determining whether there has been or would
be a "Material Adverse Effect": (i) any adverse changes or developments
resulting from conditions affecting the United States economy generally; (ii)
any acts of war, insurrection, sabotage or terrorism; (iii) any adverse changes
or developments that are primarily caused by conditions affecting the newspaper
publishing and paging industries generally; and (iv) any adverse changes or
developments arising primarily out of, or resulting primarily from, actions
taken by any party in connection with (but not in breach of) this Agreement and
the transactions contemplated hereunder, or which are primarily attributable to
the announcement of this Agreement and the transactions contemplated hereby or
the identity of the Company.
(ccccc) "TCM Material Contracts" shall have the meaning specified in
Section 4.17.
(ddddd) "TCM Permits" shall have the meaning specified in Section 4.09(b).
(eeeee) "TCM Preferred Stock" means collectively, the TCM Series A
Preferred Stock and the TCM Series B Preferred Stock.
(fffff) "TCM Real Property" shall have the meaning specified in Section
4.15(a).
(ggggg) "TCM Representatives" shall have the meaning specified in Section
5.03(e).
(hhhhh) "TCM Series A Preferred Stock" mean the Series A convertible
preferred stock of TCM, par value $0.001 per share.
(iiiii) "TCM Series B Preferred Stock" mean the Series B convertible
preferred stock of TCM, par value $0.001 per share.
(jjjjj) "TCM Special Committee" shall have the meaning specified in the
Recitals.
(kkkkk) "TCM Superior Proposal" shall have the meaning specified in Section
5.03(f).
(lllll) "TCM Takeover Proposal" shall have the meaning specified in Section
5.03(f).
(mmmmm) "TCM Takeover Proposal Interest" shall have the meaning specified
in Section 5.03(e).
(nnnnn) "TCM Terminating Breach" shall have the meaning specified in
Section 7.01(d).
(ooooo) "Transaction" means the Spin-off and the Merger.
(ppppp) "Transaction Expenses" shall have the meaning specified in Section
5.09(a).
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ARTICLE II.
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with Georgia Law, at the Effective
Time, the Company shall be merged with and into Merger Sub. As a result of the
Merger, the separate corporate existence of the Company shall cease and Merger
Sub shall continue as the surviving corporation of the Merger (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
the Company in accordance with Georgia Law. Unless this Agreement has been
terminated pursuant to Article VII, and subject to the satisfaction or waiver of
the conditions set forth in Article VI, the consummation of the Merger (the
"Closing") will take place as promptly as practicable (and in any event within
three business days) after satisfaction or waiver of the conditions set forth in
Article VI, at the offices of Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, unless another date, time or place is agreed to in writing by TCM
and the Company (the "Closing Date").
SECTION 2.02 Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VI, the parties
hereto shall file articles of merger (the "Articles of Merger") with the
Secretary of State of the State of Georgia, in such form as required by, and
executed in accordance with the relevant provisions of, Georgia Law. The Merger
shall become effective at such time as the Articles of Merger are duly filed
with such Secretary of State, or at such other time as TCM and the Company shall
agree and specify in the Articles of Merger (the time the Merger becomes
effective being the "Effective Time").
SECTION 2.03 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Articles of Merger and the
applicable provisions of Georgia Law. Without limiting the generality of the
foregoing, at the Effective Time, all the property, rights, privileges, powers
and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 2.04 Articles of Incorporation; By-Laws.
(a) At the Effective Time, the Articles of Incorporation of Merger Sub, as
in effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation.
(b) The By-Laws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the By-Laws of the Surviving Corporation.
SECTION 2.05 Directors and Officers. The individuals named on Schedule 2.05
hereto shall be the initial directors of the Surviving Corporation, each to hold
office in accordance with the Articles of Incorporation and By-Laws of the
Surviving Corporation. The individuals named on Schedule 2.05 hereto shall be
the initial officers of the Surviving Corporation, each to hold office in
accordance with the Articles of Incorporation and By-Laws of
10
the Surviving Corporation until their respective successors are duly elected or
appointed and qualified.
SECTION 2.06 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of any Company Stockholder or the
holder of any shares of the capital stock of Merger Sub:
(a) Cancellation of Shares of Company Common Stock and Company Preferred
Stock. Each share of common stock, par value $0.01 per share of the Company
("Company Common Stock") held by the Company as treasury stock (or by any
subsidiary of the Company) and each share of Company Preferred Stock held by the
Company as treasury stock (or by any subsidiary of the Company) immediately
prior to the Effective Time shall automatically be canceled and retired and
cease to exist, and no consideration or payment shall be delivered therefor or
in respect thereof.
(b) Capital Stock of Merger Sub. Each share of capital stock of Merger Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into one fully paid and non-assessable share of common stock, par
value $0.001 per share of the Surviving Corporation ("Surviving Corporation
Common Stock"), with the same rights, powers and privileges as the shares so
converted and shall constitute the only outstanding shares of capital stock of
the Surviving Corporation. Each stock certificate of Merger Sub evidencing
ownership of any such shares shall remain outstanding and evidence ownership of
shares of Surviving Corporation Common Stock.
(c) Conversion of Company Capital Stock. Subject to Sections 2.08 and 5.06,
pursuant to this Agreement and by virtue of the Merger and without any action on
the part of the Company, Merger Sub, TCM or the holders of the Company Capital
Stock:
(i) each share of Company Common Stock outstanding immediately prior
to the Effective Time shall be cancelled and extinguished and thereafter
represent the right to receive 0.0289 of a share of TCM Common Stock (the
"Common Stock Exchange Ratio");
(ii) each share of Series D Preferred outstanding immediately prior to
the Effective Time shall be cancelled and extinguished and thereafter represent
the right to receive one share of TCM Series A Preferred Stock;
(iii) each share of Series E Preferred held by a Series E Affiliated
Stockholder and outstanding immediately prior to the Effective Time shall be
cancelled and extinguished and thereafter represent the right to receive one
share of TCM Series A Preferred Stock;
(iv) each share of Series E Preferred held by a Series E Preferred
stockholder (other than a Series E Affiliated Stockholder) and outstanding
immediately prior to the Effective Time shall be cancelled and extinguished and
thereafter represent the right receive $1,000; and
(v) each share of Series F Preferred Stock outstanding immediately
prior to Effective Time shall be cancelled and extinguished and thereafter
represent the right to receive 22.56 shares of TCM Common Stock.
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As of the Effective Time, all such shares shall no longer be outstanding
and shall automatically be cancelled and shall cease to exist, and each holder
of a certificate that immediately prior to the Effective Time represented any
such shares (a "Certificate") shall cease to have any rights with respect
thereto, except the right to receive the applicable Merger Consideration with
respect thereto and any cash in lieu of fractional shares of TCM Capital Stock
upon surrender of such Certificate in accordance with Section 2.07, without
interest. The right of any Company Stockholder to receive its portion of the
Merger Consideration in accordance with this Section 2.06(c) shall be subject to
and reduced by the amount of any withholding that is required under applicable
tax law.
(d) Stock Options. All options to purchase Company Common Stock granted
pursuant to the Company's 1994 Long Term Incentive Plan, as amended (the "1994
Plan"), or the Company's Non-Employee Directors' 1994 Stock Option Plan (the
"1994 Directors' Plan") (collectively, the "Company Option Plans") or pursuant
to any other arrangement adopted by the Company Board to provide options or
other rights to purchase Company Common Stock to directors, officers, employees
or consultants of the Company (in any such case, an "Option") then outstanding
(whether vested or unvested) shall be subject to the provisions of Section 5.06.
(e) Accrued and Unpaid Dividends. Pursuant to this Agreement, (i) at the
Effective Time, the Surviving Corporation shall pay each Series E Preferred
stockholder (other than a Series E Affiliated Stockholder) an amount equal to
the accrued and unpaid dividends due to each such stockholder, (ii) all accrued
and unpaid dividends (through July 1, 2005) on each outstanding share of Series
D Preferred and Series E Preferred held by a Series E Affiliated Stockholder
shall be converted at the Effective Time into the number of shares of TCM Series
A Preferred Stock determined by dividing the accrued and unpaid dividends due on
such shares by 1,000; provided that no fractional shares of TCM Series A
Preferred Stock shall be issued upon conversion and, upon such conversion, the
actual number of shares of TCM Series A Preferred Stock ultimately issued to any
holder shall have been rounded down to the nearest whole number of shares, and
(iii) all accrued and unpaid dividends (through July 1, 2005) on the outstanding
Series F Preferred shall be converted at the Effective Time into the number of
shares of TCM Common Stock determined by multiplying 0.0289 by the product of
the Series F Dividend Amount divided by $0.66; provided that no fractional
shares of TCM Common Stock shall be issued upon conversion and, upon such
conversion, the actual number of shares of TCM Common Stock ultimately issued to
any holder shall have been rounded down to the nearest whole number of shares.
(f) Cash Advance. Pursuant to this Agreement, at the Effective Time, the
Cash Advance shall be converted into 6,050 shares of TCM Series B Preferred
Stock.
SECTION 2.07 Exchange of Certificates. The procedures for exchanging
outstanding shares of Company Capital Stock for the applicable Merger
Consideration pursuant to the Merger are as follows:
(a) Exchange Agent. At or promptly following the Effective Time, TCM shall
deposit with Mellon Investor Services, LLC (the "Exchange Agent"), for the
benefit of the Company Stockholders, for exchange in accordance with this
Section 2.07, through the Exchange Agent, (i)
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the certificates representing shares of TCM Common Stock issuable pursuant to
Section 2.06(c)(i) in exchange for outstanding shares of Company Common Stock,
(ii) the certificates representing shares of TCM Series A Preferred Stock
issuable pursuant to Section 2.06(c)(ii), Section 2.06(c)(iii) and 2.06(e)(ii),
(iii) the cash payable pursuant to Section 2.06(c)(iv), (iv) the TCM Common
Stock issuable pursuant to Section 2.06(c)(v) and Section 2.06(e)(iii), and (v)
the TCM Series B Preferred Stock issuable pursuant to Section 2.06(f).
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time and in any event no later than five (5) business days thereafter,
the Exchange Agent shall mail to each holder of record (as of the Effective
Time) of a Certificate whose shares were converted pursuant to Section 2.06(c)
into the applicable Merger Consideration (plus cash in lieu of fractional
shares, if any, of TCM Common Stock as provided in Section 2.07(e)) (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates held by such person shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such form and
have such other provisions as TCM may reasonably specify), and (ii) instructions
for effecting the surrender of the Certificates in exchange for the applicable
Merger Consideration (plus cash in lieu of fractional shares, if any, of TCM
Common Stock as provided in Section 2.07(e)). Upon surrender of a Certificate
for cancellation to the Exchange Agent or to such other agent or agents as may
be appointed by TCM, together with such letter of transmittal, duly completed
and validly executed, and such other documents as may reasonably be required by
the Exchange Agent, the holder of such Certificate shall be entitled to receive
in exchange therefor the applicable Merger Consideration plus cash in lieu of
fractional shares, if any, pursuant to Section 2.07(e), and the Certificate so
surrendered shall immediately be cancelled. In the event of a transfer of
ownership of Company Capital Stock that is not registered in the transfer
records of the Company, the applicable Merger Consideration issued (and if
applicable, paid) in exchange therefor plus cash in lieu of fractional shares,
if any, pursuant to Section 2.07(e) may be issued and paid to a person other
than the person in whose name the Certificate so surrendered is registered, if
such Certificate is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes with respect to such transfer have been paid.
Until surrendered as contemplated by this Section 2.07(b), each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon such surrender the applicable Merger Consideration plus cash in
lieu of fractional shares, if any, pursuant to Section 2.07(e).
(c) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions declared or made after the Effective Time with respect to shares
of TCM Capital Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the shares of TCM
Capital Stock represented thereby until the holder of record of such Certificate
surrenders such Certificate. Subject to applicable Law, following surrender of
any such Certificate, there shall be issued and paid to the record holder of the
Certificate, (i) the applicable Merger Consideration, (ii) the amount of any
cash payable in lieu of a fractional share of TCM Common Stock to which such
holder is entitled pursuant to Section 2.07(e), without interest and (iii) the
amount of dividends or other distributions with a record date after the
Effective Time payable with respect to such whole shares of TCM Capital Stock,
without interest.
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(d) No Registration of Transfers. From and after the Effective Time there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of any Company Capital Stock that was outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be cancelled and exchanged as provided in this
Article II.
(e) No Fractional Shares. No certificate or scrip representing fractional
shares of TCM Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any other rights of a stockholder of TCM. Fractional
shares of TCM Common Stock will be aggregated and sold in the market by the
Exchange Agent at the then prevailing prices. The aggregated net cash proceeds
of those sales will be distributed ratably to each holder of shares of Company
Common Stock exchanged pursuant to the Merger who would otherwise have been
entitled to receive a fraction of a share of TCM Common Stock (after taking into
account all Certificates delivered by such holder). No interest will be payable
upon any such cash payment. The parties acknowledge that payment of the cash
consideration in lieu of issuing fractional shares of TCM Common Stock was not
separately bargained for consideration but merely represents a mechanical
rounding off for purposes of simplifying the corporate and accounting problems
that would otherwise be caused by the issuance of fractional shares of TCM
Common Stock.
(f) Return of Merger Consideration. Subject to Section 2.07(g), any portion
of the Merger Consideration that remains undistributed to the Company
Stockholders for 180 days after the Effective Time shall be delivered to TCM,
upon demand, and any Company Stockholder who has not exchanged such Company
Stockholder's shares of Company Capital Stock for such Company Stockholder's
portion of the applicable Merger Consideration shall thereafter look only to
TCM, as an unsecured creditor for payment of its claim for the applicable Merger
Consideration or any cash in lieu of fractional shares and any dividends or
distributions with respect thereto.
(g) No Liability. To the extent permitted by applicable Law, none of TCM,
Merger Sub, the Company, the Surviving Corporation or the Exchange Agent shall
be liable to any Person for any portion of the Merger Consideration payable at
Closing (or dividends or distributions with respect thereto) required to be
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(h) Withholding Rights. Each of TCM, the Surviving Corporation and the
Exchange Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement such amounts as it is
required to deduct and withhold with respect to the making of such payment under
the Code or any provision of state, local, provincial or foreign tax law. To the
extent that amounts are so withheld, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of Company
Capital Stock in respect of which such deduction and withholding was made.
(i) Lost, Stolen or Destroyed Certificates. If any Certificate shall have
been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for
such lost, stolen or destroyed Certificate, upon the making of an affidavit of
that fact by the holder thereof, such portion of the
14
applicable Merger Consideration; provided, however, that the Surviving
Corporation may, in its sole discretion and as a condition precedent to the
issuance and delivery thereof, require the owner of such lost, stolen or
destroyed Certificate to deliver a bond in such sum as it may reasonably direct
as indemnity against any claim that may be made against the Surviving
Corporation with respect to the Certificate alleged to have been lost, stolen or
destroyed.
SECTION 2.08 Dissenters' Rights. Notwithstanding Section 2.06(c), if any
Dissenting Stockholder that is entitled to dissenters' rights demands to be paid
the "fair value" of such holder's shares of Company Capital Stock (as provided
in Section 14-2-1323 of Georgia Law) and complies with all conditions and
obligations necessary to perfect dissenters' rights in accordance with Article
13 of Georgia Law, such shares of Company Capital Stock shall not be converted
into the right to receive the Merger Consideration except as provided in this
Section 2.08, and the Company shall give TCM prompt (and in any event no later
than the second business day after receipt thereof) notice thereof and TCM shall
have the right to participate in all negotiations and proceedings with respect
to any such demands and to receive any related notices. Without limiting the
generality of the foregoing, the Company shall promptly (and in any event no
later than the second business day after receipt thereof) deliver to TCM a copy
of all notices of intent to demand payment delivered to the Company in
compliance with Section 14-2-1321 of Georgia Law. Neither the Company nor the
Surviving Corporation shall, except with the prior written consent of TCM,
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for payment. If any Dissenting Stockholder shall fail to perfect or
shall have effectively withdrawn or lost the right to dissent, the shares of
Company Capital Stock held by such Dissenting Stockholder shall thereupon be
treated as though such shares had been converted into the Merger Consideration
pursuant to Section 2.06.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to TCM and Merger Sub, subject to such
qualifications and exceptions as are disclosed in writing in the applicable
parts of the disclosure letter delivered by the Company to TCM and Merger Sub
concurrently herewith (the "Company Disclosure Letter"). The Company Disclosure
Letter shall be arranged in paragraphs corresponding to the numbered and
lettered paragraphs in this Article III and the disclosure in any paragraph
shall qualify other paragraphs in this Article III only to the extent that it is
specifically indicated in such paragraph.
SECTION 3.01 Organization and Qualification; Subsidiaries. Each of the
Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has the requisite corporate power and authority necessary to own, lease and
operate the properties it purports to own, lease or operate and to carry on its
business as it is now being conducted. Each of the Company and its subsidiaries
is duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that could not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect. A
true
15
and complete list of all of the Company's subsidiaries, together with the
jurisdiction of incorporation of each subsidiary and the percentage of each
subsidiary's outstanding capital stock owned by the Company or another
subsidiary, is set forth in Section 3.01 of the Company Disclosure Letter. Other
than the Company's subsidiaries listed in Section 3.01 of the Company Disclosure
Letter, neither the Company nor its subsidiaries owns, directly or indirectly,
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture, limited liability company or other
business association or entity, whether incorporated or unincorporated.
SECTION 3.02 Articles of Incorporation and By-Laws. The Company has
heretofore furnished or made available to TCM a complete and correct copy of the
Company Articles of Incorporation and By-Laws (the "Company By-Laws"), and a
complete and correct copy of the equivalent organizational documents of each of
the Company's subsidiaries, each as amended to date. The Company Articles of
Incorporation and Company By-Laws, and the equivalent organizational documents
of each of the Company's subsidiaries, are in full force and effect. The Company
is not in violation of any of the provisions of the Company Articles of
Incorporation or Company By-Laws and none of the Company's subsidiaries is in
violation of any of the provisions of its equivalent organizational documents.
SECTION 3.03 Capitalization.
(a) The authorized capital stock of the Company consists of 100,000,000
shares of Company Common Stock and 5,000,000 shares of Company Preferred Stock,
of which 100,000 shares are designated as Series D Preferred, 25,000 shares are
designated as Series E Preferred, and 25,000 shares are designated as Series F
Preferred. As of the date hereof, (i) 6,889,767 shares of Company Common Stock
are issued and outstanding, (ii) no shares of Company Common Stock are held in
the treasury of the Company, (iii) 293,437 shares of Company Common Stock are
reserved for issuance pursuant to outstanding Options granted under the Company
Option Plans, (iv) 12,496.71233 shares of Series D Preferred are issued and
outstanding, (v) 7,584.815 shares of Series E Preferred are issued and
outstanding, (vi) 2,000 shares of Series F Preferred are issued and outstanding,
(vii) no shares of Company Preferred Stock are held in the treasury of the
Company, (viii) 1,249,671 shares of Company Common Stock are reserved for
issuance upon conversion of issued and outstanding shares of Series D Preferred,
(ix) 1,083,545 shares of Company Common Stock are reserved for issuance upon
conversion of issued and outstanding shares of Series E Preferred and (x)
1,562,500 shares of Company Common Stock are reserved for issuance upon
conversion of issued and outstanding shares of Series F Preferred. As of the
date hereof, there are no other shares of Company Capital Stock issued and
outstanding or reserved for future issuance. All of the issued and outstanding
shares of Company Capital Stock are duly authorized, validly issued, fully paid,
non-assessable and free of preemptive rights. None of the issued and outstanding
shares of Company Capital Stock has been issued in violation of any applicable
federal or state Law or any preemptive rights or rights to subscribe for or
purchase securities. All shares of Company Capital Stock subject to issuance as
aforesaid in clauses (iii) and (viii) through (x), upon issuance on the terms
and conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid, non-assessable and free of
preemptive rights and, assuming such issuance prior to the Effective Time, will
not have been issued in violation of the Company
16
Articles of Incorporation, any applicable federal or state Law or any preemptive
rights or rights to subscribe for or purchase securities. Except as set forth in
this Section 3.03 or Section 3.12, there are no options, warrants, calls or
preemptive rights relating to the issued or unissued capital stock of the
Company or any of its subsidiaries or obligating the Company or any of its
subsidiaries to issue, transfer, deliver or sell, or cause to be issued,
transferred, delivered or sold, any shares of capital stock of, or any
securities directly or indirectly convertible into or exercisable or
exchangeable for any shares of capital stock of, the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries has issued and
outstanding any stock appreciation rights, phantom stock, performance based
rights or similar rights or obligations. There are no obligations, contingent or
otherwise, of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of Company Capital Stock or capital stock of any
subsidiary or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in the Company, any subsidiary or any other
entity, other than guarantees of bank obligations of subsidiaries entered into
in the ordinary course of business. Except for the Existing Stockholder
Agreement, there are no voting trusts, proxies or other agreements or
understandings with respect to any Company Capital Stock to which the Company
or, to the knowledge of the Company, any other person is a party or by which the
Company or any such other person is bound. All of the outstanding shares of
capital stock of each of the Company's subsidiaries are duly authorized, validly
issued, fully paid, non-assessable and free of preemptive rights, and all such
shares are owned of record and beneficially by the Company or another subsidiary
free and clear of any and all Encumbrances.
(b) Section 3.03(b) of the Company Disclosure Letter lists all holders of
Company Preferred Stock as of the date hereof, as well as the number, class and
series of shares of Company Preferred Stock held by each such holder.
(c) Section 3.03(c) of the Company Disclosure Letter sets forth a true and
complete list of each current or former employee, officer, director or
consultant of the Company or any of its subsidiaries that holds an Option as of
the date of this Agreement, together with the number of shares of Company Common
Stock subject to such Option, the date of grant of such Option, the exercise
price of such Option, the expiration date of such Option, the vesting schedule
for such Option and whether or not such Option is intended to qualify as an
"incentive stock option" within the meaning of Section 422(b) of the Code.
Section 3.03(c) of the Company Disclosure Letter also sets forth the total
number of outstanding Options. No awards of stock purchase rights have been
granted under the Company Option Plans.
SECTION 3.04 Authority Relative to This Agreement.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement and each of the Ancillary Agreements to which the
Company is a party (subject to the receipt of the consents described in Section
3.05(b)) and to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby (other than the
approval and adoption of this Agreement, the Merger and the other transactions
contemplated hereby by the stockholders of the Company in accordance with
Georgia Law and the Company Articles of Incorporation (the "Company
Stockholders' Action"). The execution and delivery of this Agreement and the
Ancillary Agreements by the Company and the
17
consummation by the Company of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate action on the
part of the Company, and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or any of the Ancillary
Agreements or to consummate the transactions so contemplated, other than the
Company Stockholders' Action. This Agreement has been, and the Ancillary
Agreements will be, duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery of this Agreement and the
Ancillary Agreements by each of the other parties hereto and thereto,
constitutes, or, in the case of the Ancillary Agreements, will constitute,
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except to the extent such
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting creditors
generally or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(b) The Company Special Committee and the Company Board (i) have
unanimously declared that this Agreement, the Merger and the other transactions
contemplated hereby (other than the Spin-off) and thereby are advisable, fair to
and in the best interests of the stockholders of the Company, (ii) have
unanimously authorized, approved and adopted this Agreement, the Ancillary
Agreements, the Merger and the other transactions contemplated hereby and
thereby and (iii) have recommended that the stockholders of the Company
authorize, approve and adopt this Agreement, the Merger and the other
transactions contemplated hereby (other than the Spin-off) and thereby.
SECTION 3.05 No Conflict; Required Filings and Consents.
(a) Except as set forth in Section 3.05 of the Company Disclosure Letter,
the execution and delivery of this Agreement and the Ancillary Agreements by the
Company do not, and the performance of this Agreement and the Ancillary
Agreements by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby will not (i) conflict with or
violate the Company Articles of Incorporation or Company By-Laws or the
equivalent organizational documents of any of the Company's subsidiaries, (ii)
conflict with or violate any Law applicable to the Company or any of its
subsidiaries or by which any of its or any of its subsidiaries' properties or
operations is bound or affected or (iii) conflict with, result in any breach of,
or constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair the Company's or any of its
subsidiaries' rights or entitle any party to rights or privileges that such
party was not entitled to receive immediately before this Agreement or the
Ancillary Agreements were executed, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of an
Encumbrance (other than a Permitted Encumbrance) on any of the properties or
assets of the Company or any of its subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries, or any of its or
any of its subsidiaries' properties, is bound or affected, except in the case of
clauses (ii) and (iii), as would not, individually or in the aggregate, have a
Company Material Adverse Effect.
18
(b) The execution and delivery of this Agreement and the Ancillary
Agreements by the Company do not, and the performance of this Agreement and the
Ancillary Agreements by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby will not, require any waiver,
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity or other third party, except (i) for applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and state
securities laws ("Blue Sky Laws"), (ii) for the filing of the Articles of Merger
as required by Georgia Law, and (iii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay consummation of the Merger, otherwise prevent or
delay the Company from performing its obligations under this Agreement.
SECTION 3.06 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents required to be
filed by it pursuant to the Securities Act or the Exchange Act with the
Securities and Exchange Commission (the "SEC") since August 31, 2003
(collectively, the "Company SEC Reports"). The Company SEC Reports (i) were
prepared in compliance in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. None of the
Company's subsidiaries is required to file any forms, reports or other documents
with the SEC.
(b) The consolidated financial statements (including, in each case, the
related notes thereto) contained in the Company SEC Reports were prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated therein or in the notes thereto), and
fairly present in all material respects the consolidated financial position of
the Company and its subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not, or are not expected to
be, material in amount and such statements do not contain notes required by
GAAP.
(c) Since the date of the latest Company SEC Report that included the
certifications required by Rule 13a-14(a) of the Exchange Act, the Company has
not materially and adversely amended its disclosure controls and procedures (as
defined in Rule 13a-15(e) of the Exchange Act) or its internal controls over
financial reporting (as defined in Rule 13a-15(f) of the Exchange Act), as
previously described in its Company SEC Reports. The Company has made available
to TCM, complete and correct copies of, all formal written descriptions of, and
all policies, manuals and other documents promulgating, such disclosure controls
and procedures.
(d) Since the date of the latest Company SEC Report that included the
certifications required by Rule 13a-14(a) of the Exchange Act, neither the
Company nor any subsidiary nor, to the Company's knowledge, any member of the
audit committee or executive officer of the
19
Company or any subsidiary, has received any complaint, allegation, assertion or
claim, whether made in writing or orally to any such person, regarding the
accounting, internal accounting controls or auditing matters of the Company or
any subsidiary, including any complaint, allegation, assertion or claim that the
Company or any Subsidiary has engaged in questionable accounting or auditing
matters. Since the date of the latest Company SEC Report that included the
certifications required by Rule 13a-14(a) of the Exchange Act, no attorney
representing the Company or any subsidiary has reported evidence of a material
violation of the U.S. securities laws, or a material breach of fiduciary duty by
the Company or any of its officers or directors to the Company Board or any
committee thereof or to any executive officer of the Company. Since the date of
the latest Company SEC Report that included the certifications required by Rule
13a-14(a) of the Exchange Act, there have been no internal investigations
regarding improper accounting or revenue recognition initiated at the direction
of the chief executive officer, chief financial officer, general counsel, the
Company Board or any committee thereof.
(e) Except as provided in the Company SEC Reports, there are no material
off balance sheet arrangements (as defined in Item 303 of Regulation S-K) that
have or are reasonably likely to have a material current or future effect on the
Company's financial liquidity, capital expenditures or capital resources.
(f) The Company is in compliance in all material respects with the
applicable provisions of the Sarbanes Oxley Act of 2002 in effect as of the date
hereof.
SECTION 3.07 Proxy Statement. The Company Proxy Statement will comply in
all material respects with the Exchange Act. The Company Proxy Statement shall
not, at the time the Proxy Statement is mailed or at the time of the Company
Stockholder's Meeting or at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the Company makes no representation or warranty as to any of the
information supplied by or on behalf of TCM and Merger Sub specifically for
inclusion in the Company Proxy Statement. The letter to stockholders, notice of
meeting, proxy statement and form of proxy contained in the Form S-4, to be
distributed to stockholders in connection with the Merger, or any schedule
required to be filed with the SEC in connection therewith, together with any
amendments or supplements thereto, are collectively referred to herein as the
"Company Proxy Statement."
SECTION 3.08 Compliance, Permits.
(a) Each of the Company and its subsidiaries, and each of its and its
subsidiaries' properties and operations, are in compliance with all foreign,
federal, state and local statutes, laws, rules, regulations, ordinances, orders,
judgments, decrees and other authorizations and approvals of Governmental
Entities (collectively, "Laws"), applicable to the Company or any of its
subsidiaries or by which any of its or any of its subsidiaries' properties or
operations is bound or affected, except where any such non-compliance would not
have a Company Material Adverse Effect. Neither the Company nor any of its
subsidiaries has received any notice or other communication (whether written or
oral) from any Governmental Entity regarding any actual,
20
alleged, possible or potential violation of, or any failure to comply with, any
Law, except where any such violation or failure to comply would not have a
Company Material Adverse Effect.
(b) Each of the Company and its subsidiaries possesses all permits,
licenses, consents, franchises, orders, approvals, certifications, registrations
and authorizations from Governmental Entities necessary to enable it to continue
to own, lease, operate and use its assets and properties and conduct its
business as presently conducted, including all permits, licenses, consents,
franchises, orders, approvals, certifications, registrations and authorizations
required under applicable Environmental Laws (collectively, the "Company
Permits"), except where the failure to possess any of the foregoing would not
have a Company Material Adverse Effect. All of the Company Permits are valid and
in full force and effect, except where any such invalidity would not have a
Company Material Adverse Effect, and there is no proceeding pending to revoke,
cancel, rescind, refuse to renew in the ordinary course or modify any of the
Company Permits. Each of the Company and its subsidiaries is in compliance with
the terms and conditions of the Company Permits and with all material
requirements, standards and procedures of the Governmental Entities that issued
them, and with any limitation or, to the knowledge of the Company, proposed
limitation on any Company Permit, except where such non-compliance would not
have a Company Material Adverse Effect, and the Company has no reasonable basis
to believe that the business will not remain capable of continued operation
consistent with past practice and in compliance with the terms and conditions of
the Company Permits following consummation of the transactions contemplated by
this Agreement.
SECTION 3.09 Absence of Certain Changes or Events. Except as set forth in
Section 3.09 of the Company Disclosure Letter and to the extent specifically
disclosed in the Company SEC reports, since August 31, 2004, each of the Company
and its subsidiaries has conducted its business in the ordinary course
consistent with past practice and there has not been: (i) any Company Material
Adverse Effect; (ii) any damage to, destruction or loss of any material assets
of the Company or any of its subsidiaries (whether or not covered by insurance);
(iii) any declaration, setting aside or payment of any dividend or other
distribution in respect of the Company Capital Stock or any repurchase,
redemption or other acquisition by the Company or any of its subsidiaries of any
Company Capital Stock; (iv) any change in accounting methods, principles or
practices by the Company affecting the consolidated assets, liabilities, results
of operations or business of the Company, except insofar as have been required
by a change in GAAP; or (v) any action that, if it had been in effect, would
have been prohibited by Section 5.01.
SECTION 3.10 No Undisclosed Liabilities. At May 31, 2005, the Company and
each of its subsidiaries did not have any liabilities or obligations of any
nature (whether absolute, contingent or otherwise) other than those that would
be required to be and were reflected on a balance sheet prepared in accordance
with GAAP or for which adequate reserves are reflected in the Company's
financial statements. Since May 31, 2005, except (i) as and to the extent
specifically disclosed in the Company SEC Reports or accrued on the May 31, 2005
balance sheet, (ii) as set forth in Section 3.10 of the Company Disclosure
Letter, (iii) for liabilities incurred in the ordinary course of business and
otherwise not in contravention of this Agreement and (iv) where any liability,
individually or in the aggregate, would not have a Company Material Adverse
Effect, the Company and each of its subsidiaries does not have any liabilities
or
21
obligations of any nature (whether absolute, contingent or otherwise) other than
liabilities and obligations under this Agreement or incurred in connection with
the transactions contemplated by this Agreement.
SECTION 3.11 Litigation. Except as disclosed in Section 3.11 of the Company
Disclosure Letter, there is no claim, suit, action or proceeding pending or, to
the knowledge of the Company, threatened against the Company or any of its
subsidiaries that individually or in the aggregate has had or could reasonably
be expected to have a Company Material Adverse Effect, or which questions or
challenges the validity of this Agreement, the transactions contemplated by this
Agreement or any action taken or to be taken by the Company or which attempts to
restrain, enjoin or prohibit the transactions contemplated by this Agreement.
Except as disclosed in the Company Disclosure Letter, there is no judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any of its subsidiaries which individually or
in the aggregate has had or could reasonably be expected to have a Company
Material Adverse Effect.
SECTION 3.12 Employee Benefit Plans; Employment Agreements.
(a) Section 3.12(a) of the Company Disclosure Letter sets forth a true and
complete list of all "employee benefit plans" within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and any other material bonus, profit sharing, compensation, pension, severance,
deferred compensation, fringe benefit, insurance, welfare, post-retirement,
health, life, stock option, stock purchase, restricted stock, tuition refund,
service award, company car, scholarship, relocation, disability, accident, sick,
vacation, holiday, termination, unemployment, individual employment, consulting,
executive compensation, incentive, commission, retention, change in control,
noncompetition and other plans, agreements, policies, trust funds or
arrangements (whether written or unwritten, insured or self-insured, domestic or
foreign) (1) established, maintained, sponsored or contributed to (or with
respect to which any obligation to contribute has been undertaken) by the
Company or any entity that would be deemed a "single employer" with the Company
under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA (a
"Company ERISA Affiliate") on behalf of any employee, officer, director,
consultant or stockholder of the Company or any of its subsidiaries (whether
current, former or retired) or their beneficiaries or (2) with respect to which
the Company or any Company ERISA Affiliate has or has had any obligation on
behalf of any such employee, officer, director, consultant, stockholder or
beneficiary (each a "Company Plan" and, collectively, the "Company Plans"). True
and complete copies of each of the Company Plans and related documents have been
delivered or made available to TCM.
(b) None of the Company (including any subsidiary thereof), any Company
ERISA Affiliate or any of their respective predecessors has within the past six
years contributed to, contributes to, has within the past six years been
required to contribute to, or otherwise participated in or participates in or in
any way, directly or indirectly, has any liability with respect to any plan
subject to Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA,
including, without limitation, any "multiemployer plan" (within the meaning of
Sections 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code) or any
single employer pension plan (within
22
the meaning of Section 4001(a)(15) of ERISA) which is subject to Sections 4063
and 4064 of ERISA.
(c) Except as set forth in Section 3.12(c) of the Company Disclosure
Letter, With respect to each of the Company Plans: (1) each Company Plan
intended to qualify under Section 401(a) of the Code has received a favorable
opinion letter or advisory letter of the master and prototype plan sponsor of
such plan in accordance with Announcement 2001-77 by the United States Internal
Revenue Service (the "IRS") and nothing has occurred or, is expected to occur
through the date of the Effective Time that caused or is reasonably likely to
cause the loss of such qualification or the imposition of any penalty or tax
liability; (2) all payments required by such Company Plan, any collective
bargaining agreement or other agreement, or by Law (including, without
limitation, all contributions, insurance premiums or intercompany charges) with
respect to all prior periods have been made or provided for by the Company as
applicable, in accordance with the provisions of such Company Plan, applicable
Law and United States GAAP; (3) no claim, lawsuit, arbitration or other action
has been asserted, instituted or, to the knowledge of the Company, is threatened
against such Company Plan (other than routine claims for benefits and appeals of
such claims), any trustee or fiduciaries thereof, the Company (including any
subsidiary thereof), any Company ERISA Affiliate, any director, officer or
employee thereof, or any of the assets of any trust of such Company Plan; (4)
such Company Plan complies and has been maintained and operated in all material
respects in accordance with its terms and applicable Law, including, without
limitation, ERISA and the Code; (5) no non-exempt "prohibited transaction,"
within the meaning of Section 4975 of the Code and Section 406 of ERISA, has
occurred or is reasonably expected to occur with respect to such Company Plan
that could result in the imposition of any penalty or tax on the Company or any
Company ERISA Affiliate; and (6) such Company Plan is not under, and the Company
has not received any notice of, an audit or investigation by the IRS, U.S.
Department of Labor or any other Governmental Entity and no such completed
audit, if any, has resulted in the imposition of any tax or penalty.
(d) Except as set forth in Section 3.12(d) of the Company Disclosure
Letter, the consummation of the transactions contemplated by this Agreement
alone, or in combination with a termination of any employee, director or
stockholder of the Company or any of its subsidiaries (whether current, former
or retired), will not give rise to any liability under any Company Plan,
including, without limitation, liability for severance pay, or accelerate the
time of payment or vesting or increase the amount of compensation or benefits
due to any employee, director or stockholder of the Company or any of its
subsidiaries (whether current, former or retired) or their beneficiaries. No
amounts payable under any Company Plan will fail to be deductible for federal
income tax purposes by virtue of Sections 280G or 162(m) of the Code. Neither
the Company (including any subsidiary thereof) nor any Company ERISA Affiliate
maintains, contributes to or in any way provides for any benefits of any kind
whatsoever (other than under Section 4980B of the Code, the Federal Social
Security Act or a plan qualified under Section 401(a) of the Code) to any
current or future retiree or terminee. Any individual who performs services for
the Company or any of its subsidiaries and who is not treated as an employee for
federal income tax purposes by the Company or any of its subsidiaries is not an
employee under applicable Law or for any purpose including, without limitation,
for tax withholding purposes or Company Plan purposes.
23
(e) None of the Company, its subsidiaries and their respective Company
ERISA Affiliates have any unfunded liabilities pursuant to any Company Plan that
is not intended to be qualified under Section 401(a) of the Code and is an
employee pension benefit plan within the meaning of Section 3(2) of ERISA, a
nonqualified deferred compensation plan or an excess benefit plan. Each Company
Plan that is a "nonqualified deferred compensation plan" (as defined under
Section 409A(d)(1) of the Code) has been operated and administered in good faith
compliance with Section 409A of the Code from the period beginning January 1,
2005 through the date hereof and has not been materially modified since October
2, 2004.
SECTION 3.13 Employees; Labor Matters.
(a) No employee or former employee of the Company or any of its
subsidiaries is owed any wages, benefits or other compensation for past services
(other than wages, benefits and compensation accrued in the ordinary course of
business during the current pay period and accrued vacation).
(b) There are no labor disputes, including, without limitation, charges of
unfair labor practices within the meaning of the National Labor Relations Act,
pending or, to the knowledge of the Company, threatened against the Company or
any of its subsidiaries by any of its employees. Neither the Company nor any of
its subsidiaries, within the past five years, has or is knowingly engaged in any
unfair labor practices within the meaning of the National Labor Relations Act,
except where such actions would not have a Company Material Adverse Effect.
Neither the Company nor any of its subsidiaries is presently a party to, or is
bound by, any collective bargaining agreement or union contract with respect to
any persons employed by the Company or any of its subsidiaries, and no
collective bargaining agreement is being negotiated by the Company or any of its
subsidiaries. To the knowledge of the Company, no organizing activities are
presently being made or are threatened by or on behalf of any labor union with
respect to any employees of the Company or any of its subsidiaries. The Company
has no knowledge of any strikes, slowdowns, work stoppages or lockouts, or
threats thereof, by or with respect to any employees of the Company or any of
its subsidiaries, and there have been no such strikes, slowdowns, work stoppages
or lockouts within the past three years. Each of the Company and its
subsidiaries is in compliance with all applicable Laws relating to employment
and employment practices, workers' compensation, terms and conditions of
employment, worker safety, wages and hours and the Worker Adjustment and
Retraining Notification Act, except where such non-compliance would not have a
Company Material Adverse Effect. There has been no harassment, discrimination,
retaliatory act or similar claim against any officer, director or employee of
the Company or any of its subsidiaries at any time during the past three years,
except where any such action would not have a Company Material Adverse Effect.
SECTION 3.14 Taxes.
(a) Except as set forth in Section 3.14(a) of the Company Disclosure
Letter, each of the Company and its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which the Company or
any of its subsidiaries is a member, have timely filed all United States federal
income Tax Returns and all other Tax Returns required to be filed by them or any
of them (taking into account applicable extensions), and have timely paid and
discharged
24
all material Taxes required to be paid (whether or not shown on such Tax
Returns), other than Taxes the payment of which is being contested in good faith
by appropriate proceedings. The most recent financial statements contained in
the Company SEC Reports reflect, with respect to any liability for Taxes of the
Company and its subsidiaries for any years ended on or before the date of such
Company SEC Reports and either not finally determined or with respect to which
the applicable statute of limitations has not expired, an adequate reserve to
satisfy any assessment for such Taxes for such years. All federal income Tax
Returns and all other Tax Returns filed by each of the Company and its
subsidiaries with respect to Taxes are true and correct in all material
respects. Copies of all federal, state and foreign income Tax Returns for the
three years preceding the Closing Date that are true, complete and correct in
all material respects have been previously provided or made available to TCM.
Neither the IRS nor any other taxing authority or agency is now asserting or, to
the Company's knowledge, threatening to assert against the Company or any of its
subsidiaries any deficiency or claim for material additional Taxes which have
not been paid. There are no requests for information from the IRS or any other
taxing authority or agency currently outstanding. There are no pending audits of
the Company or any of its subsidiaries by any taxing authority nor, to the
Company's knowledge, are any proceedings (whether administrative or judicial)
currently being conducted with respect to any issues relating to Taxes. No Tax
claim has become a lien on any assets of the Company or any of its subsidiaries.
Neither the Company nor any of its subsidiaries is required to include in income
(i) any material items in respect of any change in accounting methods or (ii)
any gain with respect to installment sales.
(b) (i) Neither the Company nor any of its subsidiaries has any liability
for any accumulated earnings tax or personal holding company tax; (ii) there are
no waivers or extensions of any applicable statute of limitations for the
assessment or collection of Taxes with respect to any Tax Return that relates to
the Company or any of its subsidiaries that remain in effect; (iii) there are no
Tax rulings or closing agreements relating to the Company or any of its
subsidiaries that would affect its or any of their liability for Taxes for any
period after the Effective Time; and (iv) neither the Company nor any of its
subsidiaries has any liability for Taxes of any person (other than the Company
and its subsidiaries) under Treasury Regulation Section 1.1502-6 or any similar
state, local or foreign provision.
(c) Neither the Company nor any of its subsidiaries is a party to any
agreement (written or oral) providing for the allocation or sharing of, or
indemnification from, Taxes with any party other than the Company and/or one or
more of its subsidiaries.
(d) Each of the Company and its subsidiaries has withheld from each payment
made to any of its past or present employees, officers or directors, or any
other person, the amount of all material Taxes and other deductions required to
be withheld therefrom and paid the same to the proper taxing authorities within
the time required by Law, including , without limitation, withholding Taxes on
Options exercised prior to the Closing.
(e) The Company is not, nor was it any time during the five-year period
ending on the date on which the Effective Time occurs, a "United States real
property holding corporation" within the meaning of Section 897(c) of the Code.
25
(f) Neither the Company nor any of its subsidiaries has any excess loss
accounts or deferred intercompany gain.
SECTION 3.15 Environmental Matters.
(a) All of the current and past operations of the Company, its subsidiaries
and the Assets, including any operations at or from any real property owned,
used, leased, occupied, managed or operated by the Company or any of its
subsidiaries (the "Company Real Property"), comply and have at all times during
the Company's ownership, use or operation thereof complied in all material
respects with all applicable Environmental Laws. Neither the Company nor any of
its subsidiaries, or, to the knowledge of the Company, any other person, has
engaged in, authorized, allowed or suffered any operations or activities upon
any of the Company Real Property for the purpose of or in any way involving the
handling, manufacture, treatment, processing, storage, use, generation, release,
discharge, emission, dumping or disposal of any Hazardous Substances at, on or
under the Company Real Property, except in compliance with all applicable
Environmental Laws.
(b) Neither the Assets nor the Company Real Property contain any Hazardous
Substances in, on, over, under or at it in concentrations which would presently
violate Environmental Laws or impose liability or obligations on the present or
former owner, manager, or operator of the Company Real Property under the
Environmental Laws for any investigation, corrective action, remediation or
monitoring of Hazardous Substances in, on, over, under or at the Company Real
Property. None of the Company Real Property is listed or proposed for listing on
the National Priorities List pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et
seq., or any similar inventory of sites requiring investigation or remediation
maintained by any state. Neither the Company nor any of its subsidiaries has
received any notice, whether oral or written, from any Governmental Entity or
other person of any actual or threatened Environmental Liabilities with respect
to the Company, its subsidiaries, the Company Real Property or the Assets or the
conduct of the business of the Company or any of its subsidiaries.
(c) There are no underground storage tanks, asbestos or asbestos containing
materials, polychlorinated biphenyls, urea formaldehyde, or other Hazardous
Substances (other than small quantities of Hazardous Substances stored and
maintained in accordance and compliance with all applicable Environmental Laws
for use in the ordinary course of business of the Company and its subsidiaries)
in, on, over, under or at any presently owned, managed or operated Company Real
Property.
(d) To the knowledge of the Company, there are no conditions existing at
any Company Real Property or with respect to the Assets, that require, or which
with the giving of notice or the passage of time or both may require remedial or
corrective action, removal or closure pursuant to the Environmental Laws.
(e) The Company has provided or made available to TCM all material
environmental reports, assessments, audits, studies, investigations, data and
other material written
26
environmental information in its custody, possession or control concerning the
Company, its subsidiaries, the Assets or the Company Real Property.
(f) Neither the Company nor any of its subsidiaries has contractually, or
to the knowledge of the Company, by operation of law, by the Environmental Laws,
by common law or otherwise assumed or succeeded to any Environmental Liabilities
of any predecessors or any other person.
SECTION 3.16 Brokers. Except for those fees and expenses payable to the
Company Financial Advisor, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company has heretofore furnished to TCM a complete
and correct copy of all agreements between the Company and the Company Financial
Advisor, pursuant to which such firm would be entitled to any payment relating
to the transactions contemplated by this Agreement.
SECTION 3.17 Material Contracts. All of the material contracts that are
required to be described in the Company SEC Reports or required to be filed as
exhibits thereto have been described or filed as required. The Company is not,
and to the knowledge of the Company the other parties thereto are not, in
violation of, or in default under (nor does there exist any condition which upon
the passage of time or the giving of notice would cause such a violation of or
default under) any such contract, except for violations or defaults that
individually or in the aggregate have not and could not reasonably be expected
to have a Company Material Adverse Effect.
SECTION 3.18 Title to Properties; Absence of Encumbrances. The Company has
title to, or leasehold interests in, its properties sufficient to operate such
properties and to conduct its business in the ordinary course, except (i) for
those securing Taxes, assessments and other governmental charges or levies not
yet due and payable (excluding any imposed pursuant to any of the provisions of
ERISA), (ii) as listed in Section 3.18 of the Company Disclosure Letter, (iii)
such imperfections in title, liens and easements as do not materially detract
from or interfere with the use of the properties subject thereto or affected
thereby or otherwise materially impair business operations involving such
properties, and (iv) Encumbrances securing debt that is reflected in the most
recent financial statements contained in the Company SEC Reports (each of the
Encumbrances set forth in (i) through (iv), a "Permitted Encumbrance") that
individually or in the aggregate have not had and could not reasonably be
expected to have a Company Material Adverse Effect. The Company and its
subsidiaries have all patents, trademarks, trade names, service marks,
copyrights, know-how, processes and all agreements and other rights necessary to
carry on their business in substantially the same manner as now conducted. The
patents, trademarks and copyrights owned by the Company are valid and
enforceable and to the knowledge of the Company do not infringe on the rights of
any persons.
SECTION 3.19 Insurance. The Company and its subsidiaries maintain policies
of fire and casualty, liability and other forms of insurance in such amounts,
with such deductibles and against such risks and losses as are, in the Company's
judgment, reasonable for the assets and properties of the Company and its
subsidiaries and customary in the Company's industry, except
27
where the failure to maintain any such policy has not had and could not
reasonably be expected to have a Company Material Adverse Effect. As of the date
of this Agreement, except as individually or in the aggregate have not had and
could not reasonably be expected to have a Company Material Adverse Effect and
except as set forth in Section 3.19 of the Company Disclosure Letter, all such
policies are in full force and effect, all premiums due and payable thereon have
been paid or accrued, and no notice of cancellation or termination has been
received by the Company with respect to any such policy.
SECTION 3.20 Tax Matters. None of the Company, any of its subsidiaries or
any of their respective affiliates, directors, officers, employees or agents has
taken, or agreed or failed to take, any action that to their knowledge would
prevent the Merger from constituting a reorganization within the meaning of
Section 368(a) of the Code. None of the Company, any of its subsidiaries or, to
the knowledge of the Company, any of their respective affiliates, directors,
officers, employees or agents is aware of any agreement, plan or other
circumstance that would prevent the Merger from constituting a reorganization
with the meaning of Section 368(a) of the Code.
SECTION 3.21 Vote Required. The affirmative vote of the holders of (x) a
majority of each class of the then outstanding shares of Company Preferred
Stock, each voting separately as a single class, and (y) a majority of the
outstanding shares of Company Common Stock entitled to vote on the Merger is the
only vote of the holders of any class or series of the Company Capital Stock
necessary to approve or adopt this Agreement, the Merger or the consummation of
the other transactions contemplated hereby (the "Company Stockholders' Vote
Condition"). For purposes of the Company Stockholders' Vote Condition, each
outstanding share of Company Common Stock and each outstanding share of Company
Preferred Stock is entitled to one vote.
SECTION 3.22 State Takeover Statutes. The approval of this Agreement, the
Merger and the Ancillary Agreements and the transactions contemplated hereby and
thereby by the Company Board referred to in Section 3.04(b) constitutes approval
of this Agreement, the Merger and the Ancillary Agreements and the transactions
contemplated hereby and thereby for purposes of Section 14-2-1132 of Georgia Law
and represents the only action necessary to ensure that Section 14-2-1132 of
Georgia Law does not and will not apply to the execution and delivery of this
Agreement or the Ancillary Agreements or the consummation of the Merger or the
other transactions contemplated hereby (other than the Spin-off) or thereby. No
other state takeover or similar statute or regulation is applicable to this
Agreement, the Merger or the other transactions contemplated by this Agreement.
The Company has no shareholder rights or "poison pill" that would be applicable
to the Merger, this Agreement, the Ancillary Agreements or the transactions
contemplated hereby or thereby.
SECTION 3.23 Fairness Opinion. The Company has received the written opinion
of the Company Financial Advisor, in customary form and based on customary
assumptions, to the effect that the Common Stock Exchange Ratio is fair to the
holders of the Company Common Stock (other than J. Xxxx Xxxxxxxx and other
affiliated stockholders of the Company). The Company has delivered to TCM a
true, correct and complete copy of such opinion. The Company has been authorized
by the Company Financial Advisor to permit the inclusion of such
28
opinion (and, subject to prior review and consent by the Company Financial
Advisor, a reference thereto) in the Company Proxy Statement.
SECTION 3.24 No Other Representations and Warranties.
(a) Except for (i) the representations and warranties contained in Article
IV, (ii) in connection with any information supplied by TCM for inclusion in the
Form S-4 and (iii) the representations and warranties contained in the Xxxx Side
Letter, the Company acknowledges that neither TCM nor any other person makes any
express or implied representation or warranty with respect to TCM or its
subsidiaries, the business of TCM and its subsidiaries or otherwise or with
respect to any other information provided to the Company, whether on behalf of
TCM or such other persons, including the success or profitability of the
ownership, use or operation of the business of TCM and its subsidiaries Business
after the Closing.
(b) In connection with the Company's investigation of the Assets and the
business of TCM and its subsidiaries, the Company may have received or may
receive from or on behalf of TCM or its subsidiaries certain projections or
forward-looking statements, including projected statements of operating revenues
and income from operations. The Company acknowledges that there are
uncertainties inherent in attempting to make such estimates, projections and
other forecasts and plans, that the Company is familiar with such uncertainties,
that the Company is taking full responsibility for making its own evaluation of
the adequacy and accuracy of all estimates, projections and other forecasts and
plans so furnished to it, and that the Company, in the absence of fraud, or
except as provided in the next sentence, shall have no claim against TCM or any
of its subsidiaries or any other person acting on their behalf with respect
thereto whether before or after the execution and delivery of this Agreement or
the Closing Date. Accordingly, neither TCM nor its subsidiaries make any
representation or warranty with respect to such estimates, projections,
forward-looking statements and other forecasts and plans, except that TCM and
its subsidiaries had a reasonable basis to make such estimates, projections,
forward-looking statements and other forecasts and plans. Notwithstanding the
preceding sentence, nothing in this Section 3.24(b) shall be construed to limit
the representations and warranties of the Company set forth in Sections 3.06,
3.07, 3.09, 3.10 and 3.18.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF TCM
TCM and Merger Sub represent and warrant to the Company, subject to such
qualifications and exceptions as are disclosed in writing in the applicable
parts of the disclosure letter delivered by TCM to the Company concurrently
herewith (the "TCM Disclosure Letter"). The TCM Disclosure Letter shall be
arranged in paragraphs corresponding to the numbered and lettered paragraphs in
this Article IV and the disclosure in any paragraph shall qualify other
paragraphs in this Article IV only to the extent that it is specifically
indicated in such paragraph.
SECTION 4.01 Organization and Qualification. Each of TCM and Merger Sub is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has the requisite corporate
power and authority necessary to own, lease and operate the properties it
purports to own, lease or operate and to carry on its
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business as it is now being conducted. Each of TCM and Merger Sub is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not result in a material adverse effect on the
business, operations, condition (financial or otherwise), assets, properties
(including intangible properties) or liabilities of TCM and its subsidiaries,
taken as a whole. Other than Merger Sub and TCM's subsidiaries listed in Section
4.01 of the TCM Disclosure Letter, neither TCM, Merger Sub nor its respective
subsidiaries owns, directly or indirectly, any equity or similar interest in, or
any interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, joint venture, limited
liability company or other business association or entity, whether incorporated
or unincorporated.
SECTION 4.02 Organizational Documents. TCM has heretofore furnished to the
Company a complete and correct copy of its organizational documents and the
organizational documents of Merger Sub, each as amended to date. Such
organizational documents are in full force and effect. Neither TCM nor Merger
Sub is in violation of any of the provisions of its organizational documents.
SECTION 4.03 Capitalization. The authorized capital stock of the TCM
consists of (i) 25,000,000 shares of TCM Common Stock, and (ii) 150,000 shares
of TCM Preferred Stock of TCM, of which 50,000 shares have been designated as
TCM Series A Preferred Stock and 20,000 shares have been designated as TCM
Series B Preferred Stock. As of the date hereof, (i) 100 shares of TCM Common
Stock are issued and outstanding, (ii) no share of TCM Common Stock is held in
the treasury of TCM, and (iii) no share of TCM Preferred Stock is issued and
outstanding. As of the date hereof, there are no other shares of TCM Capital
Stock issued and outstanding or reserved for future issuance. All of the issued
and outstanding shares of TCM Capital Stock are duly authorized, validly issued,
fully paid, non-assessable and free of preemptive rights. None of the issued and
outstanding shares of TCM Capital Stock has been issued in violation of any
applicable federal or state Law or any preemptive rights or rights to subscribe
for or purchase securities. There are no options, warrants, calls or preemptive
rights relating to the issued or unissued capital stock of TCM or any of its
subsidiaries or obligating TCM or any of its subsidiaries to issue, transfer,
deliver or sell, or cause to be issued, transferred, delivered or sold, any
shares of capital stock of, or any securities directly or indirectly convertible
into or exercisable or exchangeable for any shares of capital stock of, TCM or
any of its subsidiaries. Neither TCM nor any of its subsidiaries has issued and
outstanding any stock appreciation rights, phantom stock, performance based
rights or similar rights or obligations. There are no obligations, contingent or
otherwise, of TCM or any of its subsidiaries to repurchase, redeem or otherwise
acquire any shares of TCM Capital Stock or capital stock of any subsidiary or to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in TCM, any subsidiary or any other entity, other
than guarantees of bank obligations of subsidiaries entered into in the ordinary
course of business. There are no voting trusts, proxies or other agreements or
understandings with respect to any TCM Capital Stock to which TCM or, to the
knowledge of TCM, any other person is a party or by which TCM or any such other
person is bound. All of the outstanding shares of capital stock of each of TCM's
subsidiaries are duly authorized, validly issued, fully paid, non-assessable and
free of
30
preemptive rights, and all such shares are owned of record and beneficially by
TCM or another subsidiary free and clear of any and all Encumbrances.
SECTION 4.04 Issuance of Merger Consideration. The issuance of the TCM
Common Stock pursuant to the Merger has been duly authorized by all necessary
corporate action and, when issued in accordance with the terms of this Agreement
and the instruments pursuant to which they are issuable, such shares of TCM
Common Stock will be duly authorized and validly issued, fully paid and
non-assessable.
SECTION 4.05 Authority Relative to this Agreement.
(a) Each of TCM and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement and each of the Ancillary
Agreements to which it is a party and (subject to the receipt of the consents
described in Section 4.06(b) hereof) to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Ancillary Agreements to
which it is a party by TCM and Merger Sub, and the consummation by TCM and
Merger Sub of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all necessary corporate action on the part of TCM and
Merger Sub, as the case may be, and no other corporate proceedings on the part
of TCM or Merger Sub are necessary to authorize this Agreement or any of the
Ancillary Agreements or to consummate the transactions so contemplated. This
Agreement has been, and the Ancillary Agreements will be, duly and validly
executed and delivered by TCM and Merger Sub and, assuming the due
authorization, execution and delivery of this Agreement and the Ancillary
Agreements by each of the other parties hereto and thereto, constitutes, or, in
the case of the Ancillary Agreements, will constitute, legal, valid and binding
obligations of TCM and Merger Sub, enforceable against TCM and Merger Sub in
accordance with their respective terms.
(b) The board of directors of Merger Sub (i) has declared that this
Agreement, the Merger, the Ancillary Agreements to which it is party and the
other transactions contemplated hereby and thereby are advisable and in the best
interests of its stockholder and (ii) has authorized, approved and adopted this
Agreement, the Ancillary Agreements to which it is party, the Merger and the
other transactions contemplated hereby and thereby.
(c) The TCM Special Committee and the TCM Board (i) have unanimously
declared that this Agreement, the Merger, the Ancillary Agreements and the other
transactions contemplated hereby and thereby are advisable, fair to and in the
best interests of the stockholder of TCM and (ii) have unanimously authorized,
approved and adopted this Agreement, the Ancillary Agreements, the Merger and
the other transactions contemplated hereby and thereby.
(d) The sole stockholder of TCM and the sole stockholder of Merger Sub have
authorized, approved and adopted this Agreement, the Ancillary Agreements, the
Merger and the other transactions contemplated hereby and thereby.
SECTION 4.06 No Conflict; Required Filings and Consents.
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(a) The execution and delivery of this Agreement and the Ancillary
Agreements by TCM and Merger Sub do not, and the performance of this Agreement
and the Ancillary Agreements by TCM and Merger Sub and the consummation by TCM
and Merger Sub of the transactions contemplated hereby and thereby will not, (i)
conflict with or violate the organizational documents of TCM or Merger Sub, (ii)
conflict with or violate any Law applicable to TCM or Merger Sub or by which any
of their respective properties is bound or affected or (iii) conflict with,
result in any breach of, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or impair TCM's or
Merger Sub's rights or alter the rights or obligations of any third party under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of an Encumbrance (other than a
Permitted Encumbrance) on any of the material properties or assets of TCM or
Merger Sub pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which TCM or Merger Sub is a party or by which TCM or Merger Sub or any of
their respective properties is bound or affected except, in the case of clauses
(ii) and (iii), for such conflicts, breaches, violations, defaults, impairments
or alterations that would not prevent or delay consummation of the Merger, or
otherwise prevent or delay TCM or Merger Sub from performing its obligations
under this Agreement.
(b) Except as set forth in Section 4.06(b) of the TCM Disclosure Letter,
the execution and delivery of this Agreement and the Ancillary Agreements by TCM
and Merger Sub do not, and the performance of this Agreement and the Ancillary
Agreements by TCM and Merger Sub and the consummation by TCM and Merger Sub of
the transactions contemplated hereby and thereby will not, require any waiver,
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity or other third party, except (i) for applicable
requirements of the Securities Act, the Exchange Act, Blue Sky Laws, and the
rules and regulations of Nasdaq, (ii) for the filing of the Articles of Merger
as required by Georgia Law, and (iii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay consummation of the Merger, or otherwise prevent or
delay TCM or Merger Sub from performing its obligations under this Agreement.
SECTION 4.07 Financial Statements. TCM has heretofore furnished to the
Company complete and correct copies of (i) the unaudited consolidated balance
sheet of TCM as of June 30, 2005 and the related consolidated statements of
income and cash flows for the three months then ended (the "TCM Interim
Financial Statements"), certified by the principal financial and accounting
officer of TCM as being in accordance with GAAP, and (ii) the audited
consolidated balance sheets of the Company as of December 31, 2004 and December
31, 2003 and the related consolidated statements of income and cash flows for
three years ended December 31, 2004, accompanied by the report of TCM's
independent public accountants thereon (the "TCM Audited Financial Statements"
and, together with the TCM Interim Financial Statements, the "TCM Financial
Statements"). Each of the TCM Financial Statements (including, in each case, the
related notes thereto) was prepared in accordance with the books and records of
TCM and its subsidiaries and in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated therein or in
the notes thereto), and each fairly presents the consolidated financial position
of TCM and its subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the
32
periods indicated consistent with the books and records of TCM, except that the
TCM Interim Financial Statements are subject to normal and recurring year-end
adjustments which will not be material in amount and such TCM Interim Financial
Statements may not contain all notes required by GAAP. The books and records of
TCM are complete and correct in all material respects.
SECTION 4.08 Registration Statement. The registration statement on Form S-4
pursuant to which the TCM Common Stock to be issued in the Merger will be
registered with the SEC (including any amendment or supplement thereto) will
comply in all material respects with the Securities Act. The Form S-4 shall not,
at the Effective Time, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that TCM makes no representation
or warranty as to any of the information supplied by or on behalf of the Company
specifically for inclusion in the Form S-4.
SECTION 4.09 Compliance, Permits.
(a) Each of TCM and its subsidiaries, and each of its and its subsidiaries'
properties and operations, are in compliance with all Laws, applicable to TCM or
any of its subsidiaries or by which any of its or any of its subsidiaries'
properties or operations is bound or affected, except where any such
non-compliance would not have a TCM Material Adverse Effect. Neither TCM nor any
of its subsidiaries has received any notice or other communication (whether
written or oral) from any Governmental Entity regarding any actual, alleged,
possible or potential violation of, or any failure to comply with, any Law,
except where any such violation or failure to comply would not have a TCM
Material Adverse Effect.
(b) Each of TCM and its subsidiaries possesses all permits, licenses,
consents, franchises, orders, approvals, certifications, registrations and
authorizations from Governmental Entities necessary to enable it to continue to
own, lease, operate and use its assets and properties and conduct its business
as presently conducted, including all permits, licenses, consents, franchises,
orders, approvals, certifications, registrations and authorizations required
under applicable Environmental Laws (collectively, the "TCM Permits"), except
where the failure to possess any of the foregoing would not have a TCM Material
Adverse Effect. All of the TCM Permits are valid and in full force and effect,
except where any such invalidity would not have a TCM Material Adverse Effect,
and there is no proceeding pending to revoke, cancel, rescind, refuse to renew
in the ordinary course or modify any of the TCM Permits. Each of TCM and its
subsidiaries is in compliance with the terms and conditions of the TCM Permits
and with all material requirements, standards and procedures of the Governmental
Entities that issued them, and with any limitation or, to the knowledge of TCM,
proposed limitation on any TCM Permit, except where such non-compliance would
not have a TCM Material Adverse Effect, and TCM has no reasonable basis to
believe that the business will not remain capable of continued operation
consistent with past practice and in compliance with the terms and conditions of
the TCM Permits following consummation of the transactions contemplated by this
Agreement.
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SECTION 4.10 Absence of Certain Changes or Events. Except as set forth in
Section 4.10 of the TCM Disclosure Letter, since December 31, 2004, each of TCM
and its subsidiaries has conducted its business in the ordinary course
consistent with past practice and there has not been: (i) any TCM Material
Adverse Effect; (ii) any damage to, destruction or loss of any material assets
of TCM or any of its subsidiaries (whether or not covered by insurance); (iii)
any declaration, setting aside or payment of any dividend or other distribution
in respect of the TCM Capital Stock or any repurchase, redemption or other
acquisition by TCM or any of its subsidiaries of any TCM Capital Stock; or (iv)
any change in accounting methods, principles or practices by TCM affecting the
consolidated assets, liabilities, results of operations or business of TCM,
except insofar as have been required by a change in GAAP.
SECTION 4.11 No Undisclosed Liabilities. At June 30, 2005, TCM and each of
its subsidiaries did not have any liabilities or obligations of any nature
(whether absolute, contingent or otherwise) other than those that would be
required to be and were reflected on a balance sheet prepared in accordance with
GAAP or for which adequate reserves are reflected in TCM's financial statements.
Since June 30, 2005, except (i) as and to the extent accrued on the June 30,
2005 balance sheet, (ii) as set forth in Section 4.11 of the TCM Disclosure
Letter, (iii) for liabilities incurred in the ordinary course of business and
otherwise not in contravention of this Agreement and (iv) where any liability,
individually or in the aggregate, would not have a TCM Material Adverse Effect,
TCM and each of its subsidiaries does not have any liabilities or obligations of
any nature (whether absolute, contingent or otherwise) other than liabilities
and obligations under this Agreement or incurred in connection with the
transactions contemplated by this Agreement.
SECTION 4.12 Litigation. Except as disclosed in Section 4.12 of the TCM
Disclosure Letter, there is no claim, suit, action or proceeding pending or, to
the knowledge of TCM, threatened against TCM or any of its subsidiaries that
individually or in the aggregate has had or could reasonably be expected to have
a TCM Material Adverse Effect, or which questions or challenges the validity of
this Agreement, the transactions contemplated by this Agreement or any action
taken or to be taken by TCM or which attempts to restrain, enjoin or prohibit
the transactions contemplated by this Agreement. Except as disclosed in the TCM
Disclosure Letter, there is no judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against TCM or any of its
subsidiaries which individually or in the aggregate has had or could reasonably
be expected to have a TCM Material Adverse Effect.
SECTION 4.13 Employees; Labor Matters.
(a) No employee or former employee of TCM or any of its subsidiaries is
owed any wages, benefits or other compensation for past services (other than
wages, benefits and compensation accrued in the ordinary course of business
during the current pay period and accrued vacation).
(b) There are no labor disputes, including, without limitation, charges of
unfair labor practices within the meaning of the National Labor Relations Act,
pending or, to the knowledge of TCM, threatened against TCM or any of its
subsidiaries by any of its employees. Neither TCM nor any of its subsidiaries,
within the past five years, has or is knowingly engaged in any
34
unfair labor practices within the meaning of the National Labor Relations Act,
except where such actions would not have a TCM Material Adverse Effect. Neither
TCM nor any of its subsidiaries is presently a party to, or is bound by, any
collective bargaining agreement or union contract with respect to any persons
employed by TCM or any of its subsidiaries, and no collective bargaining
agreement is being negotiated by TCM or any of its subsidiaries. To the
knowledge of TCM, no organizing activities are presently being made or are
threatened by or on behalf of any labor union with respect to any employees of
TCM or any of its subsidiaries. TCM has no knowledge of any strikes, slowdowns,
work stoppages or lockouts, or threats thereof, by or with respect to any
employees of TCM or any of its subsidiaries, and there have been no such
strikes, slowdowns, work stoppages or lockouts within the past three years. Each
of TCM and its subsidiaries is in compliance with all applicable Laws relating
to employment and employment practices, workers' compensation, terms and
conditions of employment, worker safety, wages and hours and the Worker
Adjustment and Retraining Notification Act, except where such non-compliance
would not have a TCM Material Adverse Effect. There has been no harassment,
discrimination, retaliatory act or similar claim against any officer, director
or employee of TCM or any of its subsidiaries at any time during the past three
years, except where any such action would not have a TCM Material Adverse
Effect.
SECTION 4.14 Taxes.
(a) Each of TCM and its subsidiaries, and any consolidated, combined,
unitary or aggregate group for Tax purposes of which TCM or any of its
subsidiaries is a member, have timely filed all United States federal income Tax
Returns and all other Tax Returns required to be filed by them or any of them
(taking into account applicable extensions), and have timely paid and discharged
all material Taxes required to be paid (whether or not shown on such Tax
Returns), other than Taxes the payment of which is being contested in good faith
by appropriate proceedings. The most recent TCM Financial Statements reflect,
with respect to any liability for Taxes of TCM and its subsidiaries for any
years ended on or before the date of such TCM Financial Statements and either
not finally determined or with respect to which the applicable statute of
limitations has not expired, an adequate reserve to satisfy any assessment for
such Taxes for such years. All federal income Tax Returns and all other Tax
Returns filed by or with respect to each of TCM and its subsidiaries with
respect to Taxes are true and correct in all material respects. Copies of all
federal, state and foreign income Tax Returns of or with respect to TCM and its
subsidiaries for the three years preceding the Closing Date that are true,
complete and correct in all material respects have been previously provided or
made available to the Company. Neither the IRS nor any other taxing authority or
agency is now asserting or, to TCM's knowledge, threatening to assert against
TCM or any of its subsidiaries any deficiency or claim for material additional
Taxes which have not been paid. There are no requests for information from the
IRS or any other taxing authority or agency currently outstanding with respect
to Taxes of or with respect to TCM or any of its subsidiaries. There are no
pending audits of TCM or any of its subsidiaries by any taxing authority nor, to
TCM's knowledge, are any proceedings (whether administrative or judicial)
currently being conducted with respect to any issues relating to Taxes. No Tax
claim has become a lien on any assets of TCM or any of its subsidiaries. Neither
TCM nor any of its subsidiaries is required to include in income (i) any
material items in respect of any change in accounting methods or (ii) any gain
with respect to installment sales.
35
(b) (i) Neither TCM nor any of its subsidiaries has any liability for any
accumulated earnings tax or personal holding company tax; (ii) there are no
waivers or extensions of any applicable statute of limitations for the
assessment or collection of Taxes with respect to any Tax Return that relates to
TCM or any of its subsidiaries that remain in effect; (iii) there are no Tax
rulings or closing agreements relating to TCM or any of its subsidiaries that
would affect its or any of their liability for Taxes for any period after the
Effective Time; and (iv) neither TCM nor any of its subsidiaries has any
liability for Taxes of any person (other than TCM and its subsidiaries) under
Treasury Regulation Section 1.1502-6 or any similar state, local or foreign
provision.
(c) Neither TCM nor any of its subsidiaries is a party to any agreement
(written or oral), except for the Tax Sharing Agreement, providing for the
allocation or sharing of, or indemnification from, Taxes with any party other
than TCM and/or one or more of its subsidiaries.
(d) Each of TCM and its subsidiaries has withheld from each payment made to
any of its past or present employees, officers or directors, or any other
person, the amount of all material Taxes and other deductions required to be
withheld therefrom and paid the same to the proper taxing authorities within the
time required by Law.
(e) TCM is not, nor was it any time during the five-year period ending on
the date on which the Effective Time occurs, a "United States real property
holding corporation" within the meaning of Section 897(c) of the Code.
(f) Neither TCM nor any of its subsidiaries has any excess loss accounts or
deferred intercompany gain.
SECTION 4.15 Environmental Matters.
(a) All of the current and past operations of TCM, its subsidiaries and the
Assets, including any operations at or from any real property presently owned,
used, leased, occupied, managed or operated by TCM or any of its subsidiaries
(the "TCM Real Property"), comply and have at all times during TCM's ownership,
use or operation thereof complied in all material respects with all applicable
Environmental Laws. Neither TCM nor any of its subsidiaries, or, to the
knowledge of TCM, any other person, has engaged in, authorized, allowed or
suffered any operations or activities upon any of TCM Real Property for the
purpose of or in any way involving the handling, manufacture, treatment,
processing, storage, use, generation, release, discharge, emission, dumping or
disposal of any Hazardous Substances at, on or under TCM Real Property, except
in compliance with all applicable Environmental Laws.
(b) Neither the Assets nor TCM Real Property contain any Hazardous
Substances in, on, over, under or at it in concentrations which would presently
violate Environmental Laws or impose liability or obligations on the present or
former owner, manager, or operator of TCM Real Property under the Environmental
Laws for any investigation, corrective action, remediation or monitoring of
Hazardous Substances in, on, over, under or at TCM Real Property. None of TCM
Real Property is listed or proposed for listing on the National Priorities List
pursuant to
36
CERCLA, or any similar inventory of sites requiring investigation or remediation
maintained by any state. Neither TCM nor any of its subsidiaries has received
any notice, whether oral or written, from any Governmental Entity or other
person of any actual or threatened Environmental Liabilities with respect to
TCM, its subsidiaries, TCM Real Property or the Assets or the conduct of the
business of TCM or any of its subsidiaries.
(c) There are no underground storage tanks, asbestos or asbestos containing
materials, polychlorinated biphenyls, urea formaldehyde, or other Hazardous
Substances (other than small quantities of Hazardous Substances stored and
maintained in accordance and compliance with all applicable Environmental Laws
for use in the ordinary course of business of TCM and its subsidiaries) in, on,
over, under or at any presently owned, managed or operated TCM Real Property.
(d) To the knowledge of TCM, there are no conditions existing at any TCM
Real Property or with respect to the Assets, that require, or which with the
giving of notice or the passage of time or both may require remedial or
corrective action, removal or closure pursuant to the Environmental Laws.
(e) TCM has provided to the Company all material environmental reports,
assessments, audits, studies, investigations, data and other material written
environmental information in its custody, possession or control concerning TCM,
its subsidiaries, the Assets or TCM Real Property.
(f) Neither TCM nor any of its subsidiaries has contractually, or to the
knowledge of TCM, by operation of law, by the Environmental Laws, by common law
or otherwise assumed or succeeded to any Environmental Liabilities of any
predecessors or any other person.
SECTION 4.16 Brokers. No broker, finder or investment banker, other than
the TCM Financial Advisor is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of TCM or Merger Sub. TCM has
heretofore furnished to the Company a complete and correct copy of all
agreements between TCM and the TCM Financial Advisor, pursuant to which such
firm would be entitled to any payment relating to the transactions contemplated
by this Agreement.
SECTION 4.17 Material Contracts. Section 4.17 of the TCM Disclosure Letter
contains a true, complete and correct list of each of the following contracts
(or, in the case of oral contracts, summaries thereof) to which TCM or any of
its subsidiaries is a party or by which TCM or any of its subsidiaries, or any
of TCM's or its subsidiaries' assets or properties, is bound or subject
(collectively, the "TCM Material Contracts"):
(a) any agreement or series of related agreements requiring aggregate
payments by or to the Company or any of its subsidiaries of more than $100,000;
(b) any agreement with or for the benefit of any current or former officer
or director, holder of any security, employee or consultant of TCM or any of its
subsidiaries under which
37
TCM or any of its subsidiaries has any obligations as of the date hereof and
that (i) involves an obligation of TCM or any of its subsidiaries to make
payments exceeding $100,000 in any year, (ii) contains non-competition
provisions imposing restrictions on TCM or an executive officer or key employee
of TCM, or (iii) involves any severance or termination payments or other similar
obligation;
(c) any agreement with any labor union or association representing any
employee of TCM or any of its subsidiaries;
(d) any agreement for the purchase of any materials, supplies, equipment,
merchandise or services that contains an escalation clause or that obligates TCM
or any of its subsidiaries to purchase all or substantially all of its
requirements of a particular product or service from a supplier or to make
periodic minimum purchases of a particular product or service from a supplier,
that is not terminable on not more than 30 days' notice (without penalty or
premium) and that involves future payments by TCM of more than $100,000;
(e) any agreement for the sale of any of the assets, properties or
securities of TCM or any of its subsidiaries (other than in the ordinary course
of business) or for the grant to any person of any option, right of first
refusal or preferential or similar right to purchase any such assets, properties
or securities;
(f) any agreement of surety, guarantee or indemnification, other than
agreements in the ordinary course of business with respect to obligations in an
aggregate amount not in excess of $150,000;
(g) any agreement with customers or suppliers for the sharing of fees, the
rebating of charges or other similar arrangements;
(h) any agreement relating to the acquisition by TCM or any of its
subsidiaries of any operating business or the capital stock of any other person;
(i) any agreement requiring the payment to any person of a brokerage or
sale commission or a finder's or referral fee (other than arrangements to pay
commissions or fees to employees or agents in the ordinary course of business or
as set forth in Section 4.09 of this Agreement);
(j) any agreement, note or other document relating to or evidencing
outstanding indebtedness of TCM or any of its subsidiaries for borrowed money
(including capitalized lease obligations) in excess of $100,000;
(k) any lease, sublease or other agreement under which TCM or any of its
subsidiaries is lessor or lessee of any real property or equipment or other
tangible property that involves the future payment by the Company of more than
$100,000;
(l) any agreement with a change of control provision or otherwise requiring
any consent, approval, waiver or other action by any person in connection with
the Spin-off or the Merger;
38
(m) any phantom stock plan or bonus, incentive or similar agreement,
arrangement or understanding;
(n) any agreement involving the assignment, transfer, license (whether as
licensee or licensor), pledge or Encumbrance of intellectual property of TCM or
any of its subsidiaries;
(o) any distribution or sales representative agreement or agreement
appointing any agent;
(p) any other material agreement whether or not made in the ordinary course
of business; and
(q) any agreement that would be required to be filed as an exhibit to a
periodic report if TCM was required to filed reports under the Exchange Act.
True and complete copies of all written TCM Material Contracts and true and
complete summaries of all oral TCM Material Contracts (and all amendments,
waivers or other modifications thereto) have been furnished to the Company. Each
Material Contract is valid, subsisting, in full force and effect and binding
upon TCM or any of its subsidiaries that is party thereto and, to the knowledge
of TCM, the other parties thereto in accordance with its terms. Neither TCM nor
any of its subsidiaries is in default (and no condition exists that, with notice
or lapse of time or both, would constitute a default by TCM or such subsidiary)
under any Material Contract, which default would give the other party the right
to terminate or modify such Material Contract or would accelerate any obligation
or payment by TCM, nor, to the knowledge of TCM, is any other party to any
Material Contract in default thereunder (or does any condition exist that, with
notice or lapse of time or both, would constitute a default by any such party).
None of the TCM Material Contracts is currently being renegotiated, and the
validity, effectiveness and continuation of each of the TCM Material Contracts
will not be materially adversely affected by the transactions contemplated by
this Agreement, except as otherwise listed on Section 4.17 of the TCM Disclosure
Letter. To the knowledge of TCM, no party to any of the TCM Material Contracts
has made, asserted or has any defense, setoff or counterclaim under its Material
Contract or has exercised any option granted to it to cancel, terminate or
shorten the term of its Material Contract.
SECTION 4.18 Title to Properties; Absence of Encumbrances. TCM has, or at
the Effective Time, TCM will have title to, or leasehold interests in, its
properties sufficient to operate such properties and to conduct its business in
the ordinary course, except (i) for those securing Taxes, assessments and other
governmental charges or levies not yet due and payable (excluding any imposed
pursuant to any of the provisions of ERISA), (ii) as listed in Section 4.18 of
the TCM Disclosure Letter, (iii) such imperfections in title, liens and
easements as do not materially detract from or interfere with the use of the
properties subject thereto or affected thereby or otherwise materially impair
business operations involving such properties, and (iv) Encumbrances securing
debt that is reflected in the TCM Financial Statements that individually or in
the aggregate have not had and could not reasonably be expected to have a
material adverse effect on TCM. Except as set forth in Section 4.18 of the TCM
Disclosure Letter, TCM and its subsidiaries have all patents, trademarks, trade
names, service marks, copyrights, know-how,
39
processes and all agreements and other rights necessary to carry on their
business in substantially the same manner as now conducted. The patents,
trademarks and copyrights owned or licensed by TCM are valid and enforceable and
to the knowledge of TCM do not infringe on the rights of any persons.
SECTION 4.19 Interim Operations of Merger Sub. 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 by this Agreement.
SECTION 4.20 Tax Matters. None of TCM, any of its subsidiaries or any of
their respective affiliates, directors, officers, employees or agents has taken,
or agreed or failed to take, any action that to their knowledge would prevent
the Merger from constituting a reorganization within the meaning of Section
368(a) of the Code. None of TCM, any of its subsidiaries or, to the knowledge of
TCM, any of their respective affiliates, directors, officers, employees or
agents is aware of any agreement, plan or other circumstance that would prevent
the Merger from constituting a reorganization with the meaning of Section 368(a)
of the Code.
SECTION 4.21 Employee Benefits. Each "employee benefit plan" within the
meaning of Section 3(3) of ERISA adopted and maintained by TCM as of the Closing
Date in accordance with Section 5.13 of this Agreement will, as of the Closing
Date, comply in all material respects in form and operation with the
requirements of applicable Laws and TCM will take all corporate actions
necessary to adopt such plans and comply with applicable Laws. Except as
required by applicable Laws, TCM will have no liability for any liabilities
arising under any employee benefit plan currently, formerly, or in the future
maintained by Xxxx. No such "employee benefit plan" shall be subject to Title IV
of ERISA and no such "employee benefit plan" shall provide for medical or other
welfare benefits for former employees (other than as required under Section
4980B of the Code or Part 6 of Title I of ERISA). Each such "employee benefit
plan" has received or will apply for a favorable determination letter from the
Internal Revenue Service (which may be the favorable opinion letter of the
master and prototype or volume submitter plan sponsor of such plan).
SECTION 4.22 Fairness Opinions. The special committee of the Board of
Directors of TCM and the Board of Directors of TCM have received the opinion of
Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Capital, Inc. to the effect that, as of the date
of such opinion and based upon and subject to the assumptions and limitations
set forth in such opinion, the Merger Consideration to be paid to the Company's
shareholders is fair, from a financial point of view, to TCM. TCM has delivered
to the Company true, correct and complete copies of such opinion. TCM has been
authorized by Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Capital, Inc. to permit the
inclusion of the such opinion (subject to prior review and consent by Xxxxxxxx
Xxxxx Xxxxxx & Xxxxx Capital, Inc.) in the Form S-4.
SECTION 4.23 No Other Representations and Warranties.
40
processes and all agreements and other rights necessary to carry on their
business in substantially the same manner as now conducted. The patents,
trademarks and copyrights owned or licensed by TCM are valid and enforceable and
to the knowledge of TCM do not infringe on the rights of any persons.
SECTION 4.19 Interim Operations of Merger Sub. 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 by this Agreement.
SECTION 4.20 Tax Matters. None of TCM, any of its subsidiaries or any of
their respective affiliates, directors, officers, employees or agents has taken,
or agreed or failed to take, any action that to their knowledge would prevent
the Merger from constituting a reorganization within the meaning of Section
368(a) of the Code. None of TCM, any of its subsidiaries or, to the knowledge of
TCM, any of their respective affiliates, directors, officers, employees or
agents is aware of any agreement, plan or other circumstance that would prevent
the Merger from constituting a reorganization with the meaning of Section 368(a)
of the Code.
SECTION 4.21 Employee Benefits. Each "employee benefit plan" within the
meaning of Section 3(3) of ERISA adopted and maintained by TCM as of the Closing
Date in accordance with Section 5.13 of this Agreement will, as of the Closing
Date, comply in all material respects in form and operation with the
requirements of applicable Laws and TCM will take all corporate actions
necessary to adopt such plans and comply with applicable Laws. Except as
required by applicable Laws, TCM will have no liability for any liabilities
arising under any employee benefit plan currently, formerly, or in the future
maintained by Xxxx. No such "employee benefit plan" shall be subject to Title IV
of ERISA and no such "employee benefit plan" shall provide for medical or other
welfare benefits for former employees (other than as required under Section
4980B of the Code or Part 6 of Title I of ERISA). Each such "employee benefit
plan" has received or will apply for a favorable determination letter from the
Internal Revenue Service (which may be the favorable opinion letter of the
master and prototype or volume submitter plan sponsor of such plan).
SECTION 4.22 Fairness Opinions. The special committee of the Board of
Directors of TCM and the Board of Directors of TCM have received the opinion of
Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Capital, Inc. to the effect that, as of the date
of such opinion and based upon and subject to the assumptions and limitations
set forth in such opinion, the Merger Consideration to be paid to the Company's
shareholders is fair, from a financial point of view, to TCM. TCM has delivered
to the Company true, correct and complete copies of such opinion. TCM has been
authorized by Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Capital, Inc. to permit the
inclusion of the such opinion (subject to prior review and consent by Xxxxxxxx
Xxxxx Xxxxxx & Xxxxx Capital, Inc.) in the Form S-4.
SECTION 4.23 No Other Representations and Warranties.
40
(a) Except for (i) the representations and warranties contained in Article
III and (ii) in connection with any information supplied by the Company for
inclusion in the Form S-4, TCM acknowledges that neither the Company nor any
other person makes any express or implied representation or warranty with
respect to the Company or its subsidiaries, the business of the Company and its
subsidiaries or otherwise or with respect to any other information provided to
TCM, whether on behalf of the Company or such other persons, including the
success or profitability of the ownership, use or operation of the business of
the Company and its subsidiaries after the Closing.
(b) In connection with TCM's investigation of the Assets and the business
of the Company and its subsidiaries, TCM may have received or may receive from
or on behalf of the Company or its subsidiaries certain projections or
forward-looking statements, including projected statements of operating revenues
and income from operations. TCM acknowledges that there are uncertainties
inherent in attempting to make such estimates, projections and other forecasts
and plans, that TCM is familiar with such uncertainties, that TCM is taking full
responsibility for making its own evaluation of the adequacy and accuracy of all
estimates, projections and other forecasts and plans so furnished to it, and
that TCM, in the absence of fraud, or except as provided in the next sentence,
shall have no claim against the Company or any of its subsidiaries or any other
person acting on their behalf with respect thereto whether before or after the
execution and delivery of this Agreement or the Closing Date. Accordingly,
neither the Company nor its subsidiaries make any representation or warranty
with respect to such estimates, projections, forward-looking statements and
other forecasts and plans, except that the Company and its subsidiaries had a
reasonable basis to make such estimates, projections, forward-looking statements
and other forecasts and plans. Notwithstanding the foregoing, nothing in this
Section 4.23(b) shall be construed to limit the representations and warranties
of TCM contained in Sections 4.07, 4.08, 4.10, 4.11 and 4.18.
ARTICLE V.
COVENANTS
SECTION 5.01 Conduct of Business by the Company. Except as set forth in
Section 5.01 of the Company Disclosure Letter, during the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to Article VII and the Effective Time, the Company covenants
and agrees that, unless TCM shall otherwise agree in writing and unless
otherwise expressly permitted hereunder, the Company and its subsidiaries shall
use their commercially reasonable efforts to conduct their respective
businesses, and the Company and its subsidiaries shall not take any action
except, in the ordinary course of business and in a manner consistent with past
practice; and the Company shall use commercially reasonable efforts to preserve
substantially intact the business organization of the Company and its
subsidiaries, to keep available the services of the present officers, employees
and consultants of the Company and its subsidiaries and to preserve satisfactory
relationships of the Company and its subsidiaries with customers, suppliers and
other persons with which the Company or any of its subsidiaries has significant
business relations. By way of amplification and not limitation, except as set
forth in Section 5.01 of the Company Disclosure Letter or except as shall be
mutually agreed in writing by the parties, during the period from the date of
this Agreement and continuing until the earlier to occur of the termination of
this Agreement
41
pursuant to Article VII and the Effective Time, the Company shall not and shall
cause its subsidiaries not to, directly or indirectly, do or propose to do any
of the following without the prior written consent of TCM (which consent shall
not be unreasonably withheld or delayed), unless otherwise expressly permitted
under this Agreement:
(a) amend or otherwise change the Company Articles of Incorporation or
Company By-Laws or any of the Company's subsidiaries' equivalent organizational
documents;
(b) issue, sell, pledge, dispose of or encumber, or authorize the issuance,
sale, pledge, disposition or encumbrance of, any shares of capital stock of any
class, or any options (including, without limitation, any Options), warrants,
convertible or exchangeable securities, or other rights of any kind to acquire
any shares of Company Capital Stock, or any other ownership interest (including,
without limitation, any phantom interest), of the Company or any of its
subsidiaries or affiliates except (A) pursuant to the terms of Options that are
outstanding as of the date of this Agreement, (B) upon conversion of the Company
Preferred Stock outstanding as of the date of this Agreement and (C) new Options
for the exercise of up to an aggregate of 150,000 shares of Company Common
Stock;
(c) sell, lease, license, pledge, dispose of or encumber any assets of the
Company or any of its subsidiaries (except (i) dispositions in the ordinary
course of business and in a manner consistent with past practice and that, in
the aggregate, are not material in amount and (ii) dispositions of obsolete or
worthless assets);
(d) (i) amend or change the period (or permit any acceleration, amendment
or change) of exercisability of any Options or (ii) authorize cash payments in
exchange for any such Options (except for Options that are subject to agreements
existing on the date hereof that provide for mandatory acceleration of vesting
as a result of the Merger and that have not been waived);
(e) (i) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock, except that a wholly owned subsidiary of the Company
may declare and pay a dividend to its parent, (ii) split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for any shares of its
capital stock or (iii) amend the terms of, repurchase, redeem or otherwise
acquire any of its securities, or propose to do any of the foregoing;
(f) sell, transfer, license, sublicense or otherwise dispose of, or allow
any rights to lapse with respect to, any intellectual property other than in the
ordinary course of business or amend or modify any existing agreements with
respect to any intellectual property, other than in the ordinary course of
business, in each case so long as such action does not involve material
intellectual property;
(g) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof; (ii) incur any Indebtedness for Borrowed Money or other obligation or
liability of any kind (other than accounts payable incurred in the ordinary
course of business), or issue any debt securities or
42
assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person, or make any loans or advances to
any person, that exceed an aggregate of $5,000,000; (iii) enter into or amend
any contract or agreement other than in the ordinary course of business; (iv)
authorize or make any capital expenditures or purchase of fixed assets that,
quarterly, exceed, $150,000 or, in the aggregate, exceed $250,000; (v) terminate
any Material Contract or amend any of its material terms (other than amendments
designed to remedy defaults thereunder); or (vi) enter into or amend any
contract, agreement, commitment or arrangement to effect any of the matters
prohibited by this Section 5.01(g);
(h) except as required by applicable Law or the terms of an agreement
existing on the date hereof, increase the compensation, bonus or other benefits
payable or to become payable to any of the Company's or its subsidiaries'
officers, directors or employees, grant any severance or termination pay or
rights to, or enter into any employment or severance agreement with, any of the
Company's or its subsidiaries' officers, directors or employees, increase any
benefits payable under existing severance or termination pay policies or
employment agreements or establish, adopt, enter into or, except as required by
law, terminate or amend, any Company Plan, except, in each case, for general
increases, grants or agreements for non-executive employees in the ordinary
course of business and in a manner consistent with past practice;
(i) take any action, other than in the ordinary course of business and in a
manner consistent with past practice as required by changes in GAAP, to change
accounting policies, principles, methods or practices (including, without
limitation, procedures with respect to reserves, revenue recognition,
capitalization of development costs, payments of accounts payable and collection
of accounts receivable);
(j) make any Tax election inconsistent with past practice or settle or
compromise any Tax liability, in excess of the amount accrued in the most recent
financial statements contained in the Company SEC Reports;
(k) (i) commence, pay, discharge, settle or satisfy any lawsuits, claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business and consistent with past practice of liabilities
reflected or reserved against in the most recent financial statements contained
in the Company SEC Reports or incurred in the ordinary course of business and
consistent with past practice or (ii) waive any material benefits of any
confidentiality, standstill or similar agreements to which the Company or any of
its subsidiaries is a party;
(l) permit any material increase in the number of employees employed by the
Company or any of its subsidiaries on the date hereof;
(m) terminate or fail to renew any material Company Permit;
(n) enter into any collective bargaining agreement or union contract with
any labor organization or union;
43
(o) except in the ordinary course of business and in a manner consistent
with past practice, accelerate or defer any material obligation or payment by or
to the Company; or
(p) take or fail to take, or agree in writing or otherwise to take or fail
to take, any of the actions described in Section 5.01(a) through (o) above, or
that would result in any of the conditions to the Merger set forth in this
Agreement not being satisfied.
SECTION 5.02 Form S-4; Company Stockholder Approval.
(a) Each of TCM and the Company shall cooperate and as promptly as
practicable prepare, and TCM shall file with the SEC, a registration statement
on Form S-4 (or other appropriate form) for the purpose of registering under the
Securities Act TCM Common Stock issuable in the Merger (including any amendment
or supplements thereto, the "Form S-4"). The Form S-4 shall contain a prospectus
relating to such issuance and the issuance of the TCM Common Stock in the
Spin-off and the Company Proxy Statement with respect to the Company
Stockholders' Meeting. Each of TCM and the Company shall use their respective
reasonable best efforts to have the S-4 cleared by the SEC and the Form S-4
declared effective by the SEC and to keep the Form S-4 effective as long as is
necessary to consummate the Spin-off and the Merger and any other transactions
contemplated thereby. TCM and the Company shall, as promptly as practicable
after receipt thereof, provide the other party copies of any written comments,
and advise the other party of any oral comments or communications regarding the
Form S-4 received from the SEC. TCM and the Company shall cooperate and provide
the other with a reasonable opportunity to review and comment on any amendment
or supplement to the Form S-4 prior to filing the same with the SEC, and such
parties will provide promptly each other with a copy of all such filings made
with the SEC.
(b) Each of TCM and the Company covenant that the portions of the Form S-4
concerning itself, its subsidiaries, management, financial statements, business
and the holders of its capital stock (and in the case of the Company, the
special meeting of the shareholders of the Company) shall comply in all material
respects as to form with the provisions of the Securities Act and the Exchange
Act, and the rules and regulations thereunder. Each of TCM and the Company shall
furnish all information concerning itself, its subsidiaries, management,
financial statements, business and the holders of its capital stock and shall
take all such other action as may be reasonably requested in connection with the
Form S-4. If at any time prior to the Effective Time, either party determines
that the Form S-4 contains or is informed by the other party that the
information supplied by it for inclusion in the Form S-4 contains an untrue
statement of a material fact or omits to state a material fact required to be
stated therein in order to make the statements therein in light of the
circumstances under which they were made not misleading, TCM and the Company
shall promptly prepare and TCM shall file an amendment or supplement to the Form
S-4 to correct the untrue statement or omission and take all other appropriate
action in respect thereof. Each party will advise the other party, promptly
after it receives notice thereof, of the time when the Form S-4 has become
effective, the issuance of any stop order, the suspension of the qualification
of the TCM Common Stock issuable in connection with the merger or saleable in
any jurisdiction or any request by the SEC for amendment of the Form S-4.
44
(c) The Company shall, in accordance with Georgia Law and the Company
Articles of Incorporation and Company By-Laws, hold a special meeting of the
stockholders of the Company (after having duly called and given notice of such
meeting) (the "Company Stockholders' Meeting"), as promptly as practicable after
the execution of this Agreement, to consider and vote upon the approval and
adoption of the Company Stockholder's Action. Subject to Section 5.03(c), the
Company Special Committee and the Company Board shall recommend the approval and
adoption of the Company Stockholders' Action by the stockholders of the Company
and shall include such recommendation in the Company Proxy Statement. Subject to
Section 5.03(c), the Company shall take all lawful action to solicit from the
stockholders of the Company proxies (in compliance with this Section 5.02(b)) in
favor of the approval and adoption of the Company Stockholders' Action and to
secure the vote of the stockholders of the Company required by Georgia Law and
the Company Articles of Incorporation and Company By-Laws to approve and adopt
the Company Stockholders' Action in accordance with the Company Stockholders'
Vote Condition. As promptly as practicable after the Company Proxy Statement
contained in the Form S-4 has been cleared by the SEC, the Company shall mail
the proxy statement/prospectus/information statement contained in the Form S-4
to the Company Stockholders as of the record date for the Company Stockholders'
Meeting.
(d) Each party shall advise the other parties hereto promptly of the
happening of any event which makes untrue any statement of a material fact
contained in the Form S-4 or the Company Proxy Statement, as applicable.
(e) The Company shall take all actions necessary to comply with Article 13
of Georgia Law.
SECTION 5.03 Exclusivity; Superior Proposal.
(a) From the date hereof until the earlier of the termination of this
Agreement pursuant to Article VII or the Effective Time, the Company and its
subsidiaries will not, and the Company and its subsidiaries will not permit or
cause any of their respective officers, directors, employees, investment
bankers, attorneys, affiliates, accountants and other agents (collectively, the
"Company Representatives") to, directly or indirectly: (i) initiate, solicit,
seek, encourage knowingly, entertain, support or take any action to facilitate
any inquiries or the making of any offer or proposal which constitutes or is
reasonably likely to lead to any Takeover Proposal (as defined below); (ii)
engage in negotiations or discussions with, or provide any non-public
information or data concerning the Company to, any person (other than TCM,
Merger Sub and any of their affiliates or representatives) relating to any
Takeover Proposal, whether made before or after the date of this Agreement or
(iii) subject to Section 5.03(c), enter into any letter of intent, agreement in
principle, acquisition agreement or any other agreement with respect to any
Takeover Proposal; provided, however, that the Company may, in response to an
unsolicited bona fide written Takeover Proposal by any person, provide such
non-public information or data or engage in negotiations or discussion with such
person, if, prior to taking such actions: (i) the proposal did not result from a
breach of this Section 5.03(a), (ii) the Company Special Committee determines in
good faith, after consultation with legal counsel, that the failure to take such
action is reasonably likely to result in a breach of its fiduciary duties under
applicable Law, (iii) the Company Special Committee determines in good faith
that such Takeover Proposal is
45
reasonably likely to be or result in a Superior Proposal (as defined below),
(iv) the Company receives from such person an executed confidentiality
agreement, which is substantially the same as the TCM Confidentiality Agreement,
(v) the Company has previously notified TCM of the Takeover Proposal Interest
(as defined below) in accordance with the last sentence of this Section 5.03(a),
and (vi) the Company Stockholders' Action has not been adopted and approved in
satisfaction of the Company Stockholders' Vote Condition. Subject to Section
5.03(c), nothing shall prevent the Company Board or Company Special Committee
from complying with Rule 14e-2 under the Exchange Act. The Company agrees that
it will take the necessary steps to promptly inform the Company Representatives
of the obligations undertaken in this Section 5.03. From the date hereof until
the earlier of the termination of this Agreement pursuant to Article VII and the
Effective Time, the Company shall notify TCM as promptly as practicable, and in
any event not later than the next business day, of any inquiries, expressions of
interest, requests for information or access to property, books or records,
proposals or offers relating to any Takeover Proposal received by the Company,
its officers or its directors or, to the best of its knowledge, any other
Company Representatives, from any person that informs the Company that it is
considering making, or has made, a proposal relating to a Takeover Proposal (a
"Takeover Proposal Interest") indicating, in connection with such notice, the
name of the person who made such inquiries, expressions of interest, requests,
proposals or offers and the material terms and conditions of any proposals or
offers, and thereafter shall keep TCM informed, on a current basis, of any
changes in the status and content of any such proposals or offers. The Company
will, and will cause its subsidiaries and the officers, directors, employees and
other agents of the Company and its subsidiaries to, immediately cease and cause
to be terminated all discussions and negotiations, if any, that have taken place
prior to the date of this Agreement with any parties (other than TCM and its
subsidiaries) with respect to a Takeover Proposal.
(b) As used in this Agreement, "Takeover Proposal" shall mean (i) any
proposal or offer for a merger, share exchange, consolidation or other business
combination concerning the Company or any of its subsidiaries, (ii) any proposal
or offer to the Company or any of its stockholders to acquire in any manner,
directly or indirectly, any material part of the assets or 10% or more of the
equity securities, as outstanding as of the date hereof, of the Company or any
of its subsidiaries, (iii) any proposal or offer with respect to any
recapitalization or restructuring concerning the Company or any of its
subsidiaries or (iv) any proposal or offer with respect to any other transaction
similar to any of the foregoing relating to the Company or any of its
subsidiaries. For purposes of this Agreement, "Superior Proposal" means a
Takeover Proposal that involves at least 80% of the Company Capital Stock (or,
if such Takeover Proposal involves a transfer of the assets of the Company and
its subsidiaries, taken as a whole, at least 80% of the fair market value of
such assets) which the Company Special Committee determines in good faith
(taking into account all of the terms and conditions of the Takeover Proposal,
including any conditions to consummation, break-up fees and expense
reimbursement provisions) to be more favorable and the value of which exceeds
the value of the Merger Consideration (it being agreed that the Merger
Consideration shall be deemed to include such number of shares of TCM Common
Stock as it would have included pursuant to this Agreement had the transactions
consummated by this Agreement been consummated on the date on which the Company
Special Committee evaluates such Takeover Proposal).
46
(c) From the date hereof until the termination of this Agreement pursuant
to Article VII, neither the Company Board nor any committee thereof shall (i)
withdraw, qualify or modify or propose to withdraw, qualify or modify, in a
manner adverse to TCM, its approval or recommendation of the Company
Stockholders' Action by the Company Board, (ii) approve or recommend, or propose
to approve or recommend, a Superior Proposal, or (iii) cause the Company to
enter into any letter of intent, agreement in principle, acquisition agreement
or other agreement with respect to any Superior Proposal unless (A) an
unsolicited, written Superior Proposal has been made and has not been withdrawn,
(B) the Company Special Committee has complied with its obligations in Section
5.03(a), (C) the Company Special Committee has concluded in good faith, after
consultation with legal counsel, that, in light of such Superior Proposal, the
failure of the Company Special Committee to take any of the actions described in
Section 5.03(c) (i), (ii) or (iii) is reasonably likely to result in a breach of
its fiduciary duties to the Company's stockholders under applicable Law, (D) the
Company Stockholders Action has not been adopted and approved in satisfaction of
the Company Stockholders' Vote Condition, (E) the Company Special Committee
provides TCM with at least five business days' prior notice of its proposal to
take any of the actions described in Section 5.03(c) (i), (ii) or (iii) during
which time TCM may make, and in such event the Company shall consider, a
counterproposal to such Superior Proposal, and the Company shall and shall cause
its legal advisors to, negotiate with TCM with respect to the terms and
conditions of any such counterproposal, and (F) the Superior Proposal does not
impose any "break-up" or other fees (including, without limitation, expense
reimbursements) or options or rights to acquire assets or securities, or any
other obligations that would survive the Effective Time, on the Company or any
subsidiary unless and until this Agreement is terminated in accordance with its
terms.
(d) If the Company Board or any committee (i) withdraws, qualifies or
modifies or proposes to withdraw, qualify or modify, in a manner adverse to TCM,
its approval or recommendation of the Company Stockholders' Action by the
Company Board, (ii) approves or recommends, or proposes to approve or recommend,
a Superior Proposal, or (iii) causes the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other agreement with
respect to any Superior Proposal, and in taking any such action, has complied
with Section 5.03(c), the Company shall be relieved of its obligation under this
Agreement to duly call, give notice of, convene and hold, the Company
Stockholder's Meeting to consider and vote upon the approval and adoption of the
Company Stockholders' Action.
(e) From the date hereof until the earlier of the termination of this
Agreement pursuant to Article VII or the Effective Time, TCM and its
subsidiaries will not, and TCM and its subsidiaries will not permit or cause any
of their respective officers, directors, employees, investment bankers,
attorneys, affiliates, accountants and other agents (collectively, the "TCM
Representatives") to, directly or indirectly: (i) initiate, solicit, seek,
encourage knowingly, entertain, support or take any action to facilitate any
inquiries or the making of any offer or proposal which constitutes or is
reasonably likely to lead to any TCM Takeover Proposal (as defined below); (ii)
engage in negotiations or discussions with, or provide any non-public
information or data concerning TCM to, any person (other than the Company and
any of its affiliates or representatives) relating to any TCM Takeover Proposal,
whether made before or after the date of this Agreement or (iii) enter into any
letter of intent, agreement in principle, acquisition agreement or any other
agreement with respect to any TCM Takeover Proposal;
47
provided, however, that TCM may, in response to an unsolicited bona fide written
TCM Takeover Proposal by any person, provide such non-public information or data
or engage in negotiations or discussion with such person, if, prior to taking
such actions: (i) the proposal did not result from a breach of this Section
5.03(e), (ii) the TCM Special Committee determines in good faith, after
consultation with legal counsel, that the failure to take such action is
reasonably likely to result in a breach of its fiduciary duties under applicable
Law, (iii) the TCM Special Committee determines in good faith that such Takeover
Proposal is reasonably likely to be or result in a TCM Superior Proposal (as
defined below), (iv) TCM receives from such person an executed confidentiality
agreement, which is substantially the same as the TCM Confidentiality Agreement,
and (v) TCM has previously notified the Company of the TCM Takeover Proposal
Interest (as defined below) in accordance with the last sentence of this Section
5.03(e). TCM agrees that it will take the necessary steps to promptly inform the
TCM Representatives of the obligations undertaken in this Section 5.03. From the
date hereof until the earlier of the termination of this Agreement pursuant to
Article VII and the Effective Time, TCM shall notify the Company as promptly as
practicable, and in any event not later than the next business day, of any
inquiries, expressions of interest, requests for information or access to
property, books or records, proposals or offers relating to any TCM Takeover
Proposal received by TCM, its officers or its directors or, to the best of its
knowledge, any other TCM Representatives, from any person that informs TCM that
it is considering making, or has made, a proposal relating to a TCM Takeover
Proposal (a "TCM Takeover Proposal Interest") indicating, in connection with
such notice, the name of the person who made such inquiries, expressions of
interest, requests, proposals or offers and the material terms and conditions of
any proposals or offers, and thereafter shall keep the Company informed, on a
current basis, of any changes in the status and content of any such proposals or
offers. TCM will, and will cause its subsidiaries and the officers, directors,
employees and other agents of TCM and its subsidiaries to, immediately cease and
cause to be terminated all discussions and negotiations, if any, that have taken
place prior to the date of this Agreement with any parties (other than the
Company and its subsidiaries) with respect to a TCM Takeover Proposal.
(f) As used in this Agreement, "TCM Takeover Proposal" shall mean (i) any
proposal or offer for a merger, share exchange, consolidation or other business
combination concerning TCM or any of its subsidiaries, (ii) any proposal or
offer to TCM or its stockholder to acquire in any manner, directly or
indirectly, any material part of the assets or 10% or more of the equity
securities, as outstanding as of the date hereof, of TCM or any of its
subsidiaries, (iii) any proposal or offer with respect to any recapitalization
or restructuring concerning TCM or any of its subsidiaries or (iv) any proposal
or offer with respect to any other transaction similar to any of the foregoing
relating to TCM or any of its subsidiaries. For purposes of this Agreement, "TCM
Superior Proposal" means a Takeover Proposal that involves at least 80% of the
TCM Capital Stock (or, if such Takeover Proposal involves a transfer of the
assets of the Company and its subsidiaries, taken as a whole, at least 80% of
the fair market value of such assets) which the TCM Special Committee determines
in good faith (taking into account all of the terms and conditions of the TCM
Takeover Proposal, including any conditions to consummation, break-up fees and
expense reimbursement provisions) to be more favorable and the value of which
exceeds 95% of the value of the common stock of the Surviving Corporation.
SECTION 5.04 Access to Information; Confidentiality.
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(a) Upon reasonable notice during normal business hours, each of TCM and
the Company shall (and shall cause its subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of the other party
reasonable access, during the period from the date of this Agreement and until
the earlier of the termination of this Agreement and the Effective Time, to all
its properties, books, contracts, commitments and records, and, during such
period, each of TCM and the Company shall (and shall cause its subsidiaries to)
furnish promptly to the other party all information concerning its business,
properties and personnel as such party may reasonably request, and shall make
available to such other party the appropriate individuals (including attorneys,
accountants, other professionals, customers and suppliers) for discussion of its
business, properties and personnel as such party may reasonably request.
(b) The parties acknowledge that TCM and the Company have previously
executed the TCM Confidentiality Agreement which will continue in full force and
effect in accordance with its terms.
SECTION 5.05 Consents and Approvals.
(a) Subject to the terms of this Agreement, the Company and TCM shall each
use its commercially reasonable efforts to (i) take, or cause to be taken, all
actions, and do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated hereby as promptly as practicable,
(ii) obtain from any Governmental Entity or any other third party any consents,
licenses, permits, waivers, approvals, authorizations or orders required to be
obtained or made by the Company or TCM or any of their respective subsidiaries
in connection with the authorization, execution and delivery of this Agreement,
the Ancillary Agreements and the consummation of the Merger and transactions
contemplated hereby and thereby, and (iii) as promptly as practicable, make all
necessary filings, and thereafter make any other required submissions, with
respect to this Agreement and the Merger required under (A) the Securities Act
and the Exchange Act, and any other applicable U.S. federal or state securities
Laws, (B) the rules and regulations of the National Association of Securities
Dealers Automated Quotation System and (C) any other applicable Law. The Company
and TCM shall cooperate with each other in connection with the making of all
such filings.
(b) Each of the Company and TCM shall give (or shall cause their respective
subsidiaries to give) any notices to third parties, and use, and cause their
respective subsidiaries to use, their commercially reasonable efforts to obtain
any third party consents related to or required in connection with the Merger
that are (i) necessary to consummate the transactions contemplated hereby, or
(ii) required to prevent a Company Material Adverse Effect from occurring prior
to or after the Effective Time.
SECTION 5.06 Stock Options.
(a) At the Effective Time, each outstanding Option, whether vested or
unvested, shall, by virtue of this Agreement and without any further action of
the Company, the Surviving Corporation, TCM or the holder of any Option, be
converted into a stock option to purchase TCM Common Stock in a manner
consistent with Section 424 of the Code and as provided by
49
subsection (b) below, and, after the Effective Time, all references to the
Company in the Company Option Plan and the applicable stock option agreements
shall be deemed to refer to the Surviving Corporation, which shall have retained
the Company Option Plan as of the Effective Time by virtue of this Agreement and
the Merger and without any further action, except that references to shares of
Company Common Stock shall be deemed to be to TCM Common Stock in accordance
with subsection (b) below.
(b) Each Option so retained by the Surviving Corporation under this
Agreement shall continue to have, and be subject to, the same terms and
conditions set forth in the Company Option Plan and the applicable stock option
agreements as in effect immediately prior to the Effective Time, except that (i)
such Option will be exercisable for that number of shares of TCM Common Stock
equal to the product of the number of shares of Company Common Stock that were
purchasable under such Option immediately prior to the Effective Time multiplied
by the Common Stock Exchange Ratio, rounded down to the nearest whole number of
shares of TCM Common Stock and (ii) the per share exercise price for the TCM
Common Stock issuable upon exercise of such assumed Option shall be equal to the
quotient of (x) the exercise price per share of Company Common Stock at which
such Option was exercisable immediately prior to the Effective Time, divided by
(y) the Common Stock Exchange Ratio, rounding the resulting exercise price up to
the next whole cent. It is the intention of the parties that the Options
remaining outstanding following the Effective Time will qualify, to the maximum
extent permissible following the Effective Time, as incentive stock options as
defined in Section 422 of the Code solely to the extent such Options qualified
as incentive stock options prior to the Effective Time.
(c) As soon as reasonably practicable after the Effective Time, the Company
will deliver to Option holders appropriate notices setting forth such holders'
rights pursuant to the Company Option Plan and the applicable stock option
agreements evidencing the Options and confirming that the Company Option Plan
and the Options have been converted in accordance with the terms and conditions
required by this Section 5.06. TCM hereby agrees to register the TCM Common
Stock underlying such Options with the SEC on Form S-8 within ten (10) business
days subsequent to the Effective Time.
SECTION 5.07 Notification of Certain Matters.
(a) The Company shall give prompt notice to TCM of (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which would
be likely to cause any representation or warranty of the Company contained in
this Agreement to be untrue or inaccurate in any material respect and (ii) any
failure of the Company to materially 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 5.07
shall not limit or otherwise affect the remedies available hereunder to TCM or
Merger Sub.
(b) TCM 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 any representation or warranty of TCM contained in this
Agreement to be untrue or inaccurate and (ii) any failure of TCM or Merger Sub
materially to comply with or satisfy any covenant,
50
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 5.07
shall not limit or otherwise affect the remedies available hereunder to the
Company.
SECTION 5.08 Public Announcements. The initial press release with respect
to the execution of this Agreement shall be a joint press release acceptable to
TCM and the Company. Thereafter, so long as this Agreement is in effect, TCM and
the Company shall consult with each other before issuing any press release or
otherwise making any public statement with respect to the Merger or this
Agreement and shall not issue any such press release or make any such public
statement without the prior written consent of the other party, which consent
shall not be unreasonably withheld or delayed; provided, however, that TCM or
the Company may, without the prior written consent of the other party, issue
such press release or make such public statement as may upon the advice of
counsel be required by applicable Law or applicable regulation of a
self-regulatory organization if it has used all commercially reasonable efforts
to consult with the other party.
SECTION 5.09 Expenses.
(a) Except as otherwise specifically provided in this Agreement, if the
Merger is not consummated, all costs and expenses incurred in connection with
the negotiation of this Agreement and the Ancillary Agreements, the taking of
all actions (including, without limitation, any due diligence investigations)
contemplated hereby and thereby, including, without limitation, attorneys' and
accountants' fees and fees of any brokers, financial advisors, other advisors,
investment bankers or finders (collectively, the "Transaction Expenses"), shall
be paid by the party incurring such costs or expenses. If the Merger is
consummated, all Transaction Expenses of the Company, including any amounts that
may become payable due to the execution of this Agreement or the consummation of
the Merger (i.e., change of control, retention payments or similar fees) shall
be the obligation of TCM.
(b) The Company shall use its commercially reasonably efforts to cause all
persons (including, without limitation, attorneys, accountants, brokers,
financial advisors, other advisors, investment bankers and finders), who have
provided or will provide the Company with services in connection with this
Agreement, the Merger, the Ancillary Agreements and the transactions
contemplated hereby and thereby, to submit to the Company, no less than three
business days prior to the Effective Time, invoices with respect to all such
services.
SECTION 5.10 Tax Treatment. This Agreement is intended to constitute a
"plan of reorganization" within the meaning of Treasury Regulation section
1.368-2(g). Each of the parties hereto shall use commercially reasonable efforts
to cause the Merger to qualify, and shall not knowingly take actions or cause
actions to be taken that could reasonably be expected to prevent the Merger from
qualifying, as a reorganization under Section 368(a) of the Code.
SECTION 5.11 Continuing Director and Officer Indemnification.
(a) From and after the Effective Time, the Surviving Corporation (or its
successors or assigns) shall fulfill and honor the obligations of the Company
pursuant to the indemnification
51
provisions in the Company Articles of Incorporation and Company By-Laws existing
as in effect on the date of this Agreement with respect to the Company's
directors and officers, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would affect adversely the rights thereunder of persons who at any
time prior to the Effective Time were entitled to indemnification, advancement
or exculpation under the Company Articles of Incorporation and Company By-Laws
in respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), unless such modification is required by Law and prior notification
is given to such affected persons.
(b) The Surviving Corporation shall cause to be maintained for a period of
six years from the Effective Time the Company's current directors' and officers'
insurance and indemnification policy and fiduciary liability policy ("D&O
Insurance"), provided that, the Surviving Corporation may substitute therefor,
at is election, policies or financial guarantees with the same carriers or other
reputable and financially sound carriers of at least the same coverage and
amounts containing terms and conditions which are no less advantageous that the
existing D&O Insurance, to the extent that such insurance policies provide
coverage for events occurring at or prior to the Effective Time for all persons
who are directors and officers of the Company on the date of this Agreement (or
were prior to the date of this Agreement), so long as the annual premium after
the date of this Agreement for such D&O Insurance during such six-year period
would not exceed 300% of the annual premium as of the date of this Agreement.
If, during such six-year period, such insurance coverage cannot be obtained at
all or can only be obtained for an amount in excess of 300% of the annual
premium therefor as of the date of this Agreement, the Surviving Corporation
shall use reasonable best efforts to cause insurance coverage to be obtained for
an amount equal to 300% of the current annual premium therefore, on terms and
conditions substantially similar to the existing D&O Insurance. Set forth in
Section 5.11(b) of the Company Disclosure Letter is the amount of the annual
premium currently paid by the Company for its D&O Insurance.
(c) If any claim or claims shall, subsequent to the Effective Time and
within six years thereafter, be made in writing against any present or former
director or officer of the Company based on or arising out of the services of
such person at or prior to the Effective Time in the capacity of such person as
a director or officer of the Company (and such director or officer promptly
shall have given the Surviving Corporation written notice of such claim or
claims within such six-year period), the provisions of Sections 5.11(a) and (b)
respecting the rights to indemnify the current or former directors or officers
under the Company Articles of Incorporation and Company By-Laws shall continue
in effect until the final disposition of all such claims.
(d) The provisions of this Section 5.11 are intended to be for the benefit
of, and shall be enforceable by each indemnified party, his or her heirs and
representative and may not be amended, altered or repealed without the prior
written consent of the affected indemnified party.
SECTION 5.12 Certain Tax Matters.(a) Each of the parties hereto covenants
and agrees to report the Merger for United States federal and applicable state
income tax purposes in a manner consistent with the characterization of the
Merger as a tax-free reorganization under
52
Section 368 of the Code, including causing the Surviving Corporation to file the
statements required by Treasury Regulation section 1.368-3.
(b) Prior to the Closing (or at such other times as requested by counsel),
TCM, Merger Sub and the Company shall execute and deliver to King & Spalding LLP
and Xxxxxxxx Xxxxxxx LLP, tax representation letters (which will be used in
connection with the tax opinions contemplated by Sections 6.02(f) and 6.03(d))
customary for transactions of this type.
SECTION 5.13 Employees and Employee Benefit Matters(a) . Prior to the
Spin-Off, TCM shall use its commercially reasonable efforts to take all actions
contemplated by the Separation and Distribution Agreement or otherwise deemed
necessary and appropriate to establish employee benefit plans for the benefit of
employees of TCM on and after the Closing Date.
SECTION 5.14 Listing of TCM Common Stock. TCM shall use its commercially
reasonable efforts to have authorized for listing on Nasdaq, upon official
notice of issuance, the shares of TCM Common Stock to be issued or reserved as a
result of the Merger.
SECTION 5.15 Necessary Actions. Each of the parties hereto covenants and
agrees that, at or before the Effective Time, it shall take commercially
reasonable steps so that all corporate actions, proceedings, instruments, and
documents required to carry out the transactions contemplated hereby or
incidental hereto and all other related legal matters are reasonably
satisfactory to each of the parties' counsel and shall furnish such counsel with
such certified copies of such corporate actions and proceedings and such other
instruments and documents as it shall have reasonably requested.
ARTICLE VI.
CONDITIONS TO THE MERGER
SECTION 6.01 Conditions to Obligation of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction, or waiver, at or prior to the Effective Time of each of the
following conditions:
(a) Xxxx shall have transferred all of the membership interests of Xxxx
Publishing, LLC to TCM;
(b) Xxxx and TCM have executed and delivered the Separation and
Distribution Agreement and the Tax Sharing Agreement;
(c) Xxxx shall have completed the Spin-off;
(d) the Form S-4 shall have been declared effective by the SEC under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order and all state securities or Blue Sky Laws necessary to
carry out the transactions contemplated hereby shall have been obtained and be
in effect;
53
(e) the Company Stockholders' Action shall have been approved and adopted
by the stockholders of the Company in satisfaction of the Company Stockholders'
Vote Condition at the Company Stockholders' Meeting or by written consent in
accordance with Georgia Law and the Company Articles of Incorporation;
(f) all other consents, approvals, orders or authorizations of, or
registrations, declarations or filings with, any Governmental Entity required to
consummate the Spin-off and to consummate the Merger shall have been filed, made
or obtained, except for such consents, approvals, orders or authorizations that
involve an immaterial amount of assets and that do not provide for any penalties
or fines due to the failure to receive such consents, approvals, orders or
authorizations (it being understood that the parties shall use commercially
reasonable efforts to put in place a structure in order to provide Merger Sub
and indirectly, TCM, with the benefit of such assets);
(g) all notices to, and consents, approvals or waivers of, all persons
under the agreements, instruments or documents listed in Schedule 6.01(g) shall
have been given or obtained in a form and manner reasonably acceptable to TCM
and the Company;
(h) there shall not have been any action taken, or any Law enacted,
promulgated, issued or deemed applicable to the Merger by any Governmental
Entity, that would (i) prohibit the Surviving Corporation's ownership or
operation of all or a material portion of the Company's business or assets, or
compel the Surviving Corporation or TCM to dispose of or hold separately all or
a material portion of the Company's or TCM's business or assets, as a result of
the Merger; (ii) render TCM or Merger Sub unable to consummate the Merger; or
(iii) impose or confirm material limitations on the ability of TCM or Merger Sub
effectively to exercise full rights of ownership of shares of the capital stock
of the Surviving Corporation, including without limitation, the right to vote
any such shares on all matters properly presented to the stockholders of the
Surviving Corporation;
(i) no judgment, order, injunction, decree or ruling issued by any
Governmental Entity restraining, enjoining or otherwise prohibiting the
consummation of the Merger shall have been issued and then be in effect
(provided that the parties hereto shall use their commercially reasonable
efforts to have any such judgment, order, injunction, decree or ruling vacated
or lifted), nor shall there have been any Law enacted, enforced or deemed
applicable to the Merger that makes the consummation of the Merger illegal; and
(j) the shares of TCM Common Stock to be issued or reserved that constitute
the Merger Consideration shall be approved for listing on Nasdaq, subject to
official notice of issuance.
SECTION 6.02 Additional Conditions to Obligations of TCM and Merger Sub.
The obligations of TCM and Merger Sub to effect the Merger also are subject to
the satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived by TCM:
54
(a) The representations and warranties of the Company set forth in this
Agreement shall be true and correct in all material respects (except for such
representations and warranties that are qualified by their terms by a reference
to materiality or to Company Material Adverse Effect, which representations and
warranties as so qualified shall be true and correct in all respects) as of the
Closing Date as though such representations and warranties were made on and as
of the Closing Date, except for those representations and warranties that
address matters only as of a particular date, which representations and
warranties shall be true and correct in all material respects (except for such
representations and warranties that are qualified by their terms by a reference
to materiality or to Company Material Adverse Effect, which representations and
warranties as so qualified shall be true and correct in all respects) only as of
such date, and TCM shall have received a certificate signed on behalf of the
Company by the Chief Executive Officer and Chief Financial Officer of the
Company to such effect;
(b) the Company shall have performed or complied in all material respects
with all agreements and covenants required by this Agreement and by each
Ancillary Agreement to be performed or complied with by it on or prior to the
Effective Time, and TCM shall have received a certificate signed on behalf of
the Company by the Chief Executive Officer and Chief Financial Officer of the
Company to such effect;
(c) Company Stockholders entitled to receive, in the aggregate, not more
than 5% of the Merger Consideration shall have demanded appraisal for their
shares in accordance with Article 13 of Georgia Law;
(d) at or prior to the Effective Time, the Existing Stockholder Agreement
shall have been terminated, and TCM shall have received evidence of such
termination reasonably satisfactory to it;
(e) all corporate actions, proceedings, instruments, and documents required
to carry out the transactions contemplated hereby or incidental hereto and all
other related legal matters shall have been reasonably satisfactory to and
approved by counsel for TCM and such counsel shall have been furnished with such
certified copies of such corporate actions and proceedings and such other
instruments and documents as it shall have reasonably requested; and
(f) TCM shall have received a legal opinion of King & Spalding LLP, dated
as of the Closing Date, and subject to the customary assumptions and
qualifications, to the effect that the Merger will qualify as a "reorganization"
under Section 368(a) of the Code;
(g) the special committee of the Board of Directors of TCM and the Board of
Directors of TCM shall have received the opinion of a nationally recognized
independent valuation firm to the effect that, as of the date of such opinion,
based upon and subject to the assumptions, factors and limitations set forth in
such opinion, assuming the Spin-off, Merger and Refinancing have been
consummated as proposed, immediately after giving effect to the Transaction and
the Refinancing, and on a pro forma basis: (A) the fair value and present
saleable value of TCM's assets would exceed TCM's stated liabilities and
identified contingent liabilities, (B) TCM should be able to pay its debts as
they become absolute and mature and (C) the capital remaining in TCM would not
be unreasonably small for the business in which TCM is engaged, as
55
management has indicated it is proposed to be conducted following the
consummation of the Spin-off, Merger and the Refinancing (the "Solvency
Opinion"); and
(h) Bull Run's Indebtedness for Borrowed Money at the Effective Time shall
not exceed $69.1 million plus any Indebtedness for Borrowed Money incurred by
Bull Run pursuant to Section 5.01(g)(ii) (it being understood and agreed that
the Cash Advance shall not be considered Indebtedness for Borrowed Money).
SECTION 6.03 Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger also is subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived by the Company:
(a) The representations and warranties of TCM set forth in this Agreement
shall be true and correct in all material respects (except for such
representations and warranties that are qualified by their terms by a reference
to materiality or to TCM Material Adverse Effect, which representations and
warranties as so qualified shall be true and correct in all respects) as of the
Closing Date as though such representations and warranties were made on and as
of the Closing Date, except for those representations and warranties that
address matters only as of a particular date, which representations and
warranties shall be true and correct in all material respects (except for such
representations and warranties that are qualified by their terms by a reference
to materiality or to TCM Material Adverse Effect, which representations and
warranties as so qualified shall be true and correct in all respects) only as of
such date, and the Company shall have received a certificate signed on behalf of
TCM by the Chief Executive Officer and Chief Financial Officer of TCM to such
effect;
(b) each of TCM and Merger Sub shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Closing Date, and the
Company shall have received a certificate signed on behalf of TCM by the Chief
Executive Officer and Chief Financial Officer of TCM to such effect;
(c) all corporate actions, proceedings, instruments and documents required
to carry out the transactions contemplated hereby or incidental hereto and all
other related legal matters shall have been reasonably satisfactory to and
approved by counsel for the Company Special Committee and such counsel shall
have been furnished with such certified copies of such corporate actions and
proceedings and such other instruments and documents as it shall have reasonably
requested;
(d) the Company shall have received a legal opinion of Xxxxxxxx Xxxxxxx
LLP, dated as of the Closing Date, and subject to the customary assumptions and
qualifications, to the effect that the Merger will qualify as a "reorganization"
under Section 368(a) of the Code;
(e) the Company shall have received the written opinion of the Company
Financial Advisor, in customary form and based on customary assumptions, to the
effect that the Merger Consideration to be received by the Company Stockholders
pursuant to the Merger is fair to the
56
Company Stockholders from a financial point of view, which opinion shall not
have been withdrawn;
(f) TCM and its subsidiaries shall have obtained policies of fire and
casualty, liability and other forms of insurance in such amounts, with such
deductibles and against such risks and losses as are, in TCM's reasonable
judgment, appropriate for the assets and properties of TCM and its subsidiaries
and customary in TCM's industry;
(g) TCM's Indebtedness for Borrowed Money at the Effective Time shall not
exceed $40.0 million, which shall include the amount of money that TCM is
required to distribute to Xxxx pursuant to Section 6.5 of the Separation and
Distribution Agreement; and
(h) the Company shall have received a copy of the Solvency Opinion, which
shall be in form and substance reasonably satisfactory to the Company.
SECTION 6.04 Rule 145 Affiliates. The Company shall, at least 30 days prior
to the Effective Time, cause to be delivered to TCM a list, reviewed by its
counsel, identifying all persons who are, at the Effective Time, "affiliates" of
the Company for purposes of Rule 145 promulgated by the SEC under the Securities
Act (each a "Rule 145 Affiliate"). The Company shall furnish such information
and documents as TCM may reasonably request for the purpose of reviewing such
list. The Company shall use all commercially reasonable efforts to cause each
person who is identified as a rule 145 Affiliate in the list furnished pursuant
to this Section 6.04 to execute a written agreement (each, a "Rule 145 Affiliate
Agreement"), substantially in the form attached hereto as Exhibit C, at least 15
days prior to the Effective Time.
ARTICLE VII.
TERMINATION
SECTION 7.01 Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (with respect to
Section 7.01(b) through (h), by written notice by the terminating party to the
other party):
(a) by mutual written consent duly authorized by the TCM Board, TCM Special
Committee, board of directors of Merger Sub, the Company Board and the Company
Special Committee; or
(b) by either the TCM Special Committee or the Company Special Committee,
if a Governmental Entity shall have (i) issued a non-appealable final judgment,
order, injunction, decree or ruling or taken any other action or (ii) enacted,
enforced or deemed applicable to the Merger a Law in final form, in each case
having the effect of permanently restraining, enjoining, prohibiting or making
illegal the consummation of the Merger (provided that the party seeking to
terminate pursuant to this Section 7.01(b) shall have used commercially
reasonable efforts to have any such judgment, order, injunction, decree, ruling
or other action vacated or lifted); or
(c) by the TCM Special Committee, (i) upon a breach of any representation,
warranty, covenant or agreement of the Company set forth in this Agreement such
that the conditions set forth in Section 6.02(a) or 6.02(b) would not be
satisfied (a "Company Terminating Breach"),
57
provided that, if such Company Terminating Breach is curable prior to the
expiration of 30 days from notice to the Company of its occurrence through the
exercise of the Company's commercially reasonable efforts, and for so long as
the Company continues to exercise such commercially reasonable efforts, the TCM
Special Committee may not terminate this Agreement under this Section 7.01(c)
until the expiration of such 15-day period (but in no event shall the preceding
proviso be deemed to extend the date set forth in Section 7.01(e)), or (ii) if
satisfaction of any of the conditions set forth in Section 6.02 is or becomes
impossible (other than through the failure of TCM or the Merger Sub to comply
with its obligations under this Agreement); or
(d) by the Company Special Committee, (i) upon a breach of any
representation, warranty, covenant or agreement of TCM or Merger Sub set forth
in this Agreement such that the conditions set forth in Section 6.03(a) or
6.03(b) would not be satisfied (a "TCM Terminating Breach"), provided that, if
such TCM Terminating Breach is curable prior to the expiration of 30 days from
notice to TCM of its occurrence through the exercise of TCM's commercially
reasonable efforts, and for so long as TCM continues to exercise such
commercially reasonable efforts, the Company Special Committee may not terminate
this Agreement under this Section 7.01(d) until the expiration of such 30-day
period (but in no event shall the preceding proviso be deemed to extend the date
set forth in Section 7.01(e)), or (ii) if satisfaction of any of the conditions
set forth in Section 6.03 is or becomes impossible (other than through the
failure of the Company to comply with its obligations under this Agreement); or
(e) by either the Company Special Committee or the TCM Special Committee,
if the Merger has not been consummated by the 12-month anniversary of the
execution of this Agreement (provided that the failure to consummate the Merger
by such date was not the result of any act or failure to act by the party
seeking to terminate this Agreement pursuant to this Section 7.01(e)); or
(f) by TCM, if the Company Board and the Company Special Committee shall
have failed to recommend or shall be withdrawn, or modified or changed in a
manner adverse to TCM its approval or recommendation of this Agreement or the
Merger or shall have recommended a Superior Proposal, or the Company shall have
entered into a definitive agreement in respect of a Takeover Proposal with a
Person other than TCM or its subsidiaries (or the Company Board or the Company
Special Committee resolves to do any of the foregoing); or
(g) by the Company, if the Company Board and the Company Special Committee
authorizes the Company, subject to complying with Section 5.03 of this
Agreement, to enter into a binding agreement concerning a transaction that
constitutes a Superior Proposal;
(h) by either the TCM Special Committee or the Company Special Committee,
if the Stockholder Vote Condition shall not have been satisfied by reason of the
failure to obtain the required vote at the Company Stockholders' Meeting;
(i) by either TCM or the Company, if the Separation and Distribution
Agreement is terminated; or
58
(j) by the Company, if any material amendment or modification of the
Separation and Distribution Agreement to the disadvantage of TCM had been made
or if the Separation and Distribution Agreement is breached in any material
respect.
SECTION 7.02 Effect of Termination. If this Agreement is terminated
pursuant to Section 7.01, all further obligations of the parties under this
Agreement will terminate, except that the obligations in Section 5.09 will
survive; provided, however, that if this Agreement is terminated by a party
because of the breach of this Agreement by the other party, or because one or
more of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's failure to comply
with its obligations under this Agreement, the terminating party's right to
pursue all legal remedies will survive such termination unimpaired. Without
limiting the foregoing, if the Merger is not consummated and (x) if the Company
shall have breached any of its obligations under Section 5.03 hereof, the actual
Transaction Expenses of TCM and Merger Sub shall be paid by the Company to TCM
or (y) if TCM shall have breached any of its obligations under Section 5.03
hereof, the actual Transaction Expenses of the Company shall be paid by TCM to
the Company.
ARTICLE VIII.
GENERAL PROVISIONS
SECTION 8.01 Survival of Representations and Warranties. The
representations and warranties made by the parties in this Agreement and in any
Ancillary Agreement or in any document or agreement delivered pursuant hereto or
thereto shall not survive the Effective Time.
SECTION 8.02 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date received if delivered personally, sent by nationally
recognized overnight courier or mailed by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses (or
at such other address for a party as shall be specified by like changes of
address, which shall be effective upon receipt), or sent by electronic
transmission, with confirmation received, to the telecopy numbers specified
below:
(a) If to TCM or Merger Sub:
Triple Crown Media, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxx X. Xxxx
With a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
59
Attention: Xxxxxx X. Xxxxxx, Esq.
and: Chorey, Taylor & Xxxx
0000 Xxxxxxxxx Xxxx, X.X.
Suite 0000, Xxx Xxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxx Xxxxxx, Esq.
If to the Company:
Bull Run Corporation
Special Committee of the Board of Directors
1251 Avenue of the Americas
Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
With a copy to:
Xxxxxxxxxx Helpern Syracuse & Hirschtritt LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
and: Xxxxxxxx Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
SECTION 8.03 Waiver. The TCM Special Committee may, with respect to the
Company, and the Company Special Committee may, with respect to TCM or Merger
Sub, (a) extend the time for the performance of any of its obligations or other
acts, (b) waive any inaccuracies in its representations and warranties contained
herein or in any document delivered pursuant hereto or (c) waive compliance with
any of its agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
SECTION 8.04 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.
60
SECTION 8.05 Limited Liability. Notwithstanding any other provisions of
this Agreement, in the absence of fraud, no stockholder, director, officer,
affiliate, agent, representative or counsel of the Company, TCM or Merger Sub,
in its capacity as such, shall have any liability in respect of or relating to
the covenants, obligations, representations or warranties of such party under
this Agreement or in respect of any certificate delivered with respect hereto or
thereto and, to the fullest extent legally permissible, each of the Company, TCM
and Merger Sub, for itself and its stockholders, directors, officers and
affiliates, waives and agrees not to seek to assert or enforce any such
liability that any such person otherwise might have pursuant to applicable law.
SECTION 8.06 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all other conditions and provisions of this Agreement nevertheless shall
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the TCM Special Committee and the
Company Special Committee shall negotiate in good faith to modify this Agreement
so as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are fulfilled
to the extent possible.
SECTION 8.07 Entire Agreement; Amendment. This Agreement (including any
exhibits and schedules hereto), the Company Disclosure Letter, the TCM
Disclosure Letter and the Ancillary Agreements constitute the entire agreement
among the parties hereto and supersede all prior and contemporaneous agreements
and undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. This Agreement may be amended prior to the
Company Stockholders' Action being adopted only by an instrument in writing
approved by the TCM Special Committee and the Company Special Committee and
signed by TCM, Merger Sub and the Company stating that it constitutes an
amendment to this Agreement, except that the provisions of Section 5.11 shall
not be amended except as provided therein.
SECTION 8.08 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise by any of the parties hereto
without the prior written approval of the TCM Special Committee or the Company
Special Committee, as applicable, and any such assignment without such prior
written approval shall be null and void, except that TCM and/or Merger Sub may
assign this Agreement to any direct or indirect wholly owned subsidiary of TCM
without consent of the Company; provided that (1) TCM shall remain liable for
all of its obligations under this Agreement, including the obligation to issue
shares of TCM Common Stock as contemplated herein and (2) such assignment does
not cause the Merger to fail to be treated as a reorganization within the
meaning of Section 368(a) of the Code.
SECTION 8.09 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors, and except
as provided in Section 5.11, nothing in this Agreement, express or implied, is
intended to or shall confer upon
61
any other person any right, benefit or remedy of any nature whatsoever under or
by reason of this Agreement.
SECTION 8.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 8.11 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 8.12 Counterparts. This Agreement may be executed in any number of
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 8.13 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 8.14 Jurisdiction; Forum. Each of the parties hereto (i) consents
to submit itself to the non-exclusive personal jurisdiction of any federal court
located in the City of New York in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement and (ii)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court.
SECTION 8.15 General Interpretative Provisions; Definition of Knowledge.
(a) Terms for which meanings are defined in this Agreement shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine and
feminine forms. Words such as "herein," "hereafter," "hereto," "hereby" and
"hereunder," when used with reference to this Agreement, refer to this Agreement
as a whole, unless the context otherwise requires. The words "include",
"includes," "included," "including" and "such as" shall be construed as if
followed by the phrase "without being limited to." No distinction in
interpretation shall be made between the terms "shall" and "will."
(b) As used herein, the words "knowledge" or "known" shall mean, (i) with
respect to the Company, the actual knowledge (and not constructive) of Xxxxxx X.
Xxxxxx, Xxxxxxxxx X. Xxxxxxxx and Xxxxxx X. Xxxxxxx, Xx., each in their capacity
as an officer or director of the
62
Company, (ii) with respect to TCM, the actual knowledge (and not constructive)
of Xxxxxx X. Xxxxxxx, Xx. and Xxxxx X. Xxxx, each in their capacity as an
officer or director of TCM, and in each case after any of the foregoing
individuals have made due and diligent inquiry as to the matters which are the
subject of the statements which are "known" by the Company or TCM, as
applicable, or made to the "knowledge" of the Company or TCM, as applicable.
SECTION 8.16 Specific Performance and Injunctive Relief. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached or threatened to be breached. It is
accordingly agreed that the parties shall be entitled to seek a preliminary and
permanent injunction or injunctions to prevent breaches, or threatened breaches,
of this Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state having jurisdiction, without the
need to post bond or furnish other security, this being in addition to any other
remedy to which they are entitled at law or in equity.
SECTION 8.17 Attorneys' Fees. If any action, suit, arbitration or other
proceeding for the enforcement of this Agreement is brought, or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions hereof, or otherwise relating to or in connection with this
Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action, suit,
arbitration or other proceeding, in addition to any other relief to which it may
be entitled.
SECTION 8.18 Limitation of Liability
(a) Except with respect to liability under the Securities Act and the
Exchange Act and in the absence of fraud, TCM and the Company agree that neither
the other party nor any other person will have, or be subject to, any liability
for, or indemnification obligation to, the other party or any other person, to
the extent that such liability or indemnification obligation results from the
distribution to, as applicable, TCM or the Company, or TCM's or the Company's
use of, any information related to the business of the other party and its
subsidiaries and any other information, document or material made available to
TCM or the Company, as applicable, in certain "data rooms," management
presentations or any other form in connection with the transactions contemplated
by this Agreement and the Ancillary Agreements.
[Signature page follows.]
63
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed as of the date first written above by a duly authorized officer or
other person.
TRIPLE CROWN MEDIA, INC.
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
------------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President and Chief Executive
Officer
BR ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxx
------------------------------------
Name: Xxxxx X. Xxxx
Title: Treasurer and Secretary
BULL RUN CORPORATION
By: /s/ Xxxxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Vice President -- Finance
64
EXHIBIT 10.2
SCHEDULE 2.05
DIRECTORS
X. Xxxx Xxxxxxxx
Xxxxxx X. Xxxxxxx, Xx.
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxx
Xxxxxx X. Xxxxxx, Xx.
Xxxxx X. Xxxxxxx
OFFICERS
Xxxxxx X. Xxxxxxx, Xx. - Chairman
Xxxxxx X. Xxxxxx - President and Chief Executive Officer
Xxxxxxxxx X. Xxxxxxxx - Chief Financial Officer
SCHEDULE 6.01(G)
Wachovia Bank, pursuant to the Third Amended and Restated Credit Agreement
Quest International Users Group, Inc., pursuant to its Amended and Restated
Management Agreement with Host Communications, Inc.
License Agreement dated as of May 9, 2005 by and between NEWSTEC, Inc. and Xxxx
Publishing, LLC.
Application for Service, Letter of Agency, and Agreement Choice One/US Xchange
dated March 28, 2003.
2
