-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I163yIW+cH+0tNcHFi35RQ3BOcLjFtdMsSYwrD/RCAnDdaLMjKlfBgeJOvDEbmvS nhD4DtmAUwSY8X+RAo64pQ== 0000902664-04-000968.txt : 20040528 0000902664-04-000968.hdr.sgml : 20040528 20040528160204 ACCESSION NUMBER: 0000902664-04-000968 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20040528 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: JANA PARTNERS LLC CENTRAL INDEX KEY: 0001159159 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: JANA PARTNERS LLC STREET 2: 536 PACIFIC AVENUE CITY: SAN FRANCISCO STATE: CA ZIP: 94133 BUSINESS PHONE: 2125935955 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: INTERCEPT INC CENTRAL INDEX KEY: 0001054930 STANDARD INDUSTRIAL CLASSIFICATION: FUNCTIONS RELATED TO DEPOSITORY BANKING, NEC [6099] IRS NUMBER: 582237359 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-55377 FILM NUMBER: 04838610 BUSINESS ADDRESS: STREET 1: 3150 HOLCOMB BRIDGE ROAD SUITE 200 CITY: NORCROSS STATE: GA ZIP: 30071 BUSINESS PHONE: 7702489600 MAIL ADDRESS: STREET 1: 3150 HOLCOMB BRIDGE ROAD SUITE 200 CITY: NORCROSS STATE: GA ZIP: 30071 FORMER COMPANY: FORMER CONFORMED NAME: INTERCEPT GROUP INC DATE OF NAME CHANGE: 19980209 SC 13D/A 1 srz9658044-13da.txt INTERCEPT, INC. - SC 13D/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------- SCHEDULE 13D/A (RULE 13D-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13D-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13D-2(a) (Amendment No.6) INTERCEPT, INC. - ----------------------------------------------------------------------- (Name of Issuer) COMMON STOCK - ----------------------------------------------------------------------- (Title of Class of Securities) 45845L107 - ----------------------------------------------------------------------- (CUSIP Number) Marc Weingarten, Esq. SCHULTE ROTH & ZABEL LLP 919 Third Avenue New York, New York 10022 (212) 756-2000 - ----------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) May 26, 2004 - ----------------------------------------------------------------------- (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box |_|. NOTE. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. SEE Rule 13d-7 for other parties to whom copies are to be sent. - -------- 1 The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, SEE the NOTES). (page 1 of 4 pages) - ------------------------- --------- CUSIP No. 45845L107 13D Page 2 of 4 Pages - ------------------------- --------- ======================================================================= 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) JANA PARTNERS LLC - ----------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| b) |_| - ----------------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - ----------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) |_| - ----------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - ----------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 1,914,737 OWNED BY EACH REPORTING PERSON WITH - -------------------------------------------------------- 8 SHARED VOTING POWER -0- - -------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 1,914,737 - -------------------------------------------------------- 10 SHARED DISPOSITIVE POWER -0- - ----------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,914,737 - ----------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_| - ----------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.4% - ----------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IA ======================================================================= SEE INSTRUCTIONS BEFORE FILLING OUT!* - ------------------------- --------- CUSIP No. 45845L107 13D Page 3 of 4 Pages - ------------------------- --------- The Schedule 13D filed on April 12, 2004 by Jana Partners LLC, a Delaware limited liability company (the "Reporting Person"), relating to the common stock, no par value (the "Shares"), of InterCept, Inc. (the "Issuer"), as amended by Amendment No. 1 relating to the Event Date of April 26, 2004, Amendment No. 2 relating to the Event Date of April 29, 2004, Amendments No. 3 and No. 4 relating to the Event Date of May 3, 2004 (collectively, the "Schedule 13D"), and Amendment No. 5 relating to the Event Date of May 20, 2004 is hereby amended and supplemented as set forth below by this Amendment No. 6 to the Schedule 13D. Item 4. Purpose of Transaction. ---------------------- Item 4 of the Schedule 13D is hereby supplemented as follows: On May 26, 2004, the Reporting Person filed a Memorandum of Law in Support of Expedited Treatment and For Entry of Declaratory Judgment (the "Memorandum") in Georgia federal court seeking a declaration that the Reporting Person's proposal to amend Section 3.3 of the Issuer's bylaws, to be considered at the Issuer's 2004 Annual Meeting, is valid and may be adopted by the shareholders. More information is available in the Memorandum, a copy of which is attached as exhibit 7 hereto. Item 5. Interest in Securities of the Issuer. ------------------------------------ Item 5(a) of the Schedule 13D is hereby amended and restated in its entirety as follows: (a) The aggregate percentage of Shares of Common Stock reported owned beneficially by the Reporting Person is based upon 20,288,562 Shares outstanding, which is the total number of Shares of Common Stock outstanding as of May 7, 2004, as reported in the Issuer's Form 10-Q for the quarter ending March 31, 2004, filed by the Issuer on May 10, 2004. As of the close of business on May 27, 2004, JANA Partners LLC beneficially owned 1,914,737 Shares of Common Stock, constituting approximately 9.4% of the Shares outstanding. - ------------------------- --------- CUSIP No. 45845L107 13D Page 4 of 4 Pages - ------------------------- --------- SIGNATURES After reasonable inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: May 28, 2004 JANA PARTNERS LLC By: /s/ Barry S. Rosenstein ------------------------ Barry S. Rosenstein Managing Director By: /s/ Gary Claar ------------------- Gary Claar Managing Director Schedule A of the Schedule 13D is hereby amended and restated as follows: JANA PARTNERS LLC Shares of Common Stock Price Per Date of Purchased (Sold) Share($) Purchase (Sale) ---------------- --------- --------------- 218, 610 $12.3390 03/10/04 160,000 $12.7084 03/11/04 50,000 $12.4533 03/12/04 80,000 $11.9757 03/15/04 67,600 $11.4782 02/23/04 201,027 $10.7546 03/24/04 50,000 $10.8500 03/25/04 112,700 $11.6988 03/30/04 95,400 $12.0020 03/31/04 176,200 $12.2856 04/01/04 173,900 $12.4782 04/02/04 150,500 $12.4860 04/05/04 84,000 $12.8200 04/07/04 20,000 $12.9000 04/12/04 156,500 $14.7800 05/11/04 14,200 $13.7296 05/19/04 48,000 $13.5900 05/20/04 31,100 $14.4834 05/21/04 25,000 $15.0011 05/25/04 EX-99 2 legal_brief.txt MEMORANDUM OF LAW UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION - ----------------------------------------- INTERCEPT, INC., ) ) Plaintiff, ) ) v. ) ) JANA PARTNERS LLC and ) JANA MASTER FUND, LTD. ) ) Defendants. ) - -----------------------------------------) ) CIVIL ACTION FILE NO.: JANA MASTER FUND, LTD., ) 1-04-CV-1058-JOF ) Counterclaim-Plaintiff, ) ) v. ) ) INTERCEPT, INC., ) ) COUNTERCLAIM-DEFENDANT. ) - ----------------------------------------- JANA'S MEMORANDUM OF LAW IN SUPPORT OF EXPEDITED TREATMENT AND FOR ENTRY OF DECLARATORY JUDGMENT JANA Master Fund, Ltd. ("JANA") files this Memorandum of Law in Support of Expedited Treatment And For Entry of Declaratory Judgment, showing the Court as follows: I. INTRODUCTION Consistent with the Court's April 29, 2004 Order, JANA submitted proposals to InterCept, Inc. ("InterCept") for matters to be considered by InterCept's shareholders at InterCept's 2004 Annual Meeting, currently scheduled to be held on June 24, 2004. One of the proposals, if adopted by the shareholders, would amend InterCept's bylaws to provide that shareholders may remove directors with or without cause. InterCept wrongly has taken the position in its preliminary proxy materials filed with the SEC that JANA's proposed bylaw is invalid. According to InterCept, the chairman of the 2004 Annual Meeting will declare the proposal out of order and prevent the matter from coming up for a vote unless this Court orders otherwise. Subject to leave of Court, JANA is filing contemporaneously an Amended Counterclaim for Declaratory and Injunctive Relief (the "Amended Counterclaim"). In its Amended Counterclaim, JANA asserts a new claim seeking a declaration pursuant to 28 U.S.C. Section 2201 and Rule 57, Fed. R. Civ. P., that JANA's proposed bylaw amendment is valid and may be adopted by the shareholders. 2 As argued below, the Court should grant JANA declaratory relief, on an expedited basis. Contrary to InterCept's arguments, its Articles of Incorporation do not preclude adoption of the proposed amended bylaw. Read in isolation or in connection with InterCept's Bylaws, it is clear that the Articles do not prevent the shareholders from adopting a bylaw that provides that directors may be removed with or without cause. If the Articles did prevent the shareholders from adopting such a bylaw, they would be inconsistent with the Georgia Business Corporate Code and invalid. SEE O.C.G.A. Section 14-2-808(d). For these reasons, JANA respectfully requests that the Court grant its motion seeking expedited treatment and enter a declaratory judgment that the proposed bylaw amendment is valid and may be considered by InterCept's shareholders. II. FACTUAL BACKGROUND The facts relative to JANA's Motion for Expedited Treatment and claim for declaratory relief are not in dispute. A. THE PARTIES AND JANA'S PURCHASE OF INTERCEPT STOCK InterCept is a data processing company incorporated in Georgia and publicly traded on NASDAQ. JANA Partners LLC is headquartered in California and manages investment funds, including JANA. 3 Based on InterCept's bylaws in place from 1998 until April 14, 2004, JANA believed that four directors - a majority - would be up for election at InterCept's 2004 Annual Meeting. Relying on this belief, JANA purchased a stake in InterCept that now constitutes more than 9% of InterCept's outstanding common stock. Second Declaration of Barry S. Rosenstein ("2d Rosenstein Dec.") paragraph 3. B. PROCEDURAL HISTORY After JANA announced its intention to nominate four individuals for election as directors at the 2004 Annual Meeting, InterCept commenced this lawsuit seeking declaratory and injunctive relief to prevent JANA from nominating more than two directors. On April 29, 2004, this Court denied InterCept's Motion for a Temporary Restraining Order and Preliminary Injunction. Order dated April 29, 2004 (the "Order"). However, in its Order, the Court indicated that InterCept was likely to succeed on its argument that only two directors would be up for election at the 2004 Annual Meeting. ID. at 4. Recognizing that JANA had detrimentally relied on InterCept's faulty disclosure, the Court permitted JANA to submit proposals for additional business to be considered at the 2004 Annual Meeting. ID. at 7 ("Defendants may submit alternative proposals for business to be discussed at the June 2004 annual 4 shareholder meeting provided they are submitted no later than five (5) days of the date of entry of this order."). C. THE CURRENT DISPUTE On May 3, 2004 (within the time specified in the Order), JANA presented three proposals (the "JANA Proposals") to InterCept for shareholder consideration and voting at the June 24, 2004 Annual Meeting. 2d Rosenstein Dec. Ex. A. The declaratory relief that JANA seeks relates to one of the three JANA Proposals - a proposal that seeks to have InterCept's shareholders vote at the 2004 Annual Meeting on whether to amend and restate Section 3.3 of InterCept's current bylaws to allow InterCept's directors to be removed either with OR WITHOUT cause (JANA's "Director Removal Bylaw Proposal"). InterCept has stated in its preliminary proxy materials that it believes the Director Removal Bylaw Proposal is invalid. InterCept's Schedule 14A, Preliminary Proxy Statement, filed May 5, 2004, at 26, 2d Rosenstein Dec. Ex. B. Accordingly, the chairman of the 2004 Annual Meeting intends to declare the proposal out of order at the meeting, preventing the proposal from coming up for a vote by the shareholders. ID. InterCept apparently believes - incorrectly - that the new bylaw, if adopted by the shareholders, would conflict with InterCept's Articles of Incorporation and, thus, cannot be adopted by the 5 shareholders. ID. Resolution of the dispute requires the Court to consider the following. 1. THE EXISTING BYLAW PROVISION AND JANA'S PROPOSED REVISION Section 3.3 of InterCept's existing Bylaws clearly provides that InterCept's directors may only be removed for cause. In its entirety, Section 3.3 currently provides: REMOVAL OF DIRECTORS. The entire Board of Directors or any individual director may be removed with cause by the shareholders, provided that directors elected by a particular Voting Group may be removed only by the shareholders in that Voting Group. Removal action may be taken only at a shareholders' meeting for which notice of the removal action has been given, and a director may be removed only by the holders of 66 2/3% of the votes entitled to be cast. If any removed director is a member of any committee of the Board of Directors, he shall cease to be a member of that committee when he ceases to be a director. A removed director's successor, if any, may be elected at the same meeting to serve the unexpired term. Directors may not be removed without cause. [First] Declaration of Barry S. Rosenstein ("1st Rosenstein Dec.") Ex. N. The proposed amended bylaw, showing the changes, is as follows: REMOVAL OF DIRECTORS. The entire Board of Directors or any individual director may be removed with or without cause by the shareholders, provided that directors elected by a particular Voting Group may be removed with or without cause only by the shareholders in that Voting Group. Removal action may be taken only at a shareholders' meeting for which notice of the removal action has been given, and a director may be removed only by the holders of at least a majority of the votes entitled to be cast. If any removed director is a member of any committee of the Board of Directors, he shall cease to be a member of 6 that committee when he ceases to be a director. A removed director's successor, if any, may be elected at the same meeting to serve the unexpired term. The Board of Directors may not amend or repeal or adopt any bylaw provision inconsistent with this section 3.3. 2d Rosenstein Dec. Ex. A. 2. INTERCEPT'S ARTICLES OF INCORPORATION Intercept has indicated in its preliminary proxy materials that JANA's proposal would conflict with Article VII of InterCept's Articles and is thus invalid. In other words, InterCept takes the position that its Articles FORBID InterCept's shareholders from amending the bylaws so that directors can be removed without cause, even though shareholders expressly have the power to do so under Georgia law. SEE O.C.G.A. Section 14-2-808(d). The language on which InterCept bases its argument is contained in Article VII of the Articles and states as follows: Except in the case of death, resignation, disqualification, or removal for cause, each director shall serve for a term ending on the date of the third annual meeting of shareholders following the annual meeting at which the director was elected; ... Amended and Restated Articles of Incorporation, Art. VII, 2d Rosenstein Dec. Ex. D. InterCept argues that this sentence absolutely precludes any effort by 7 InterCept's shareholders to amend the Bylaws to provide that directors may be removed with or without cause. III. ARGUMENT A. THE COURT SHOULD HEAR JANA'S CLAIM FOR DECLARATORY RELIEF ON AN EXPEDITED BASIS In connection with its claim for declaratory relief, JANA has submitted a Motion for Expedited Treatment pursuant to Rule 57, Fed. R. Civ. P., which states, in relevant part: The court may order a speedy hearing of an action for declaratory judgment and may advance it on the calendar. The Eleventh Circuit has stated that "Rule 57 should be liberally construed to achieve the objectives of the declaratory remedy." MCDOUGALD V. JENSON, 786 F.2d 1465, 1481 (11th Cir. 1986). Those objectives include: Affording one threatened with liability, but otherwise without a satisfactory remedy, an early adjudication of an actual controversy, and avoiding multiplicity of actions by affording an adequate and expedient means of declaring the rights and obligations of litigants in one action rather than several. ID. Because the objectives stated above would best be achieved through an expedited adjudication, JANA's Motion for Expedited Treatment should be granted. 8 Whether JANA's proposal conflicts with Plaintiff's Articles of Incorporation is an "actual controversy" appropriate for declaratory relief. ID. SEE ALSO MISSISSIPPI POWER & LIGHT CO. V. CITY OF JACKSON, 116 F.2d 924, 925 (5th Cir. 1941) (holding that the issue was an "actual justiciable controversy" because "every allegation has to do with and is directed to [a] single question."). A speedy hearing is warranted when the non-moving party "set[s] the time table" in a manner that would leave the moving party without relief absent accelerated adjudication. SEE, E.G., JOHN NUVEEN & CO. INC. V. NEW YORK CITY HOUSING DEV. CORP., 1986 U.S. Dist. LEXIS 25782 (N.D. Ill. May, 7, 1986) (granting a speedy hearing when defendants gave only 30 days notice for plaintiffs to redeem bonds and withheld documents explaining how to redeem the bonds). Here, a speedy hearing is necessary because InterCept has indicated it plans to hold its annual meeting on June 24, 2004, less than a month away. If the parties are not heard on this matter before the upcoming meeting, then JANA effectively will lose its ability to present this proposal to the shareholders until, at the earliest, the next shareholders' meeting and after another expensive proxy solicitation. In addition to preserving JANA's right to have its proposals voted upon by the shareholders, a speedy hearing here will save the parties and the Court time 9 and expense. First, a rapid adjudication will prevent the parties from having to send corrective proxy mailings since the content of these materials may depend in part on the Court's decision on JANA's claim for declaratory judgment. Second, a speedy hearing will mitigate the likely shareholder confusion that has already been caused by the parties' disparate positions with regard to the Director Removal Bylaw Proposal. Third, absent a decision from the Court prior to InterCept's 2004 Annual Meeting, there will be continued litigation including, if JANA were to prevail, over whether InterCept must hold another Annual Meeting. SEE 2d Rosenstein Dec. Paragraph 9. For the reasons stated above, JANA's Motion for Speedy Hearing should be granted.(1) B. THE COURT SHOULD ENTER A DECLARATORY JUDGMENT HOLDING THAT THE DIRECTOR REMOVAL BYLAW PROPOSAL IS VALID AND MAY BE CONSIDERED BY INTERCEPT'S SHAREHOLDERS Section 14-2-808(d) of the Georgia Business Corporate Code provides that "[i]f the directors have staggered terms as provided in Code Section 14-2-806, directors may be removed only for cause, UNLESS the articles of incorporation OR a bylaw adopted by the shareholders provides otherwise." (Emphasis added.) (1) In the event the Court does not hear and decide this matter in advance of the date of the annual meeting as currently scheduled, JANA intends to ask the Court to order InterCept to postpone the meeting briefly to allow time for consideration of this matter. 10 Consistent with the plain language of this section of the Georgia Code, JANA seeks to propose to InterCept's shareholders that they adopt a bylaw that "provides otherwise" - i.e., that provides that directors may be removed other than for cause. Relying on a sentence in Article VII of the Articles that references director removal, InterCept argues - in the face of the plain language of Section 14-2-808(d) - that the shareholders have no such power. JANA disagrees for either of two independent reasons. First, Article VII simply does not say what InterCept argues it says and should not be construed in the manner that InterCept suggests. Properly construed, InterCept's Articles do not purport to prevent its shareholders from adopting a bylaw providing that directors may be removed without cause. Second, even if Article VII InterCept's Articles could be so construed, it would be in direct conflict with Section 14-2-808(d) and, thus, would be invalid. Either way, the Director Removal Bylaw Proposal is valid and should be submitted to the shareholders for a vote. 1. ARTICLE VII OF INTERCEPT'S ARTICLES OF INCORPORATION CANNOT REASONABLY BE CONSTRUED TO PRECLUDE THE SHAREHOLDERS FROM AMENDING THE BYLAWS TO ADOPT JANA'S DIRECTOR REMOVAL BYLAW PROPOSAL InterCept argues that language in Article VII of its Articles precludes the shareholders of InterCept from changing its Bylaws to provide that the 11 shareholders can remove directors with, or without, cause. InterCept's argument strains credulity and should be rejected. First, to state the obvious, Article VII does not state that InterCept's shareholders cannot amend the Bylaws so that InterCept's directors could be removed with, or without, cause. The language on which InterCept relies simply states that directors serve a SPECIFIED TERM unless they die, resign, become disqualified or are removed for cause. The language says nothing about whether the shareholders can, or cannot, change bylaws provisions regarding the way directors are removed. CF. IN RE LUMMUS DEVELOPMENT CORP., 85 F.3d 575, 575 (11th Cir. 1996) ("Under Georgia law, if the agreement contains unambiguous language, the court gives the language its plain meaning"). If InterCept had intended through its Articles to prevent directors from being removed without cause, InterCept could have stated that point clearly in its Articles, AS IT DID IN SECTION 3.3 OF ITS BYLAWS, the last sentence of which reads as follows: "Directors may not be removed without cause." 1st Rosenstein Dec. Ex. N, Section 3.3. This language in the Bylaws is clear and unambiguous. There is no corresponding language in Intercept's Articles. Similarly, if InterCept had wanted to preclude its shareholders from changing the way 12 directors are removed, it could have clearly and easily stated such a desire (although such a provision would have conflicted with Section 14-2-808(d), as discussed below). For example, InterCept could have inserted a provision in the Articles such as "Directors may only be removed for cause, and this provision cannot be amended by the company's bylaws." There is no such provision in the Articles, although arguably there is evidence that InterCept knew how to write such a provision had it wanted to do so. CF. Articles, Rosenstein Dec. Ex. D, Ex. A Section 9 ("The Corporation shall not amend the Restated Articles ... except in accordance with the provisions of Section 7 hereof....") Second, JANA's interpretation of Article VII is supported by reading the Articles and Bylaws together. Article III of the Bylaws is captioned "Board of Directors" and contains eight (8) separate sections which govern InterCept's directors(2). Only one of the eight subsections in Article III of the Bylaws is captioned "Removal of Directors" (section 3.3), and it contains detailed (2) Article III of the Bylaws contains sections captioned "General Powers" (Section 3.1), "Number, Election and Term of Office" (Section 3.2), "Removal of Directors" (Section 3.3), "Vacancies" (Section 3.4), "Compensation" (Section 3.5), "Committees of the Board of Directors" (Section 3.6), "Qualifications of Directors" (Section 3.7), and "Certain Nomination Requirements" (Section 3.8). 13 provisions setting forth (among other things) when and how InterCept's directors can, and cannot, be removed. The sentence in Article VII of the Articles on which InterCept relies is also contained - verbatim - in the Bylaws, BUT NOT IN SECTION 3.3 OF THE BYLAWS WHICH IS THE PROVISION THAT DETAILS WHEN AND HOW DIRECTORS MAY BE REMOVED. Rather, the sentence in the Articles on which InterCept bases its entire argument is contained in SECTION 3.2 of the Bylaws which deals, not with director removal, but with directors' "Number, Election and Term of Office."(3) In other words, both the Articles and the Bylaws contain a section on "directors". As is typical, the section on directors in the Articles is much shorter than the section on directors in the Bylaws. The Articles contain some general guidance on the responsibilities and term of Company's directors; the Bylaws contain the same guidance and set forth additional specific provisions - including detailed provisions on the removal of directors. The Articles contain no provisions, detailed or otherwise, on the removal of directors. (3) Section 3.2 of the Bylaws is captioned "Number, Election and Term of Office", and much of its language is verbatim identical to Article III of the Articles. For example, Section 3.2 of the Bylaws provides in relevant part that "[e]xcept in the case of death, resignation, disqualification, or removal for cause, each director shall serve for a term ending on the date of the third annual meeting of shareholders following the annual meeting at which the director was elected." This is the sentence from Article VII of the Articles on which InterCept based its decision not to permit the shareholders to vote on the Director Removal Bylaw Proposal. 14 The only way reasonably to read the Articles and Bylaws together (as this Court should do, if possible) is to ascribe to Article VII the meaning that it has in the more detailed Bylaws. RUSHING V. GOLD KIST, INC., 567 S.E.2d 384, 387, 256 Ga. App. 115, 117 (2002) ("bylaws of a corporation ... must be construed according to the principles of the law of contracts"). When that is done, it is clear that the language in Article VII (on which InterCept relies) does nothing more than set forth the time period for a directors' term; whereas the Bylaws (and not the Articles) set forth how directors may be removed. CF. MAIZ V. VIRANI, 253 F.3d 641, 659 (11th Cir. 2001) ("Georgia law also contemplates that contracts executed together as part of the same transaction should generally be construed together"). Finally, JANA submits that, if the Court were to interpret InterCept's Articles and Bylaws as urged by InterCept, it would have the effect of disenfranchising InterCept's shareholders by removing from them the power to decide how and when InterCept should be able to amend its bylaw provisions on the removal of directors. Surely this is a result that should only occur, if at all, only in those situation where the language in the operative documents clearly demonstrates that such a result was intended. SEE ROHE V. RELIANCE 15 TRAINING NETWORK, INC., Case No. 117992 2000 WL 1038190, at *1 (Del. Ch. 2000) (court "refused to interpret the relevant instruments in a manner that would disenfranchise the . . . stockholders in the absence of clear evidence that such a restriction on stockholder action was intended"). 2. AN INTERPRETATION OF ARTICLE VII THAT PREVENTS INTERCEPT'S SHAREHOLDERS FROM ADOPTING THE DIRECTOR REMOVAL BYLAW WOULD DIRECTLY CONFLICT WITH THE GEORGIA CORPORATION BUSINESS CODE AND WOULD ITSELF BE INVALID Even if the Court were to construe Article VII as InterCept suggests, it could not affect the validity of the Director Removal Bylaw Proposal because Article VII would directly conflict with Section 14-2-808(d) and, thus, would itself be invalid. CF. STATE FARM FIRE & CAS. INS. V. TERRY, 495 S.E.2d 66, 71, 230 Ga. App. 12, 16, reconsideration denied, and certiorari granted, affirmed 504 S.E.2d 194, 269 Ga. 777 (1997) ("Contracts should be given a construction that renders them in compliance with a governing statute rather than in contravention thereof"). Section 14-2-808(d) provides as follows: If the directors have staggered terms as provided in Code Section 14-2-806, directors may be removed only for cause, unless the articles of incorporation or a BYLAW ADOPTED BY THE SHAREHOLDERS provides otherwise. O.C.G.A. Section 14-2-808(d) (emphasis added). Significantly, nothing in Section 14-2-808(d) contemplates the ability of a corporation to include in its Articles a provision that would abrogate the ability of the shareholders to adopt such a bylaw amendment. Instead, the GBCC specifically reserves this right to shareholders. If the drafters of the GBCC had intended for such abrogation, they would have provided that the shareholders' right to adopt a Bylaw amendment providing that directors may be removed without cause could be limited by the articles of incorporation. There is no such limitation in the GBCC. Thus, the plain meaning of Section 14-2-808(d) is that InterCept's shareholders may adopt precisely the proposal that JANA seeks to present for consideration at the 2004 Annual Meeting. SEE Order at 5 ("The Eleventh Circuit Court of Appeals has repeatedly stressed its belief that courts should enforce the plain meaning of a statute."). Importantly, Section 14-2-808(d) of the GBCC was patterned after its counterpart in Delaware, Section 141(k)(1) of the Delaware General Corporation Law (the "DGCL"). Section 141(k)(1) provides that "[u]nless the certificate of incorporation otherwise provides, in the case of a corporation whose board is classified . . . shareholders may effect such removal only for cause." Section 16 14-2-808(d) of the GBCC intentionally deviates from Section 141(k)(1) of the DGCL in one important respect. While Section 141(k)(1) of the DGCL provides that the rule permitting directors to be removed only for cause in the context of a classified board can be altered only by the certificate (or articles) of incorporation, Section 14-2-808(d) of the GBCC expressly authorizes shareholders to adopt a bylaw provision providing that directors may be removed without cause. This departure is significant in that it obviously reflects a decision by the drafters of the GBCC that the right to provide that directors may be removed without cause is vested IN SHAREHOLDERS by allowing them to adopt a Bylaw provision allowing such removal. Any interpretation of InterCept's Articles that results in divesting the rights of InterCept's shareholders to adopt Bylaws providing directors may be removed without cause is inconsistent with the clear language and intent of Section 14-2-808(d) of the GBCC and is invalid. O.C.G.A. Section 14-2-202(b)(2) (articles may set forth provision "not inconsistent with law"). Finally, InterCept has contended in its preliminary proxy materials that the Company could not adopt the amended bylaw without also amending its Articles. As noted, InterCept's position is incorrect because there is no conflict between the Articles and the proposed bylaw and, if there were, the Articles would be inconsistent with the GBCC and invalid. To the extent it is 17 necessary to amend the Articles to get rid of the invalid provision, Georgia law permits the corporation to do so "at any time." SEE O.C.G.A Section 14-2-1001(a). IV. CONCLUSION For the foregoing reasons, JANA respectfully requests that the Court enter an order on an expedited basis declaring that the Director Removal Bylaw Proposal does not conflict with InterCept's Articles of Incorporation and may be considered by the shareholders at the 2004 Annual Meeting. Respectfully submitted, this 26th day of May, 2004. KING & SPALDING LLP /s/ Joseph B. Haynes -------------------------- Joseph B. Haynes Georgia Bar No. 340600 John P. Brumbaugh Georgia Bar No. 0137626 Ranse M. Partin Georgia Bar No. 556260 191 Peachtree Street, N.E. Attorneys for Defendants Atlanta, Georgia 30303-1763 JANA Partners LLC and Telephone: (404) 572-4600 JANA Master Fund, Ltd. Facsimile: (404) 572-5100 -and- Attorneys for Counter-claim Plaintiff JANA Master Fund, Ltd. 18 CERTIFICATE OF SERVICE & COMPLIANCE THIS IS TO CERTIFY that I have this day served a true and exact copy of this JANA'S MEMORANDUM OF LAW IN SUPPORT OF EXPEDITED TREATMENT AND FOR ENTRY OF DECLARATORY JUDGMENT upon opposing counsel via United States Mail, postage prepaid, and addressed as follows: BY HAND ------- John J. Almond, Esq. Tony G. Powers, Esq. Ashley R. Hurst, Esq. A. Kirk Susong, Esq. ROGERS & HARDIN LLP 2700 International Tower Peachtree Center 229 Peachtree Street, N.E. Atlanta, Georgia 30303 BY U.S. MAIL ------------ Thomas T. Tate, Esq. James C. Joedecke, Jr., Esq. ANDERSEN, TATE, MAHAFFEY & MCGARITY, P.C. 1505 Lakes Parkway, Suite 100 Lawrenceville, Georgia 30043 Pursuant to LR 7.1D, the undersigned counsel certifies that the foregoing has been prepared with one of the font and point selections approved by the Court in LR 5.1B. /s/ John P. Brumbaugh ------------------------- John P. Brumbaugh -----END PRIVACY-ENHANCED MESSAGE-----