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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
COMPUCOM SYSTEMS, INC.,
COMPUCOM ACQUISITION CORP.
AND
DATAFLEX CORPORATION
DATED AS OF APRIL 10, 1998
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS..................................................................................1
1.1 Definitions..................................................................................1
ARTICLE II DISCLOSURE SCHEDULE..........................................................................1
2.1 Disclosure Schedule..........................................................................1
ARTICLE III THE MERGER...................................................................................2
3.1 Merger.......................................................................................2
3.2 Closing......................................................................................2
3.3 Articles of Incorporation and Bylaws of Surviving Corporation................................2
3.4 Directors and Officers.......................................................................2
ARTICLE IV CONVERSION OF THE COMPANY'S CAPITAL STOCK....................................................3
4.1 Conversion of the Company's Capital Stock....................................................3
4.2 Payment......................................................................................3
4.3 No Further Rights............................................................................4
4.4 Closing of the Company's Transfer Books......................................................4
4.5 Stock Options................................................................................4
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................5
5.1 Organization, Standing, etc. of the Company..................................................5
5.2 Authorization and Execution..................................................................6
5.3 No Consents..................................................................................6
5.4 Absence of Conflicts; Governmental Authorizations............................................6
5.5 Capitalization...............................................................................7
5.6 SEC Reports and Financial Statements.........................................................7
5.7 Absence of Certain Changes or Events.........................................................8
5.8 Absence of Undisclosed Liabilities...........................................................8
5.9 Accounts Receivable..........................................................................8
5.10 Tax Returns..................................................................................9
5.11 Agreements, Contracts and Commitments........................................................9
5.12 Intellectual Property.......................................................................12
5.13 Litigation..................................................................................14
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5.14 Compliance with Legal Requirements..........................................................14
5.15 Employee Benefit Plans......................................................................15
5.16 Absence of Labor Difficulties...............................................................17
5.17 Customers...................................................................................17
5.18 Assets Necessary to Business................................................................17
5.19 Licenses and Permits........................................................................17
5.20 Title to Properties.........................................................................18
5.21 Insurance...................................................................................18
5.22 Books and Records...........................................................................18
5.23 Absence of Certain Business Practices.......................................................19
5.24 Bank Accounts...............................................................................19
5.25 Default.....................................................................................19
5.26 Subsidiaries................................................................................19
5.27 No Broker's or Finder's Fees................................................................19
5.28 Opinion of Financial Advisor................................................................19
5.29 Information Supplied........................................................................20
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF COMPUCOM AND THE COMPUCOM SUBSIDIARY......................20
6.1 Organization, Standing, etc., of CompuCom...................................................20
6.2 Organization, Standing, etc., of CompuCom Subsidiary........................................20
6.3 Authorization and Execution.................................................................21
6.4 Absence of Conflicts; Governmental Authorizations...........................................21
6.5 Financing...................................................................................21
6.6 Information Supplied........................................................................22
ARTICLE VII COVENANTS OF THE COMPANY....................................................................22
7.1 Investigations..............................................................................22
7.2 Operation of the Company....................................................................22
7.3 No Solicitation.............................................................................25
7.4 Board Approval, Fairness Opinion, Shareholder Approval
and
Proxy Statement..................................................................................................27
7.5 Consents....................................................................................28
7.6 Financial Statements and Reports............................................................28
7.7 Termination of Covenants Not to Compete.....................................................28
7.8 Rose Employment Contract....................................................................28
7.9 Notice and Cure.............................................................................28
7.10 Commercially Reasonable Efforts and Consents................................................29
7.11 Company Profit Sharing Plan.................................................................29
7.12 Agreements and Covenants....................................................................29
ARTICLE VIII COVENANTS OF COMPUCOM AND THE
COMPUCOM SUBSIDIARY.........................................................................29
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8.1 Conduct of Business of the CompuCom Subsidiary..............................................29
8.2 Obligation of CompuCom to Make Merger Effective and
the
CompuCom Subsidiary's Shareholder Consent.......................................................................29
8.3 Notice and Cure.............................................................................29
8.4 Commercially Reasonable Efforts and Consents................................................30
8.5 Information for Proxy Statement for the Company's Shareholders..............................30
8.6 Indemnification Rights......................................................................30
ARTICLE IX CONDITIONS..................................................................................31
9.1 General Conditions..........................................................................31
9.2 Conditions to the Obligation of CompuCom and the
CompuCom Subsidiary.........................................................................32
9.3 Conditions to Obligations of the Company....................................................32
ARTICLE X TERMINATION; PAYMENT OF EXPENSES............................................................32
10.1 Termination of Agreement and Abandonment of Merger..........................................32
10.2 Effect of Termination.......................................................................33
10.3 Amendment...................................................................................34
10.4 Extension; Waiver...........................................................................34
10.5 Fees and Expenses...........................................................................34
ARTICLE XI GENERAL.....................................................................................34
11.1 Release of Information......................................................................34
11.2 Notices.....................................................................................35
11.3 Successors and Assigns......................................................................35
11.4 Further Assurances..........................................................................36
11.5 Specific Performance........................................................................36
11.6 Severability................................................................................36
11.7 Entire Agreement............................................................................36
11.8 Governing Law...............................................................................37
11.9 Certain Construction Rules..................................................................37
11.10 Survival of Covenants, Representations and Warranties.......................................37
11.11 Counterparts................................................................................37
SCHEDULE 1.1 DEFINITIONS.................................................................................39
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of April 10,
1998, among CompuCom Systems, Inc., a Delaware corporation ("CompuCom"), and
CompuCom Acquisition Corp., a Florida corporation and a wholly owned subsidiary
of CompuCom (the "CompuCom Subsidiary"), and Dataflex Corporation, a Florida
corporation (the "Company").
WHEREAS, the respective Boards of Directors of CompuCom, the CompuCom
Subsidiary and the Company have each approved the merger of the CompuCom
Subsidiary into the Company (the "Merger"), upon the terms and subject to the
conditions set forth in this Agreement, whereby each share of the Common Stock,
no par value per share, of the Company (the "Company Common Stock"), other than
shares of Company Common Stock owned directly or indirectly by CompuCom or the
Company, will be converted into the right to receive $4.10 per share in cash,
without interest thereon (the "Merger Consideration") and the Board of Directors
of the Company has adopted resolutions recommending that the Company's
stockholders approve the Merger; and
WHEREAS, CompuCom, the CompuCom Subsidiary and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual agreements, representations
and warranties contained herein, and subject to the conditions contained herein,
the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the terms set forth in
Schedule 1.1 shall have the respective meanings set forth therein.
ARTICLE II
DISCLOSURE SCHEDULE
2.1 Disclosure Schedule. The Company has prepared, executed and delivered to
CompuCom as of the date of this Agreement, a disclosure schedule (the
"Disclosure Schedule"), setting forth, among other things, certain information
that, to the extent and as provided in this Agreement, qualifies certain
representations and warranties of the Company made in this Agreement. The
Disclosure Schedule will be arranged in sections corresponding to sections of
this Agreement to be modified by the disclosures set forth in the Disclosure
Schedule. Information contained in a Section or subsection of the Disclosure
Schedule (or expressly incorporated therein) shall qualify only those
representations and warranties of the Company made in the identically numbered
Section
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or subsection of this Agreement, and shall not be deemed to qualify the
representations or warranties made in any other Section or subsection.
ARTICLE III
THE MERGER
3.1 Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time (as hereinafter defined), in accordance with
this Agreement and the Florida Business Corporation Act (the "FBCA"), the
CompuCom Subsidiary shall merge with and into the Company and the separate
existence and corporate organization of the CompuCom Subsidiary (except as may
be continued by operation of law) shall cease and the Company shall survive the
Merger as the surviving corporation (the "Surviving Corporation"). The Surviving
Corporation shall succeed to and possess all the estates, properties (real,
personal and mixed) rights, privileges, powers, franchises, immunities,
purposes, and all and every other interest of, or belonging to, the Company or
the CompuCom Subsidiary, all without further act or deed; and the Surviving
Corporation shall be subject to all the debts, liabilities, obligations,
restrictions, disabilities, penalties and duties of the Company and the CompuCom
Subsidiary, all without further act or deed. CompuCom shall not assume any
debts, liabilities, obligations, restrictions, disabilities, penalties or duties
of the Company, the CompuCom Subsidiary or the Surviving Corporation.
3.2 Closing. The Closing of the Merger (the "Closing") shall
take place at the offices of Xxxxxxxxxxx & Price, L.L.P., 000 Xxxx Xxxxxx,
Xxxxxx, Xxxxx at 10:00 a.m., Dallas, Texas time, on a date to be specified by
CompuCom or the CompuCom Subsidiary, which shall be no later than the third
business day after satisfaction or waiver of the conditions set forth in Article
IX, or at such other time and place or on such other date as CompuCom and the
Company may agree. On the Closing Date, the Articles of Merger (which shall be
completed as appropriate to reflect the terms of this Agreement) shall be
executed, delivered, filed and recorded in accordance with the FBCA, unless
otherwise agreed by the parties in writing. The Merger shall become effective
when such Articles of Merger are duly filed with the Secretary of State of the
State of Florida, or at such other time as the CompuCom Subsidiary and the
Company shall agree should be specified in the Articles of Merger (the time the
Merger becomes effective being hereinafter referred to as the "Effective Time").
3.3 Articles of Incorporation and Bylaws of Surviving Corporation 3.3
Articles of Incorporation and Bylaws of Surviving Corporation. From and after
the Effective Time, the Articles of Incorporation, as amended, of the CompuCom
Subsidiary immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation, until further amended in accordance
with the laws of the FBCA. From and after the Effective Time, the Bylaws, as
amended, of the CompuCom Subsidiary immediately prior to the Effective Time,
shall be the Bylaws of the Surviving Corporation, until further amended in
accordance with the laws of the FBCA.
3.4 Directors and Officers. The directors of the CompuCom Subsidiary
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation and the officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation,
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with each to serve as such until his or her respective successor is duly elected
and qualified in the manner provided in the Articles of Incorporation and Bylaws
of the Surviving Corporation, or his or her earlier death, resignation or
removal.
ARTICLE IV
CONVERSION OF THE COMPANY'S CAPITAL STOCK
4.1 Conversion of the Company's Capital Stock 4.1 Conversion of the
Company's Capital Stock. Subject to the terms and conditions of this Agreement,
on the Effective Time, by virtue of the Merger and without any action on the
part of the CompuCom Subsidiary, the Company or the holder of any of the
following securities:
(a) Each share of the Company Common Stock issued and outstanding
immediately prior to the Effective Time, other than shares to be cancelled
pursuant to Section 4.1(b) below, shall be converted into and represent the
right to receive the Merger Consideration.
(b) Each share of the Company Common Stock, if any, held in the
Company's treasury immediately prior to the Effective Time shall be canceled and
retired without payment of any consideration therefor.
(c) Each share of common stock of the CompuCom Subsidiary issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one fully paid and nonassessable share of Common Stock, no par value per
share, of the Surviving Corporation.
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4.2 Payment.
(a) Prior to the Effective Time, CompuCom shall designate a bank,
trust company or other entity reasonably satisfactory to the Company to act as
the disbursing agent (the "Disbursing Agent") in effecting the exchange of the
Merger Consideration for certificates of shares of the Company Common Stock
("Certificates"). On or before the Effective Time, CompuCom or the CompuCom
Subsidiary shall deposit with the Disbursing Agent cash sufficient to make the
payments contemplated by Section 4.1 to be made to the shareholders. As soon as
practicable after the Effective Time, CompuCom shall cause the Disbursing Agent
to send a notice and a transmittal form to each holder of record of shares of
the Company Common Stock advising such holder of the effectiveness of the Merger
and the procedure for surrendering to the Disbursing Agent such holder's
Certificates for exchange into the Merger Consideration. Each such holder, upon
proper surrender of such Certificates to the Disbursing Agent together with and
in accordance with such transmittal form, shall be entitled to receive in
exchange therefor the Merger Consideration deliverable in respect of the Company
Common Stock theretofore evidenced by the Certificates so surrendered, subject
to any Taxes required to be withheld. Upon surrender of such Certificates to the
Disbursing Agent, CompuCom shall cause the Disbursing Agent promptly to deliver
the Merger Consideration to the Person entitled thereto. Until properly
surrendered, each such Certificate shall be deemed for all purposes to evidence
only the right to receive the Merger Consideration multiplied by the number of
shares of the Company Common Stock represented by such Certificate. Until
properly surrendered, holders of Certificates will not be entitled to payment of
the Merger Consideration to which they would otherwise be entitled. No interest
will be paid or accrued on the cash payable upon the surrender of a Certificate.
All costs and expenses of the Disbursing Agent shall be borne by CompuCom.
(b) If the Merger Consideration (or any portion thereof) is to be
delivered to a Person other than the Person in whose name the Certificates
surrendered in exchange therefor are registered, it shall be a condition to the
payment of such Merger Consideration that the Certificates so surrendered shall
be properly endorsed or accompanied by appropriate stock powers and otherwise in
proper form for transfer, that such transfer otherwise be proper and that the
Person requesting such transfer pay to the Disbursing Agent any transfer or
other Taxes payable by reason of the foregoing or establish to the satisfaction
of the Disbursing Agent that such Taxes have been paid or are not required to be
paid. Notwithstanding the foregoing, neither the Disbursing Agent nor any party
hereto shall be liable to a holder of shares of Company Common Stock for any
Merger Consideration delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, the Surviving Corporation will
issue, in exchange for such lost, stolen or destroyed Certificate, the Merger
Consideration deliverable in respect thereof as determined in accordance with
this Article IV. When authorizing such issue of the Merger Consideration in
exchange therefor, the Board of Directors of the Surviving Corporation may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificate to give the Surviving
Corporation a bond in such sum as it may direct, or such other secured or
unsecured indemnity agreement as such Board of Directors may require, as
indemnity against any claim that
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may be made against the Surviving Corporation with respect to the Certificate
alleged to have been lost, stolen or
destroyed.
(d) Promptly following the six-month anniversary of the Effective
Time, the Disbursing Agent shall return to the Surviving Corporation all Merger
Consideration in its possession relating to the transactions described in this
Agreement, and the Disbursing Agent's duty shall thereupon terminate.
Thereafter, each holder of a Certificate may surrender such Certificate to the
Surviving Corporation, in accordance with the procedures above, and (subject to
applicable abandoned property, escheat and similar laws) receive in exchange
therefor the Merger Consideration, without any interest thereon and subject to
any Taxes required to be withheld.
4.3 No Further Rights. From and after the Effective Time, holders of
Certificates shall cease to have any rights as shareholders of the Company,
except as provided herein or by law.
4.4 Closing of the Company's Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and no transfer of the
Company Common Stock shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Disbursing Agent,
they shall be cancelled and exchanged for the Merger Consideration, as provided
in this Article IV.
4.5 Stock Options.
(a) The Company will (i) terminate, to the extent permitted by the
terms thereof, the Company's two Incentive Stock Option Plans and its five
Incentive and Nonqualified Stock Option Plans (collectively the "Company Option
Plans") immediately before the Effective Time, without prejudice to the rights
of the holders of outstanding Options issued pursuant to the Company Option
Plans, (ii) grant no additional Options after the date of this Agreement under
the Company Option Plans and (iii) grant no other options, warrants, rights,
convertible securities or other agreements or commitments pursuant to which the
Company is required to issue any shares of its capital stock or any securities
convertible into or exchangeable for its capital stock.
(b) The Company will, at or before the Closing, cancel and cause the
surrender of all outstanding Options, regardless of whether the Options are then
exercisable.
(c) In settlement of the surrender and cancellation of each Option,
each holder of Options (regardless of whether such Options are then exercisable)
will be entitled to receive an amount in cash, without any interest thereon,
equal to the product of (i)(A) the Merger Consideration, minus (B) the exercise
price per share of Company Common Stock under the Option, multiplied by (ii) the
number of shares of Company Common Stock covered by such Option; provided,
however, that the amounts payable pursuant to Options shall be reduced by any
applicable federal and state withholding Taxes. Options shall be surrendered and
cancelled at the Closing and, upon such surrender and cancellation, will be paid
for by the Surviving Corporation on the business day next following the Closing.
On or prior to Closing, the Company shall use its commercially reasonable
efforts to take all actions (including, without limitation, obtaining the
necessary Consents from each holder of Options) required to effect the matters
set forth in this Section 4.5, including, without limitation, the written
Consent to the surrender and cancellation of all of such holder's
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Options and those necessary to effect the surrender, cancellation and settlement
of Options pursuant to this Section 4.5.
ARTICLE V
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to CompuCom and the CompuCom
Subsidiary as follows:
5.1 Organization, Standing, etc. of the Company5.1 Organization, Standing,
etc. of the Company. The Company is a corporation duly organized, validly
existing, and with active status under the laws of the State of Florida, has all
requisite corporate power and authority to own its assets and to carry on its
business as presently conducted and, except as set forth in Section 5.1 of the
Disclosure Schedule, is duly qualified as a foreign corporation to do business
in and is in good standing in each jurisdiction in which the character of the
assets owned or held under lease by it or the nature of the business transacted
by it makes such qualification necessary except where the failure to be so
qualified would not be reasonably expected to have a Material Adverse Effect.
Section 5.1 of the Disclosure Schedule sets forth a true and complete list of
(a) all jurisdictions where the Company is qualified to do business and (b) each
business name which has been used by the Company since January 1, 1990 and the
city and state in which the principal office of each such business was conducted
since January 1, 1990. The Company has heretofore furnished to CompuCom true and
complete copies of its Articles of Incorporation and all amendments thereto to
the date hereof and its Bylaws as presently in effect. The Company has all
requisite corporate power and authority to execute and deliver, and perform its
obligations under, this Agreement and to consummate the transactions
contemplated hereby.
5.2 Authorization and Execution5.2 Authorization and Execution. The
execution and delivery of this Agreement and, subject to obtaining the requisite
shareholders' approval, the performance by the Company of this Agreement and the
consummation by it of the Merger and the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the part
of the Company. The Board of Directors of the Company, at meetings duly called
and held, has (a) determined that the transactions contemplated by this
Agreement, including the Merger, are fair to and in the best interests of the
shareholders of the Company, (b) approved this Agreement and the transactions
contemplated hereby, including, without limitation, the Merger, and (c) resolved
to recommend that the Company's shareholders approve and adopt this Agreement,
the Merger and the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Company and constitutes a legal,
valid and binding agreement of the Company enforceable against the Company in
accordance with its terms, assuming this Agreement is enforceable against
CompuCom and the CompuCom Subsidiary, except to the extent that enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws or by general equitable principles.
5.3 No Consents. Except as set forth in Section 5.4(b) and as set forth
in Section 5.11(x) of the Disclosure Schedule, the execution and
delivery by the Company of this Agreement and the
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consummation of the transactions contemplated hereby will not require any
Consent or other action by or in respect of, or declaration or filing with, any
Tribunal or any other Person.
5.4 Absence of Conflicts; Governmental Authorizations.
(a) The execution and delivery by the Company of this Agreement, the
performance by the Company of its obligations hereunder and the consummation by
the Company of the transactions contemplated hereby will not (i) conflict with
or result in any violation of any provision of the Company's Articles of
Incorporation or Bylaws, each as amended to date; (ii) materially conflict with,
result in any material violation or material breach of, constitute a default
under, give rise to any right of termination or acceleration (with or without
notice or the lapse of time or both) pursuant to, or result in being declared
void or voidable, any term or provision of any note, bond, mortgage, indenture,
lease, license, Contract or other instrument to which the Company is a party or
by which any of its or his properties or assets are or may be bound; (iii)
materially violate any term of any Legal Requirement applicable to the Company
or its or his properties or assets; or (iv) result in the creation of, or impose
on the Company the obligation to create, any Lien upon any properties or assets
of the Company .
(b) Except for applicable requirements, if any, of the Exchange Act
(including the filing with the SEC of a proxy statement relating to any required
approval by the Company's shareholders of this Agreement (the "Proxy
Statement")), the Securities Act of 1933 (the "33 Act"), the premerger
notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the Nasdaq National Market, the filing and
recordation of appropriate merger documents as required by the FBCA, filings
required pursuant to any state securities or "blue sky" laws and such other
notices, reports or other filings the failure of which to be made would not,
individually or in the aggregate, have a Material Adverse Effect on the Company
or prevent or materially impair the consummation of the transactions
contemplated hereby, the Company is not required to submit any notice, report or
other filing to any Tribunal, domestic or foreign, in connection with the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby.
5.5 Capitalization. The authorized capital stock of the Company consists
solely of 20,000,000 shares of Company Common Stock of which 5,963,669 shares
are issued and outstanding on the date hereof, 1,960,000 shares have been
reserved for issuance upon the exercise of the Options, 944,022 shares are
issuable upon exercise of outstanding Options, and no shares are held in the
treasury. All of the outstanding shares of Company Common Stock have been duly
authorized and are validly issued, fully paid and nonassessable and free of
preemptive rights. All of the issued shares of Company Common Stock were issued,
and to the extent purchased by the Company or transferred, have been so
purchased or transferred, in compliance with all applicable Legal Requirements,
including federal and state securities laws, and any preemptive rights and any
other statutory or contractual rights of any shareholders of the Company. Except
for the Options, there are no subscriptions, options, warrants, rights
(including "phantom" stock rights), convertible securities or other agreements
or commitments (contingent or otherwise) of any character (written or oral)
pursuant to which the Company is required to issue any shares of its capital
stock or any securities convertible into or exchangeable for its capital stock,
or is otherwise required to give any Person the right to receive any benefits or
rights similar to any rights enjoyed by or accruing to the
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holders of shares of Company Common Stock or any rights to participate in the
equity or net income of the Company. Section 5.5 of the Disclosure Schedule sets
forth the number and exercise price of all outstanding Options. As of the
Closing Date, there will be no outstanding subscriptions, options (including the
Options), warrants, rights or any other agreements or commitments of any kind or
any convertible or exchangeable securities of the sort described in the
immediately preceding sentence. There are not any shareholders' agreements,
voting trusts or other agreements or understandings between or among
shareholders or to which the Company is a party or by which it is bound with
respect to the transfer or voting of any capital stock of the Company.
5.6 SEC Reports and Financial Statements. The Company has filed with
the SEC, and has heretofore made available to CompuCom true and complete copies
of, all forms, reports, schedules, statements and other documents required to be
filed by it since March 31, 1995, under the Exchange Act or the 33 Act (such
forms, reports, schedules, statements and other documents, including any
financial statements or schedules included therein, are referred to as the
"Company SEC Documents"). The Company SEC Documents, at the time filed, (a) did
not 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 light of the circumstances under which they were made, not
misleading and (b) complied in all material respects with the applicable
requirements of the Exchange Act and the 33 Act, as the case may be, and the
applicable rules and regulations of the SEC thereunder. Except to the extent
revised or superseded by a subsequently filed Company Filed SEC Document (as
defined in Section 5.7) (a copy of which has been made available to CompuCom
prior to the date hereof), the Company SEC Documents, considered as a whole as
of their date, do not contain an untrue statement of a material fact or omit to
state a material fact required to be stated or incorporated by reference therein
are necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that the foregoing does not cover future events resulting from public
announcement of the Merger). The financial statements of the Company included in
the Company SEC Documents comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Forms 10-Q and 8-K of the SEC) and fairly
present in all material respects (subject, in the case of the unaudited
statements, to normal, recurring audit adjustments) the financial position of
the Company as of the dates thereof and the results of operations and cash flows
for the periods then ended.
5.7 Absence of Certain Changes or Events. Except as disclosed (a) in
the Company SEC Documents filed and publicly available to the date of this
Agreement (the "Company Filed SEC Documents"), (b) in the Company's financial
statements dated as of March 31, 1997 audited by Price Waterhouse, LLP (the
"Company 1997 Financial Statements"), a copy of which has been delivered to
CompuCom by the Company, or (c) in Section 5.7 of the Disclosure Schedule,
since March 31, 1997, the Company has conducted its business only in the
ordinary course, and there has not then, occurred or arisen any change in, or
any event (including, without limitation, any damage, destruction or loss
whether or not covered by insurance), condition or state of facts of any
character that individually or in the aggregate has or may be expected to have
a Material Adverse Effect except adverse conditions in the economy in general
or industry wide conditions.
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5.8 Absence of Undisclosed Liabilities. Except as specifically
reflected in the Company 1997 Financial Statements, there were as of the date
of the Company 1997 Financial Statements no liabilities, Indebtedness or
obligations (whether absolute or contingent, asserted or unasserted, due or to
become due) against, relating to or affecting the Company that could reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect. Since the date of the Company 1997 Financial Statements, the Company
has not incurred any liabilities, Indebtedness or obligations (whether absolute
or contingent, asserted or unasserted, due or to become due) other than
liabilities, Indebtedness and obligations incurred after such date in the
ordinary course of business consistent with past practice and which would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
5.9 Accounts Receivable. All Accounts Receivable existing as of the date
hereof arose out of bona fide business transactions in the ordinary course of
business consistent with past practices (including regular credit practices). To
the Knowledge of the Company, adequate reserves have been accrued and maintained
in the Company 1997 Financial Statements and in the financial statements of the
Company included in the Form 10-Q of the Company filed with the SEC for the
quarterly period ended December 31, 1997, to provide for all doubtful accounts
of, valid counterclaims or setoffs by, rebates, discounts and allowances to, and
returns from, any customers of the Company, and such reserves were established
in a manner consistent with the Company's collection experience in prior years
except as set forth in Section 5.9 of the Disclosure Schedule. Each Account
Receivable constitutes a legal, valid and binding account receivable, and to the
Knowledge of the Company, no Account Receivable is subject to any known
disputes, defenses, assignments, restrictions, counterclaims or setoffs by, and
rebates, discounts or allowances to, or any returns from, any customer except as
set forth in Section 5.9 of the Disclosure Schedule. To the Knowledge of the
Company, each Account Receivable, net of reserves, is collectible in accordance
with the Company's regular collection practices and without recourse to legal
proceedings except as set forth in Section 5.9 of the Disclosure Schedule. The
Company has furnished CompuCom with a true and complete copy of its Accounts
Receivable Aging Report, dated March 13, 1998.
5.10 Tax Returns. Except as set forth in Section 5.10 of the Disclosure
Schedule, with respect to all reporting periods applicable to the Company ended
on or before the date hereof, the Company has accurately prepared and timely
filed all returns and reports (including, without limitation, sales tax returns
and reports) required by law, and has paid (or made adequate provision on its
books for the payment of) all Taxes, fees and assessments determined to be owed
in accordance therewith, when due or within prior extensions of time. Except as
set forth in Section 5.10 of the Disclosure Schedule, none of the Company's
federal or state tax returns or reports (including, without limitation, sales
tax returns and reports) for tax periods ending after 1991 has been or is
currently being audited by any taxing authority. To the Knowledge of the
Company, there is no audit threatened or proposed by any taxing authority. There
are no outstanding agreements, waivers or other arrangements extending the
period of limitation applicable to any claim for, or the period for the
collection or assessment of, any Tax due from the Company. To the Knowledge of
the Company, there are no actual or proposed Tax adjustments or assessments
against the Company or any basis for any such assessment, and all Tax
liabilities have either been paid or are adequately provided for on the books of
the Company. No closing agreement pursuant to Section 7121 of the Code or any
similar provision of any state, local or foreign law has been entered into by or
with respect to the Company. The Company is not a party to, is not bound by and
does not have any
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14
obligation under any Tax sharing agreement or similar arrangement. The Company
has paid or is withholding and will pay when due to the proper taxing
authorities all withholding amounts required to be withheld through the date
hereof with respect to all Taxes on income, unemployment, social security or
other similar programs or benefits with respect to salary and other compensation
of directors, officers and employees of the Company.
5.11 Agreements, Contracts and Commitments. Sections 5.11(a) through
5.11(x) of the Disclosure Schedule, respectively, contain a true and complete
list as of the date hereof of all Contracts and other documents of the following
types, written or oral, to which the Company is a party or by which the business
or any of the assets of the Company are bound as of the date hereof (true and
complete copies, or if none, written descriptions, of which have been provided
or made available to CompuCom, together with all exhibits, amendments or
modifications thereto):
(a) all notes, loans, credit agreements, letters of credit,
mortgages, guarantees, surety or indemnification agreements, indentures,
security agreements and other Contracts and instruments in an amount in excess
of $25,000 annually (i) relating to the borrowing of money by or on behalf of,
or the extension of credit to, the Company, (ii) evidencing any Indebtedness or
other liabilities of the Company or the guarantee by the Company of the
Indebtedness or other liabilities of any other Person, or (iii) evidencing any
keep-well or similar obligations of the Company with respect to any other
Person;
(b) all Contracts or other instruments (excluding real property
leases or subleases) evidencing, creating or suffering to exist any Liens of any
kind on the properties and assets of the Company;
(c) all material licenses or permits from any Tribunal required to
conduct the business of the Company as presently conducted;
(d) all employment, agency, consultation, severance and collective
bargaining Contracts, including, without limitation, Contracts to employ, and
other Contracts with, (i) any present officer, director, employee, agent,
consultant or other similar representative of the Company or (ii) any former
officer, director, employee, agent, consultant or similar representative of the
Company that left the employ or engagement of the Company within the preceding
12 months to whom the Company has any continuing payment obligations;
(e) all sales, agency, representatives, broker, finders, franchise,
dealers or distributorship Contracts;
(f) all Contracts, orders or commitments for the purchase by the
Company of raw materials, supplies, finished products or any other properties
and assets in an amount exceeding $5,000;
(g) all Contracts, orders or commitments in an amount in excess of
$50,000 annually for the disposition of or license, sale or lease to customers
or any other Persons of products or services (including, without limitation, any
item of Software and any related maintenance or support services) or any other
properties or assets of the Company, with specific designation of those
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15
Contracts, orders or commitments that are not evidenced by form Contracts
previously provided to CompuCom;
(h) all noncompetition, nondisclosure, confidentiality and similar
Contracts, other than those that were entered into in the ordinary course of
business consistent with past practice and that do not contain any covenant,
provision or obligation limiting in any manner whatsoever (whether during any
particular period of time from and after the Closing Date, in certain geographic
areas or otherwise) the ability of (i) the Company, or to the Knowledge of the
Company any of the employees of the Company, to engage in any line of business,
to compete with any Person or to obtain from, or provide to, any Person any
products or services or (ii) any Person to compete with or provide products or
services to the Company;
(i) all Contracts or commitments in an amount in excess of $50,000
annually that provide for the provision of any goods, or the rendition of any
services, to the Company and that are not terminable on notice of 30 days or
less without penalty or premium other than customary maintenance agreements
relating to computer equipment or Software used by the Company, the terms of
which contain no liabilities (other than to pay for the maintenance services) or
material obligations;
(j) all Contracts or commitments for capital expenditures relating to
the business of the Company in an amount in excess of $10,000 for any single
item;
(k) all partnership, joint venture, profit sharing or similar
Contracts;
(l) all leases or subleases of real property used in the Company's
business, operations and affairs, and all other leases, subleases or rental or
use Contracts that involve a consideration or expenditure of more than $5,000
for the entire term thereof;
(m) all Contracts or arrangements (including, without limitation,
those relating
to allocations of expenses, personnel, services, equipment or facilities)
between or among the Company on the one hand and any Affiliates of the Company
on the other;
(n) all Contracts or commitments that involve a consideration or
expenditure of more than $50,000 for the entire term thereof;
(o) all Contracts pursuant to which the Company may have granted, or
agreed to grant, to another Person exclusive rights with respect to any goods or
services, items of Software or territory;
(p) all outstanding proxies, powers of attorney or similar
delegations of authority of the Company;
(q) all Contracts pursuant to which the Company may have granted, or
agreed to grant (whether or not any requirement such as the giving of notice,
the lapse of time or the happening of any further condition, event or act has
been satisfied), to another Person the right to sublicense or transfer any
Software;
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16
(r) all Contracts pursuant to which the Company or any of its
Affiliates may have delivered to another Person, or granted or agreed to grant
(whether or not any requirement such as the giving of notice, the lapse of time
or the happening of any further condition, event or act has been satisfied) to
another Person the rights to obtain, any source code to any Software (including,
without limitation, any source code escrow Contract);
(s) all Contracts pursuant to which the Company or any of its
Affiliates may have delivered to another Person, or granted or agreed to grant
(whether or not any requirement such as the giving of notice, the lapse of time
or the happening of any further condition, event or act has been satisfied) to
another Person the rights to obtain, any Software "keys" allowing access to
additional modules or programs of any Software;
(t) all performance bonds posted by the Company or any of its
Affiliates;
(u) [this paragraph intentionally left blank];
(v) to the extent not required to be disclosed elsewhere in this
Section 5.11, all material Contracts not entered into in the ordinary course of
business consistent with past practice;
(w) to the extent not required to be disclosed elsewhere in this
Section 5.11, all Contracts that are material to the Company; and
(x) all Contracts and commitments requiring the Consent of, or the
waiver by, any suppliers, distributors, customers, licensees, licensors,
insurers or other Persons in connection with the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby on the part of the Company.
Each Contract disclosed or required to be disclosed pursuant to any
clause of Section 5.11 is in full force and effect, constitutes a legal, valid
and binding obligation of the Company and, to the Knowledge of the Company, the
other parties thereto, and is enforceable against each of them in accordance
with its terms, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or
by general equitable principles. Except for obtaining the Consents required
under any of the Contracts set forth in Section 5.11(x) of the Disclosure
Schedule, the terms of each such Contract allow the succession of the Company by
the Surviving Corporation as party thereto (and at the Effective Time, the
Surviving Corporation will so succeed the Company) pursuant to the transactions
contemplated hereby without requiring any payment to any Person or any waiting
period, payment of any charge, fee or expense or any notice to any Person,
including, without limitation, any transfer fee, relicensing fee or other fee
with respect to Software. Except in the case of any Contracts as to which
Consent is required as disclosed in Section 5.11(x) of the Disclosure Schedule,
the enforceability of each Contract disclosed or required to be disclosed
pursuant to any clause of Section 5.11, and the enjoyment of all the rights and
benefits thereunder, will not be affected in any manner by the execution and
delivery of this Agreement, the performance by the parties of their obligations
hereunder and the consummation of the transactions contemplated hereby. Except
as set forth in Section 5.17 of the Disclosure Schedule, neither the Company
nor, to the Knowledge of the Company, any other party to any such Contract is in
breach or default thereunder, no notice of default, defense, offset,
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17
counterclaim, termination, cancellation or acceleration has been received by any
party thereto in connection therewith and, to the Knowledge of the Company, no
event has occurred that would constitute a breach, violation or default or give
rise to any right of offset, counterclaim, termination, cancellation or
acceleration thereunder (with or without notice or lapse of time or both). The
Company does not have any present expectation or intention of not fully
performing any such Contract substantially in accordance with its terms. The
Company does not have any Knowledge of any threat to cancel, or not to renew or
extend, any such Contract by any party thereto. There are no material disputes
with respect to any such Contract.
5.12 Intellectual Property.
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18
(a) General. (i) Section 5.12(a)(i) and Section 5.12(b)(i) of the
Disclosure Schedule set forth a true and complete list of all items of
Intellectual Property (A) which are owned by the Company and (B) which also are
used or held for use in the business and operations of the Company
(collectively, the "Owned IP"), except for Trade Secrets and Miscellaneous
Software Components. To the Knowledge of the Company, all trademark
registrations and copyright registrations which are part of the Owned IP are in
good standing, are valid and subsisting, and are in full force and effect in
accordance with their terms; (ii) Section 5.12(a)(ii) and Section 5.12(b)(ii) of
the Disclosure Schedule set forth a true and complete list of all items of
Intellectual Property (A) which the Company does not own, but in which the
Company has a right or rights (by license or otherwise), and (B) which also are
used or held for use in the business and operations of the Company
(collectively, the "Not-Owned IP"), except for Trade Secrets and Miscellaneous
Software Components. The right of the Company to use the Not-Owned IP in the
business and operations of the Company is solely evidenced by the written
license agreements or other Contracts set forth in Section 5.12(a)(ii) and
Section 5.12(b)(ii) of the Disclosure Schedule; (iii) the development, license,
use, sale, distribution and modification of the Owned IP by the Company in
connection with the business and operations of the Company, and, to the
Knowledge of the Company, the license, use, sale, distribution and modification
of the Not-Owned IP by the Company in connection with the business and
operations of the Company, has not infringed on or otherwise violated the rights
of any other Person or constituted an unlawful disclosure, use or
misappropriation of the right or rights of any other Person. The continued and
future license, use, sale, distribution or modification of the Owned IP and the
Not-Owned IP by the Surviving Corporation, shall not constitute an infringement
or other violation of the rights of any other Person or constitute an unlawful
disclosure, use or misappropriation of the right or rights of any other Person
(other than to the extent resulting from material changes to the Owned IP or the
Not-Owned IP, as the case may be, made by the Surviving Corporation or other
Persons after the Closing Date). The Company is not in violation of, or in
default (with or without notice or lapse of time or both) under, any Contract or
other Legal Requirement relating to the Company IP; (iv) (A) there is no action,
suit, inquiry, formal or informal complaint, investigation or other proceeding
that is pending, or to the Knowledge of the Company, threatened, with respect to
and (B) there is no outstanding Order concerning, (X) any right of the Company
to develop, license, use, sell, distribute or modify the Owned IP or (Y) any
right under a Contract or any other right of the Company to license, use, sell,
distribute or modify the Not-Owned IP; (v) the Company has the right, which
(subject to the expiration of copyrights and patents by operation of law or the
loss of Trade Secrets as a result of actions taken by other Persons) is
non-terminable and not subject to expiration or revocation, to develop, license,
control or regulate the use of, sell, distribute and modify the Owned IP without
any valid legal or equitable claim by, or payment or other obligation owing to,
or Consent from, any Person. The Surviving Corporation will retain at the
Effective Time all of such rights on the same basis and geographic scope as that
enjoyed by the Company immediately prior to the Effective Time, without any
diminution or alteration as a result of the Merger; (vi) except as set forth in
Section 5.12(a)(vi) of the Disclosure Schedule (and subject only to the express
terms of those Contracts that are referred to in Section 5.12(a)(ii) and Section
5.12(b)(ii) of the Disclosure Schedule to the extent that true and complete
copies have been provided to CompuCom), the Company has the right, which is
non-terminable and not subject to expiration or revocation, to license, use,
sell, distribute or modify the Not-Owned IP without any valid legal or equitable
claim by, or payment or other obligation owing to, any other Person. The
Surviving Corporation will retain at the Effective Time all of such rights on
the same basis or geographic scope as that enjoyed by the Company immediately
prior to the Effective Time, without
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any diminution or alteration as a result of the Merger. Section 5.12(a)(vi) of
the Disclosure Schedule sets forth a true, complete and correct list of all
Consents required to permit the Surviving Corporation to license, use, sell,
distribute and modify the Not-Owned IP on the same basis and geographic scope as
that enjoyed by the Company immediately prior to the Effective Time, without any
diminution or alteration as a result of the Merger; (vii) except as set forth in
Section 5.11(g) of the Disclosure Schedule, the Company has not granted or
obligated itself to grant to any Person any outstanding license, option or other
right to develop, license, sell, distribute or modify (including, without
limitation, any rights under any source code escrow Contract) in any manner, in
whole or in part, any of the Owned IP or Not-Owned IP. No Person has either
asserted any right to develop, license, use, sell, distribute or modify the
Owned IP except in accordance with a license or other Contract set forth in
Section 5.11(g) of the Disclosure Schedule, or offered to grant the Company a
license or any other right of use with respect to the Owned IP. The Company is
under no obligation to compensate any Person for any development, license, use,
sale, distribution or modification of any of the Owned IP. To the Knowledge of
the Company, no Person, other than the Company, has either applied for any
patent or registered any claim to copyright with respect to any part of the
Owned Software; and (viii) to the Knowledge of the Company, (A) none of the
Owned IP has been infringed by any Person, and (B) none of the Owned IP is being
used by any Person except pursuant to a Contract set forth in Section 5.11(g) of
the Disclosure Schedule.
(b) Software. The Company does not own any material Software.
Section 5.12(b) of the Disclosure Schedule sets forth a true and complete list
of all items of Software other than Miscellaneous Software Components (A) which
the Company does not own but in which the Company has a right or rights (by
license or otherwise), and (B) which also are used or held for use in the
business and operations of the Company, other than licenses for generally
available commercial Software used on personal computers having an individual
acquisition cost of $1,000 or less (the "Not-Owned Software").
(c) Development and Protection of the Owned IP. The Company has
taken all reasonable measures to protect in all material respects the
confidential and proprietary nature of the Trade Secrets and the source code,
object code and access codes for the Not-Owned Software (the "Confidential
Software"). To the Knowledge of the Company, all Know-How material to the
Software of the Company has been reduced to writing. Such descriptions explain
such Know-How and enable its intended use by the Surviving Corporation. To the
Knowledge of the Company, the Company has taken all reasonable measures to
protect in all material respects the confidential and proprietary nature of the
information related to the business strategy, finances, marketing plans or
employees of the Company which has not been published and is not generally known
to the public and to the Knowledge of the Company, no employee is in violation
of any confidentiality Contract with any former employer or business associate.
Section 5.12(c)(iv) of the Disclosure Schedule sets forth a list of all key
employees who have signed Confidentiality Contracts with former employers or
business associates.
5.13 Litigation. Except as set forth in Section 5.13 of the Disclosure
Schedule, there is no action, suit, inquiry, formal or informal complaint,
investigation or other proceeding that is pending or, to the Knowledge of the
Company, threatened, involving the Company, its properties or assets, or any of
its directors, officers or agents (in their capacities as such), at law or in
equity, in or before any Tribunal.
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5.14 Compliance with Legal Requirements.
(a) The Company is not in violation of, or in default under (or with
or without notice or lapse of time or both, would be in violation of, or default
under), and has not received any notice alleging any such violation or default
under, any provision of its Articles of Incorporation or Bylaws or any material
term or provision of any note, bond, mortgage, indenture, lease, license,
Contract or other instrument to which it is a party or by which any of its
properties or assets are or may be bound. To the Knowledge of the Company, the
Company is not, and has not been, in violation of, or default under (or with or
without notice or lapse of time or both, would be in violation of, or default
under), and has not received any notice alleging any such violation or default
under, any provision of any material Legal Requirement applicable to it or its
properties or assets.
(b) Without limiting the generality of Section 5.14(a), the Company
has not received, and does not have any Knowledge of any information which would
indicate that the Company will or may receive, written notice from any Tribunal
that the Company (i) does not possess all material permits, licenses and other
authorizations, or has not filed all environmental notices, which are required
under applicable Environmental Laws, (ii) is in conflict with or in material
default or material violation of any material terms and conditions of the
required permits, licenses and authorizations or of any notice filing
requirements or (iii) is in material conflict with or in material default or
material violation of any Environmental Laws. There is not, and as of the
Effective Time there will not be, any condition, event, fact, circumstance or
other matter existing or occurring which does or reasonably may be expected to
(x) interfere with, or prevent material compliance or continued material
compliance with any Environmental Laws in connection with, the ownership, use or
operation by the Company of any of its properties or assets, (y) require any
reporting, assessment or remedial action of any kind under Environmental Laws in
connection with the ownership, use or operation by the Company of any of its
properties or assets or (z) give rise to any material common law or legal
liability under Environmental Laws, including, without limitation, CERCLA, or
any similar Legal Requirements in connection with the ownership, use or
operation by the Company of any of its properties or assets.
(c) The Company is in compliance with and has complied with, in all
material respects, the requirements of the Americans with Disabilities Act.
(d) The Company is not presently subject to any outstanding Order
from any Tribunal under any Legal Requirement, nor is the Company subject to any
outstanding claims, Liens, judicial or administrative proceedings or
investigations arising under any Legal Requirement.
(e) To the Knowledge of the Company, there is no proposed Legal
Requirement that could reasonably be expected to have a Material Adverse Effect.
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5.15 Employee Benefit Plans.
(a) Schedule 5.15(a)(i) of the Disclosure Schedule hereto sets forth
a true and complete list of: (i) all "employee benefit plans" (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and any other employee benefit arrangements or payroll practices
(including, without limitation, severance pay, vacation pay, company awards,
salary continuation for disability, sick leave, deferred compensation, bonus or
other incentive compensation and stock purchase arrangements or policies)
maintained by the Company or to which the Company contributes or is obligated to
contribute with respect to employees of the Company (collectively, the "Employee
Benefit Plans"), and, in a separate category, all Employee Benefit Plans which
are "pension plans" (as defined in Section 3(2) of ERISA ("Pension Plans")).
Section 5.15(a)(ii) of the Disclosure Schedule sets forth the name, title,
current salary rate (including bonus and commissions), and current base salary
rate of the 10 most highly compensated present employees of the Company. There
is no trade or business (whether or not incorporated) which is under common
control, or treated as a single employer, with the Company under Section 414 of
the Code. No Employee Benefit Plans cover persons employed outside of the United
States. No Pension Plans are subject to Section 4063 or 4064 of ERISA
(collectively, the "Multiemployer Plans"). No Employee Benefit Plans that are
welfare plans as defined in Section 3(1) of ERISA provide benefits after
termination of employment (other than as required by Section 4980B of the Code
and at the former employee's own expense). No Employee Benefit Plan is a
"defined benefit plan" as defined in Section 3(35) of ERISA.
(b) To the knowledge of the Company, each of the Employee Benefit
Plans intended to qualify under Section 401 of the Code (collectively, the
"Qualified Plans") so qualifies, and nothing has occurred with respect to the
operation of any such plan which could reasonably be expected to cause the loss
of such qualification or the imposition of any material liability, penalty or
tax under ERISA or the Code. To the Knowledge of the Company, any entity
maintained or contributed to by the Company and which is intended to be an
association described in Section 501(c)(9) of the Code is exempt from federal
income Tax under Section 501(a) of the Code.
(c) To the Knowledge of the Company, all contributions and premiums
required by law or by the terms of each Employee Benefit Plan or any agreement
relating thereto have been timely made (without regard to any waivers granted
with respect thereto).
(d) There has been no "reportable event,"as that term is defined in
Section 4043 of ERISA and the regulations thereunder, with respect to any of the
Qualified Plans which would require the giving of notice, or any event requiring
notice to be provided, under Section 4063(a) of ERISA.
(e) To the Knowledge of the Company, there has been no violation of
ERISA that could reasonably be expected to result in a material liability with
respect to the filing of applicable returns, reports, documents or notices
regarding any of the Employee Benefit Plans with the Secretary of Labor or the
Secretary of the Treasury or the furnishing of such notices or documents to the
participants or beneficiaries of the Employee Benefit Plans.
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22
(f) Except as set forth in Section 5.15(f) of the Disclosure
Schedule, true and complete copies of the following documents, with respect to
each of the Employee Benefit Plans (as applicable) have been delivered by the
Company to CompuCom: (i) any plans and related trust documents, and all
amendments thereto, (ii) the most recent Forms 5500 and schedules thereto, (iii)
the most recent summary plan description, and (v) written descriptions of all
non-written agreements relating to the Employee Benefit Plans.
(g) There are no pending Legal Proceedings which have been asserted
or instituted against any Employee Benefit Plan, the assets of any such plan or
the Company, or the plan administrator or fiduciary of any Employee Benefit Plan
with respect to the operation of any such plan (other than routine, uncontested
benefit claims). To the Knowledge of the Company, neither the Company nor any
fiduciary of any plan which is not a Multiemployer Plan has engaged in a
nonexempt prohibited transaction described in Sections 406 of ERISA or 4975 of
the Code.
(h) To the Knowledge of the Company, each of the Employee Benefit
Plans has been maintained and administered, in all material respects, in
accordance with its terms and all provisions of applicable Legal Requirements.
All amendments and actions required to bring each of the Employee Benefit Plans
into conformity with all of the applicable provisions of ERISA and other
applicable Legal Requirements have been made or taken except to the extent that
such amendments or actions are not required by law to be made or taken until a
date after the Closing Date and are disclosed in Schedule 5.15(h) of the
Disclosure Schedule.
(i) Each Employee Benefit Plan complies in all material respects with
all applicable requirements of (i) the Age Discrimination in Employment Act of
1967, as amended, and the regulations thereunder; (ii) Title VII of the Civil
Rights Act of 1964, as amended, and the regulations thereunder; (iii) the health
care continuation provisions of COBRA; and (iv) the Medicare Secondary Payor
Provisions of Section 1862(b) of the Social Security Act.
(j) Except as set forth in Section 5.15(j) of the Disclosure
Schedule, the Company is not a party to any agreement, contract or arrangement
that would result in the payment of any "excess parachute payments" within the
meaning of Section 280G of the Code.
(k) The Company will not have by reason of the transaction
contemplated by this Agreement, any obligation to make any payment to any
employee pursuant to any Employee Benefit Plan.
5.16 Absence of Labor Difficulties. The Company is not a party to any
labor union or collective bargaining agreement. There is no labor union or
organizing activity pending or, to the Knowledge of the Company, threatened with
respect to the Company or its business. To the Knowledge of the Company, the
Company is not engaged in any unfair labor practice. There is no unfair labor
practice complaint against the Company pending before the National Labor
Relations Board or any other agency. There is no labor strike, dispute, slowdown
or stoppage pending or, to the Knowledge of the Company,
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threatened against or involving the Company. No grievance or other labor dispute
or proceeding or any arbitration proceeding arising out of or under any
collective bargaining or other employee agreement is pending or, to the
Knowledge of the Company, threatened against the Company. The Company is not
aware of any other actual or potential labor problem which could reasonably be
expected to have a Material Adverse Effect.
5.17 Customers. Section 5.17 of the Disclosure Schedule sets forth each
customer or group of affiliated customers accounting for 5% or more of the
revenue of the Company during the eleven-month period ended February 28, 1998.
Except as disclosed in Section 5.17 of the Disclosure Schedule, no customer or
group of affiliated customers listed in Section 5.17 of the Disclosure Schedule
has terminated or, to the Knowledge of the Company, has, in writing or by an
express oral statement, threatened to terminate or advised it will terminate its
relationship with the Company.
5.18 Assets Necessary to Business. The properties and assets owned or
leased by the Company (all of which, after the Effective Time, will be owned or
leased by the Surviving Corporation) are sufficient to carry on the business and
operations currently conducted by the Company. Except as set forth in Section
5.18 of the Disclosure Schedule, such properties and assets are materially fit
for the purposes for which they are presently being used in the business and
operations of the Company and are in good operating condition and repair. The
transactions contemplated hereby will not deprive the Company (or, after the
Effective Time, the Surviving Corporation) of the benefits of any properties or
assets used, or available for use, in its business or operations or of the
benefits of any rights relating thereto (whether by reason of a violation of the
terms of any Contract or commitment or a failure to obtain any Consent from any
Tribunal or any other Person or for any other cause) or the imposition of any
liabilities on the Company or any other Person.
5.19 Licenses and Permits.
(a) Except as set forth in Section 5.19(a) of the Disclosure
Schedule, the Company owns or validly holds all material licenses, franchises,
privileges, Consents, exemptions, certificates, registrations, orders and
similar documents and instruments that are required by any Legal Requirement in
connection with the conduct of the business and operations of the Company as
currently conducted.
(b) Except as would not have a Material Adverse Effect, all such
licenses, franchises, privileges, Consents, exemptions, certificates,
registrations, orders and similar documents and instruments are valid, binding
and in full force and effect, and no proceeding is pending or, to the Knowledge
of the Company, threatened for the revocation of any such license, franchise,
privilege, permit, Consent, exemption, certificate, registration, order or
similar document or instrument.
(c) All such licenses, franchises, privileges, Consents, exemptions,
certificates, registrations, orders and similar documents and instruments will,
upon consummation of the transactions contemplated by this Agreement, be valid,
binding and in full force and effect on identical terms and conditions, which
terms and conditions will, upon consummation of the transactions contemplated by
this Agreement, permit the conduct of the business and operations of the
Company, in substantially the same manner as prior to the date hereof.
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5.20 Title to Properties. Except as provided pursuant to the express
provisions of the Contracts set forth in Section 5.11(b) of the Disclosure
Schedule, the Company has good, valid and indefeasible title to all properties
and assets owned by it and valid leasehold or license interests in all
properties and assets leased by it (whether real, personal or mixed), in each
case free and clear of all Liens of any kind. All leases of properties or assets
(whether real, personal or mixed) used by the Company in its business and
operations are valid, subsisting and effective in accordance with their terms
and the Company enjoys peaceful possession of all such properties and assets.
All material improvements and fixtures constituting a part of any real property
leased by the Company are in good operating condition and repair and are
suitable for their current uses. No improvement constituting a part of such real
property encroaches upon any real property of any other Person.
5.21 Insurance. The properties and assets of the Company that are of an
insurable character are insured against loss or damage by fire or other risks to
the extent and in the manner customary for companies engaged in similar
businesses and operating similar properties. Schedule 5.21 of the Disclosure
Schedule sets forth a true and complete description of the policies of insurance
presently in force, specifying with respect to each such policy the name of the
insurer, type of coverage, term of policy, deductible amount, limits of
liability and annual premium. All such insurance is in full force and effect and
is maintained with reputable insurance companies and associations. To the
Knowledge of the Company, there are no circumstances existing that would enable
such insurers to avoid liability under the policies issued by them. There are no
Persons other than the Company having an interest under such policies. The
Company has received no notice of cancellation or termination with respect to
any such policy. Premiums in respect of each such insurance policy are fully
paid to the date hereof. The insurance coverage provided by such policies of
insurance will not in any material respect be affected by, and will not
terminate or lapse by reason of, the transactions contemplated by this
Agreement. At no time since January 1, 1995 has any insurance company or
association canceled or reduced any insurance coverage covering any of the
properties or assets of the Company or given any notice or other indication of
its intention to cancel or reduce any such coverage. The loss of any properties
or assets of the Company not covered by insurance would not reasonably be
expected to have a Material Adverse Effect.
5.22 Books and Records. The minute books and records of the Company
contain a true, complete and correct record of all material actions taken at all
meetings and by all written consents in lieu of meetings of the Board of
Directors, or any committees thereof, and shareholders of the Company. The stock
ledger and related stock transfer records of the Company contain a true,
complete and correct record of the original issuance, transfer and other
capitalization matters of the capital stock of the Company. The accounting,
financial reporting, tax and business books and records of the Company (a)
accurately and fairly reflect in all material respects the business and
condition of the Company and the transactions and the assets and liabilities of
the Company with respect thereto, and (b) have been maintained in all material
aspects in accordance with good business and bookkeeping practices. Without
limiting the generality of the foregoing, the Company has not engaged in any
material transaction with respect to its business or operations, maintained by
any bank account therefor or used any funds of the Company in the conduct
thereof except for transactions, bank accounts and funds that have been and are
reflected in the normally maintained books and records of the business.
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5.23 Absence of Certain Business Practices. To the Knowledge of the
Company, neither the Company nor any of its Affiliates, directors, officers,
employees or agents has, directly or indirectly, given or agreed to give any
gift or similar benefit to any customer, supplier, competitor or governmental
employee or official (domestic or foreign) that could subject the Company to any
material damage or penalty in any civil, criminal or governmental litigation or
proceeding.
5.24 Bank Accounts. Section 5.24 of the Disclosure Schedule sets forth a
true and complete list of the names and locations of all banks, trust companies,
securities brokers and other financial institutions at which the Company has an
account or safe deposit box or maintains a banking, custodial, trading or other
similar relationship, and a true and complete list and description of each such
account, box and relationship, indicating in each case the account number and
the names of the respective officers, employees, agents or other similar
representatives of the Company authorized to transact business with respect
thereto.
5.25 Default. Since January 1, 1995, no Indebtedness of the Company has
been the subject of a notice of acceleration of the maturity of such
Indebtedness. The Company is not in default under Indebtedness such as would
permit the acceleration thereof.
5.26 Subsidiaries. Except as set forth in Section 5.26 of the Disclosure
Schedule, the Company has no subsidiaries and does not control (directly or
indirectly, through the ownership of securities, by Contract, by proxy, alone or
in combination with others, or otherwise) any corporation, partnership, business
organization or other Person. The Company does not have any equity interest in
any Person.
5.27 No Broker's or Finder's Fees. No broker, investment banker, financial
advisor or other person, other than Xxxxxxx Xxxxx & Associates, Inc., the fees
and expenses of which will be paid by the Company, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement, based upon arrangements
made by or on behalf of the Company. The estimated fees and expenses incurred
and to be incurred by the Company in connection with this Agreement and the
transactions contemplated by this Agreement (including the fees of the Company's
legal counsel and the legal counsel for its financial advisor) are set forth in
a letter dated April 9, 1998 from the Company to CompuCom, excluding expenses
related to the solicitation of proxies.
5.28 Opinion of Financial Advisor. The Company has received the opinion of
Xxxxxxx Xxxxx & Associates, Inc., dated April 4, 1998, to the effect that, as of
that date, the consideration to be received in the Merger by the Company's
shareholders is fair from a financial point of view, and a complete and correct
signed copy of such opinion has been, or promptly upon receipt thereof will be,
delivered to CompuCom.
5.29 Information Supplied. None of the information supplied or to be
supplied by the Company specifically for inclusion or incorporation by reference
in the Proxy Statement, will at the time the Proxy Statement is first mailed to
the Company's shareholders or at the time of the Shareholders Meeting (as
defined in Section 7.4), contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading. Xxx
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Xxxxx Xxxxxxxxx will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by CompuCom or the CompuCom Subsidiary specifically for inclusion or
incorporation by reference therein.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF COMPUCOM AND THE COMPUCOM SUBSIDIARY
CompuCom and the CompuCom Subsidiary, jointly and severally, hereby
represent and warrant to the Company as follows:
6.1 Organization, Standing, etc., of CompuCom. CompuCom is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own its
assets and to carry on its business as presently conducted. CompuCom has all
requisite corporate power and authority to execute and deliver, and perform its
obligations under, this Agreement and to consummate the transactions
contemplated hereby.
6.2 Organization, Standing, etc., of CompuCom Subsidiary.
(a) The CompuCom Subsidiary is a newly formed corporation duly
organized, validly existing with active status under the laws of the State of
Florida and has all requisite corporate power and authority to own its assets
and to carry on its business as presently conducted. The CompuCom Subsidiary has
all requisite corporate power and authority to execute and deliver, and perform
its obligations under, this Agreement and to consummate the transactions
contemplated hereby.
(b) At the Effective Time, the duly authorized capital stock of the
CompuCom Subsidiary will consist of 1,000 shares of common stock, no par value,
1,000 shares of which will be validly issued, fully paid and nonassessable and
owned of record and beneficially by CompuCom. There are no outstanding options,
warrants or other rights to subscribe for or purchase capital stock (or
securities convertible into or exchangeable for capital stock) of the CompuCom
Subsidiary. The CompuCom Subsidiary has not engaged in any activities other than
as contemplated by the terms of this Agreement.
6.3 Authorization and Execution. The execution and delivery of this
Agreement and the performance of each of CompuCom and the CompuCom Subsidiary
of this Agreement and the consummation by each of them of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of CompuCom and the CompuCom Subsidiary. This
Agreement has been duly and validly executed and delivered by each of CompuCom
and the CompuCom Subsidiary and constitutes a legal, valid and binding
agreement of each of CompuCom and the CompuCom Subsidiary enforceable against
CompuCom and the CompuCom Subsidiary, as applicable, in accordance with its
terms, assuming this Agreement is
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enforceable against the Company, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws or by general principles of equity.
6.4 Absence of Conflicts; Governmental Authorizations.
(a) The execution and delivery by each of CompuCom and the CompuCom
Subsidiary of this Agreement, the performance by each of them of their
respective obligations hereunder and the consummation by each of them of the
transactions contemplated hereby will not (i) conflict with or result in any
violation of any provision of the Certificate of Incorporation or Articles of
Incorporation of CompuCom or the CompuCom Subsidiary, as applicable, or the
Bylaws of CompuCom or the CompuCom Subsidiary, each as amended to date; (ii)
materially conflict with, result in any material violation or material breach
of, constitute a default under, give rise to any right of termination or
acceleration (with or without notice or the lapse of time or both) pursuant to,
or result in being declared void or voidable, any term or provision of any note,
bond, mortgage, indenture, lease, license, Contract or other instrument to which
CompuCom or the CompuCom Subsidiary is a party or by which any of their
respective properties or assets are or may be bound; (iii) materially violate
any term of any Legal Requirement applicable to CompuCom or the CompuCom
Subsidiary or their respective properties or assets; or (iv) result in the
creation of, or impose on CompuCom or the CompuCom Subsidiary the obligation to
create, any Lien upon any properties or assets of CompuCom or the CompuCom
Subsidiary.
(b) Except for applicable requirements, if any, of the 33 Act, the
Exchange Act, the premerger notification requirements of the HSR Act, the Nasdaq
National Market, the filing and recordation of appropriate merger documents as
required by the FBCA, filings required pursuant to any state securities or "blue
sky" laws, and such other notices, reports or other filings the failure of which
to be made would not, individually or in the aggregate, have a Material Adverse
Effect on CompuCom or prevent or materially impair the consummation of the
transactions contemplated hereby, CompuCom is not required to submit any notice,
report or other filing to any Tribunal, domestic or foreign, in connection with
the execution, delivery or performance of this Agreement or the consummation of
the transactions contemplated hereby.
6.5 Financing. CompuCom or the CompuCom Subsidiary possess, or have access
to, all funds necessary to pay the Merger Consideration and related fees and
expenses, and have the financial capacity to perform their other obligations
under this Agreement. Upon the terms and subject to the conditions of this
Agreement, CompuCom or the CompuCom Subsidiary will pay the Merger
Consideration.
6.6 Information Supplied. None of the information supplied or to be
supplied by CompuCom or the CompuCom Subsidiary specifically for inclusion or
incorporation by reference in the Proxy Statement will, at the time the Proxy
Statement is first mailed to the Company's shareholders or at the time of the
Shareholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
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ARTICLE VII
COVENANTS OF THE COMPANY
The Company covenants and agrees with CompuCom or the CompuCom Subsidiary
that, at all times before the Closing, the Company at its expense will comply
with all covenants and provisions of this Article VII, except to the extent
otherwise expressly required or permitted by this Agreement.
7.1 Investigations. The Company will provide CompuCom and CompuCom's
counsel, accountants and other representatives and agents with reasonable
access, upon prior notice and during normal business hours, to all facilities,
officers, directors, employees, agents, accountants, actuaries, assets,
properties, books and records of the Company and will furnish CompuCom with such
financial and operating data and other information with respect to the business
and properties of the Company or the transactions contemplated hereby as
CompuCom shall from time to time request; provided, however, that such
investigation (a) shall be conducted in such manner as not to interfere
unreasonably with the operation of the business of the Company, and (b) shall
not affect any of the representations and warranties hereunder. The Company will
also provide CompuCom with timely notice of and access to minutes of all
meetings (and all actions by written consent in lieu thereof) of the board of
directors, or any committee thereof, and shareholders of the Company. In the
event of termination of this Agreement, CompuCom will return or cause to be
returned to the Company all documents and other material obtained from the
Company in connection with the transactions contemplated hereby and will keep
confidential any such information unless such information is ascertainable from
public or published information or is required to be disclosed by applicable
Legal Requirements.
7.2 Operation of the Company.The Company will carry on its business solely
in the usual and ordinary course consistent with past practice. Without limiting
the generality of the foregoing:
(a) The Company will not, without the prior written consent of
CompuCom: (i) authorize, issue or commit to issue any shares of its capital
stock of any class (whether or not from treasury stock) or other equity
interests in the Company, except for the issuance of shares of Company Common
Stock upon the exercise of, and in accordance with, the Options; (ii) split up,
combine or reclassify any of its capital stock or other equity interests in the
Company; (iii) grant, commit to grant, issue or commit to issue any options,
warrants or other rights (including Options) to subscribe for or purchase any
shares of its capital stock, other equity interests in the Company or any
security directly or indirectly convertible into or exchangeable for, or which
in any manner confers upon the holder thereof the right to acquire, any shares
of any class of its capital stock or other equity securities; (iv) purchase,
redeem or otherwise acquire any shares of its capital stock of any class or any
equity interests in the Company, or any interest in or right to acquire any such
shares or other equity interests in the Company; (v) declare, set aside for
payment or pay any dividend on, or make any other distribution or payment with
respect to, any share of its capital stock of any class or any other equity
interests; (vi) grant or pay any increase in the salaries or other
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compensation (including, without limitation, perquisites) of any of its officers
or directors, grant or pay any bonus to any of its officers or directors other
than paying bonuses to officers which have been earned as of the date of this
Agreement pursuant to existing bonus plans of the Company, enter into any
employment agreement or make any loan to or enter into any material transaction
of any other nature with any of its officers or directors, take any action to
institute any new severance or termination pay practices with respect to any of
its officers or directors, or increase the benefits payable under its severance
or termination pay practices applicable to its officers or directors; (vii)
grant or pay any increase in the salaries or other compensation (including,
without limitation, perquisites) of any of its employees, agents or consultants
other than in the ordinary course of business consistent with past practice,
grant or pay any bonus to any of its employees, agents or consultants other than
in the ordinary course of business consistent with past practice, enter into any
employment agreement or make any loan to or enter into any material transaction
of any other nature with any of its employees, agents or consultants, take any
action to institute any new severance or termination pay practice with respect
to any of its employees, agents or consultants, or increase the benefits payable
under its severance or termination pay practices applicable to its employees,
(viii) grant any increase in the pension, retirement or other employment
benefits of any character of, or grant any new benefits to, any of its officers,
directors, or employees other than benefits to new employees no greater than
those provided to existing employees, or, other than as contemplated by Section
4.6 or Section 7.11, amend or terminate, partially or completely, any Plan
described in Section 5.15; (ix) create, incur, assume, guarantee, endorse,
refinance, modify, extend, renew or otherwise become liable for (a) any debt,
obligation or other liability for money borrowed except pursuant to existing or
planned lines of credit disclosed in, and the disclosure set forth in, Section
5.11(a) of the Disclosure Schedule or (b) any other debt, obligation or other
liability, except in the ordinary course of business consistent with past
practice, cancel, pay, agree to cancel or pay, or otherwise provide for a
complete or partial discharge in advance of a scheduled payment date with
respect to, any debt, obligation or other liability, or waive, cancel or
compromise any right to receive any direct or indirect payment or other benefit
under any debt, obligation or other liability owing to the Company, except as
otherwise contemplated hereby or in the ordinary course of business consistent
with past practice; (x) dispose of or assign any of its material assets or
properties or permit any of its assets and properties to be subjected to any
Liens, except to the extent such disposition of any such Lien is made or
incurred in the ordinary course of business consistent with past practice, or
sell any part of its operations or business to any other Person; (xi) enter into
any lease or contract for the purchase or sale of any property, real or
personal, except in the ordinary course of business consistent with past
practice, or terminate, modify, assign, release, relinquish or waive any right
of the Company under any existing real property lease, or increase its
obligations under real property leases, except in the ordinary course of
business consistent with past practice and in accordance with the express terms
of existing real property leases listed in Section 5.11(l) of the Disclosure
Schedule; (xii) fail to maintain all material equipment and other material
assets and properties in good working condition and repair according to the
standards it has maintained to the date of this Agreement, subject only to
ordinary wear and tear; (xiii) change or remove (x) the independent certified
public accountants for the Company, (y) any operational, financial reporting
accounting practice or policy or any assumption underlying such a practice or
policy, or (z) any method of calculating any bad debt, contingency or other
reserve for financial reporting purposes or for other accounting purposes; (xiv)
except as set forth in Section 7.2(a)(xiii) of the Disclosure Schedule pursuant
to documentation to which CompuCom consents in writing in advance, amend, modify
or repeal, or propose to do, or permit or consent to any amendment, modification
or repeal of its Articles of Incorporation or
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Bylaws or take any action with respect to such action; (xv) license any of its
technology, Intellectual Property or Software except in the ordinary course of
business consistent with past practice; (xvi) (A) merge, consolidate or
otherwise combine or agree to merge, consolidate or otherwise combine with any
other Person, (B) acquire all or substantially all, or a portion of all, the
assets, capital stock or other equity securities of any other Person, or any
business division of any other Person or (C) otherwise organize or acquire
control or ownership of any other Person; (xvii) violate, breach or default, or
take or fail to take any action that (with or without notice or lapse of time or
both) would constitute a material violation, material breach or default under,
any term or provision of any material Contract to which the Company is a party
or by which any of its properties or assets is or may be bound and as to which
such violation, breach or default could affect the validity or enforceability of
this Agreement or any of the transactions contemplated hereby or, individually
or in the aggregate, has or could reasonably be expected to have a Material
Adverse Effect; (xviii) delay or postpone beyond normal past practice the
payment of any material account payable or other debt, obligation or other
liability; (xix) permit any increase in its aggregate obligations under
operating leases involving personal property having a fair market value in
excess of $5,000; (xx) permit any increase in its aggregate obligations under
capital leases involving assets having a fair market value in excess of $10,000;
(xxi) except as disclosed in Section 5.11(j) of the Disclosure Schedule, make
any capital expenditure in excess of $10,000 or make capital expenditures in
excess of $20,000 in the aggregate; (xxii) enter into, or become obligated
under, any Contract, or change, amend, terminate or otherwise modify any
Contract, except in the ordinary course of business consistent with past
practice; (xxiii) enter into, directly or indirectly, any new transaction with
any Affiliate of the Company; (xxiv) buy additional inventory pursuant to any
vendor inventory buy-in program; or (xxv) without limitation of the matters set
forth in this Article VI, enter into or become bound by any Contract,
commitment, instrument or other document after the date hereof which is of a
type, which would have been required to be disclosed pursuant to any clause of
Section 5.11 had the Company been a party to, or had its business or any of its
assets been bound by, such Contract, commitment, instrument or other document as
of the date of this Agreement.
(b) The Company will promptly advise CompuCom in writing of the
commencement or threat of any claim, litigation, action, suit, inquiry or
proceeding involving the Company, its properties or assets, or any of its
directors, officers or agents (in their capacities as such).
(c) The Company shall furnish CompuCom with a copy of all amendments
to the Company's Annual Report on Form 10-K, filed with the SEC for the year
ended March 31, 1997 (the "Company 10-K") and of any other form filed with the
SEC under the Exchange Act from the date of filing of the Company 10-K to the
Effective Time of the Merger.
(d) The Company will use its reasonable commercial efforts to (i)
preserve intact its present business organization, reputation and customer
relations, (ii) keep available the services of its present officers, directors,
employees, agents, consultants and other similar representatives, (iii) maintain
all its licenses, qualifications and authorizations to do business in each
jurisdiction in which it is so licensed, qualified or authorized, (iv) maintain
in full force and effect all contracts, documents and arrangements referred to
in Section 5.11, and (v) continue all current marketing and selling activities
relating to the business, operations or affairs of the Company.
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(e) The Company will comply, in all material respects, with all Legal
Requirements applicable to its business, operations or affairs.
7.3 No Solicitation.
(a) The Company and its officers, directors, employees,
representatives and agents shall immediately cease any discussions or
negotiations with any parties that may be ongoing with respect to a Takeover
Proposal (as hereinafter defined). The Company shall not authorize or permit any
of its officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it to,
directly or indirectly (i) solicit, initiate or encourage (including by way of
furnishing information), or take any other action to facilitate, any inquiries
or the making of any proposal which constitutes, or may reasonably be expected
to lead to, any Takeover Proposal or (ii) participate in any discussions or
negotiations regarding any Takeover Proposal; provided, however, that if, at any
time prior to the acceptance for payment of shares of the Company Common Stock
pursuant to the Merger, the Board of Directors of the Company determines in good
faith, after consultation with outside counsel, that it is necessary to do so in
order to comply with its fiduciary duties to the Company's shareholders under
applicable law, the Company may, in response to an unsolicited Takeover
Proposal, and subject to compliance with Section 7.3(c), (A) furnish information
with respect to the Company to any Person pursuant to a confidentiality
agreement in a form approved by the Company and CompuCom (such approval not to
be unreasonably withheld) and (B) participate in negotiations regarding such
Takeover Proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
director or executive officer of the Company or any investment banker, financial
advisor, attorney, accountant or other representative of the Company, whether or
not such Person is purporting to act on behalf of the Company or otherwise,
shall be deemed to be a breach of this Section 7.3(a) by the Company. For
purposes of this Agreement, "Takeover Proposal" means any inquiry, proposal or
offer from any Person relating to any direct or indirect acquisition or purchase
of twenty percent or more of the assets of the Company or twenty percent or more
of any class of equity securities of the Company, any tender offer or exchange
offer that if consummated would result in any Person beneficially owning twenty
percent or more of any class of equity securities of the Company, any merger,
consolidation, business combination, sale of substantially all of the assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company, other than the transactions contemplated by this Agreement, or any
other transaction the consummation of which could reasonably be expected to
impede, interfere with, prevent or materially delay the Merger or which would
reasonably be expected to dilute materially the benefits to CompuCom of the
transactions contemplated hereby.
(b) Except as set forth in this Section 7.3, neither the Board of the
Directors of the Company nor any committee thereof shall (i) withdraw or modify
or propose to withdraw or modify, in a manner adverse to CompuCom, the approval
or recommendation by such Board of Directors or such committee of this Agreement
or the Merger, (ii) approve or recommend, or propose to approve or recommend,
any Takeover Proposal or (iii) cause the Company to enter into any agreement
with respect to any Takeover Proposal. Notwithstanding the foregoing, in the
event that prior to the Merger, the Board of Directors of the Company determines
in good faith, after consultation with outside counsel, that it is necessary to
do so in order to comply with its fiduciary duties to the Company's shareholder
under applicable law, the Board of Directors of the Company
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may (subject to the other provisions of this Section 7.3) withdraw or modify its
approval or recommendation of this Agreement and the Merger, approve or
recommend a Superior Proposal (as defined below), cause the Company to enter
into an agreement with respect to a Superior Proposal or terminate this
Agreement, but in each case only at a time that is after the second business day
following CompuCom's receipt of written notice (a "Notice of Superior Proposal")
advising CompuCom that the Board of Directors of the Company has received a
Superior Proposal, specifying the material terms and conditions of such Superior
Proposal and identifying the Person making such Superior Proposal. In the event
that a Notice of Superior Proposal is delivered and any material term or
condition of the Superior Proposal described therein is subsequently changed,
the Company shall deliver a supplemental Notice of Superior Proposal describing
such change and may withdraw or modify its approval or recommendation of this
Agreement and the Merger, approve or recommend the modified Superior Proposal or
cause the Company to enter into an agreement with respect to the modified
Superior Proposal only at a time that is after the second business day following
CompuCom's receipt of the supplemental Notice of Superior Proposal. In addition,
if the Company proposes to enter into an Agreement with respect to any Takeover
Proposal, it shall concurrently with entering into such agreement pay, or cause
to be paid to CompuCom (x) the Termination Fee (as defined in Section 10.5) and
(y) any Indebtedness owed to CompuCom with respect to product sold or services
provided by CompuCom to the Company or supplied or provided by CompuCom to any
of the Company's customers at the request of the Company. For purposes of this
Agreement, a "Superior Proposal" means any bonafide proposal made by a third
party to acquire, directly or indirectly, for consideration consisting of cash
and/or securities, more than fifty percent of the shares of the Company Common
Stock then outstanding or all or substantially all the assets of the Company and
otherwise on terms which the Board of Directors of the Company determines in its
good faith judgment (based on the advice of a financial advisor of nationally
recognized reputation) to be more favorable to the Company's shareholders than
the Merger.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 7.3, the Company shall immediately advise
CompuCom orally and in writing of any request for information or of any Takeover
Proposal, the material terms and conditions of such request or Takeover Proposal
and the identity of the Person making such request or Takeover Proposal. The
Company will keep CompuCom fully informed of the status and details (including
amendments or proposed amendments) of any such request or Takeover Proposal.
(d) Nothing contained in this Section 7.3 shall prohibit the Company
from making any disclosure to the Company's shareholders if, in the good faith
judgment of the Board of Directors of the Company, after consultation with
outside counsel, failure so to disclose would be inconsistent with its fiduciary
duties to the Company's shareholders under applicable law; provided, however,
neither the Company nor its Board of Directors nor any committee thereof shall,
except as permitted by Section 7.3(b), withdraw or modify, or propose to
withdraw or modify, its position with respect to this Agreement or the Merger or
approve or recommend, or propose to approve or recommend, a Takeover Proposal.
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7.4 Board Approval, Fairness Opinion, Shareholder Approval and Proxy
Statement.
(a) The Company hereby approves of and consents to the Merger and
represents that the Board of Directors of the Company, at a meeting duly called
and held, duly adopted resolutions approving this Agreement and the Merger,
determining that the terms of the Merger are fair to, and in the best interest
of, the Company's shareholders and recommending that the Company's shareholders
accept the Merger and approve and adopt this Agreement and the Merger. The
Company represents that its Board of Directors has received the opinion of
Xxxxxxx Xxxxx & Associates, Inc. dated as of April 4 9, 1998 that the proposed
consideration to be received by the holders of the Company Common Stock pursuant
to the Merger is fair to such holders from a financial point of view, and a
complete and correct signed copy of such opinion has been delivered by the
Company to CompuCom.
(b) The Company will, at CompuCom's request, as soon as practicable
following execution of this Agreement, duly call, give notice of, and convene
and hold a meeting of its shareholders (the "Shareholders Meeting") for the
purpose of obtaining the requisite approval of the Company's shareholders with
respect to the Merger. The Company will, through its Board of Directors,
recommend to its shareholders that the shareholders vote in favor of, or
otherwise consent to, the approval of this Agreement, the Merger and the
transactions contemplated hereby, except as contemplated by Section 7.3. Without
limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to the first sentence of this Section 7.4(b) shall not be
affected by (i) the commencement, public proposal, public disclosure or
communication to the Company of any Takeover Proposal or (ii) the withdrawal or
modification by the Board of Directors of the Company of its approval or
recommendation of this Agreement or the Merger.
(c) The Company will, at CompuCom's request, as soon as reasonably
practicable following execution of this Agreement prepare and file a preliminary
Proxy Statement with the SEC and will use its commercially reasonable efforts to
respond to any comments of the SEC or its staff and to cause the Proxy Statement
to be mailed to the Company's shareholders as promptly as practicable after
responding to all such comments to the satisfaction of the staff of the SEC.
CompuCom and its counsel shall be given reasonable opportunity to review and
comment upon the Proxy Statement prior to its filing with the SEC or
dissemination to shareholders of the Company. The Company will notify CompuCom
promptly of the receipt of any written comments from the SEC or its staff and of
any requests by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply CompuCom with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. Each of the Company, CompuCom and the CompuCom
Subsidiary agrees promptly to correct any information provided by it for use in
the Proxy Statement if and to the extent that such information shall have become
false or misleading in any material respect, and the Company further agrees to
take all steps necessary to amend or supplement the Proxy Statement and to cause
the Proxy Statement as so amended or supplemented to be filed with the SEC and
disseminated to the Company's shareholders, in each case as and to the extent
required by applicable Federal securities laws. If at any time prior to the
Shareholders Meeting there shall occur any event that should be set forth in an
amendment or supplement to the Proxy Statement, the Company will promptly
prepare and mail to its
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shareholders such an amendment or supplement. The Company will not mail any
Proxy Statement, or any amendment or supplement thereto, to which CompuCom
reasonably objects. (d) CompuCom agrees to cause all shares of the Company
Common Stock owned by CompuCom or any subsidiary of CompuCom to be voted in
favor of the approval of the Merger by the shareholders of the Company.
7.5 Consents. The Company shall use its commercially reasonable efforts to
obtain the Consent of each Person listed in Section 5.11(x) of the Disclosure
Schedule, each of whose Consent is required in connection with the execution,
delivery or performance of this Agreement.
7.6 Financial Statements and Reports.
(a) As promptly as reasonably practicable after each calendar month
ending between the date hereof and the Closing Date, but in no event later than
30 days after the end of each such month, the Company will deliver to CompuCom
true and correct copies of the unaudited financial statements (including a
balance sheet, a statement of operations and changes in shareholders' equity and
cash flows) of the Company as of and for the month then ended, prepared in
accordance with GAAP, and which shall present fairly the financial condition and
assets and liabilities (whether accrued, absolute, contingent or otherwise) of
the Company as of the end of such month and the results of operations of the
Company for and during the period then ended, subject to normal and recurring
year-end audit adjustments.
(b) As promptly as reasonably practicable, the Company will deliver to
CompuCom true and complete copies of such other material financial statements,
reports or analyses as may be prepared or received by the Company and as relate
to the Company's business and operations, and such other information with
respect to the foregoing as CompuCom reasonably may request, including, without
limitation, normal internal reports and special reports (such as those of
consultants).
7.7 Termination of Covenants Not to Compete Prior to Closing, the Company
shall enter into agreements reasonably acceptable to CompuCom providing for an
unqualified waiver of, or otherwise rendering no longer effective, the covenants
not to compete contained in Article XII of that certain Asset Purchase
Agreement dated August 30, 1996 between Ameridata of New Jersey, Inc. and the
Company.
7.8 Rose Employment Contract. Prior to the Closing, the Company shall
terminate (contingent upon the consummation of the transactions contemplated by
this Agreement) its existing employment agreement with Xxxxxxx X. Xxxx, Chief
Executive Officer of the Company, and Xx. Xxxx and CompuCom shall have
agreed upon terms and conditions mutually acceptable to each of them with
respect to Xx. Xxxx'x employment with CompuCom following consummation of the
transactions provided for in this Agreement.
7.9 Notice and Cure. The Company will notify CompuCom promptly in writing
of, and contemporaneously will provide CompuCom with true and complete copies of
any and all
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information or documents relating to, and will use its commercially reasonable
efforts to cure before the Effective Time, any event, transaction or
circumstance that results in or will result in any covenant or agreement of the
Company under this Agreement being breached, or that renders or will render
untrue any representation or warranty of the Company contained in this Agreement
as if the same were made on or as of the date of such event, transaction or
circumstance. The Company will use its commercially reasonable efforts to cure,
at the earliest practicable date and prior to the Effective Time, any violation
or breach of any representation, warranty, covenant or agreement made by the
Company in this Agreement, whether occurring or arising before or after the date
of this Agreement.
7.10 Commercially Reasonable Efforts and Consents. Subject to the terms
and conditions herein provided, the Company shall use its commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable
Legal Requirements and otherwise to consummate and make effective the
transactions contemplated by this Agreement and shall use its commercially
reasonable efforts to obtain all necessary actions or non-actions, extensions,
waivers, Consents, licenses and clearances and to effect all registrations,
filings and notices with, to or from other Persons or Tribunals required of the
Company that are necessary or reasonably desirable to effect the Merger and the
transactions contemplated hereby. Such commercially reasonable efforts shall
include efforts to cooperate with CompuCom to, as promptly as practicable, make
any filings required pursuant to the HSR Act and to promptly and diligently
provide any additional information required or reasonably requested in order to
comply with the requirements of the HSR Act.
7.11 Company Profit Sharing Plan. The Company shall take all actions
necessary to terminate the Company's Section 401(k) Salary Savings Plan
effective immediately prior to Closing.
7.12 Agreements and Covenants. The Company shall not make any commitment,
either in writing or orally, which would violate any of the provisions set forth
in this Article VII.
ARTICLE VIII
COVENANTS OF COMPUCOM AND THE COMPUCOM SUBSIDIARY
CompuCom covenants and agrees with the Company that (except for the
provisions of Section 8.6, which shall only apply after the Closing) CompuCom at
its expense will comply with all covenants and provisions of this Article VIII,
except to the extent otherwise expressly required or permitted by this
Agreement.
8.1 Conduct of Business of the CompuCom Subsidiary. During the period from
the date of this Agreement to the Effective Time, the CompuCom Subsidiary shall
not engage in any activities of any nature except as provided in or contemplated
by this Agreement.
8.2 Obligation of CompuCom to Make Merger Effective and the CompuCom
Subsidiary's Shareholder Consent. CompuCom shall cause the CompuCom Subsidiary
to take all actions necessary on its part to carry out the transactions
contemplated hereby. CompuCom, as the
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sole shareholder of the CompuCom Subsidiary, will consent in writing to the
approval of this Agreement and the Merger in accordance with the FBCA.
8.3 Notice and Cure.CompuCom will notify the Company promptly in writing
of, and contemporaneously will provide the Company with true and complete copies
of any and all information or documents relating to, and will use its
commercially reasonable efforts to cure before the Effective Time, any event,
transaction or circumstance occurring after the date of this Agreement that
results in or will result in any covenant or agreement of CompuCom under this
Agreement to be breached, or that renders or will render untrue any
representation or warranty of CompuCom contained in this Agreement as if the
same were made on or as of the date of such event, transaction or circumstance.
CompuCom also will use its commercially reasonable efforts to cure, at the
earliest practicable date and before the Effective Time, any violation or breach
of any representation, warranty, covenant or agreement made by it in this
Agreement, whether occurring or arising before or after the date of this
Agreement.
8.4 Commercially Reasonable Efforts and Consents. Subject to the terms and
conditions herein provided, CompuCom shall use its commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable Legal
Requirements and otherwise to consummate and make effective the transactions
contemplated by this Agreement and shall use its commercially reasonable efforts
to obtain all necessary actions or non-actions, extensions, waivers, Consents,
Licenses and clearances and to effect all registrations, filings and notices
with, to or from other Persons or Tribunals required of CompuCom or the CompuCom
Subsidiary that are necessary or reasonably desirable to effect the Merger and
the transactions contemplated hereby. Such commercially reasonable efforts shall
include efforts to cooperate with the Company to, as promptly as practicable,
make any filings required pursuant to the HSR Act and to promptly and diligently
provide any additional information required or reasonably requested in order to
comply with the requirements of the HSR Act.
8.5 Information for Proxy Statement for the Company's Shareholders.
CompuCom will furnish to the Company such data and information relating to it as
the Company may reasonably request for the purpose of including such data and
information in the Proxy Statement and any amendments or supplements thereto
used by the Company to obtain the necessary shareholder approval of the Merger.
8.6 Indemnification Rights.
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(a) From and after the Effective Time, to the extent not covered by
the insurance set forth in the next succeeding sentence, CompuCom and the
CompuCom Subsidiary (or any successor to such parties) shall jointly and
severally indemnify, defend and hold harmless the officers, directors and
employees of the Company or any of its subsidiaries against all losses,
expenses, claims, damages or liabilities arising out of claims brought or made
by third parties, including, without limitation, derivative claims, in
connection with the transactions contemplated by this Agreement to the fullest
extent permitted or required under applicable law and shall advance expenses
prior to the final disposition of such claims and liabilities to which this
sentence applies. CompuCom agrees that all rights to indemnification now
existing in favor of the directors, officers or employees of the Company or any
of its subsidiaries (including, without limitation, any Person who was or
becomes a director, officer or employee prior to the Effective Time (the
"Indemnified Parties") under Florida Law or as provided in the Company's
Articles of Incorporation or By-Laws with respect to matters occurring on or
prior to the Effective Time shall survive the Merger and shall continue in full
force and effect for a period of not less than six years after the Effective
Time (or, in the case of claims or other matters occurring on or prior to the
expiration of such six year period which have not been resolved prior to the
expiration of such six year period, until such matters are finally resolved) and
CompuCom shall honor, and shall cause the Company to honor, all such rights.
CompuCom shall cause to be maintained in effect for not less than six years from
the Effective Time the current policies of the directors' and officers'
liability insurance maintained by the Company (provided that CompuCom may
substitute therefor policies of at least the same coverage containing terms and
conditions which are no less advantageous) with respect to matters occurring on
or prior to the Effective Time; provided that in no event shall CompuCom or the
Company be required to expend annually more than 150% of the amount that the
Company spent for these purposes in the last fiscal year to maintain or procure
insurance coverage pursuant hereto; and provided further that if CompuCom or the
Company are unable to obtain the insurance called for by this section CompuCom
or the Company will obtain as much comparable insurance as is available for such
amount per year.
(b) Without limiting the foregoing, in the event any claim, action,
suit, proceeding or investigation to which the provisions of this Section 8.6
are applicable is brought against any Indemnified Party (whether arising before
or after the Effective Time), (i) any counsel retained by the Indemnified
Parties for any period after the Effective Time shall be subject to the approval
of CompuCom (such approval to not be unreasonably withheld); (ii) after the
Effective Time, CompuCom shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received; and (iii) after the Effective Time, CompuCom will use commercially
reasonable efforts to assist in the vigorous defense of any such matter,
provided that CompuCom shall not be liable for any settlement of any claim
effected without its written consent, which consent, however, shall not be
unreasonably withheld. Any Indemnified Party wishing to claim indemnification
under this Section 8.6, upon learning of any such claim, action, suit,
proceeding or investigation, shall notify CompuCom (but the failure so to notify
CompuCom shall not relieve it from any liability which it may have under this
Section 8.6 except to the extent such failure materially prejudices CompuCom).
CompuCom shall be liable for the fees and expenses hereunder with respect to
only one law firm, in addition to local counsel in each applicable jurisdiction,
to represent the Indemnified Parties as a group with respect to each such matter
unless there is, under applicable standards of professional conduct, a conflict
between the
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positions of any two or more Indemnified Parties that would preclude or render
inadvisable joint or multiple representation of such parties.
ARTICLE IX
CONDITIONS
9.1 General Conditions. Notwithstanding any other provisions of this
Agreement, the obligations of all of the parties hereto to effect the Merger
shall be subject to satisfaction prior to the Closing Date of the following
conditions:
(a) The Company's Shareholder Approval. The shareholders of the
Company shall have approved the Merger in the manner required under the FBCA,
the Company's Articles of Incorporation and as provided for in Section 7.4.
(b) HSR Act Waiting Period Expired. All applicable waiting periods
specified under the HSR Act with respect to the transactions provided for in
this Agreement shall have expired or been terminated.
(c) No Violations or Proceedings. Consummation of the Merger shall not
violate any Order of any Tribunal having competent jurisdiction, and no action
or proceeding shall have been instituted by any Person or threatened by any
Tribunal which, in either such case, in the good faith judgment of either
CompuCom or the Company has a reasonable probability of resulting in an Order,
restraining, prohibiting or rendering unlawful the consummation of the
transactions contemplated by this Agreement or the ownership and operation by
CompuCom after the Effective Time of the Surviving Corporation or all of the
material assets and business of the Company.
9.2 Conditions to the Obligation of CompuCom and the CompuCom Subsidiary.
Notwithstanding any other provisions of this Agreement, the obligations of
CompuCom and the CompuCom Subsidiary to effect the Merger shall be subject to
satisfaction prior to the Closing Date of the following conditions:
(a) Representations and Warranties True and Correct. The
representations and warranties of the Company that are qualified as to
materiality shall have been true and correct and such representations and
warranties that are not so qualified shall have been true and correct in all
material respects, in each case as of the date of this Agreement and the date of
the Merger, except in the case of any representation and warranty that speaks as
of a particular date, which shall be true and correct or true and correct in all
material respects, as applicable, as of such date.
(b) Satisfaction of Obligations. The Company shall have performed its
obligations, and shall have complied with its covenants and agreements, under
this Agreement.
9.3 Conditions to Obligations of the Company. Notwithstanding any other
provisions of this Agreement, the obligations of the Company to effect the
Merger shall be subject to satisfaction prior to the Closing Date of the
following conditions:
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(a) Representations and Warranties. The representations and warranties
of CompuCom and CompuCom Subsidiary in this Agreement that are qualified as to
materiality shall have been true and correct and such representations and
warranties that are not so qualified shall have been true and correct in all
material respects, in each case as of the date of this Agreement and the date of
the Merger, except in the case of any representation and warranty that speaks as
of a particular date, which shall be true and correct or true and correct in all
material respects, as applicable, as of such date.
(b) Satisfaction of Obligations. CompuCom and CompuCom Subsidiary
shall have performed their obligations, and shall have complied with their
covenants and agreements, under this Agreement.
ARTICLE X
TERMINATION; PAYMENT OF EXPENSES ARTICLE X TERMINATION; PAYMENT OF
EXPENSES
10.1 Termination of Agreement and Abandonment of Merger. Termination of
Agreement and Abandonment of Merger. Anything herein to the contrary
notwithstanding, this Agreement and the Merger contemplated hereby may be
terminated at any time before the Effective Time, whether before or after
approval of this Agreement by the shareholders of the Company, as follows:
(a) Mutual Consent. By mutual written consent of CompuCom and the
Company.
(b) CompuCom or the Company. By either CompuCom or the Company (i) if
the Merger shall not have occurred prior to August 1, 1998; provided, however,
that the right to terminate the Agreement pursuant to this Section 10.1(b)(i)
shall not be available to any party whose failure to perform any of its
obligations under the Agreement results in the failure of any such condition or
if the failure of such condition results from facts or circumstances that
constitute a breach of a representation or warranty under the Agreement by such
party; or (ii) if any Tribunal shall have issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or otherwise
prohibiting the acceptance for payment of, or payment for, shares of the Company
Common Stock pursuant to the Merger and such order, decree or ruling or other
action shall have become final and nonappealable.
(c) CompuCom or the CompuCom Subsidiary. By CompuCom or the CompuCom
Subsidiary if (i) any of the representations and warranties of the Company
contained in this Agreement shall not have been, or shall cease to be, true and
correct in all material respects (whether because of circumstances or events
occurring in whole or in part prior to, on or after the date of this Agreement),
or (ii) the Company shall have breached or failed to perform in any material
respect any covenant or agreement to be performed by it pursuant to this
Agreement; provided, that CompuCom or CompuCom Subsidiary may not terminate the
Agreement pursuant to this Section 10.1(c) if CompuCom or CompuCom Subsidiary is
at such time in breach of its obligations under this Agreement.
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(d) Company. By the Company (i) in connection with entering into a
definitive agreement in accordance with Section 7.3(b), provided it has complied
with all provisions thereof, including the notice provisions therein, and that
it makes simultaneous payment of the Termination Fee and has paid any
Indebtedness owing to CompuCom as provided in Section 7.3; or (ii) if (A) any of
the representations and warranties of CompuCom or the CompuCom Subsidiary
contained in this Agreement shall not have been, or shall cease to be, true and
correct in all material respects (whether because of circumstances or events
occurring in whole or in part prior to, on or after the date of this Agreement)
or (B) CompuCom or the CompuCom Subsidiary shall have breached or failed to
perform in any material respect any covenant or agreement to be performed by
them pursuant to this Agreement, provided, that the Company may not terminate
the Agreement pursuant to this Section 10.1(d) if the Company is at such time in
breach of its obligations under this Agreement.
10.2 Effect of Termination. In the event of a termination of this
Agreement by either the Company or CompuCom as provided in Section 10.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the party of CompuCom, CompuCom Subsidiary or the Company or their
respective officers or directors, except with respect to Section 5.27, this
Section 10.2 and Article XII; provided, however, that nothing herein shall
relieve any party for liability for any breach hereof.
10.3 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after obtaining the approval of the Company's shareholders (if
required by law), but, after any such approval, no amendment shall be made which
by law requires further approval by such shareholders without obtaining such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
10.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (c) subject to the
proviso of Section 10.3, waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under the Agreement or otherwise shall not
constitute a waiver of those rights.
10.5 Fees and Expenses.
(a) Except as provided below in this Section 10.5, all fees and
expenses incurred in connection with the Merger, this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such fees or expenses, whether or not the Merger is consummated.
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(b) If (i) the Company shall terminate this Agreement pursuant to
Section 10.1(d)(i), (ii) CompuCom shall terminate this Agreement pursuant to
Section 10.1(c)(ii) hereof, or (iii) either the Company or CompuCom terminates
this Agreement pursuant to Section 10.1(b)(i) and (A) prior thereto there shall
have been publicly announced another Takeover Proposal and (B) a Takeover
Proposal shall be consummated on or prior to July 31, 1998, the Company shall
pay to CompuCom an amount equal to $1,000,000 (the "Termination Fee") which
shall be payable in same day funds. The Termination Fee shall be paid (x) in the
case of terminations referenced in subparts (i) and (ii) above, concurrently
with any such termination and (y) in the case of termination referenced in
subpart (iii) above, at the time of the commencement of the Takeover Proposal as
described in subpart (iii) above.
ARTICLE XI
GENERALARTICLE XI GENERAL
11.1 Release of Information. The Company and CompuCom shall, subject to
their respective legal obligations (including requirements of the Nasdaq
National Market and other similar regulatory bodies), cooperate with each other
in releasing information concerning this Agreement and the transactions
contemplated hereby. Each of the Company and CompuCom shall furnish to the other
drafts of all releases prior to publication and agree to promptly consult with
each other prior to issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and in making
any filings with any federal or state governmental or regulatory agency or with
the Nasdaq National Market with respect thereto; provided, however, that each
party shall have the right, in the event of any disagreement between CompuCom
and the Company about the timing or content of any such releases or other public
statements or filings, to issue such releases or other public statements or to
file such filings as it is advised by counsel that it is required to make to
assure continued compliance with federal and state securities laws.
11.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed), sent by overnight courier (provided proof of delivery) or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by light notice):
(a) If to CompuCom or the CompuCom Subsidiary, to:
CompuCom Systems, Inc.
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: Lazane Xxxxx, Sr. Vice President, Finance and
Chief Financial Officer
Telecopy No.: (000) 000-0000
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With a copy (which shall not constitute effective notice) to:
Xxxxxxxxxxx & Price, L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
(b) If to the Company, to:
Dataflex Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx, Chairman of the Board
Telecopy No.: (000) 000-0000
With a copy (which shall not constitute effective notice) to:
Holland & Knight, LLP
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
11.3 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors,
heirs, executors, administrators, legal representatives and permitted assigns,
provided that neither this Agreement nor any rights or obligations hereunder may
be assigned without the written consent of the other parties except that (i)
CompuCom may assign any or all of its rights hereunder to any Affiliate of
CompuCom, and (ii) the CompuCom Subsidiary may assign any or all of its rights
hereunder to any other newly organized corporation under the laws of the State
of Florida, all of the capital stock of which is owned directly or indirectly by
CompuCom; provided, however, CompuCom shall remain liable on a direct and
primary basis for the performance of any such direct or indirect subsidiary.
Nothing in this Agreement, express or implied, is intended to or shall confer
upon any Person (other than the parties hereto, any permitted assignee, holders
of shares of Company Common Stock, holders of Options and Indemnities) any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement, and no Person (other than as so specified) shall be deemed a third
party beneficiary under or by reason of this Agreement.
11.4 Further Assurances. Each party hereto agrees to use its commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things that may be necessary or appropriate to consummate
and to make effective the transactions contemplated by this Agreement,
including, without limitation, the execution and delivery of such other
certificates, agreements, instruments and documents and the provision of all
such information as may be necessary or appropriate as aforesaid.
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11.5 Specific Performance. All remedies, either under this Agreement or by
law or otherwise afforded to any party hereto, shall be cumulative and not
alternative. Each party hereto acknowledges and agrees to any breach of the
agreements and covenants contained in this Agreement would cause irreparable
injury to the other parties hereto for which such parties would have no adequate
remedy at law. In addition to any other remedy to which any party hereto may be
entitled, each party hereto agrees that temporary and permanent injunctive and
other equitable relief and specific performance may be granted without proof of
actual damages or inadequacy of legal remedy in any proceeding that may be
brought to enforce any of the provisions of this Agreement.
11.6 Severability. If any provision of this Agreement or the application
of any such provision to any Person or circumstance, shall be declared
judicially to be invalid, unenforceable or void, such decision shall not have
the effect of invalidating or voiding the remainder of this Agreement, it being
the intent and agreement of the parties that this Agreement shall be deemed
amended by modifying such provision to the extent necessary to render it valid,
legal and enforceable while preserving its intent or, if such modification is
not possible, by substituting therefor another provision that is valid, legal
and enforceable and that achieves the same objective.
11.7 Entire Agreement. This Agreement (including the exhibits and
schedules including, without limitation, the Disclosure Schedule hereto) and the
documents and instruments executed and delivered in connection herewith
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior and contemporaneous agreements and
understandings, whether written or oral, among the parties or any of them with
respect to the subject matter hereof, and there are no representations,
understandings or agreements relating to the subject matter hereof that are not
fully expressed in this Agreement and the documents and instruments executed and
delivered in connection herewith. All exhibits and schedules attached to this
Agreement are expressly made a part of, and incorporated by reference into, this
Agreement.
11.8 Governing Law. This Agreement shall be construed in accordance with,
and the rights of the parties shall be governed by, the substantive laws of the
State of Florida, without giving effect to any choice-of-law rules that may
require the application of the laws of another jurisdiction.
11.9 Certain Construction Rules. The article and section headings and the
table of contents contained in this Agreement are for convenience of reference
only and shall in no way define, limit, extend or describe the scope or intent
of any provisions of this Agreement. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa. In addition, as used in this Agreement,
unless otherwise provided to the contrary, (a) all references to days, months or
years shall be deemed references to calendar days, months or years and (b) any
reference to a "Section," "Article," "Exhibit" or "Schedule" shall be deemed to
refer to a section or article of this Agreement or an exhibit or schedule
attached to this Agreement. The words "hereof," "herein," and "hereunder" and
words of similar import referring to this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Unless otherwise
specifically provided for herein, the term "or" shall not be deemed to be
exclusive.
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11.10 Survival of Covenants, Representations and Warranties. The
respective covenants, representations and warranties of CompuCom, the Company
and the CompuCom Subsidiary contained herein shall expire and be terminated on
the Effective Time, unless specifically herein provided.
11.11 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one instrument binding on all the parties,
notwithstanding that all the parties are not signatories to the original or the
same counterpart.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first above written.
THE COMPANY:
DATAFLEX CORPORATION
By:
-------------------------------------
Xxxxxxx X. Xxxx
Chief Executive Officer
COMPUCOM:
COMPUCOM SYSTEMS, INC.
By:
-------------------------------------
Xxxxxx Xxxxxxxx
Chief Executive Officer
THE COMPUCOM SUBSIDIARY:
COMPUCOM ACQUISITION CORP.
By:
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Name:
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Title:
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SCHEDULE 1.1
DEFINITIONS
"33 Act" has the meaning specified in Section 5.4(b).
"Accounts Receivable" as of any specified date means the accounts
receivable (including, without limitation, any "accounts" as defined under the
Uniform Commercial Code of the State of Florida) and notes receivable of the
Company as of that date, including any Indebtedness arising from the sale or
license of goods or the performance of services by the Company and the right to
payment of any interest or finance charges or similar fees or charges relating
thereto.
"Affiliate" means, with respect to any specified Person, any other Person
that, directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such specified Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by Contract or
otherwise.
"Agreement" has the meaning specified in the preamble hereof.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, and as in effect on the date hereof.
"Certificates" has the meaning specified in Section 4.3.
"Closing" has the meaning specified in Section 2.2.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated and the rulings issued thereunder.
"Company" has the meaning specified in the preamble hereof.
"Company 10-K" has the meaning specified in Section 7.2(c).
"Company 1997 Financial Statements" has the meaning specified in Section
5.7.
"Company Common Stock" has the meaning specified in the recitals hereof.
"Company Filed SEC Documents" has the meaning specified in Section 5.7.
"Company IP" means, collectively, the Owned IP and the Not-Owned IP.
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"Company Option Plans" has the meaning specified in Section 4.6(a).
"Company SEC Documents" has the meaning specified in Section 5.6.
"CompuCom" has the meaning specified in the preamble hereof.
"CompuCom Subsidiary" has the meaning specified in the preamble hereof.
"Confidential Software" has the meaning specified in Section 5.12(c)(ii).
"Confidentiality Contract" has the meaning specified in Section
5.12(c)(ii).
"Consent" means any consent, approval, permit, notice, action,
authorization or giving of notice to any Person not a party to this Agreement.
"Contract" means, with respect to any Person, any contract, agreement,
understanding or other instrument or obligation (whether oral or written,
pending or executory) to which such Person is a party or by which such Person
or such Person's properties or assets are or may be bound.
"Disbursing Agent" has the meaning specified in Section 3.3(a).
"Disclosure Schedule" has the meaning specified in Section 2.1.
"Effective Time" means the date and time at which the Merger becomes
effective as provided in Section 3.2.
"Employee Benefit Plans" has the meanings specified in Section 5.15(a).
"Environmental Laws" mean any Legal Requirement relating to (i) emissions,
discharges, releases, threatened releases, or the presence of pollutants,
contaminants, toxic materials, waste, Hazardous Substances or other substances
into or in the environment, including, but not limited to, ambient air, surface
water, groundwater, publicly owned treatment works, septic systems or land;
(ii) the use, treatment, storage, disposal, handling, manufacturing, sale,
transportation or shipment of any Hazardous Substance, toxic materials, waste,
material, substances, products or by-products as defined in CERCLA; or (iii)
otherwise relating to the pollution or protection of health, safety or
environment.
"ERISA" has the meaning specified in Section 5.15(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FBCA" has the meaning specified in Section 3.1.
"GAAP" means generally accepted accounting principles and practices which
are recognized as such by the American Institute of Certified Public Accountants
acting through its Accounting
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Principles Board or other appropriate board or committee (other than the
Emerging Standards Committee), and which are consistently applied for all
periods so as to present fairly the financial condition, the results of
operations and the cash flows of the relevant Person or Persons.
"Hazardous Substance" means hazardous substance as defined in CERCLA, any
petroleum or petroleum based substance, natural gas or any other hazardous,
toxic or noxious pollutant, material or substance.
"HSR Act" has the meaning specified in Section 5.4(b).
"Indebtedness" means, with respect to any Person, all obligations,
contingent or otherwise, which in accordance with GAAP would be required to be
presented upon the such Person's balance sheet as liabilities, but in any event
including liabilities secured by any Lien existing on property owned or
acquired by such Person or a subsidiary thereof, whether or not the liability
secured thereby shall have been assumed by or shall otherwise be the Person's
legal liability, capitalized lease obligations and all guarantees, endorsements
and other contingent obligations in respect of Indebtedness of other Persons.
"Indemnified Parties" has the meaning specified in Section 8.6(a).
"Intellectual Property" shall mean and include (a) all domestic and
foreign patents (including, without limitation, certificates of invention and
other patent equivalents), patent applications and patents issuing therefrom as
well as any division, continuation or continuation in part thereof, and any
reissue, extension, revival or renewal of any patent; (b) all domestic and
foreign trademarks (whether registered or at common law), trade names, service
marks, assumed names, trade dress, logos and registrations for and applications
to register any of the same; (c) copyrights and registration of claim to
copyright, (d) novel devices, processes, compositions of matter, methods,
techniques, observations, discoveries, apparatuses, designs, expressions,
theories and ideas, whether or not patentable; (e) Software; and (f) Trade
Secrets.
"Know-How" means scientific, engineering, mechanical, electrical,
financial, marketing or practical knowledge or experience useful in the
business and operations of the Company.
"Knowledge" means with respect to a particular fact or other matter, the
actual current knowledge of Xxxxx Xxxxxx, Xxxxxxx Xxxx, Xxxxx Xxxxx, Xxxxxx
Xxxxx, Xxxxxxx Xxxxxx, Xxxxxx Xxxxxxxxx, Xxxx Xxxxxx, Xxxxxxx Xx-liacco and the
executive officers and directors of the Company after having conducted a
reasonably comprehensive investigation concerning the existence of such fact or
other matter.
"Legal Requirement" means any domestic, foreign or international law,
treaty, ordinance, statute, rule or regulation of any Tribunal or any Order.
"Lien" means, with respect to any properties or assets, any mortgage,
pledge, hypothecation, assignment, security interest, lien, tax lien,
assessment, lease, sublease, adverse claim, levy, charge, liability or
encumbrance, or preference, priority or other security agreement or preferential
arrangement of any kind or character whatsoever (including, without limitation,
any conditional sale
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or other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement under the Uniform Commercial Code or comparable
law of any jurisdiction) in respect of such properties or assets.
"Material Adverse Effect" means a material adverse effect (which shall be
deemed to include, without limitation, any adverse effect aggregating $150,000
or more) on the business, operations, affairs, condition (financial or
otherwise), results of operations, properties, assets, liabilities or prospects
of the Company or, after the Effective Time, the Surviving Corporation.
"Merger" has the meaning specified in the preambles.
"Merger Consideration" has the meaning specified in the preambles.
"Miscellaneous Software Components" has the meaning specified in the
definition of "Software."
"Multiemployer Plans" has the meaning specified in Section 5.15(a).
"Notice of Superior Proposal" has the meaning specified in Section 7.3(b).
"Not-Owned IP" has the meaning specified in Section 5.12(a)(ii).
"Not-Owned Software" has the meaning specified in Section 5.12(b)(ii).
"Options" means options of the Company to purchase shares of Company
Common Stock, as granted pursuant to the Company's two Incentive Stock Option
Plans and its five Incentive and Nonqualified Stock Option Plans.
"Order" means any decision, judgment, order, writ, injunction, decree,
award or determination of any Tribunal.
"Owned IP" has the meaning specified in Section 5.12(a)(i).
"Owned Software" has the meaning specified in Section 5.12(b)(i).
"Pension Plans" has the meaning specified in Section 5.15(a).
"Person" means any corporation, association, partnership, joint venture,
organization, individual, business, trust or any other entity or organization
of any kind or character, including a Tribunal.
"Proxy Statement" has the meaning specified in Section 5.4(b).
"Qualified Plans" has the meaning specified in Section 5.15(b).
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"Schedule 14D-1" has the meaning specified in Section 2.1(b).
"Schedule 14D-9" has the meaning specified in Section 2.2(b).
"SEC" means the Securities and Exchange Commission.
"Shareholders Meeting" has the meaning specified in Section 7.4(b).
"Software" means the expression of an organized set of instructions in a
natural or coded language which is contained on a physical media of any nature
(e.g., written, electronic, magnetic, optical or otherwise) and which may be
used with a computer or other automated data processing equipment device of any
nature which is based on digital technology, to make such computer or other
device operate in a particular manner and for a certain purpose, as well as any
related documentation for such set of instructions. The term shall include
computer programs in source and object code, test or other significant data
libraries, user documentation for computer programs, and any of the following
which is contained on a physical media of any nature and which is used in the
design, development, modification, enhancement, testing, installation,
maintenance, diagnosis or assurance of the performance of a computer program
(collectively, "Miscellaneous Software Components"): flow diagrams, masks,
input and output formats, file layouts, database formats, test programs,
installation and operating instructions, diagnostic and maintenance
instructions, and other similar materials and information.
"Superior Proposal" has the meaning specified in Section 7.3(b).
"Surviving Corporation" has the meaning specified in Section 3.1.
"Takeover Proposal" has the meaning specified in Section 7.3(a).
"Taxes" means all taxes, charges, fees, levies or other similar
assessments or liabilities (including, without limitation, income, receipts, ad
valorem, value added, excise, property (whether real property or personal
property), windfall profit, sales, occupation, service, stamp, use, licensing,
withholding, employment, payroll, share, capital, surplus, franchise,
occupational or other taxes imposed by any Tribunal, whether computed on a
separate, consolidated, unitary or combined basis or in any other manner, and
includes any interest, fines, penalties, assessments, deficiencies, or
additions to tax.
"Termination Fee" has the meaning specified in Section 10.5.
"Trade Secrets" means any formula, design, device or compilation of
information which is used or held for use in the business and operations of the
Company, which gives the holder thereof an advantage or opportunity for
advantage over competitors which do not have or use the same, and which is not
generally known by the public. Trade Secrets can include, by way of example,
information contained on drawings and other documents, and information relating
to research, development or testing; provided, however, that for purposes of
this Agreement, Trade Secrets shall not include Software.
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"Tribunal" means any government, any arbitration panel, any court or any
governmental department, commission, board, bureau, agency or instrumentality
of the United States or any foreign or domestic state, province, commonwealth,
nation, territory, possession, country, parish, town, township, village or
municipality.
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