Exhibit 1
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
dated as of
May 4, 1997
among
DECISIONONE HOLDINGS CORP.
and
QUAKER HOLDING CO.
TABLE OF CONTENTS1
_____________
Page
ARTICLE 1 THE MERGER
Section 1.01. The Merger................................ 1
Section 1.02. Conversion (or Retention) of Shares....... 2
Section 1.03. Elections................................. 3
Section 1.04. Proration of Election Price............... 5
Section 1.05. Surrender and Payment..................... 6
Section 1.06. Dissenting Shares......................... 8
Section 1.07. Stock Options............................. 9
Section 1.08. Warrants.................................. 9
Section 1.09. Fractional Shares......................... 10
ARTICLE 2 THE SURVIVING CORPORATION
Section 2.01. Certificate of Incorporation.............. 10
Section 2.02. Bylaws.................................... 10
Section 2.03. Directors and Officers.................... 10
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.01. Corporate Existence and Power............. 11
Section 3.02. Corporate Authorization................... 11
Section 3.03. Governmental Authorization................ 11
Section 3.04. Non-contravention......................... 12
Section 3.05. Capitalization............................ 12
Section 3.06. Subsidiaries.............................. 13
Section 3.07. SEC Filings............................... 14
Section 3.08. Financial Statements...................... 14
Section 3.09. Disclosure Documents...................... 15
Section 3.10. Absence of Certain Changes................ 16
Section 3.11. No Undisclosed Material Liabilities....... 17
_______________________
1 The Table of Contents is not a part of this Agreement.
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Page
Section 3.12. Litigation................................ 17
Section 3.13. Taxes..................................... 18
Section 3.14. ERISA..................................... 19
Section 3.15. Employees................................. 21
Section 3.16. Labor Matters............................. 21
Section 3.17. Compliance with Laws and Court Orders..... 22
Section 3.18. Licenses and Permits...................... 22
Section 3.19. Repairable Parts.......................... 22
Section 3.20. Intellectual Property..................... 22
Section 3.21. Finders' Fees............................. 23
Section 3.22. Inapplicability of Certain Restrictions... 23
Section 3.23. Rights Plan............................... 23
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF MERGERSUB
Section 4.01. Corporate Existence and Power............. 24
Section 4.02. Corporate Authorization................... 24
Section 4.03. Governmental Authorization................ 24
Section 4.04. Non-contravention......................... 24
Section 4.05. Disclosure Documents...................... 25
Section 4.06. Finders' Fees............................. 25
Section 4.07. Financing................................. 25
Section 4.08. Capitalization............................ 26
ARTICLE 5 COVENANTS OF THE COMPANY
Section 5.01. Conduct of the Company.................... 27
Section 5.02. Stockholder Meeting; Proxy Material....... 29
Section 5.03. Access to Information..................... 29
Section 5.04. Other Offers.............................. 30
Section 5.05. Notices of Certain Events................. 33
Section 5.06. Resignation of Directors.................. 33
Section 5.07. Preferred Stock........................... 33
Section 5.08. Solvency Advice........................... 33
ARTICLE 6 COVENANTS OF MERGERSUB
Section 6.01. SEC Filings............................... 34
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Page
Section 6.02. Voting of Shares.......................... 34
Section 6.03. Director and Officer Liability............ 34
Section 6.04. Employee Plans and Benefit Arrangements... 35
Section 6.05. Financing................................. 36
Section 6.06. NASDAQ Listing............................ 36
Section 6.07. Access to Information..................... 36
ARTICLE 7 COVENANTS OF MERGERSUB AND THE COMPANY
Section 7.01. Best Efforts.............................. 36
Section 7.02. Certain Filings........................... 37
Section 7.03. Public Announcements...................... 38
Section 7.04. Further Assurances........................ 38
ARTICLE 8 CONDITIONS TO THE MERGER
Section 8.01. Conditions to the Obligations of Each Party 38
Section 8.02. Conditions to the Obligations of MergerSub 39
Section 8.03. Condition to the Obligation of the Company 41
ARTICLE 9 TERMINATION
Section 9.01. Termination............................... 42
Section 9.02. Effect of Termination..................... 43
ARTICLE 10 MISCELLANEOUS
Section 10.01. Notices................................... 43
Section 10.02. Survival of Representations and Warranties 44
Section 10.03. Amendments; No Waivers.................... 44
Section 10.04. Expenses.................................. 45
Section 10.05. Successors and Assigns; Benefit........... 45
Section 10.06. Governing Law............................. 45
Section 10.07. Counterparts; Effectiveness............... 45
Section 10.08. Knowledge Defined......................... 46
Exhibit A Amendments to the Company's Certificate of
Incorporation
iii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of May 4, 1997 among
DecisionOne Holdings Corp., a Delaware corporation (the
"COMPANY") and Quaker Holding Co., a Delaware corporation
("MERGERSUB").
W I T N E S S E T H:
WHEREAS, as of the date of execution of this Agreement,
all of the outstanding capital stock of, or other ownership
interest in, MergerSub is owned, in the aggregate, by DLJ
Merchant Banking Xxxxxxxx XX, X.X., XXX Xxxxxxxx Xxxxxxxx XX,
X.X., XXX Diversified Partners, L.P., DLJMB Funding II, Inc.,
UK Investment Plan 1997 Partners and DLJ First ESC LLC;
WHEREAS, MergerSub is unwilling to enter into this
Agreement unless, contemporaneously with the execution and
delivery of this Agreement, certain beneficial and record
stockholders of the Company enter into a Voting Agreement and
Irrevocable Proxy providing for certain actions relating to
certain of the shares of common stock, options and warrants of
the Company owned by them;
WHEREAS, MergerSub and the Company desire to make certain
representations, warranties, covenants and agreements in
connection with the Merger (as defined in Section 1.01) and
also to prescribe certain conditions to the Merger;
WHEREAS, it is intended that the Merger be recorded as a
recapitalization for financial reporting purposes and both
parties, after discussion with their auditors, believe that the
Merger is eligible for such accounting treatment;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein
contained, the parties hereto agree as follows:
ARTICLE 1
The Merger
Section 1.1. The Merger. (a) At the Effective Time,
MergerSub shall be merged (the "MERGER") with and into the
Company in accordance with the Delaware Law, and in accordance
with the terms and conditions hereof, whereupon the separate
existence of MergerSub shall cease, and the Company shall be
the surviving corporation (the "SURVIVING CORPORATION").
(b) As soon as practicable after satisfaction or, to the
extent permitted hereunder, waiver of all conditions to the
Merger, the Company and MergerSub will file a certificate of
merger with the Secretary of State of the State of Delaware and
make all other filings or recordings required by Delaware Law
in connection with the Merger. The Merger shall become
effective at such time as the certificate of merger is duly
filed with the Secretary of State of the State of Delaware or
at such later time as is specified in the certificate of merger
(the "EFFECTIVE TIME").
(c) From and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers
and franchises and be subject to all of the restrictions,
disabilities and duties of the Company and MergerSub, all as
provided under Delaware Law.
(d) The Company hereby represents that its Board of
Directors, at a meeting duly called and held and acting on the
unanimous recommendation of the Board of Directors of the
Company, other than any directors expected to become affiliated
with MergerSub, has (i) determined that this Agreement and the
transactions contemplated hereby, including the Merger, are
fair to and in the best interest of the Company's stockholders,
(ii) approved this Agreement and the transactions contemplated
hereby, including the Merger, which approval satisfies in full
the requirements of the General Corporation Law of the State of
Delaware (the "DELAWARE LAW") including, without limitation,
Section 203 thereof with respect to the transactions
contemplated hereby, and (iii) resolved to recommend approval
and adoption of this Agreement and the Merger by its
stockholders. The Company further represents that Xxxxx Xxxxxx
Inc. has delivered to the Company's Board of Directors its
opinion that the consideration to be paid in the Merger is fair
to the holders of shares of common stock of the Company, par
value $0.01 per share (each, a "SHARE"), from a financial point
of view.
Section 1.2. Conversion (or Retention) of Shares. At the
Effective Time:
(a) each Share held by the Company as treasury stock or
owned by MergerSub immediately prior to the Effective Time
shall be canceled, and no payment shall be made with respect
thereto;
(b) each share of common stock, par value $.01 per share,
of MergerSub ("MERGERSUB COMMON STOCK") outstanding immediately
prior to the Effective Time shall be converted into and become
1 share of common stock of the Surviving Corporation with the
same rights, powers and privileges as the shares
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so converted;
(c) each share of preferred stock, par value $.01 per
share, of MergerSub ("MERGERSUB PREFERRED STOCK"), if any,
outstanding immediately prior to the Effective Time shall be
converted into and become 1 share of preferred stock of the
Surviving Corporation with the same rights, powers and
privileges as the shares of preferred stock so converted;
(d) each outstanding warrant to purchase shares of
MergerSub common stock (each, a "MERGERSUB WARRANT") shall be
automatically amended to constitute a warrant to acquire shares
of common stock of the Surviving Corporation on the same terms
and conditions as the MergerSub Warrant; and
(e) each Share outstanding immediately prior to the
Effective Time shall, except as otherwise provided in Section
1.02(a)-(d) or as provided in Section 1.06 with respect to
Shares as to which appraisal rights have been exercised, be
converted into the following (the "MERGER CONSIDERATION"):
(i) for each such Share with respect to which
an election to retain Company Stock (as defined
below) has been effectively made and not revoked or
lost pursuant to Sections 1.03(c), (d) and (e)
("STOCK ELECTING SHARES"), or is deemed made pursuant
to Section 1.04(d)(ii), as the case may be, the right
to retain one share of common stock (the "STOCK ELEC-
TION PRICE"), par value $.01 per share ("COMPANY
STOCK"); and
(ii) for each such Share (other than Stock
Electing Shares and Shares as to which an election to
retain Company Stock is deemed made pursuant to
Section 1.04(d)(ii)), the right to receive in cash
from MergerSub an amount equal to $23.00 (the "CASH
ELECTION PRICE").
Section 1.3. Elections. (a) Each person who, on or
prior to the Election Date referred to in (c) below, is a
record holder of Shares will be entitled, with respect to such
Shares, to make an unconditional election on or prior to such
Election Date to retain the Stock Election Price (a "STOCK
ELECTION"), on the basis hereinafter set forth. For purposes
of this Agreement, "ELECTION" means a Stock Election.
(b) Prior to the mailing of the Company Proxy Statement
(as defined in Section 3.09), MergerSub shall appoint an agent
reasonably acceptable to the Company (the "EXCHANGE AGENT") for
the purpose of exchanging certificates
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representing Shares for the Merger Consideration.
(c) MergerSub shall prepare and mail a form of election,
which form shall be subject to the reasonable approval of the
Company (the "FORM OF ELECTION"), with the Company Proxy
Statement to the record holders of Shares as of the record date
for the Company Stockholder Meeting (as defined in Section
5.02), which Form of Election shall be used by each record
holder of Shares who makes an Election with respect to any or
all its Shares. The Company will use its reasonable best
efforts to make the Form of Election and the Company Proxy
Statement available to all persons who become holders of Shares
during the period between such record date and the Election
Date referred to below. Any such holder's Election shall have
been properly made only if the Exchange Agent shall have
received at its designated office, by 5:00 p.m., New York City
time on the business day (the "ELECTION DATE") next preceding
the date of the Company Stockholder Meeting, a Form of Election
properly completed and signed and accompanied by certificates
for the Shares to which such Form of Election relates, duly
endorsed in blank or otherwise in form acceptable for transfer
on the books of the Company (or by an appropriate guarantee of
delivery of such certificates as set forth in such Form of
Election from a firm which is a member of a registered national
securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company
having an office or correspondent in the United States,
provided such certificates are in fact delivered to the
Exchange Agent within five New York Stock Exchange trading days
after the date of execution of such guarantee of delivery).
(d) Any Form of Election may be revoked by the holder
submitting it to the Exchange Agent only by written notice re-
ceived by the Exchange Agent (i) prior to 5:00 p.m., New York
City time on the Election Date or (ii) after the date of the
Company Proxy Statement, if (and to the extent that) the
Exchange Agent is legally required to permit revocations, and
the Effective Time shall not have occurred prior to such date.
In addition, all Forms of Election shall automatically be
revoked if the Exchange Agent is notified in writing by
MergerSub or the Company that the Merger has been abandoned or
this Agreement has been terminated. If a Form of Election is
revoked, the certificate or certificates (or guarantees of
delivery, as appropriate) for the Shares to which such Form of
Election relates shall be promptly returned to the stockholder
submitting the same to the Exchange Agent.
(e) The determination of the Exchange Agent shall be
binding whether
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or not Elections have been properly made or revoked pursuant to
this Section 1.03 with respect to Shares and when elections and
revocations were received by it. If the Exchange Agent
determines that any Election either (x) was not properly made
or (y) was not submitted to or received by the Exchange Agent
with respect to any Shares, such Shares shall be converted into
Merger Consideration in accordance with Section 1.04(b)(iii) or
Section 1.04(d)(ii), as the case may be. The Exchange Agent
shall also make all computations as to the allocation and the
proration contemplated by Section 1.04, and any such
computation shall be conclusive and binding on the holders of
Shares. The Exchange Agent may, with the mutual agreement of
MergerSub and the Company, make such rules as are consistent
with this Section 1.03 for the implementation of the elections
provided for herein as shall be necessary or desirable fully to
effect such elections.
Section 1.4. Proration of Election Price. (a)
Notwithstanding anything in this Agreement to the contrary but
subject to Sections 1.02(a) and 1.06, the number of Shares to
be converted into the right to retain Company Stock at the
Effective Time (the "STOCK ELECTION NUMBER") shall be the sum
of (A) 1,474,345 plus (B) 5.3% of the number of Shares, if any,
issued after April 21, 1997 but prior to the Effective Time in
respect of Options (as defined below) or Warrants (as defined
below) (excluding for this purpose any Shares to be canceled
pursuant to Section 1.02(a)).
(b) If the number of Stock Electing Shares exceeds in the
aggregate the Stock Election Number, then the Stock Electing
Shares for each Stock Election shall be converted into the
right to retain the Stock Election Price or the right to
receive the Cash Election Price in accordance with the terms of
Section 1.02(e) in the following manner:
(i) A stock proration factor (the "STOCK
PRORATION FACTOR") shall be determined by dividing
the Stock Election Number by the total number of
Stock Electing Shares.
(ii) The number of Stock Electing Shares covered
by each Stock Election to be converted into the right
to retain the Stock Election Price shall be
determined by multiplying the Stock Proration Factor
by the total number of Stock Electing Shares covered
by such Stock Election.
(iii) Each Stock Electing Share, other than any
Shares converted into the right to receive the Stock
Election Price in accordance with
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Section 1.04(b)(ii), shall be converted into the
right to receive the Cash Election Price as if such
shares were not Stock Electing Shares in accordance
with the terms of Section 1.02(e)(ii).
(c) If the number of Stock Electing Shares is equal to
the Stock Election Number, then all Stock Electing Shares shall
be converted into the right to receive the Stock Election Price
in accordance with the terms of Section 1.02(e)(i), and all
Shares other than Stock Electing Shares shall be converted into
the right to receive the Cash Election Price.
(d) If the number of Stock Electing Shares is less in the
aggregate than the Stock Election Number, then:
(i) All Stock Electing Shares shall be
converted into the right to receive the Stock
Election Price in accordance with Section 1.02(e)(i).
(ii) Such number of Shares with respect to which
a Stock Election is not in effect ("NON-ELECTING
SHARES") shall be converted into the right to retain
the Stock Election Price (and a Stock Election shall
be deemed to have been made with respect to such
Shares) in accordance with Section 1.02(e) in the
following manner:
(A) a cash proration factor (the "CASH
PRORATION FACTOR") shall be determined by
dividing (x) the difference between the Stock
Election Number and the number of Stock Electing
Shares, by (y) the total number of Shares other
than Stock Electing Shares and Dissenting Shares
(as defined in Section 1.06); and
(B) the number of Shares in addition to
Stock Electing Shares to be converted into the
right to retain the Stock Election Price shall
be determined by multiplying the Cash Proration
Factor by the total number of Shares other than
Stock Electing Shares and Dissenting Shares so
that the aggregate number of Stock Electing
Shares and Non-Electing Shares converted into
such right equals the Stock Election Number.
Subject to the provisions of Section 1.04(d)(ii), the
Exchange Agent shall determine (on a consistent basis among
stockholders who held Shares as to which
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they did not make the election referred to in Section
1.02(e)(i), pro rata to the number of shares as to which they
did not make such election) which Non-Electing Shares shall be
converted into the right to receive the Stock Election Price.
Section 1.5. Surrender and Payment. (a) As soon as
reasonably practicable as of or after the Effective Time,
MergerSub shall deposit with the Exchange Agent, for the
benefit of the holders of Shares, for exchange in accordance
with this Article 1, the Merger Consideration. For purposes of
determining the Merger Consideration to be made available,
MergerSub shall assume that no holder of Shares will perfect
his right to appraisal of his Shares. Promptly after the
Effective Time, MergerSub will send, or will cause the Exchange
Agent to send, to each holder of Shares at the Effective Time a
letter of transmittal for use in such exchange (which shall
specify that the delivery shall be effected, and risk of loss
and title shall pass, only upon proper delivery of the
certificates representing Shares to the Exchange Agent).
(b) Each holder of Shares that have been converted into a
right to receive the Merger Consideration, upon surrender to
the Exchange Agent of a certificate or certificates
representing such Shares, together with a properly completed
letter of transmittal covering such Shares, will be entitled to
receive the Merger Consideration payable in respect of such
Shares. Until so surrendered, each such certificate shall,
after the Effective Time, represent for all purposes, only the
right to receive such Merger Consideration. No interest will
be paid or will accrue on any cash payable as Merger
Consideration or in lieu of any fractional shares of Company
Stock.
(c) If any portion of the Merger Consideration is to be
paid to a Person other than the registered holder of the Shares
represented by the certificate or certificates surrendered in
exchange therefor, it shall be a condition to such payment that
the certificate or certificates so surrendered shall be
properly endorsed or otherwise be in proper form for transfer
and that the Person requesting such payment shall pay to the
Exchange Agent any transfer or other taxes required as a result
of such payment to a Person other than the registered holder of
such Shares or establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable. For
purposes of this Agreement, "PERSON" means an individual, a
corporation, a limited liability company, a partnership, an
association, a trust or any other entity or organization,
including a government or political subdivision or any agency
or instrumentality thereof.
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(d) After the Effective Time, there shall be no further
registration of transfers of Shares. If, after the Effective
Time, certificates representing Shares are presented to the
Surviving Corporation, they shall be canceled and exchanged for
the Merger Consideration provided for, and in accordance with
the procedures set forth, in this Article 1.
(e) Any portion of the Merger Consideration made avail-
able to the Exchange Agent pursuant to Section 1.05 (a) that
remains unclaimed by the holders of Shares six months after the
Effective Time shall be returned to MergerSub, upon demand, and
any such holder who has not exchanged his Shares for the Merger
Consideration in accordance with this Section prior to that
time shall thereafter look only to MergerSub for payment of the
Merger Consideration in respect of his Shares. Notwithstanding
the foregoing, MergerSub shall not be liable to any holder of
Shares for any amount paid to a public official pursuant to
applicable abandoned property laws. Any amounts remaining
unclaimed by holders of Shares two years after the Effective
Time (or such earlier date immediately prior to such time as
such amounts would otherwise escheat to or become property of
any governmental entity) shall, to the extent permitted by
applicable law, become the property of MergerSub free and clear
of any claims or interest of any Person previously entitled
thereto.
(f) Any portion of the Merger Consideration made avail-
able to the Exchange Agent pursuant to Section 1.05(a) to pay for
Shares for which appraisal rights have been perfected shall be
returned to MergerSub, upon demand.
(g) No dividends or other distributions with respect to
Company Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered certificate for
Shares with respect to the shares of Company Stock represented
thereby and no cash payment in lieu of fractional shares shall
be paid to any such holder pursuant to Section 1.09 until the
surrender of such certificate in accordance with this Article
1. Subject to the effect of applicable laws, following
surrender of any such certificate, there shall be paid to the
holder of the certificate representing whole shares of Company
Stock issued in exchange therefor, without interest, (i) at the
time of such surrender or as promptly after the sale of the
Excess Shares (as defined in Section 1.09) as practicable, the
amount of any cash payable in lieu of a fractional share of
Company Stock to which such holder is entitled pursuant to
Section 1.09 and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid
with respect to such whole shares of Company Stock, and (ii) at
the appropriate
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payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender
payable with respect to such whole shares of Company Stock.
Section 1.6. Dissenting Shares. Notwithstanding Section
1.02, Shares which are issued and outstanding immediately prior
to the Effective Time and which are held by a holder who has
not voted such shares in favor of the Merger, who shall have
delivered a written demand for appraisal of such Shares in the
manner provided by the Delaware Law and who, as of the
Effective Time, shall not have effectively withdrawn or lost
such right to appraisal ("DISSENTING SHARES") shall not be
converted into a right to receive the Merger Consideration.
The holders thereof shall be entitled only to such rights as
are granted by Section 262 of the Delaware Law. Each holder of
Dissenting Shares who becomes entitled to payment for such
Shares pursuant to Section 262 of the Delaware Law shall
receive payment therefor from the Surviving Corporation in
accordance with the Delaware Law; provided, however, that (i)
if any such holder of Dissenting Shares shall have failed to
establish his entitlement to appraisal rights as provided in
Section 262 of the Delaware Law, (ii) if any such holder of
Dissenting Shares shall have effectively withdrawn his demand
for appraisal of such Shares or lost his right to appraisal and
payment for his Shares under Section 262 of the Delaware Law or
(iii) if neither any holder of Dissenting Shares nor the
Surviving Corporation shall have filed a petition demanding a
determination of the value of all Dissenting Shares within the
time provided in Section 262 of the Delaware Law, such holder
shall forfeit the right to appraisal of such Shares and each
such Share shall be treated as if it had been a Non-Electing
Share and had been converted, as of the Effective Time, into a
right to receive the Merger Consideration, without interest
thereon, from the Surviving Corporation as provided in Section
1.02 hereof. The Company shall give MergerSub prompt notice of
any demands received by the Company for appraisal of Shares,
and MergerSub shall have the right to participate in all
negotiations and proceedings with respect to such demands. The
Company shall not, except with the prior written consent of
MergerSub, make any payment with respect to, or settle or offer
to settle, any such demands.
Section 1.7. Stock Options. (a) Immediately prior to
the Effective Time, each outstanding option to acquire Shares
granted to employees and directors, whether vested or not (the
"OPTIONS") shall be canceled and, in lieu thereof, as soon as
reasonably practicable as of or after the Effective Time, the
holders of
9
such Options shall receive, with respect to each Option, a cash
payment in an amount equal to the product of (x) the excess, if
any, of $23.00 over the exercise price of such Option
multiplied by (y) the number of Shares subject to such Option.
(b) Prior to the Effective Time, the Company shall (i)
obtain any consents from holders of options to purchase Shares
granted under the Company's stock option or compensation plans
or arrangements and (ii) make any amendments to the terms of
such stock option or compensation plans or arrangements that
are necessary to give effect to the transactions contemplated
by Section 1.07(a). Notwithstanding any other provision of
this Section, payment may be withheld in respect of any Option
until necessary consents are obtained.
Section 1.8. Warrants. The Company shall use its
reasonable best efforts to cause holders of all outstanding
warrants ("WARRANTS") to surrender such Warrants to the Company
prior to the Effective Time in exchange for payment immediately
after the Effective Time of an amount equal to the difference
between the exercise price in respect of each Share for which
such Warrant is exercisable and $23.00, multiplied by the
number of Shares subject to such Warrant, and upon such other
terms and conditions satisfactory to MergerSub. With respect
to Warrants that are not surrendered prior to the Effective
Time, after the Effective Time, the Surviving Corporation shall
comply with all applicable terms of such unsurrendered
Warrants.
Section 1.9. Fractional Shares. (a) No certificates or
scrip representing fractional shares of Company Stock shall be
issued upon the surrender for exchange of certificates
representing Shares, and such fractional share interests will
not entitle the owner thereof to vote or to any rights of a
stockholder of the Surviving Corporation; and
(b) Notwithstanding any other provision of this
Agreement, each holder of Shares exchanged pursuant to the
Merger who would otherwise have been entitled to receive a
fraction of a share of Company Stock (after taking into account
all Shares delivered by such holder) shall receive, in lieu
thereof, a cash payment (without interest) representing such
holder's proportionate interest in the net proceeds from the
sale by the Exchange Agent (following the deduction of
applicable transaction costs), on behalf of all such holders,
of the shares (the "EXCESS SHARES") of Company Stock rep-
resenting such fractions. Such sale shall be made as soon as
practicable after the Effective Time.
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ARTICLE 2
The Surviving Corporation
Section 2.1. Certificate of Incorporation. The
certificate of incorporation of the Company in effect
immediately prior to the Effective Time shall be amended as of
the Effective Time as set forth in Exhibit A, and as so
amended, shall be the certificate of incorporation of the
Surviving Corporation until thereafter amended in accordance
with applicable law.
Section 2.2. Bylaws. The bylaws of MergerSub in effect
at the Effective Time shall be the bylaws of the Surviving
Corporation until amended in accordance with applicable law.
Section 2.3. Directors and Officers. From and after the
Effective Time, until successors are duly elected or appointed
and qualified in accordance with applicable law, (a) the
directors of MergerSub at the Effective Time shall be the
directors of the Surviving Corporation, and (b) the officers of
the Company at the Effective Time shall be the officers of the
Surviving Corporation.
ARTICLE 3
Representations and Warranties of the Company
The Company represents and warrants to MergerSub that:
Section 3.1. Corporate Existence and Power. The Company
is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and has
all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where
the failure to be so qualified would not, individually or in
the aggregate, have a Material Adverse Effect. The Company has
heretofore delivered to MergerSub true and complete copies of
the Company's certificate of incorporation and bylaws as
currently in effect. For purposes of this Agreement, "MATERIAL
ADVERSE EFFECT" means any
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material adverse effect on the condition (financial or
otherwise), business, assets, or results of operations of the
Company and the Subsidiaries taken as a whole, but excluding
(i) any change resulting from general economic conditions and
(ii) with respect to Section 3.10(a) and Section 3.10(h) (in
the case of the latter, with respect to agreements only), any
change arising out of the transactions contemplated by this
Agreement and the public announcement thereof.
Section 3.2. Corporate Authorization. The execution,
delivery and performance by the Company of this Agreement and
the consummation by the Company of the transactions
contemplated hereby are within the Company's corporate powers
and, except for any required approval by the Company's
stockholders by majority vote in connection with the
consummation of the Merger, have been duly authorized by all
necessary corporate and stockholder action. This Agreement
constitutes a valid and binding agreement of the Company.
Section 3.3. Governmental Authorization. The execution,
delivery and performance by the Company of this Agreement and
the consummation of the Merger by the Company require no action
by or in respect of, or filing with, any governmental body,
agency, official or authority other than (a) the filing of a
certificate of merger in accordance with Delaware Law; (b)
compliance with any applicable requirements of the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"); (c) compliance with any applicable requirements of the
Securities Exchange Act of 1934, as amended and the rules and
regulations promulgated thereunder (the "EXCHANGE ACT"); (d)
compliance with the applicable requirements of the Securities
Act of 1933, as amended and the rules and regulations
promulgated thereunder (the "SECURITIES ACT"); (e) compliance
with any applicable foreign or state securities or Blue Sky
laws; and (f) where the failure to take such action would not,
individually or in the aggregate, have a Material Adverse
Effect.
Section 3.4. Non-contravention. Except as set forth on
Schedule 3.04, the execution, delivery and performance by the
Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby do not and will not (a)
contravene or conflict with the certificate of incorporation or
bylaws of the Company, (b) assuming compliance with the matters
referred to in Section 3.03, contravene or conflict with or
constitute a violation of any provision of any law, regulation,
judgment, writ, injunction, order or decree of any court or
governmental authority binding upon or applicable to the
Company or any Subsidiary or any of their properties or assets,
(c) except under the Revolving
12
Credit Agreement dated as of April 26, 1996 among the Company,
certain of its Subsidiaries and the banks named therein, as
amended (the "REVOLVING CREDIT AGREEMENT") constitute a default
under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Company or any
Subsidiary or to a loss of any benefit to which the Company or
any Subsidiary is entitled under any provision of any
agreement, contract or other instrument binding upon the
Company or any Subsidiary or any license, franchise, permit or
other similar authorization held by the Company or any
Subsidiary, or (d) result in the creation or imposition of any
Lien on any asset of the Company or any Subsidiary, except, in
the case of clauses (b), (c) and (d), to the extent that any
such violation, failure to obtain any such consent or other
action, default, right, loss or Lien would not, individually or
in the aggregate, have a Material Adverse Effect. For purposes
of this Agreement, "LIEN" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or encum-
brance of any kind in respect of such asset.
Section 3.5. Capitalization. The authorized capital
stock of the Company consists of (i) 100,000,000 shares of
common stock ("COMMON STOCK"), par value $.01 per share, of
which as of April 21, 1997, there were outstanding 27,817,830
shares of Common Stock and Options to purchase an aggregate of
not more than 2,932,014 shares of Common Stock (of which
options to purchase an aggregate of 1,364,014 shares of Common
Stock were exercisable) and (ii) 5,000,000 shares of preferred
stock ("PREFERRED STOCK"), par value $.01 per share, of which
as of April 21, 1997 none were issued and outstanding. As of
April 21, 1997 there were Warrants to purchase: (i) 134,478
shares of common stock of the Company at an exercise price of
$5.90 per share and (ii) 468,750 shares or common stock of the
Company at an exercise price of $0.10 per share. The aggregate
exercise price of the (i) Options outstanding as of April 21,
1997 is $22,064,966.50 and (ii) Warrants outstanding as of
April 21, 1997 is $840,295.20. All outstanding shares of capi-
tal stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable. Except as set
forth in this Section and except for changes since April 21,
1997 resulting from the exercise of Options and Warrants, in
each case, outstanding on such date, there are outstanding (a)
no shares of capital stock or other voting securities of the
Company, (b) no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities
of the Company, and (c) no options or other rights to acquire
from the Company, and no obligation of the Company to issue,
any capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities of
13
the Company (the items in clauses 3.05(a), 3.05(b) and 3.05(c)
being referred to collectively as the "COMPANY SECURITIES").
There are no outstanding obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any
Company Securities.
Section 3.6. Subsidiaries. (a) Each Subsidiary is a
corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation,
has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to
carry on its business as now conducted and is duly qualified to
do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such
qualification necessary, except where the failure to have such
licenses, authorizations, consents and approvals or for those
jurisdictions where failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse
Effect. For purposes of this Agreement, "SUBSIDIARY" means any
corporation or other entity of which securities or other own-
ership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing
similar functions are directly or indirectly owned by the
Company and/or one or more Subsidiary, except for Properties
Holding Corporation, Decision Data Computer Investment
Corporation, Decision Data Computer International S.A. and
Properties Development Corporation, none of which (i) is
performing any activity significant to the business of the
Company and its Subsidiaries or (ii) has any material assets or
liabilities (together, the "IMMATERIAL SUBSIDIARIES"),
provided, however that for the purposes of Articles 5, 6 and 7
hereof, the term "Subsidiaries" shall be deemed to include the
Immaterial Subsidiaries. All Subsidiaries and their respective
jurisdictions of incorporation are identified in the Company's
annual report on Form 10-K for the fiscal year ended June 30,
1996 (the "COMPANY 10-K").
(b) Except for the restrictions on disposition of capital
stock pursuant to the Revolving Credit Agreement, all of the
outstanding capital stock of, or other ownership interests in,
each Subsidiary, is owned by the Company, directly or
indirectly, free and clear of any Lien and free of any other
limitation or restriction (including any restriction on the
right to vote, sell or otherwise dispose of such capital stock
or other ownership interests). All such capital stock has been
duly authorized and validly issued and is fully paid and non-
assessable. There are no outstanding (i) securities of the
Company or any Subsidiary convertible into or exchangeable for
shares of capital stock or other voting securities or ownership
interests in any Subsidiary, and (ii) options or other rights
to acquire from the
14
Company or any Subsidiary, and no other obligation of the
Company or any Subsidiary to issue, any capital stock, voting
securities or other ownership interests in, or any securities
convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any Subsidiary (the items
in clauses 3.06(b)(i) and 3.06(b)(ii) being referred to
collectively as the "SUBSIDIARY SECURITIES"). There are no
outstanding obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any outstanding
Subsidiary Securities.
Section 3.7. SEC Filings. (a) The Company has made
available to MergerSub (i) the Company 10-K, (ii) its quarterly
reports on Form 10-Q for its fiscal quarters ended September
30, 1996 and December 31, 1996 (collectively, the "FORMS
10-Q"), (iii) its proxy or information statements relating to
meetings of, or actions taken without a meeting by, the
stockholders of the Company held since January 1, 1996, and
(iv) all of its other reports, statements, schedules and
registration statements filed with the Securities and Exchange
Commission (the "SEC") since January 1, 1996 (the documents
referred to in clauses (i)-(iv), together with Schedule 3.08
collectively, the "SEC DOCUMENTS").
(b) As of its filing date, each such report or statement
filed pursuant to the Exchange Act did not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not mis-
leading.
(c) Each such registration statement, as amended or
supplemented, if applicable, filed pursuant to the Securities
Act, as of the date such statement or amendment became
effective did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading.
Section 3.8. Financial Statements. The audited
consolidated financial statements and unaudited consolidated
interim financial statements of the Company included in its
annual reports on Form 10-K, in the Forms 10-Q and in Schedule
3.08 fairly present, in all material respects, in conformity
with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of the Company
and its consolidated subsidiaries as of the dates thereof and
their consolidated results of operations and changes in
financial position for the periods then ended (subject to
normal year-end adjustments in the case of any unaudited
interim financial statements). For purposes of this Agreement,
"BALANCE SHEET" means
15
the consolidated balance sheet of the Company and its
subsidiaries as of June 30, 1996 set forth in the Company 10-K
and "BALANCE SHEET DATE" means June 30, 1996.
Section 3.9. Disclosure Documents. (a) Each document
required to be filed by the Company with the SEC in connection
with the transactions contemplated by this Agreement (the
"COMPANY DISCLOSURE DOCUMENTS"), including, without limitation,
the proxy or information statement of the Company containing
information required by Regulation 14A under the Exchange Act,
and, if applicable, Rule 13e-3 and Schedule 13E-3 under the
Exchange Act (the "COMPANY PROXY STATEMENT"), to be filed with
the SEC in connection with the Merger, and any amendments or
supplements thereto will, when filed, comply as to form in all
material respects with the applicable requirements of the
Exchange Act. The representations and warranties contained in
this Section 3.09(a) will not apply to statements or omissions
included in the Company Disclosure Documents based upon
information furnished to the Company in writing by MergerSub
specifically for use therein.
(b) At the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to stockholders
of the Company and at the time such stockholders vote on
adoption of this Agreement, the Company Proxy Statement, as
supplemented or amended, if applicable, will not contain any
untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they
were made, not misleading. At the time of the filing of any
Company Disclosure Document other than the Company Proxy
Statement and at the time of any distribution thereof, such
Company Disclosure Document will not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading. The representations and warranties contained in
this Section will not apply to statements or omissions
included in the Company Disclosure Documents based upon
information furnished to the Company in writing by MergerSub
specifically for use therein.
(c) The information with respect to the Company or any
Subsidiary that the Company furnishes to MergerSub in writing
specifically for use in the MergerSub Disclosure Documents (as
defined in Section 6.01) will not, at the time of the filing
thereof, at the time of any distribution thereof and at the
time of the meeting of the Company's stockholders, contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or
16
necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading.
Section 3.10. Absence of Certain Changes. Since the
Balance Sheet Date, the Company and Subsidiaries have conducted
their business in the ordinary course consistent with past
practice and there has not been:
(a) except as disclosed in the Forms 10-Q and Schedule
3.08, any event, occurrence or development of a state of facts
which, individually or in the aggregate, has had, or would
reasonably be expected to have a Material Adverse Effect;
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of
capital stock of the Company, or (other than any retirement of
Options or Warrants contemplated pursuant to this Agreement)
any repurchase, redemption or other acquisition by the Company
or any Subsidiary of any outstanding shares of capital stock or
other securities of, or other ownership interests in, the
Company or any Subsidiary;
(c) except as disclosed in the SEC Documents, any
amendment of any material term of any outstanding security of
the Company or any Subsidiary;
(d) except as disclosed in the SEC Documents, any in-
xxxxxxxx, assumption or guarantee by the Company or any
Subsidiary of any indebtedness for borrowed money, other than
in the ordinary course of business and in amounts and on terms
consistent with past practices;
(e) any damage, destruction or other casualty loss
(whether or not covered by insurance) affecting the business or
assets of the Company or any Subsidiary which, individually or
in the aggregate, has had, or would reasonably be expected to
have, a Material Adverse Effect;
(f) except as disclosed in Schedule 5.01, any material
change in any method of accounting or accounting practice by
the Company or any Subsidiary, except for any such change
required by reason of a concurrent change in generally accepted
accounting principles;
(g) except as disclosed in the SEC Documents or in
Schedule 3.10(g), any (i) grant of any severance or termination
pay to any director, officer or
17
employee of the Company or any Subsidiary, (ii) entering into
of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement)
with any director, officer or employee of the Company or any
Subsidiary, (iii) increase in benefits payable under any
existing severance or termination pay policies or employment
agreements or (iv) increase in compensation, bonus or other
benefits payable to directors, officers or employees of the
Company or any Subsidiary, other than in the ordinary course of
business consistent with past practice; or
(h) any cancellation of any licenses, sublicenses,
franchises, permits or agreements to which the Company or any
Subsidiary is a party, or any notification to the Company or
any Subsidiary that any party to any such arrangements intends
to cancel or not renew such arrangements beyond its expiration
date as in effect on the date hereof, which cancellation or
notification, individually or in the aggregate, has had, or
would reasonably be expected to have, a Material Adverse
Effect.
Section 3.11. No Undisclosed Material Liabilities. There
are no liabilities of the Company or any Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, which, individually or in the
aggregate, would reasonably be expected to be material to the
business of the Company and its Subsidiaries taken as a whole,
other than:
(a) liabilities disclosed or provided for in the Balance
Sheet;
(b) liabilities disclosed in the SEC Documents filed
after the Balance Sheet Date but prior to the date of this
Agreement;
(c) liabilities incurred in the ordinary course of
business consistent with past practice since the Balance Sheet
Date, which in the aggregate would not have a Material Adverse
Effect;
(d) liabilities under this Agreement; and
(e) liabilities under contracts or agreements of the
Company or any Subsidiary entered into in the ordinary course
of business (as to which contracts or agreements there is no
breach or violation by the Company or any Subsidiary).
Section 3.12. Litigation. Except as disclosed in
Schedule 3.12, there is no action, suit, investigation or
proceeding (or any basis therefor) pending against,
18
or to the knowledge of the Company threatened against or
affecting, the Company or any Subsidiary or any of their
respective properties before any court or arbitrator or any
governmental body, agency or official which, if determined or
resolved adversely to the Company or any Subsidiary in
accordance with the plaintiff's demands, would reasonably be
expected to have a Material Adverse Effect or which in any
manner challenges or seeks to prevent, enjoin, alter or
materially delay the Merger or any of the other transactions
contemplated hereby.
Section 3.13. Taxes. (a) All material tax returns,
statements, reports and forms (including estimated tax returns
and reports and information returns and reports) required to be
filed with any taxing authority with respect to any tax period
(or portion thereof) ending on or before the Effective Time (a
"PRE-CLOSING TAX PERIOD") by or on behalf of the Company or any
Subsidiary of the Company (collectively, the "RETURNS"), were
filed when due (including any applicable extension periods) in
accordance with all applicable laws.
(b) The Company and its Subsidiaries have timely paid, or
withheld and remitted to the appropriate taxing authority, all
material taxes shown as due and payable on all Returns that
have been filed.
(c) The charges, accruals and reserves for taxes with
respect to the Company and any Subsidiary for any Pre-Closing
Tax Period (including any Pre-Closing Tax Period for which no
Return has yet been filed, with respect to which Periods the
Company has made estimates in accordance with past practice)
reflected on the books of the Company and its Subsidiaries
(excluding any provision for deferred income taxes) are
adequate to cover such taxes.
(d) There is no material claim (including under any
indemnification or tax-sharing agreement), audit, action, suit,
proceeding, or investigation now pending or threatened in
writing against or in respect of any tax or "tax asset" of the
Company or any Subsidiary, other than (i) periodic sales tax
audits occurring in the ordinary course of business, the
resolution of which, individually or in the aggregate, the
Company believes will not have a Material Adverse Effect, and
(ii) claims, audits, actions, suits, proceedings or
investigations with respect to which the Company is indemnified
in full pursuant to the Stock Purchase Agreement among Decision
Servcom, Inc., Xxxx Atlantic Business Systems Services, Inc.,
and Xxxx Atlantic Business Systems, Inc. dated September 19,
1995. For purposes of this Section 3.13, the term "TAX ASSET"
shall include any net operating loss, net capital loss,
investment tax credit, foreign tax credit, charitable deduction
or any other credit or tax attribute which could reduce taxes.
19
(e) There are no Liens for taxes upon the assets of the
Company or its Subsidiaries except for Liens for current taxes
not yet due.
(f) Neither the Company nor any of its Subsidiaries has
been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Internal Revenue Code
of 1986, as amended (the "CODE") during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
Section 3.14. ERISA. (a) Schedule 3.14(a) sets forth a
list identifying each "EMPLOYEE BENEFIT PLAN", as defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974 ("ERISA"), which (i) is subject to any provision of ERISA
and (ii) is maintained, administered or contributed to by the
Company or any affiliate (as defined below) and covers any
employee or former employee of the Company or any affiliate or
under which the Company or any affiliate has any liability.
Copies of such plans (and, if applicable, related trust
agreements) and all amendments thereto and written
interpretations thereof have been furnished to MergerSub
together with (A) the three most recent annual reports (Form
5500 including, if applicable, Schedule B thereto) prepared in
connection with any such plan and (B) the most recent actuarial
valuation report prepared in connection with any such plan.
Such plans are referred to collectively herein as the "EMPLOYEE
PLANS". For purposes of this Section, "AFFILIATE" of any
Person means any other Person which, together with such Person,
would be treated as a single employer under Section 414 of the
Code. The only Employee Plans which individually or
collectively would constitute an "employee pension benefit
plan" as defined in Section 3(2) of ERISA (the "PENSION PLANS")
are identified as such in the list referred to above. The
Company will make available to MergerSub complete age, salary,
service and related data as of the most recently available date
for employees and former employees of the Company and any
affiliate covered under the Pension Plans.
(b) No Employee Plan constitutes a "MULTIEMPLOYER PLAN",
as defined in Section 3(37) of ERISA (a "MULTIEMPLOYER PLAN"),
and no Employee Plan is maintained in connection with any trust
described in Section 501(c)(9) of the Code. Except as other-
wise identified in Schedule 3.14(b), no Employee Plan is
subject to Title IV of ERISA and no "ACCUMULATED FUNDING
DEFICIENCY", as defined in Section 412 of the Code, has been
incurred with respect to any Pension Plan, whether or not
waived. The Company knows of no "REPORTABLE EVENT", within the
meaning of Section 4043 of ERISA, and no event described in
Section 4041, 4042, 4062 or 4063 of ERISA has occurred in
connection with any Employee Plan, other than a "REPORTABLE
EVENT" or other event that individually
20
or in the aggregate, has not had, and would not reasonably be
expected to have, a Material Adverse Effect. To the Company's
knowledge, no condition exists and no event has occurred that
could constitute grounds for termination of any Employee Plan
subject to Title IV of ERISA and neither the Company nor any of
its affiliates has incurred any liability under Title IV of
ERISA arising in connection with the termination of, or
complete or partial withdrawal from, any plan covered or
previously covered by Title IV of ERISA. Nothing done or
omitted to be done and no transaction or holding of any asset
under or in connection with any Employee Plan has or will make
the Company or any Subsidiary, any officer or director of the
Company or any Subsidiary subject to any liability under Title
I of ERISA or liable for any tax pursuant to Section 4975 of
the Code which liability, individually or in the aggregate, has
had, or would reasonably be expected to have, a Material
Adverse Effect.
(c) Each Employee Plan which is intended to be qualified
under Section 401(a) of the Code is either a standardized
prototype plan covered by an opinion letter issued by the IRS
or an individually designed plan covered by a determination
letter issued by the IRS and, to the knowledge of the Company,
nothing has occurred since the date of the opinion or
determination letter which resulted, or is likely to result, in
the Company's inability to rely on such letters. The Company
has furnished to MergerSub copies of the most recent Internal
Revenue Service opinion determination letters with respect to
each such Plan. Each Employee Plan has been maintained in
substantial compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and
regulations, including but not limited to ERISA and the Code,
which are applicable to such Plan.
(d) Except as set forth in Schedule 3.14(d) there is no
contract, agreement, plan or arrangement covering any employee
or former employee of the Company or any affiliate that,
individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to the terms
of Section 280G of the Code.
(e) Schedule 3.14(e) sets forth a list of each employ-
ment, severance or other similar contract, arrangement or
policy and each plan or arrangement (written or oral) providing
for insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits,
retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation or
other
21
forms of incentive compensation or post-retirement insurance,
compensation or benefits which (i) is not an Employee Plan,
(ii) is entered into, maintained or contributed to, as the case
may be, by the Company or any of its Subsidiaries and (iii)
covers any employee or former employee of the Company or any of
its Subsidiaries. Such contracts, plans and arrangements as
are described above, copies or descriptions of all of which
have been furnished previously to MergerSub are referred to
collectively herein as the "BENEFIT ARRANGEMENTS". Each
Benefit Arrangement has been maintained in substantial
compliance with its terms and with the requirements prescribed
by any and all statutes, orders, rules and regulations that are
applicable to such Benefit Arrangement.
(f) To the knowledge of the Company, no condition exists
that would prevent the Company or any Subsidiary from amending
or terminating any Employee Plan or Benefit Arrangement pro-
viding health or medical benefits in respect of any active em-
ployee of the Company or any Subsidiary.
(g) Except as disclosed on Schedule 3.14(g), there has
been no amendment to, written interpretation or announcement
(whether or not written) by the Company or any of its
affiliates relating to, or change in employee participation or
coverage under, any Employee Plan or Benefit Arrangement which
would increase materially the expense of maintaining such
Employee Plan or Benefit Arrangement above the level of the
expense incurred in respect thereof for the fiscal year ended
on the Balance Sheet Date other than with regard to any changes
mandated by law.
(h) Except as disclosed in Section 3.15, neither the
Company nor any Subsidiary is a party to or subject to any
union contract or any employment contract or arrangement
providing for annual future compensation (excluding sales
commissions) of $150,000 or more with any officer, director or
employee.
Section 3.15. Employees. The Company has disclosed to
MergerSub in writing on the date of this Agreement the names,
titles, annual salaries and other compensation of all employees
of the Company (the "KEY EMPLOYEES") whose base compensation,
together with any other cash compensation (excluding sales
commissions), was in excess of $150,000 per annum for calendar
year 1996. Except as disclosed to MergerSub in writing on the
date of this Agreement, none of the Key Employees has indicated
to the Company in writing on or prior to the date hereof that
he or she intends to resign or retire as a result of the
transactions contemplated by this Agreement or otherwise within
three months after the Effective Time.
22
Section 3.16. Labor Matters. The Company is in
compliance with all currently applicable laws respecting
employment practices, terms and conditions of employment and
wages and hours, and is not engaged in any unfair labor
practice, the failure to comply with which or engagement in
which, as the case may be, individually or in the aggregate,
has not had, and would not reasonably be expected to have, a
Material Adverse Effect. There is no unfair labor practice
complaint pending or, to the knowledge of the Company,
threatened against the Company before the National Labor
Relations Board. Except as otherwise set forth on Schedule
3.16, there are no strikes, slowdowns, union organizational
campaigns or other protected concerted activity under the
National Labor Relations Act or, to the knowledge of Company,
threats thereof, by or with respect to any employees of the
Company.
Section 3.17. Compliance with Laws and Court Orders.
Neither the Company nor any Subsidiary is in violation of, or
has since January 1, 1996 violated, and to the knowledge of the
Company none is under investigation with respect to or has been
threatened to be charged with or given notice of any violation
of, in each case, by any governmental agency or authority, any
applicable law, rule, regulation, judgment, injunction, order
or decree, except for violations that have not had, and would
not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
Section 3.18. Licenses and Permits. Except as set forth
on Schedule 3.18 or except as has not had, and would not
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, (i) the Permits are valid
and in full force and effect, (ii) neither the Company nor any
Subsidiary is in default under, and no condition exists that
with notice or lapse of time or both would constitute a default
under, the Permits and (iii) none of the Permits will be
terminated or impaired or become terminable, in whole or in
part, as a result of the transactions contemplated hereby.
"PERMITS" means each material license, franchise, permit,
certificate, approval or other similar authorization affecting,
or relating in any way to, the assets or business of the
Company and its Subsidiaries.
Section 3.19. Repairable Parts. The repairable parts set
forth in the Balance Sheet were stated therein at cost less ac-
cumulated amortization. Since the Balance Sheet Date, the
repairable parts of the Company and its Subsidiaries have been
maintained in the ordinary course of business. All such
repairable parts are owned free and clear of all Liens, except
for a purchase money security interest in certain parts in
favor of Electronic Data Systems Corp. to secure the
23
issuance of approximately $2,000,000 of credits. The
repairable parts recorded on the Balance Sheet consist of, and
all repairable parts of the Company and its Subsidiaries as of
the Effective Time will consist of, items of a quality usable
in the normal course of business consistent with past practices
(it being understood that at any given time, a portion of
repairable parts are not in good repair) and are and will be in
quantities sufficient for the normal operation of the business
of the Company and its Subsidiaries in accordance with past
practice.
Section 3.20. Intellectual Property. Except for that
litigation involving certain independent service providers
referred to in "Item 3. Legal Proceedings" in the Company 10-K,
provided that the Company is not a party to litigation of such
nature which would be required to be disclosed in response to
this sentence, the Company and the Subsidiaries own or possess
adequate licenses or other rights to use all Intellectual
Property Rights necessary to conduct the business now operated
by them, except where the failure to own or possess such
licenses or rights, individually or in the aggregate, has not
had, and would not reasonably be expected to have, a Material
Adverse Effect. To the knowledge of the Company, the
Intellectual Property Rights of the Company and the
Subsidiaries do not conflict with or infringe upon any Intel-
lectual Property Rights of others to the extent that, if sus-
tained, such conflict or infringement, individually or in the
aggregate, would reasonably be expected to have a Material
Adverse Effect. For purposes of this Agreement, "INTELLECTUAL
PROPERTY RIGHT" means any trademark, service xxxx, trade name,
mask work, copyright, patent, software license, other data
base, invention, trade secret, know-how (including any
registrations or applications for registration of any of the
foregoing) or any other similar type of proprietary
intellectual property right.
Section 3.21. Finders' Fees. With the exception of fees
payable to Xxxxx Xxxxxx Inc., a copy of whose engagement
agreement has been provided to MergerSub, there is no
investment banker, broker, finder or other intermediary which
has been retained by or is authorized to act on behalf of, the
Company or any Subsidiary who might be entitled to any fee or
commission from the Company or any Subsidiary or any of its
affiliates upon consummation of the transactions contemplated
by this Agreement.
Section 3.22. Inapplicability of Certain Restrictions.
Section 203 of the Delaware Law does not in any way restrict
the consummation of the Merger or the other transactions
contemplated by this Agreement. The adoption of this Agreement
by the affirmative vote of the holders of Shares entitling such
holders to exercise at least a majority of the voting power of
the Shares is the only vote of
24
holders of any class or series of the capital stock of the
Company required to adopt this Agreement or to approve the
Merger or any of the other transactions contemplated hereby,
and no higher or additional vote is required pursuant to of the
Company's certificate of incorporation or otherwise.
Section 3.23. Rights Plan. Neither the Company nor any
of its Subsidiaries has any rights plan or similar common stock
or preferred stock purchase plan or similar arrangement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MERGERSUB
MergerSub represents and warrants to the Company that:
Section 4.1. Corporate Existence and Power. MergerSub is
a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation
and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to
carry on its business as now conducted. Since the date of its
incorporation, MergerSub has not engaged in any activities
other than in connection with or as contemplated by this
Agreement and the Merger or in connection with arranging any
financing required to consummate the transactions contemplated
hereby. MergerSub has furnished to the Company true and
correct copies of its certificate of incorporation and by-laws,
which shall not be amended or modified prior to the Effective
Time except to reflect the terms of the MergerSub Preferred
Stock.
Section 4.2. Corporate Authorization. The execution,
delivery and performance by MergerSub of this Agreement and the
consummation by MergerSub of the transactions contemplated
hereby are within the corporate powers of MergerSub and have
been duly authorized by all necessary corporate and stockholder
action. This Agreement constitutes a valid and binding
agreement of MergerSub.
Section 4.3. Governmental Authorization. The execution,
delivery and performance by MergerSub of this Agreement and the
consummation by MergerSub of the transactions contemplated by
this Agreement require no action by or in respect of, or filing
with, any governmental body, agency, official or authority
other than (a) the filing of a certificate of merger in
accordance with the Delaware Law, (b) compliance with any
applicable requirements of the HSR Act;
25
(c) compliance with any applicable requirements of the Exchange
Act; (d) compliance with the applicable requirements of the
Securities Act; and (e) compliance with any applicable foreign
or state securities or Blue Sky laws.
Section 4.4. Non-contravention. The execution, delivery
and performance by MergerSub of this Agreement and the
consummation by MergerSub of the transactions contemplated
hereby do not and will not (a) contravene or conflict with the
certificate of incorporation or bylaws of MergerSub, (b)
assuming compliance with the matters referred to in Section 4.03,
contravene or conflict with any provision of law, regulation,
judgment, order or decree binding upon MergerSub, or (c)
constitute a default under or give rise to any right of
termination, cancellation or acceleration of any right or
obligation of MergerSub or to a loss of any benefit to which
MergerSub is entitled under any agreement, contract or other
instrument binding upon MergerSub.
Section 4.5. Disclosure Documents. (a) The information
with respect to MergerSub that MergerSub furnishes to the
Company in writing specifically for use in any Company
Disclosure Document will not contain any untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading (i) in
the case of the Company Proxy Statement at the time the Company
Proxy Statement or any amendment or supplement thereto is first
mailed to stockholders of the Company, at the time the
stockholders vote on adoption of this Agreement and at the
Effective Time, and (ii) in the case of any Company Disclosure
Document other than the Company Proxy Statement, at the time of
the filing thereof and at the time of any distribution thereof.
(b) The MergerSub Disclosure Documents (as defined in
Section 6.01), when filed, will comply as to form in all
material respects with the applicable requirements of the
Securities Act and the Exchange Act and will not at the time of
the filing thereof, at the time of any distribution thereof or
at the time of the meeting of the Company's stockholders,
contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made
therein, in the light of the circumstances under which they
were made, not misleading, provided, that this representation
and warranty will not apply to statements or omissions in the
MergerSub Disclosure Documents based upon information furnished
to MergerSub in writing by the Company specifically for use
therein.
Section 4.6. Finders' Fees. Except for Xxxxxxxxx, Xxxxxx
& Xxxxxxxx
26
Securities Corporation ("DLJSC"), a copy of whose engagement
agreement has been provided to the Company and whose fees will
be paid by MergerSub, there is no investment banker, broker,
finder or other intermediary which has been retained by or is
authorized to act on behalf of MergerSub who might be entitled
to any fee or commission from MergerSub or any of its
affiliates upon consummation of the transactions contemplated
by this Agreement.
Section 4.7. Financing. The Company has received copies
of (a) a commitment letter dated May 4, 1997 from DLJ Merchant
Banking Partners II, L.P., DLJ Offshore Partners II, C.V., DLJ
Diversified Partners, C.V., DLJ Funding II, Inc., UK Investment
Plan 1997 Partners and DLJ First ESC LLC pursuant to which each
of the foregoing has committed, subject to the terms and
conditions set forth therein, to purchase securities of
MergerSub for an aggregate amount equal to $310,000,007, (b) a
letter dated May 4, 1997 from DLJSC pursuant to which DLJSC has
indicated that it is highly confident of its ability to place
privately, or underwrite in the public markets, Senior
Subordinated Notes of DecisionOne Corporation, a Delaware
corporation ("OPERATING CO.") in the amount of $150,000,000,
and (c) a commitment letter dated April 30, 1997 from DLJ
Capital Funding, Inc. ("DLJ SENIOR DEBT FUND") pursuant to
which DLJ Senior Debt Fund has committed, subject to the terms
and conditions set forth therein, to enter into one or more
credit agreements providing for loans to Operating Co. of up to
$575,000,000. As used in this Agreement, the aforementioned
entities shall hereinafter be referred to as the "FINANCING
ENTITIES." The aforementioned credit agreements and
commitments to purchase equity securities of MergerSub or
Operating Co. shall be referred to as the "FINANCING
AGREEMENTS" and the financing to be provided thereunder and
under the arrangements described in clause (b) above shall be
referred to as the "FINANCING." The aggregate proceeds of the
Financing are in an amount sufficient to pay the Merger
Consideration, to repay all of the Company's and its Sub-
sidiaries' indebtedness together with any interest, premium or
penalties payable in connection therewith, to provide a
reasonable amount of working capital financing and to pay
related fees and expenses (collectively, the "REQUIRED
AMOUNTS"). As of the date hereof, none of the commitment
letters relating to the Financing Agreements referred to above
has been withdrawn and MergerSub does not know of any facts or
circumstances that may reasonably be expected to result in any
of the conditions set forth in the commitment letters relating
to the Financing Agreements not being satisfied. MergerSub
believes that the Financing will not create any liability to
the directors and stockholders of the Company under any federal
or state fraudulent conveyance or transfer law.
27
MergerSub further believes that, upon the consummation of the
transactions contemplated hereby, including, without
limitation, the Financing, the Surviving Corporation (i) will
not become insolvent, (ii) will not be left with unreasonably
small capital, (iii) will not have incurred debts beyond its
ability to pay such debts as they mature, and (iv) the capital
of the Company will not become impaired.
Section 4.8. Capitalization. The authorized capital
stock of MergerSub consists of (i) 30,000,000 shares of
MergerSub Common Stock, of which as of the date hereof, there
were outstanding 101 shares and (ii) 15,000,000 shares of
MergerSub Preferred Stock, of which as of the date hereof no
shares were outstanding. All outstanding shares of capital
stock of MergerSub have been duly authorized and validly issued
and are fully paid and nonassessable. As of the moment
immediately prior to the Effective Time, 9,782,609 shares of
MergerSub Common Stock, 3,400,000 shares of MergerSub Preferred
Stock (or, in lieu thereof, Senior Discount Notes of MergerSub
in an equivalent proceeds amount of $85,000,000) and MergerSub
Warrants to acquire 1,417,180 shares of MergerSub Common Stock
at an exercise price of not less than $0.01 per share, will be
outstanding; provided that if any Shares are issued after the
date hereof but prior to the Effective Time in respect of
Options or Warrants as set forth in Section 1.04(a), the number
of MergerSub Warrants shall be increased to reflect any such
issuances.
ARTICLE 5
COVENANTS OF THE COMPANY
The Company agrees that:
Section 5.1. Conduct of the Company. Except as otherwise
specifically provided in this Agreement, from the date hereof
to the Effective Time, the Board of Directors of the Company
shall not approve or authorize any action that would allow the
Company and its Subsidiaries to carry on their respective
businesses other than in the ordinary and usual course of
business and consistent with past practice or any action that
would prevent the Company and its Subsidiaries from using their
best efforts to (i) preserve intact their respective present
business organizations, (ii) maintain in effect all federal,
state and local licenses, approvals and authorizations,
including, without limitation, all permits that are required
for the Company or any of its Subsidiaries to carry on its
business, (iii) keep available
28
the services of their respective key officers and employees and
(iv) maintain satisfactory relationships with their respective
customers, lenders, suppliers and others having business
relationships with any of them. Without limiting the
generality of the foregoing, and except as otherwise
specifically provided in this Agreement, without the prior
written consent of MergerSub, prior to the Effective Time, the
Board of Directors of the Company shall not, nor shall it
authorize or direct the Company or any Subsidiary, directly or
indirectly, to:
(a) adopt or propose any change in its certificate of
incorporation or bylaws (other than as contemplated by this
Agreement);
(b) except pursuant to existing agreements or arrange-
ments (i) acquire (by merger, consolidation or acquisition of
stock or assets) any material corporation, partnership or other
business organization or division thereof, or sell, lease or
otherwise dispose of a material subsidiary or a material amount
of assets or securities; (ii) make any investment whether by
purchase of stock or securities, contributions to capital or
any property transfer, or purchase any property or assets of
any other individual or entity other than the purchase of
inventory, supplies, office equipment or repairable parts in
the ordinary course of business (it being understood that
purchases pursuant to the agreement referenced in 8.02(i) are
in the ordinary course of business) in the aggregate for an
amount in excess of $3,000,000; (iii) waive, release, grant, or
transfer any rights of material value; (iv) modify or change in
any material respect any existing material license, lease, con-
tract, or other document; (v) other than endorsements of
negotiable instruments in the ordinary course, guaranties of
obligations of Subsidiaries or guaranties or other liabilities
related to the purchases of inventory, repairable parts, office
equipment or supplies which arise in the ordinary course of
business, assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise)
for the obligations of any other Person which, are in excess of
$1,500,000 in the aggregate; (vi) make any loans, advances or
capital contributions to, or investments in, any other Person
which, are in excess of $1,000,000 in the aggregate or (vii)
make any capital expenditure which, individually, is in excess
of $1,000,000 or, in the aggregate with any other such
expenditure, are in excess of $5,000,000;
(c) take any action that would make any representation
and warranty of the Company hereunder inaccurate in any respect
at, or as of any time prior to, the Effective Time, or omit to
take any action necessary to prevent any such representation or
warranty from being inaccurate in any respect at any such time;
29
(d) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, other
than cash dividends and distributions by a wholly owned
subsidiary of the Company to the Company or to a subsidiary all
of the capital stock which is owned directly or indirectly by
the Company, or redeem, repurchase or otherwise acquire or
offer to redeem, repurchase, or otherwise acquire any of its
securities or any securities of its subsidiaries;
(e) adopt or amend any bonus, profit sharing, compensa-
tion, severance, termination, stock option, pension,
retirement, deferred compensation, employment or employee
benefit plan, agreement, trust, plan, fund or other arrangement
for the benefit and welfare of any director, officer or
employee, or (except for normal increases in the ordinary
course of business that are consistent with past practices and
that, in the aggregate, do not result in a material increase in
benefits or compensation expense to the Company or any
Subsidiary) increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any
benefit not required by any existing plan or arrangement
(including, without limitation, the granting of stock options
or stock appreciation rights or the removal of existing
restrictions in any benefit plans or agreements);
(f) revalue in any material respect any significant
portion of its assets, including, without limitation, writing
down the value of inventory in any material manner or write-off
of notes or accounts receivable in any material manner;
(g) pay, discharge or satisfy any material claims, li-
abilities or obligations (whether absolute, accrued, asserted
or unasserted, contingent or otherwise) other than the payment,
discharge or satisfaction in the ordinary course of business,
consistent with past practices, of liabilities reflected or
reserved against in the consolidated financial statements of
the Company or incurred in the ordinary course of business,
consistent with past practices;
(h) make any tax election with respect to or settle or
compromise any material income tax liability;
(i) take any action other than in the ordinary course of
business and consistent with past practices with respect to
accounting policies or procedures; or
30
(j) agree or commit to do any of the foregoing.
Section 5.2. Stockholder Meeting; Proxy Material. The
Company shall cause a meeting of its stockholders (the "COMPANY
STOCKHOLDER MEETING") to be duly called and held as soon as
reasonably practicable for the purpose of voting on the
approval and adoption of this Agreement and the Merger. The
Board of Directors of the Company shall, subject to its
fiduciary duties as determined in good faith and as advised by
counsel, recommend approval and adoption of this Agreement and
the Merger by the Company's stockholders. In connection with
such meeting, the Company (a) shall promptly prepare and file
with the SEC, shall use its reasonable best efforts to have
cleared by the SEC and shall thereafter mail to its
stockholders as promptly as practicable the Company Proxy
Statement and all other proxy materials for such meeting, (b)
subject to its fiduciary duties as determined in good faith and
as advised by counsel, shall use its reasonable best efforts to
obtain the necessary approvals by its stockholders of this
Agreement and the transactions contemplated hereby and (c)
shall otherwise comply with all legal requirements applicable
to such meeting.
Section 5.3. Access to Information. From the date hereof
until the Effective Time, the Company shall give MergerSub, its
counsel, financial advisors, auditors and other authorized
representatives full access to the offices, properties, books
and records of the Company and the Subsidiaries during normal
business hours, will furnish to MergerSub, their counsel,
financial advisors, auditors and other authorized
representatives such financial and operating data and other
information as such Persons may reasonably request and will
instruct the Company's and its Subsidiaries' employees, counsel
and financial advisors to cooperate with MergerSub in its
investigation of the business of the Company and the
Subsidiaries; provided that no investigation pursuant to this
Section shall affect any representation or warranty given by
the Company to MergerSub hereunder; and provided, further that
any information provided to MergerSub pursuant to this Section
5.03 shall be subject to the Confidentiality Agreement dated as
of March 19, 1997 between the Company and DLJ Merchant Banking
II, Inc. (the "CONFIDENTIALITY AGREEMENT").
Section 5.4. Other Offers. (a) Neither the Company nor
any of its Subsidiaries shall (whether directly or indirectly
through advisors, agents or other intermediaries), nor shall
the Company or any of its Subsidiaries authorize or permit any
of its or their officers, directors, agents, representatives,
advisors or Subsidiaries to, (i) solicit, initiate or take any
action knowingly to facilitate the submission of inquiries,
proposals or offers from any Third Party (as defined
31
below) (other than MergerSub) relating to (A) any acquisition
or purchase of 20% or more of the consolidated assets of the
Company and its Subsidiaries or of over 20% of any class of
equity securities of the Company or any of its Subsidiaries,
(B) any tender offer (including a self tender offer) or
exchange offer that if consummated would result in any Third
Party beneficially owning 20% or more of any class of equity
securities of the Company or any of its Subsidiaries, (C) any
merger, consolidation, business combination, sale of
substantially all assets, recapitalization, liquidation,
dissolution or similar transaction involving the Company, or
any of its Subsidiaries whose assets, individually or in the
aggregate, constitute more than 20% of the consolidated assets
of the Company, other than the transactions contemplated by
this Agreement, or (D) any other transaction the consummation
of which would, or could reasonably be expected to impede,
interfere with, prevent or materially delay the Merger or which
would, or could reasonably be expected to, materially dilute
the benefits to MergerSub of the transactions contemplated
hereby (collectively, "ACQUISITION PROPOSALS"), or agree to or
endorse any Acquisition Proposal, or (ii) enter into or
participate in any discussions or negotiations regarding any of
the foregoing, or furnish to any Third Party any information
with respect to its business, properties or assets or any of
the foregoing, or otherwise cooperate in any way with, or
knowingly assist or participate in, facilitate or encourage,
any effort or attempt by any Third Party (other than MergerSub)
to do or seek any of the foregoing; provided, however, that the
foregoing shall not prohibit the Company (either directly or
indirectly through advisors, agents or other intermediaries)
from (i) publicly disclosing in a press release, in a general
manner, the Company's permitted activities hereunder,
(ii) furnishing information pursuant to an appropriate
confidentiality letter (which letter shall not be less
favorable to the Company in any material respect than the
Confidentiality Agreement, and a copy of which shall be
provided for informational purposes only to MergerSub)
concerning the Company and its businesses, properties or assets
to a Third Party who has made a bona fide Acquisition Proposal,
(iii) engaging in discussions or negotiations with such a Third
Party who has made a bona fide Acquisition Proposal, (iv)
following receipt of a bona fide Acquisition Proposal, taking
and disclosing to its stockholders a position contemplated by
Rule 14d-9 or Rule 14e-2(a) under the Exchange Act or otherwise
making disclosure to its stockholders, (v) following receipt of
a bona fide Acquisition Proposal, failing to make or
withdrawing or modifying its recommendation referred to in
Section 5.02 and/or (vi) taking any non-appealable, final ac-
tion ordered to be taken by the Company by any court of
competent jurisdiction but in each case referred to in the
foregoing clauses (ii) through (vi) only to the extent that the
Board of Directors of the Company shall have
32
concluded in good faith on the basis of advice from counsel
that such action is required to prevent the Board of Directors
of the Company from breaching its fiduciary duties to the
stockholders of the Company under applicable law; provided,
further, that (A) the Board of Directors of the Company shall
not take any of the foregoing actions until reasonable notice
to MergerSub of its intent to take such action shall have been
give to MergerSub; and (B) if the Board of Directors of the
Company receives an Acquisition Proposal, to the extent it may
do so without breaching its fiduciary duties as advised by
counsel and as determined in good faith, and without violating
any of the conditions of such Acquisition Proposal, then the
Company shall promptly inform MergerSub of the terms and
conditions of such proposal and the identity of the person
making it. Subject to the provisions of the previous sentence,
the Company shall immediately cease and cause its Subsidiaries
and its and their advisors, agents and other intermediaries to
cease any and all existing activities, discussions or
negotiations with any parties (other than MergerSub) conducted
heretofore with respect to any of the foregoing, and shall use
its reasonable best efforts to cause any such parties in
possession of confidential information about the Company that
was furnished by or on behalf of the Company to return or
destroy all such information in the possession of any such
party (other than MergerSub) or in the possession of any agent
or advisor of any such party. As used in this Agreement, the
term "THIRD PARTY" means any Person or "GROUP," as described in
Rule 13d-5(b) promulgated under the Exchange Act, other than
MergerSub or any of its affiliates.
(b) If a Payment Event (as hereinafter defined) occurs,
the Company shall pay to MergerSub, within two business days
following such Payment Event, a fee of $20,947,000.00.
(c) "PAYMENT EVENT" shall mean that at least one enu-
merated event has occurred in all of the following clauses (i)-
(iii): (i) a Third Party shall have made an Acquisition
Proposal prior to the Company Stockholder Meeting, (ii) this
Agreement shall have been terminated pursuant to any of
Sections 9.01(e), 9.01(f) or 9.01(g) and (iii) any Acquisition
Proposal (whether or not proposed prior to the Company
Stockholders Meeting and whether or not it involves the Third
Party making the Acquisition Proposal referred to in Section
5.04(c)(i) above) shall have been consummated within 12 months
following the termination of this Agreement.
(d) Upon the termination of this Agreement for any reason
other than (i)
33
a termination by the Company pursuant to Section 9.01(c), (ii)
a termination by either the Company or MergerSub pursuant to
Section 9.01(a), (iii) a termination that follows a failure of
the condition set forth in Section 8.01(e) or Section 8.02(e)
to be satisfied, or (iv) any termination that follows a refusal
by MergerSub to consummate the Merger because Section 3.10(a)
or 3.10(h) is not true and correct as of the Effective Time, by
reason of an event that occurs between the date hereof and the
Effective Time, the Company shall reimburse MergerSub and its
affiliates not later than two business days after submission of
reasonable documentation thereof for 100% of their documented
out-of-pocket fees and expenses (including, without limitation,
the reasonable fees and expenses of their counsel and
investment banking fees), actually incurred by any of them or
on their behalf in connection with this Agreement and the
transactions contemplated hereby and the arrangement, obtaining
the commitment to provide or obtaining the Financing for the
transactions contemplated by this Agreement (including fees
payable to the Financing Entities and their respective counsel)
provided that the aggregate amount payable pursuant to this
Section 5.04(d) shall not exceed $8,250,000; provided further,
that (i) in the event that a fee is paid pursuant to Section
5.04(b) or (ii) in the event of any termination of this
Agreement which follows a refusal of MergerSub to consummate
the Merger by reason of the condition set forth in Section
8.01(c) or Section 8.02(b), the aggregate amount payable
pursuant to this Section 5.04(d) shall not include any
investment banking fee payable to DLJSC as disclosed in Section
4.06 and the limit set forth in the immediately proceeding
clause shall be reduced from $8,250,000 to $5,750,000.
(e) The Company acknowledges that the agreements con-
tained in this Section 5.04 are an integral part of the
transactions contemplated by this Agreement, and that, without
these agreements, MergerSub would not enter into this
Agreement; accordingly, if the Company fails to promptly pay
any amount due pursuant to this Section 5.04, and, in order to
obtain such payment, the other party commences a suit which
results in a judgment against the Company for the fee or fees
and expenses set forth in this Section 5.04, the Company shall
also pay to MergerSub its costs and expenses incurred in
connection with such litigation.
(f) Sections 5.04(b)-(e) shall survive any termination of
this Agreement, however caused.
Section 5.5. Notices of Certain Events. The Company
shall promptly notify MergerSub of:
(a) any notice or other communication from any Person
alleging that the
34
consent of such Person is or may be required in connection with
the transactions contemplated by this Agreement;
(b) any notice or other communication from any govern-
mental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or pro-
ceedings commenced or, to the best of its knowledge threatened
against, relating to or involving or otherwise affecting the
Company or any Subsidiary which, if pending on the date of this
Agreement, would have been required to have been disclosed
pursuant to Section 3.12 or which relate to the consummation of the
transactions contemplated by this Agreement.
Section 5.6. Resignation of Directors. Prior to the
Effective Time, the Company shall deliver to MergerSub evidence
satisfactory to MergerSub of the resignation of all directors
of the Company effective at the Effective Time.
Section 5.7. Preferred Stock. Provided that MergerSub
shall have provided to Company reasonably in advance of the
first mailing to stockholders of the Company Proxy Statement
the terms thereof, prior to the Effective Time, the Board of
Directors of the Company shall take all necessary action to
establish the terms of the Mirror Preferred Stock and file the
Certificate of Designations with the Delaware Secretary of
State, all in accordance with the applicable provisions of
Delaware Law. The "MIRROR PREFERRED STOCK" shall be Preferred
Stock of the Company, the terms of and certificate of
designations of which shall be identical in all respects
(except the name of the Company) to the terms of the MergerSub
Preferred Stock and the certificate of designations therefor.
Section 5.8. Solvency Advice. The Company shall request
an independent advisor to deliver the advice contemplated by
Section 8.03(a) as promptly as practicable.
ARTICLE 6
COVENANTS OF MERGERSUB
MergerSub agrees that:
35
Section 6.1. SEC Filings. As soon as practicable after
the date of announcement of the execution of the Merger
Agreement, MergerSub shall file (separately, or as part of the
Company Proxy Statement) with the SEC, if required, a Rule 13E-
3 Transaction Statement ("TRANSACTION STATEMENT") with respect
to the Merger (together with any supplements or amendments
thereto, collectively the "MERGERSUB DISCLOSURE DOCUMENTS").
MergerSub and the Company each agrees to correct any
information provided by it for use in the MergerSub Disclosure
Documents if and to the extent that it shall have become false
or misleading in any material respect. MergerSub agrees to
take all steps necessary to cause the MergerSub Disclosure
Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. The
Company and its counsel shall be given reasonable opportunity
to review and comment on each MergerSub Disclosure Document
prior to its being filed with the SEC.
Section 6.2. Voting of Shares. MergerSub agrees to vote
all Shares beneficially owned by it in favor of adoption of
this Agreement at the Company Stockholder Meeting.
Section 6.3. Director and Officer Liability. (a) For a
period of 6 years after the Effective Time, MergerSub shall
cause the Surviving Corporation to indemnify and hold harmless
the present and former officers and directors of the Company in
respect of acts or omissions occurring prior to the Effective
Time to the extent provided under the Company's certificate of
incorporation and bylaws in effect on the date hereof; provided
that such indemnification shall be subject to any limitation
imposed from time to time under applicable law. For a period
of 6 years after the Effective Time, MergerSub shall cause the
Surviving Corporation to provide officers' and directors'
liability insurance in respect of acts or omissions occurring
prior to the Effective Time covering each such Person currently
covered by the Company's officers' and directors' liability
insurance policy on terms with respect to coverage and amount
no less favorable than those of such policy in effect on the
date hereof (or, if such insurance policy cannot be obtained,
such insurance policy on terms with respect to coverage and
amount as favorable as can be obtained, subject to the proviso
at the conclusion of this sentence), provided that in
satisfying its obligation under this Section, MergerSub shall
not be obligated to cause the Surviving Corporation to pay
premiums in excess of 125% of the amount per annum the Company
paid in its last full fiscal year, which amount has been
disclosed to MergerSub.
(b) In furtherance of and not in limitation of the
preceding paragraph,
36
MergerSub agrees that the officers and directors of the Company
that are defendants in all litigation commenced by stockholders
of the Company with respect to (x) the performance of their
duties as such officers and/or directors under federal or state
law (including litigation under federal and state securities
laws) and (y) the Merger, including, without limitation, any
and all such litigation commenced on or after the date of this
Agreement (the "SUBJECT LITIGATION") shall be entitled to be
represented, at the reasonable expenses of the Company, in the
Subject Litigation by one counsel (and Delaware counsel if
appropriate and one local counsel in each jurisdiction in which
a case is pending) each of which counsel shall be selected by a
plurality of such director defendants; provided that the
Company shall not be liable for any settlement effected without
its prior written consent (which consent shall not be
unreasonably withheld) and that a condition to the
indemnification payments provided in Section 6.03(a) shall be
that such officer/director defendant not have settled any
Subject Litigation without the consent of the Surviving
Corporation (such consent not to be unreasonably withheld) and,
prior to the Effective Time, MergerSub; and provided further
that neither MergerSub nor the Surviving Corporation shall have
any obligation hereunder to any officer/director defendant when
and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and
non-appealable, that indemnification of such officer/director
defendant in the manner contemplated hereby is prohibited by
applicable law.
Section 6.4. Employee Plans and Benefit Arrangements.
(a) From and after the Effective Time, subject to applicable
law, the Surviving Corporation and its subsidiaries will honor
obligations of the Company and its Subsidiaries incurred prior
to the Effective Time under all existing Employee Plans and
Benefit Arrangements (as defined in Section 3.14).
(b) MergerSub agrees that, for at least one year from the
Effective Time, subject to applicable law, the Surviving Cor-
poration and its Subsidiaries will provide benefits to their
employees which will, in the aggregate, be comparable to those
currently provided by the Company and its subsidiaries to their
employees. Notwithstanding the foregoing, nothing herein shall
obligate or require the Surviving Corporation or any of its
subsidiaries to provide its employees with a plan or
arrangement similar to any equity based compensation plans
currently maintained by the Company and nothing herein shall
otherwise limit the Surviving Corporation's right to amend,
modify or terminate any Employee Plan or Benefit Arrangement,
as defined in Section 3.14.
37
(c) It is MergerSub's current intention to maintain the
Surviving Corporation's headquarters at its present location or
another location in the greater Philadelphia area.
Section 6.5. Financing. MergerSub shall use its
reasonable best efforts to obtain the Financing. In the event
that any portion of such Financing becomes unavailable,
regardless of the reason therefor, MergerSub will use its
reasonable best efforts to obtain alternative financing on
substantially comparable or more favorable terms from other
sources.
Section 6.6. NASDAQ Listing. MergerSub will not take any
action, for at least three years after the Effective Time of
the Merger, to cause the Company Stock to be de-listed from The
NASDAQ National Market System ("NASDAQ"); provided, however,
that MergerSub may cause or permit the Company Stock to be de-
listed in connection with any transaction which results in the
termination of registration of such securities under Section 12
of the Exchange Act, and provided, further, that nothing in
this Section 6.06 shall require the Company to take any
affirmative action to prevent the Company Stock from being de-
listed by NASDAQ if the Company Stock ceases to meet the
applicable listing standards.
Section 6.7. Access to Information. From the date hereof
until the Effective Time, MergerSub shall give the Company and
its independent advisor any such information regarding
MergerSub as may be necessary to permit such independent
advisor to render the advice to be delivered to the Company's
Board of Directors pursuant to Section 8.03(b).
ARTICLE 7
COVENANTS OF MERGERSUB AND THE COMPANY
The parties hereto agree that:
Section 7.1. Best Efforts. Subject to the terms and
conditions of this Agreement, each party will use its
reasonable best 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 laws and regulations to
consummate the transactions
38
contemplated by this Agreement. Each party shall also refrain
from taking, directly or indirectly, any action contrary to or
inconsistent with the provisions of this Agreement, including
action which would impair such party's ability to consummate
the Merger and the other transactions contemplated hereby.
Without limiting the foregoing, the Company and its Board of
Directors shall use their reasonable best efforts to (a) take
all action necessary so that no state takeover statute or
similar statute or regulation is or becomes applicable to the
Merger or any of the other transactions contemplated by this
Agreement and (b) if any state takeover statute or similar
statute or regulation becomes applicable to any of the
foregoing, take all reasonable action necessary so that the
Merger and the other transactions contemplated by this
Agreement may be consummated as promptly as practicable on the
terms contemplated by this Agreement and otherwise to minimize
the effect of such statute or regulation on the Merger and the
other transactions contemplated by this Agreement.
Section 7.2. Certain Filings. (a) The Company and
MergerSub shall use their respective reasonable best efforts to
take or cause to be taken, (i) all actions necessary, proper or
advisable by such party with respect to the prompt preparation
and filing with the SEC a registration statement on Form S-4
(the "REGISTRATION STATEMENT"), the Company Disclosure
Documents and the MergerSub Disclosure Documents, (ii) such
actions as may be required to have the Registration Statement
declared effective under the Securities Act and to have the
Company Proxy Statement cleared by the SEC, in each case as
promptly as practicable, and (iii) such actions as may be
required to have to be taken under state securities or
applicable Blue Sky laws in connection with the issuance of the
securities contemplated hereby.
(b) The Company agrees to provide, and will cause its
Subsidiaries and its and their respective officers, employees
and advisors to provide, all necessary cooperation in
connection with the arrangement of any financing to be
consummated contemporaneous with or at or after the Closing in
respect of the transactions contemplated by this Agreement,
including without limitation, (x) participation in meetings,
due diligence sessions and road shows, (y) the preparation of
offering memoranda, private placement memoranda, prospectuses
and similar documents, and (z) the execution and delivery of
any commitment letters, underwriting or placement agreements,
pledge and security documents, other definitive financing
documents, or other requested certificates or documents,
including a certificate of the chief financial officer of the
Company with respect to solvency matters, comfort letters of
accountants and legal opinions as may be requested by
MergerSub; provided that the form and substance of any of the
39
material documents referred to in clause (y), and the terms and
conditions of any of the material agreements and other
documents referred to in clause (z), shall be substantially
consistent with the terms and conditions of the financing
required to satisfy the condition precedent set forth in
Section 8.01(e).
(c) The Company and MergerSub shall cooperate with one
another (i) in determining whether any action by or in respect
of, or filing with, any governmental body, agency or official,
or authority is required, or any actions, consents, approvals
or waivers are required to be obtained from parties to any
material contracts, in connection with the consummation of the
transactions contemplated by this Agreement (including the
Financing) and (ii) in seeking any such actions, consents,
approvals or waivers or making any such filings, furnishing
information required in connection therewith or with the
Registration Statement, the Company Disclosure Documents and
MergerSub Disclosure Documents and seeking timely to obtain any
such actions, consents, approvals or waivers.
Section 7.3. Public Announcements. MergerSub and the
Company will consult with each other before issuing any press
release or making any public statement with respect to this
Agreement and the transactions contemplated hereby and, except
for any press release or public statement as may be required by
applicable law or any listing agreement with any national
securities exchange, will not issue any such press release or
make any such public statement prior to such consultation.
Section 7.4. Further Assurances. At and after the
Effective Time, the officers and directors of the Surviving
Corporation will be authorized to execute and deliver, in the
name and on behalf of the Company or MergerSub, any deeds,
bills of sale, assignments or assurances and to take and do, in
the name and on behalf of the Company or MergerSub, any other
actions and things to vest, perfect or confirm of record or
otherwise in the Surviving Corporation any and all right, title
and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with,
the Merger.
ARTICLE 8
CONDITIONS TO THE MERGER
Section 8.1. Conditions to the Obligations of Each Party.
The
40
obligations of the Company and MergerSub to consummate the
Merger are subject to the satisfaction of the following
conditions:
(a) this Agreement shall have been adopted by the
stockholders of the Company in accordance with Delaware Law;
(b) any applicable waiting period under the HSR Act
relating to the Merger shall have expired or been terminated;
(c) no provision of any applicable law or regulation and
no judgment, order, decree or injunction shall prohibit or
restrain the consummation of the Merger; provided, however,
that the Company and MergerSub shall each use its reasonable
best efforts to have any such judgment, order, decree or
injunction vacated; and
(d) all consents, approvals and licenses of any govern-
mental or other regulatory body required in connection with the
execution, delivery and performance of this Agreement and for
the Surviving Corporation to conduct the business of the
Company in substantially the manner now conducted, shall have
been obtained, unless the failure to obtain such consents,
authorizations, orders or approvals would not have a Material
Adverse Effect after giving effect to the transactions
contemplated by this Agreement (including the Financing);
(e) the funds in an amount at least equal to the Required
Amounts shall have been made available to MergerSub and/or
Operating Co. as contemplated in Section 4.07; and
(f) the Registration Statement shall have been declared
effective and no stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings
for such purpose shall be pending before or threatened by the
SEC.
Section 8.2. Conditions to the Obligations of MergerSub.
The obligations of MergerSub to consummate the Merger are
subject to the satisfaction of the following further
conditions:
(a) the Company shall have performed in all material
respects all of its obligations hereunder required to be
performed by it at or prior to the Effective Time, the
representations and warranties of the Company contained in this
Agreement and in any certificate or other writing delivered by
the Company
41
pursuant hereto shall be true in all material respects at and
as of the Effective Time (provided that representations made as
of a specific date shall be required to be true as of such date
only) as if made at and as of such time and MergerSub shall
have received a certificate signed by any Vice President of the
Company to the foregoing effect;
(b) There shall not be instituted or pending (x) any
action or proceeding by any government or governmental
authority or agency, or (y) any action or proceeding by any
other person, that has a reasonable likelihood of success, in
any case referred to in clauses (x) or (y), before any court or
governmental authority or agency, (i) challenging or seeking to
make illegal, to delay materially or otherwise directly or
indirectly to restrain or prohibit the consummation of the
Merger or seeking to obtain material damages or otherwise
directly or indirectly relating to the transactions
contemplated by this Agreement, (ii) seeking to restrain or
prohibit MergerSub's (including its Subsidiaries and
affiliates) ownership or operation of all or any material
portion of the business or assets of the Company and its
Subsidiaries, taken as a whole, or to compel MergerSub or any
of its Subsidiaries or affiliates to dispose of or hold
separate all or any material portion of the business or assets
of the Company and its Subsidiaries, taken as a whole, (iii)
seeking to impose or confirm material limitations on the
ability of MergerSub or any of its Subsidiaries or affiliates
to effectively control the business or operations of the
Company and its Subsidiaries, taken as a whole, or effectively
to exercise full rights of ownership of the Shares or Company
Stock, including, without limitation, the right to vote any
Shares or Company Stock acquired or owned by MergerSub or any
of its Subsidiaries or affiliates on all matters properly
presented to the Company's stockholders, or (iv) seeking to
require divestiture by MergerSub or any of its Subsidiaries or
affiliates of any Shares or Company Stock, and no court,
arbitrator or governmental body, agency or official shall have
issued any judgment, order, decree or injunction, and there
shall not be any statute, rule or regulation, that, in the sole
judgment of MergerSub is likely, directly or indirectly, to
result in any of the consequences referred to in the preceding
clauses (i) through (iv);
(c) MergerSub shall have received all documents it may
reasonably request relating to the existence of the Company and
the Subsidiaries and the authority of the Company for this
Agreement, all in form and substance satisfactory to MergerSub;
(d) the holders of not more than 3% of the outstanding
Shares shall have demanded appraisal of their Shares in
accordance with Delaware Law;
42
(e) MergerSub shall be reasonably satisfied that the
Merger will be recorded as a "recapitalization" for financial
reporting purposes;
(f) MergerSub shall have received undertakings in writing
from each person, if any, who according to counsel for the
Company might reasonably be considered "affiliates" of the
Company within the meaning of Rule 145(c) of the SEC pursuant
to the Securities Act (each, an "AFFILIATE"), in each case in
form and substance satisfactory to counsel for MergerSub
providing (i) such Affiliate will notify MergerSub in writing
before offering for sale or selling or otherwise disposing of
any shares of Company Stock owned by such Affiliate and (ii) no
such sale or other disposition shall be made unless and until
the Affiliate has supplied to MergerSub an opinion of counsel
for the Affiliate (which opinion and counsel shall be
reasonably satisfactory to MergerSub) to the effect that such
transfer is not in violation of the Securities Act;
(g) the Registration Rights Agreement dated as of October
20, 1995, entered into among the Company and the Significant
Security Holders (as defined therein), shall have been amended
in the manner previously agreed;
(h) The certificate of designation for the Mirror
Preferred Stock shall have been accepted for filing by the
Delaware Secretary of State; and
(i) Total indebtedness (long and short term) of the
Company and its Subsidiaries as of the Effective Time,
excluding any indebtedness attributable to "Phase II" as
defined in the Agreement for Services for End-Of-Life Inventory
Management dated as of June 7, 1996 between Operating Co. and
Compaq Computer Corporation ("ATTRIBUTABLE INDEBTEDNESS") shall
not exceed $240,000,000 and shall not exceed $255,000,000
including Attributable Indebtedness.
Section 8.3. Condition to the Obligation of the Company.
The obligation of the Company to consummate the Merger is
subject to the satisfaction of the following further
conditions:
(a) MergerSub shall have performed in all material
respects all of its obligations hereunder required to be
performed by it at or prior to the Effective Time, the
representations and warranties of MergerSub contained in this
Agreement and in any certificate or other writing delivered by
either of them pursuant hereto shall be true in all material
respects at and as of the Effective
43
Time (except for any inaccuracies in such representations and
warranties that are solely due to an action taken after the
date hereof of the type described in Section 5.01 which is taken
specifically in accordance with Section 5.01) (provided that
representations made as of a specific date shall be required to
be true as of such date only) as if made at and as of such time
and the Company shall have received a certificate signed by any
Vice President of MergerSub to the foregoing effect; and
(b) The Board of Directors of the Company shall have
received advice, reasonably satisfactory to the Board, from an
independent advisor confirming the belief of MergerSub set
forth in the last sentence of Section 4.07.
ARTICLE 9
TERMINATION
Section 9.1. Termination. This Agreement may be
terminated and the Merger may be abandoned at any time prior to
the Effective Time (notwithstanding any approval of this
Agreement by the stockholders of the Company):
(a) by mutual written consent of the Company and MergerSub;
(b) by either the Company or MergerSub, if the Merger has
not been consummated by the later of (x) the earlier of Sep-
tember 15, 1997 and ten business days after the Company
Stockholders Meeting, and (y) August 15, 1997, provided that
the party seeking to exercise such right is not then in breach
in any material respect of any of its obligations under this
Agreement;
(c) by either the Company or MergerSub, if MergerSub (in
the case of termination by the Company), or the Company (in the
case of termination by MergerSub) shall have breached in any
material respect any of its obligations under this Agreement or
any representation and warranty of MergerSub (in the case of
termination by the Company) or the Company (in the case of
termination by MergerSub) shall have been incorrect in any
material respect when made or at any time prior to the Closing;
(d) by either the Company or MergerSub, if there shall be
any law or regulation that makes consummation of the Merger
illegal or otherwise prohibited or if any judgment, injunction,
order or decree enjoining MergerSub or the
44
Company from consummating the Merger is entered and such
judgment, injunction, order or decree shall become final and
nonappealable;
(e) by MergerSub if the Board of Directors of the Company
shall have withdrawn or modified or amended, in a manner ad-
verse to MergerSub, its approval or recommendation of this
Agreement and the Merger or its recommendation that
stockholders of the Company adopt and approve this Agreement
and the Merger, or approved, recommended or endorsed any
proposal for a transaction other than the Merger (including a
tender or exchange offer for Shares) or if the Company has
failed to call the Company Stockholders Meeting or failed as
promptly as reasonably practicable after the Registration
Statement is declared effective to mail the Company Proxy
Statement to its stockholders or failed to include in such
statement the recommendation referred to above;
(f) by the Company if prior to the Effective Time the
Board of Directors of the Company shall have withdrawn or
modified or amended, in a manner adverse to MergerSub, its
approval or recommendation of this Agreement and the Merger or
its recommendation that stockholders of the Company adopt and
approve this Agreement and the Merger in order to permit the
Company to execute a definitive agreement providing for the
acquisition of the Company or in order to approve a tender or
exchange offer for any or all of the Shares, in either case, as
determined by the Board of Directors of the Company to be on
terms more favorable to the Company's stockholders than the
Merger from a financial point of view, provided that the
Company shall be in compliance with Section 5.04;
(g) by either the Company or MergerSub if, at a duly held
stockholders meeting of the Company or any adjournment thereof
at which this Agreement and the Merger is voted upon, the
requisite stockholder adoption and approval shall not have been
obtained.
The party desiring to terminate this Agreement pursuant to
Sections 9.01(b)-(g) shall give written notice of such
termination to the other party in accordance with Section 10.01.
Section 9.2. Effect of Termination. If this Agreement is
terminated pursuant to Section 9.01, this Agreement shall become
void and of no effect with no liability on the part of any
party hereto, except that the agreements contained in Sections
5.04(b)-(f) and 10.04 shall survive the termination hereof.
45
ARTICLE 10
MISCELLANEOUS
Section 10.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including telecopy or similar writing) and shall be given,
if to MergerSub, to:
Xxxxx X. Xxxxxx
C/O DLJ Merchant Banking II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: 000-000-0000
with a copy to:
Xxxxxx X. Xxxxx, Xx.
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
if to the Company, to:
Xxxxxx X. Xxxxxxx
DecisionOne Holdings Corp.
00 Xxxx Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
with a copy to:
Xxxxx X. Xxxx
Xxxxxx, Xxxxx & Xxxxxxx LLP
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
46
Telecopy: (000) 000-0000
or such other address or telecopy number as such party may
hereafter specify for the purpose by notice to the other
parties hereto. Each such notice, request or other
communication shall be effective (a) if given by telecopy, when
such telecopy is transmitted to the telecopy number specified
in this Section and the appropriate telecopy confirmation is
received or (b) if given by any other means, when delivered at
the address specified in this Section.
Section 10.2. Survival of Representations and Warranties.
The representations and warranties and agreements contained
herein and in any certificate or other writing delivered
pursuant hereto shall not survive the Effective Time or the
termination of this Agreement except for the agreements set
forth in Sections 6.03, 6.04, 6.06 and 7.04 which will survive
the Effective Time and Sections 5.04(b)-(f) and 10.04 which
will survive any termination hereof.
Section 10.3. Amendments; No Waivers. (a) Any provision
of this Agreement may be amended or waived prior to the
Effective Time if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by the Company
and MergerSub or in the case of a waiver, by the party against
whom the waiver is to be effective; provided that after the
adoption of this Agreement by the stockholders of the Company,
no such amendment or waiver shall, without the further approval
of such stockholders, alter or change (i) the amount or kind of
consideration to be received in exchange for any shares of
capital stock of the Company, (ii) any term of the certificate
of incorporation of the Surviving Corporation or (iii) any of
the terms or conditions of this Agreement if such alteration or
change would adversely affect the holders of any shares of
capital stock of the Company.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 10.4. Expenses. Except as provided in Section 5.04,
all costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or
expense.
Section 10.5. Successors and Assigns; Benefit. The
provisions of this
47
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns,
provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto. Nothing in
this Agreement, expressed or implied, shall confer on any
Person other than the parties hereto, and their respective
successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except that
the present and former officers and directors of the Company
shall have the rights set forth in Section 6.03 hereof.
Section 10.6. Governing Law. This Agreement shall be
construed in accordance with and governed by the law of the
State of Delaware, without reference to the conflicts of laws
rules thereof.
Section 10.7. Counterparts; Effectiveness. This
Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto
shall have received counterparts hereof signed by all of the
other parties hereto.
Knowledge Defined. When used with respect to the Company,
"KNOWLEDGE" means the actual knowledge of any of the following
officers of the Company or any of their successors: Xxxxxxx
Xxxxxxx, Xxxxxxx Xxxxxx, Xxxxxx Xxxxxxxxxxx and Xxxxxx Xxxxxxx.
48
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
DECISIONONE HOLDINGS CORP.
By: /s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
QUAKER HOLDING CO.
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: President
49
EXHIBIT A
CERTIFICATE OF INCORPORATION
OF THE
SURVIVING CORPORATION
*****
As of the Effective Time, the Certificate of Incorporation
of the Surviving Corporation shall be amended as follows:
Article Second shall be deleted in its entirety and
replaced with the following:
"SECOND: The address of its registered office in the
State of Delaware is 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx
00000. The name of its registered agent at such address is
Corporation Service Company."
The first paragraph of Article Fourth shall be deleted in
its entirety and replaced with the following:
"FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is 45,000,000
consisting of 30,000,000 shares of Common Stock, par value $.01
per share (the "COMMON STOCK") and 15,000,000 shares of
Preferred Stock, par value $.01 per share (the "PREFERRED
STOCK")."
In addition, the second paragraph and Sections I and II of
Article Fourth shall be deleted. Section III of Article Fourth
shall be renumbered "Section I", Section IV of Article Fourth
shall be renumbered "Section III". Articles Fifth through
Seventh shall be deleted in their entirety, and replaced with
the following:
"FIFTH: The Board of Directors shall have the power to
adopt, amend or repeal the bylaws of the Corporation.
SIXTH: Election of directors need not be by written
ballot unless the bylaws of the Corporation so provide.
SEVENTH: (1) A director of the Corporation shall not be
liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director to the
fullest extent permitted by Delaware Law.
(2)(a) Each person (and the heirs, executors or
administrators of such person) who was or is a party or is
threatened to be made a party to, or is involved in any
threatened, pending or
50
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that
such person is or was a director or officer of the Corporation
or is or was serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified and
held harmless by the Corporation to the fullest extent per-
mitted by Delaware Law. The right to indemnification conferred
in this ARTICLE SEVENTH shall also include the right to be paid
by the Corporation the expenses incurred in connection with any
such proceeding in advance of its final disposition to the
fullest extent authorized by Delaware Law. The right to
indemnification conferred in this ARTICLE SEVENTH shall be a
contract right.
(b) The Corporation may, by action of its Board of
Directors, provide indemnification to such of the officers,
employees and agents of the Corporation to such extent and to
such effect as the Board of Directors shall determine to be
appropriate and authorized by Delaware Law.
(3) The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any expense,
liability or loss incurred by such person in any such capacity
or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such
liability under Delaware Law.
(4) The rights and authority conferred in this ARTICLE
SEVENTH shall not be exclusive of any other right which any
person may otherwise have or hereafter acquire.
(5) Neither the amendment nor repeal of this ARTICLE
SEVENTH, nor the adoption of any provision of this Certificate
of Incorporation or the bylaws of the Corporation, nor, to the
fullest extent permitted by Delaware Law, any modification of
law, shall eliminate or reduce the effect of this ARTICLE SEV-
ENTH in respect of any acts or omissions occurring prior to
such amendment, repeal, adoption or modification.
EIGHTH: The Corporation reserves the right to amend this
Certificate of Incorporation in any manner permitted by
Delaware Law and, with the sole exception of those rights and
powers conferred under the above ARTICLE SEVENTH, all rights
and powers conferred herein on stockholders, directors and
officers, if any, are subject to this reserved power."
Except as provided above, the Certificate of Incorporation
of the Surviving Corporation shall remain in full force and
effect.
51
