1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
dated as of
May 4, 1997
among
DECISIONONE HOLDINGS CORP.
and
QUAKER HOLDING CO.
2
TABLE OF CONTENTS
----------------------
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
SECTION 3.12. Litigation................................................... 17
--------
(1) The Table of Contents is not a part of this Agreement.
i
3
PAGE
----
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
ii
4
PAGE
----
ARTICLE 6
COVENANTS OF MERGERSUB
SECTION 6.01. SEC Filings.....................................................................34
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
iii
5
PAGE
----
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
iv
6
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 1.01. 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").
7
(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 1.02. 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 so
converted;
2
8
(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 ELECTION 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 1.03. 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
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
3
9
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 received 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
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
4
10
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 1.04. 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 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.
5
11
(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 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 1.05. 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
6
12
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.
(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 available 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
7
13
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 available 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 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 1.06. 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
8
14
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 1.07. 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 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 1.08. 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.
9
15
SECTION 1.09. 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 representing such fractions.
Such sale shall be made as soon as practicable after the Effective Time.
ARTICLE 2
THE SURVIVING CORPORATION
SECTION 2.01. 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 2.02. 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 2.03. 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.
10
16
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to MergerSub that:
SECTION 3.01. 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 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 3.02. 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 3.03. 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
11
17
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 3.04. 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 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 encumbrance of any kind in respect of such asset.
SECTION 3.05. 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
12
18
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 capital 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 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 3.06. 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 ownership
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").
13
19
(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 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 3.07. 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 misleading.
(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 3.08. 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
14
20
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 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 3.09. 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 3.09(b) 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
15
21
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 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 incurrence,
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;
16
22
(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
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, or to the knowledge of the Company threatened against or affecting, the
Company
17
23
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.
(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.
18
24
(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 otherwise 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 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
19
25
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 employment, 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 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
20
26
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 providing health or medical benefits in respect of
any active employee 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.
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
21
27
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 accumulated 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 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
22
28
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 Intellectual Property Rights of others to the
extent that, if sustained, 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 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.
23
29
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MERGERSUB
MergerSub represents and warrants to the Company that:
SECTION 4.01. 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 4.02. 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 4.03. 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;
(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 4.04. 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
24
30
MergerSub or to a loss of any benefit to which MergerSub is entitled under any
agreement, contract or other instrument binding upon MergerSub.
SECTION 4.05. 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 4.06. Finders' Fees. Except for Xxxxxxxxx, Xxxxxx & Xxxxxxxx
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 4.07. 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
25
31
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
Subsidiaries' 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. 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 4.08. 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
26
32
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 5.01. 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 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 arrangements (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)
27
33
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, contract, 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;
(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, compensation, 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);
28
34
(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, liabilities 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
(j) agree or commit to do any of the foregoing.
SECTION 5.02. 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 5.03. 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
29
35
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 5.04. 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 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
30
36
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 action 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 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 enumerated 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
31
37
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) 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 contained 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.
32
38
SECTION 5.05. Notices of Certain Events. The Company shall promptly
notify MergerSub of:
(a) any notice or other communication from any Person alleging that
the 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 governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings
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 5.06. 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 5.07. 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 5.08. Solvency Advice. The Company shall request an
independent advisor to deliver the advice contemplated by Section 8.03(a) as
promptly as practicable.
33
39
ARTICLE 6
COVENANTS OF MERGERSUB
MergerSub agrees that:
SECTION 6.01. 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 6.02. 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 6.03. 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
34
40
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, 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 6.04. 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 Corporation 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.
35
41
(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 6.05. 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 6.06. 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 6.07. 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 7.01. 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 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
36
42
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 7.02. 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 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).
37
43
(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 7.03. 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 7.04. 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 8.01. Conditions to the Obligations of Each Party. The
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;
38
44
(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 governmental 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 8.02. 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
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
39
45
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;
(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
40
46
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 8.03. 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 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.
41
47
ARTICLE 9
TERMINATION
SECTION 9.01. 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 September 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
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 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, 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;
42
48
(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 9.02. 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.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. 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
43
49
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
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 10.02. 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 10.03. 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,
44
50
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 10.04. 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 10.05. Successors and Assigns; Benefit. The provisions of this
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 10.06. 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 10.07. 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.
45
51
SECTION 10.08. 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.
46
52
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
47
53
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.
54
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 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 permitted
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 too 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
SEVENTH 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
2
55
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.
