EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SIEMENS CORPORATION,
XXXXXX ACQUISITION CORP.
AND
ENTEX INFORMATION SERVICES, INC.
Dated as of March 13, 2000
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TABLE OF CONTENTS
Page
1. The Merger; Additional Actions......................................2
1.1 The Merger..............................................2
1.2 Effective Time..........................................2
1.3 Closing.................................................2
1.4 Effects of the Merger...................................3
1.5 Certificate of Incorporation, By-Laws and Officers
and Directors of the Surviving Corporation ...........3
1.6 Directors...............................................3
1.7 Further Assurances......................................4
2. Conversion of Shares................................................5
2.1 Conversion of Capital Stock.............................5
2.2 Closing Statement Procedures............................8
2.3 Deposits of Funds at and following the Closing..........9
2.4 Payment for Certificates................................9
3. Representations and Warranties of the Company......................11
3.1 Organization...........................................11
3.2 Capitalization.........................................11
3.3 Authority..............................................13
3.4 No Conflicts; Governmental Requirements;
SEC Documents........................................14
3.5 Subsidiaries...........................................15
3.6 Books and Records......................................16
3.7 Financial Statements...................................16
3.8 Absence of Undisclosed Liabilities.....................16
3.9 Operations and Obligations.............................16
3.10 Properties.............................................17
3.11 Accounts Receivable; Accounts Payable; Inventory.......18
3.12 Contracts..............................................18
3.13 [INTENTIONALLY OMITTED]................................21
3.14 Litigation.............................................21
3.15 Compliance with Law; Authorizations....................21
3.16 Intellectual Property..................................21
3.17 Tax Matters............................................24
3.18 Employee Benefit Plans.................................26
3.19 Employee Compensation..................................28
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3.20 Employees..............................................28
3.21 Environmental Laws.....................................29
3.22 Insurance..............................................29
3.23 Bank Accounts, Letters of Credit and
Powers of Attorney...................................30
3.24 No Adverse Development.................................30
3.25 Transactions with Affiliates...........................30
3.26 Information Statement; Merger Materials................30
3.27 Brokers................................................31
4. Representations and Warranties of Siemens and Acquisition..........31
4.1 Organization...........................................31
4.2 Corporate Authority....................................31
4.3 No Breach..............................................31
4.4 Litigation.............................................32
4.5 Brokers................................................32
4.6 Information............................................32
4.7 Financing..............................................33
5. Covenants and Additional Agreements................................33
5.1 Conduct of Business....................................33
5.2 No Solicitations.......................................36
5.3 Access to Information; Confidentiality.................37
5.4 Preparation of Information Statement;
Approval of Stockholders; Siemens Approval...........38
5.5 Regulatory and Other Approvals.........................39
5.6 Notice and Cure........................................39
5.7 Company Stock Plans; Warrants..........................40
5.8 Termination of Contracts...............................40
5.9 Fulfillment of Conditions..............................40
5.10 Cooperation............................................40
5.11 Director and Officer Indemnification...................41
5.12 Additional Covenants...................................42
6. Conditions to Closing..............................................42
6.1 Conditions to the Obligations of Siemens
and Acquisition......................................42
6.2 Conditions to the Obligations of the Company...........44
7. Survival; Indemnification; Tax Matters.............................45
7.1 Survival...............................................45
7.2 Indemnification........................................45
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Page
7.3 Limitation of Liability; Disposition of Escrow Fund....46
7.4 Stockholders' Representative...........................46
7.5 Notice of Claims.......................................47
7.6 Defense of Third Party Claims..........................47
7.7 Dispute Resolution: Negotiation, Mediation
and Arbitration......................................48
7.8 Exclusive Remedy.......................................49
7.9 Tax Matters............................................49
8. Termination; Effect of Termination.................................51
8.1 Termination............................................51
8.2 Effect of Termination..................................51
9. Fees and Expenses..................................................52
9.1 Expenses...............................................52
9.2 Stockholders of the Company............................53
10. Definitions........................................................53
11. Miscellaneous......................................................63
11.1 Press Releases.........................................63
11.2 Integration............................................63
11.3 Assignment and Binding Effect..........................64
11.4 Waiver.................................................64
11.5 Notices................................................64
11.6 Amendment..............................................66
11.7 Governing Law..........................................66
11.8 Third Party Beneficiaries..............................66
11.9 Performance............................................66
11.10 Severability...........................................66
11.11 Extensions.............................................66
11.12 Section Headings.......................................67
11.13 Exhibits; Disclosure Schedule..........................67
11.14 Counterparts...........................................67
EXHIBITS
Exhibit A Certificate of Incorporation of Surviving Corporation
Exhibit B By-Laws of Surviving Corporation
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Exhibit C Form of Closing Statement and Measurement Date Balance Sheet
Methodologies
Exhibit D Form of Confidentiality/Non-Solicit Agreement
Exhibit E Matters to be opined to by counsel to the Company
Exhibit F-1 List of Individual Resignations (Employment and Offices)
Exhibit F-2 List of Individual Resignations (Offices)
Exhibit G Form of Tax-Related Insurance Policies
Exhibit H Form of Opinion of Siemens Internal Counsel
Exhibit I Escrow Agreement
Exhibit J Tax Escrow Agreement
Exhibit K Directors and Officers of Surviving Corporation
Exhibit L Form of Dort X. Xxxxxxx, III Side Letter
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of March 13,
2000, by and among SIEMENS CORPORATION, a Delaware corporation ("Siemens"),
XXXXXX ACQUISITION CORP., a Delaware corporation ("Acquisition"), and ENTEX
INFORMATION SERVICES, INC., a Delaware corporation (the "Company"). Capitalized
terms used in this Agreement and not otherwise defined have the meanings
ascribed to them in Section 10.
RECITALS
A. The Company is a Delaware corporation, with its principal executive
office located at Xxx Xxxxxxxxxxxxx Xxxxx, Xxx Xxxxx, Xxx Xxxx 00000.
B. Siemens is a Delaware corporation with its principal offices located at
000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. Acquisition is a wholly owned
subsidiary of Siemens and was formed to merge with and into the Company so that,
as a result of the merger, the Company will survive and become a wholly owned
subsidiary of Siemens.
C. The respective Boards of Directors of Siemens, Acquisition and the
Company have determined that this Agreement and the consummation of the merger
of Acquisition with and into the Company (the "Merger") in accordance with the
laws of the State of Delaware and subject to the terms and conditions of this
Agreement, is advisable and in the best interests of Siemens, Acquisition and
the Company, respectively, and their respective stockholders and have approved
this Agreement.
D. The principal stockholder of the Company and certain of his affiliates
have simultaneously herewith entered into an agreement with Siemens and
Acquisition (the "Stockholders Agreement") in which those Persons have (i)
granted Acquisition an option to acquire their shares (the "Call Option"); (ii)
agreed to vote their shares (x) in favor of the adoption of this Agreement and
(y) against any Acquisition Transaction with any third party; (iii) agreed to
provide all notices and perform all actions necessary for the consummation of
the transactions contemplated herein; (iv) received an undertaking from
Acquisition to purchase their shares, at their option, under certain
circumstances (the "Put Option"); and (v) agreed to exercise certain rights (the
"Drag-Along Rights") to require various stockholders of the Company to sell
their shares on the same terms.
E. The parties intend that Siemens' acquisition of the Company will be
accomplished in a single step pursuant to the Merger, but that under certain
conditions the acquisition will instead be accomplished in two phases - namely,
a purchase by Acquisition of the shares covered by the Stockholders Agreement,
followed by completion of the Merger. In this Agreement, the term "Initial
Purchase" refers to Acquisition's acquisition of the shares cov-
ered by the Stockholders Agreement, either as a result of the exercise of the
Call Option or the Put Option, if that acquisition is prior to the Effective
Time, and the term "Initial Purchase Date" refers to the date on which title to
those shares passes to Acquisition.
F. Certain officers and employees of the Company have executed and
delivered to Siemens employment agreements, termination and severance agreements
and/or non-competition/non-solicitation agreements that by their terms will take
effect as of the earlier of (i) the Effective Time or (ii) the Initial Purchase
Date.
G. Siemens, Acquisition and the Company desire to make certain
representations and warranties, covenants and agreements in connection with the
Merger and/or the Initial Purchase and also to set forth the terms and
conditions of the Merger and the Initial Purchase, all as set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound do hereby agree
as follows:
1. The Merger; Additional Actions.
1.1 The Merger. At the Effective Time, upon the terms and subject to the
conditions of this Agreement, Acquisition shall be merged with and into the
Company in accordance with the provisions of the General Corporation Law of the
State of Delaware (the "DGCL"). The Company shall be the surviving corporation
in the Merger (the "Surviving Corporation"). As a result of the Merger, all of
the respective outstanding shares of capital stock of the Company and
Acquisition shall be converted or cancelled in the manner provided in Section 2.
1.2 Effective Time. At the Closing, a certificate of merger (the
"Certificate of Merger") shall be duly prepared and executed by the Surviving
Corporation and thereafter delivered to the Secretary of State of the State of
Delaware (the "Secretary of State") for filing, as provided in Section 251 of
the DGCL, on, or as soon as practicable after, the Closing Date. The Merger
shall become effective at the time of the filing of the Certificate of Merger
with the Secretary of State, or at such later time as may be agreed by Siemens
and the Company and stated in the Certificate of Merger (the date and time of
such filing (or stated later time, if any) being referred to herein as the
"Effective Time").
1.3 Closing. The closing of the Merger (the "Closing") shall take place at
the offices of Xxxxxxxx Chance Xxxxxx & Xxxxx LLP, 000 Xxxx Xxxxxx,
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Xxx Xxxx, Xxx Xxxx 00000, on a date and at a time to be specified by the
parties, which shall in no event be later than 10:00 a.m., local time, on the
second business day following satisfaction of the conditions set forth in
Section 6.1(e), (g) and (i), provided that the other closing conditions set
forth in Section 6 shall have been satisfied or, if permissible, waived in
accordance with this Agreement, or on such other date, time and place as the
parties may mutually agree (the "Closing Date"). At the Closing there shall be
delivered to Siemens, Acquisition and the Company the certificates and other
documents and instruments required to be delivered under Section 6.
1.4 Effects of the Merger. At the Effective Time, the effects of the Merger
shall be as provided in the applicable provisions of the DGCL.
1.5 Certificate of Incorporation, By-Laws and Officers and Directors of the
Surviving Corporation.
(a) The certificate of incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended in the Merger so as to
read in its entirety as set forth in Exhibit A and, as so amended, shall be the
certificate of incorporation of the Surviving Corporation until thereafter
amended as provided by law and such certificate of incorporation.
(b) The by-laws in the form set forth in Exhibit B shall be the by-laws of
the Surviving Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the Surviving Corporation and such by-laws.
(c) From and after the Effective Time, the directors and officers of the
Surviving Corporation shall be as set forth on Exhibit K hereto, until their
respective successors are duly elected and qualified or until their earlier
death, resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and By-Laws.
1.6 Directors.
If the Initial Purchase occurs:
(a) Upon the Initial Purchase Date and from time to time thereafter so long
as Acquisition, Siemens and Siemens' other direct or indirect wholly-owned
Subsidiaries collectively continue to hold shares of Company Common Stock in an
amount at least equal to a majority of the outstanding voting power of the
Company's capital stock, Siemens shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company, each Subsidiary and each standing committee thereof as is equal to
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the product of the total number of directors on the Board of Directors of the
Company, such Subsidiary and such committee (determined after giving effect to
the directors elected pursuant to this sentence), as the case may be, multiplied
by the percentage that the aggregate number of shares of Company Common Stock
beneficially owned by Siemens or its wholly owned Subsidiaries bears to the
total number of shares of Company Common Stock then outstanding, and the Company
shall, upon request of Siemens, promptly take all actions necessary to cause
Siemens' designees to be so elected, including, if necessary, increasing the
size of the Board of Directors of the Company or such Subsidiary or using its
best efforts to obtain the resignations of one or more existing directors of the
Company or such Subsidiary; provided, however, that prior to the Effective Time,
the Board of Directors of the Company and each Subsidiary shall contain at least
two members who are neither officers, directors nor designees of Siemens (the
"Company Designees").
(b) The Company's obligations to appoint Siemens' designees to the Board
shall be subject to Section 14(f) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and Rule 14f-1 promulgated thereunder. The Company
shall promptly take all actions required pursuant to Section 14(f) and Rule
14f-1 in order to fulfill its obligations under this Section 1.6 and shall
distribute to its stockholders promptly following the execution and delivery of
this Agreement such written material as is required under such Section and Rule
in order to fulfill its obligations under this Section 1.6 (the "14(f)
Material"). Siemens will supply any information with respect to itself and its
officers, directors and Affiliates required by such Section and Rule to the
Company to be included in the 14(f) Material distributed by the Company.
(c) From and after the election or appointment of Siemens' designees
pursuant to this Section 1.6, if any, and prior to the Effective Time, any
amendment or termination of this Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations or other acts
of Siemens or Acquisition or waiver of any of the Company's rights hereunder, or
any other action taken by the Board of Directors of the Company in connection
with this Agreement, will require the concurrence of a majority of the directors
of the Company then in office who are Company Designees.
1.7 Further Assurances. Each party hereto shall execute such further
documents and instruments and take such further actions as may reasonably be
requested by one or more of the others to consummate the Merger, to vest the
Surviving Corporation with full title to all assets, properties, rights,
approvals, immunities and franchises of Acquisition and the Company or to
otherwise effect the purposes of this Agreement.
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2. Conversion of Shares.
2.1 Conversion of Capital Stock. At the Effective Time, by virtue of the
Merger and without any further action on the part of any holder of capital stock
of the Company:
(a) Capital Stock of Acquisition. Each issued and outstanding share of the
common stock, par value $.0001 per share, of Acquisition ("Acquisition Common
Stock") shall be converted into and become one fully paid and nonassessable
share of common stock, par value $.0001 per share, of the Surviving Corporation
("Surviving Corporation Common Stock"). Each certificate representing
outstanding shares of Acquisition Common Stock shall at the Effective Time
represent an equal number of shares of Surviving Corporation Common Stock.
(b) Cancellation of Treasury Stock and Stock Owned by Siemens and
Acquisition. All shares of capital stock of the Company that are owned by the
Company as treasury stock and any shares of Company Common Stock owned by
Siemens or Acquisition or by any direct or indirect wholly-owned Subsidiary of
Siemens or Acquisition automatically shall be cancelled and shall cease to exist
and no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Capital Stock.
(i) Each issued and outstanding share of the common stock, par value
$.0001 per share, of the Company ("Company Common Stock") (other than
shares to be cancelled in accordance with Section 2.1(b) and other than
shares that are Dissenting Shares (as defined in Section 2.1(d)(i)) shall
be converted into the right to receive an amount per share in cash (the
"Merger Price") equal to the quotient of (x) the Adjusted Acquisition Price
divided by (y) the number of shares of Company Common Stock that are issued
and outstanding immediately prior to the Effective Time (the "Outstanding
Share Amount"); provided, however, that in no event shall the aggregate
Merger Price exceed the sum of (i) 66,942,037 plus (ii) the aggregate
amount in cash received by the Company after the date of this Agreement and
prior to the Effective Time upon exercise of Options.
All such shares of Company Common Stock shall no longer be outstanding and
shall be cancelled automatically and shall cease to exist, and each holder of a
certificate representing any such shares of Company Common Stock shall cease to
have any rights with respect thereto, except the right to receive, subject to
the terms of the Escrow Agreement and the Tax Escrow Agreement and Sections
2.1(c)(ii), (iii) and (iv), the Merger Price and, if applicable, the Incremental
Amount per share, upon the surrender of such certificate in accordance with
Section 2.3, without interest. For purposes of this Agreement, the term
"Adjusted Acquisition
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Price" shall be (i) $105,000,000 (the "Acquisition Price") minus (ii) the
Closing Liquid Net Worth Adjustment plus (iii) an additional amount equal to the
product of (x) the amount determined pursuant to the preceding clauses (i) and
(ii) times (y) 6.5% per year from the Measurement Date to the Effective Time,
calculated on an uncompounded basis.
(ii) The first $20,000,000 of the aggregate Merger Price and, if
applicable, Incremental Amount (the "Indemnity Amount") shall be deposited
into escrow pursuant to the terms of the Escrow Agreement. In accordance
with the terms of the Escrow Agreement, following completion of the Escrow
period, the Remaining Escrow Balance shall be deposited with the Payment
Agent in accordance with Section 2.3 for distribution to the holders of
shares of the Company Common Stock as of the Effective Time in proportion
to their respective share ownership.
(iii) If the Tax Insurance Election is made, to the extent the
aggregate Merger Price and, if applicable, Incremental Amount exceeds
$20,000,000, the next $20,000,000 of the aggregate Merger Price and, if
applicable, Incremental Amount (the "Tax Escrow Amount") shall be deposited
into escrow pursuant to the terms of the Tax Escrow Agreement. In
accordance with the terms of the Tax Escrow Agreement, following completion
of the Tax Matters Escrow Period, the Tax Escrow Balance shall be deposited
with the Payment Agent in accordance with Section 2.3 for distribution to
the holders of shares of Company Common Stock as of the Effective Time in
proportion to their respective share ownership.
(iv) To the extent the aggregate Merger Price and, if applicable,
Incremental Amount exceeds $20,000,000 or, if the Tax Insurance Election is
made, $40,000,000, the next $500,000 of the aggregate Merger Price and, if
applicable, Incremental Amount (the "Stockholder Representative Expense
Amount") shall be paid to the Stockholders' Representative for the purpose
of funding expenses in connection with his performance of the duties of
Stockholders' Representative; provided that the Stockholders'
Representative shall deliver an undertaking to the Company pursuant to
which he will agree to deliver to the Payment Agent any portion of such
amount not utilized for such purpose, which portion shall be distributed to
the holders of shares of Company Common Stock as of the Effective Time in
proportion to the respective share ownership.
(v) If the Effective Time occurs prior to the date letters of
transmittal are first mailed pursuant to Section 2.4(b), an additional
amount per share of Company Common Stock shall be received upon conversion
of each share in the Merger in an amount equal to product of (x) the Merger
Price and (y) 6.5% per year from the Effective Time until the date letters
of transmittal are first mailed pursuant to Section 2.4(b), calculated on
an uncompounded basis (the "Incremental Amount").
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(d) Dissenting Shares. Notwithstanding any provision of this Agreement to
the contrary, each outstanding share of Company Common Stock the holder of which
has not voted in favor of the Merger, has perfected such holder's right to an
appraisal of such holder's shares in accordance with the applicable provisions
of the DGCL and has not effectively withdrawn or lost such right to appraisal
(in each case a "Dissenting Share"), shall not be converted into or represent a
right to receive the Merger Price and, if applicable, the Incremental Amount
pursuant to Section 2.1(c), but rather the holder thereof shall be entitled only
to such rights as are granted by the applicable provisions of the DGCL;
provided, however, that any Dissenting Share held by a Person at the Effective
Time who shall, after the Effective Time, withdraw the demand for appraisal or
lose the right of appraisal, in either case pursuant to the DGCL, shall be
deemed to be converted into, as of the Effective Time, the right to receive,
subject to the terms of the Escrow Agreement and the Tax Escrow Agreement and
Sections 2.1(c)(ii), (iii) and (iv), the Merger Price and, if applicable, the
Incremental Amount pursuant to Section 2.1(c).
The Company shall give Siemens (x) prompt notice of any written demands for
appraisal, withdrawals of demands for appraisal and any other instruments served
pursuant to the applicable provisions of the DGCL relating to the appraisal
process received by the Company and (y) the exclusive right to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. The Company will not, except with the prior written consent of Siemens,
voluntarily make any payment with respect to any demands for appraisal or settle
or offer to settle any such demands.
(e) Treatment of Options. As of the date of this Agreement, each option to
purchase Company Common Stock that is then outstanding (each an "Option")
pursuant to a compensation plan or arrangement of the Company (the "Company
Stock Plans"), whether or not then vested or exercisable, will become vested and
exercisable. Each Option (other than Options issued pursuant to the Company's
1996 Performance Incentive Plan) that has not been exercised as of the Effective
Time shall be cancelled without consideration. Each Option issued pursuant to
the Company's 1996 Performance Incentive Plan that has not been exercised as of
the Effective Time shall be exercisable solely for cash in an amount not to
exceed the Merger Price. Prior to the Effective Time, the Company will obtain
all consents and make all amendments, if any, to the terms of Options and the
Company Stock Plans, if any, pursuant to which the Options were issued that are
necessary to give effect to the provisions of this Section 2.1(e).
(f) Warrants. At the Effective Time, each warrant to purchase Company
Common Stock that is outstanding as of the Effective Time (each a "Warrant")
pursuant to any of the Warrant Agreements or otherwise shall be exercisable
solely for cash in an amount not to exceed the Merger Price. Prior to the
Effective Time, the Company will obtain all consents and
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make all amendments, if any, to the terms of the Warrants and the Warrant
Agreements that are necessary to give effect to the provisions of this Section
2.1(f).
2.2 Closing Statement Procedures.
(a) As promptly as practicable, but in any event not later than 30 days
after the date (the "Measurement Date") that is the first to occur of (i) the
Closing Date and (ii) the Initial Purchase Date, Siemens shall cause to be
prepared and delivered to Dort X. Xxxxxxx, III (the "Stockholders'
Representative") a draft Closing Statement substantially in the form of Exhibit
C setting forth (x) the balance sheet of the Company at the close of business on
the Measurement Date, which shall be prepared using the procedures and
methodologies set forth in Exhibit C, and (y) Siemens' calculation (based on the
amounts set forth on the balance sheet) of the Closing Liquid Net Worth
Adjustment.
(b) Subject to the provisions of paragraph (c) below, the Stockholders'
Representative shall have 15 days from the date of delivery of the Closing
Statement to review and approve the Closing Statement. If the Stockholders'
Representative agrees with Siemens' calculation of the Closing Liquid Net Worth
Adjustment contained in the Closing Statement, the Stockholders' Representative
shall promptly so advise Siemens in writing, in which event the Closing Liquid
Net Worth Adjustment shall be deemed final and the Adjusted Acquisition Price
shall be calculated and deposited with the Payment Agent in accordance with
Section 2.3.
(c) If the Stockholders' Representative in good faith disagrees with the
calculation of the Closing Liquid Net Worth Adjustment set forth in the Closing
Statement, the Stockholders' Representative shall notify Siemens in writing (the
"Notice of Disagreement") of such disagreement within 15 days after delivery of
the Closing Statement. The Notice of Disagreement shall set forth in reasonable
detail the basis for the disagreement. Thereafter, Siemens and the Stockholders'
Representative shall attempt in good faith to resolve and finally determine the
Closing Liquid Net Worth Adjustment. If Siemens and the Stockholders'
Representative are unable to resolve the disagreement within 10 days after the
delivery of the Notice of Disagreement, Siemens and the Stockholders'
Representative shall appoint PriceWaterhouse Coopers (the "Independent
Accountant") to resolve the disputed items and make a determination with respect
thereto. Such determination will be made, and written notice thereof given to
Siemens and the Stockholders' Representative, within 30 days after such
selection. The determination by the Independent Accountant shall be final,
binding and conclusive upon the parties hereto. The scope of the Independent
Accountant's engagement (which shall not be an audit) shall be limited to the
resolution of the items contained in the Notice of Disagreement, and the
recalculation, if any, of the Closing Liquid Net Worth Adjustment in light of
such resolution and such firm shall be deemed to be acting as experts and not as
arbitrators. In their review of the Closing Statement and recalculation of the
Closing Liquid Net Worth
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Adjustment, the Independent Accountant will be limited to using the procedures
and methodologies set forth in Exhibit C. The fees, costs and expenses of the
Independent Accountant, if any, will be borne equally by Siemens and the
Stockholders' Representative (it being understood that the Stockholders'
Representative's portion thereof shall be one of the expenses for which he is
entitled to receive reimbursement in accordance with the terms of the Escrow
Agreement). Within five days of delivery of a notice of determination by the
Independent Accountant as described above, the applicable portions of the
Adjusted Acquisition Price (calculated using the Closing Liquid Net Worth
Adjustment so determined by the Independent Accountant) shall be delivered or
made available to the Payment Agent, the Escrow Agent, the Stockholders'
Representative and/or the Tax Escrow Agent, as the case may be, in accordance
with Section 2.3.
2.3 Deposits of Funds at and following the Closing.
(a) On the date (the "Initial Distribution Date") which is the later to
occur of (i) the date on which the Adjusted Acquisition Price is determined
pursuant to the provisions of Section 2.2 or (ii) the Effective Time, (x)
Siemens shall deposit with the Escrow Agent funds in an amount equal to the
Indemnity Amount, (y) if the Tax Insurance Election is not made, Siemens shall
deposit with the Stockholders' Representative, the Stockholders' Representative
Expense Amount, if any, and shall deposit with the Payment Agent the balance, if
any, of the aggregate Merger Price and the aggregate Incremental Amount, if any,
and (z) if the Tax Insurance Election is made, Siemens: shall deposit with the
Tax Escrow Agent the Tax Escrow Amount, if any; shall deposit with the
Stockholders' Representative, the Stockholders' Representative Expense Amount,
if any; and shall deposit with the Payment Agent the balance, if any, of the
aggregate Merger Price and the aggregate Incremental Amount, if any.
2.4 Payment for Certificates.
(a) Exchange Fund. Siemens shall appoint the Payment Agent no later than
the Closing Date. The Payment Agent shall agree to hold the funds deposited with
it pursuant to Section 2.3 and, in its capacity as the Escrow Agent pursuant to
the Escrow Agreement and as the Tax Escrow Agent pursuant to the Tax Escrow
Agreement (such funds, together with earnings thereon, being referred to herein
as the "Exchange Fund"), for disbursement as provided in this Section 2.4.
(b) Payment Procedures. As soon as reasonably practicable (and in any event
not later than five business days) after the Initial Distribution Date, the
Surviving Corporation shall cause to be mailed to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates")
whose shares are converted pursuant to Section 2.1(c) into the right to receive
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the merger consideration described in Section 2.1(c), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Payment Agent and shall be in such form and have such other
provisions as the Surviving Corporation may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the portions, if any, of the Merger Price and Incremental Amount, if any,
deposited with the Payment Agent on the Initial Distribution Date. Upon
surrender of a Certificate to the Payment Agent, together with such letter of
transmittal, duly executed and completed in accordance with its terms, the
holder of such Certificate shall be entitled to receive in exchange therefor a
check representing such portion, if any, of the Merger Price and Incremental
Amount, if any, per share of Company Common Stock represented thereby which such
holder has the right to receive pursuant to the provisions of Section 2.1(c),
and the Certificate so surrendered shall forthwith be cancelled. Except as
otherwise provided in this Agreement, the Tax Escrow Agreement or the Escrow
Agreement, in no event shall the holder of any Certificate be entitled to
receive interest on any funds to be received in the Merger. Until surrendered as
contemplated by this Section 2.4(b), each Certificate shall be deemed at all
times after the Effective Time to represent only the right to receive the merger
consideration provided for in this Agreement.
(c) Tax Escrow Balance. As soon as reasonably practicable (and in any event
not later than five business days) following the end of the Tax Matters Escrow
Period, Siemens shall cause to be mailed to each Person entitled to a portion of
the Tax Escrow Balance pursuant to Section 2.1(c) a notice setting forth (i) the
amount of the Tax Escrow Balance and (ii) instructions for obtaining the amount
thereof to which each such Person is entitled pursuant to Section 2.1(c) from
the Payment Agent. Upon compliance by each such Person with those instructions,
such Person shall be entitled to be paid the applicable amount due under Section
2.1(c). Except as expressly provided in the Tax Escrow Agreement, in no event
shall interest be paid on any such amount.
(d) Remaining Escrow Balance. As soon as reasonably practicable (and in any
event not later than five business days) following the end of the Escrow Period,
Siemens shall cause to be mailed to each Person entitled to a portion of the
Remaining Escrow Balance pursuant to Section 2.1(c) a notice setting forth (i)
the amount of the Remaining Escrow Balance and (ii) instructions for obtaining
the amount thereof to which each such Person is entitled pursuant to Section
2.1(c) from the Payment Agent. Upon compliance by each such Person with those
instructions, such Person shall be entitled to be paid the applicable amount due
under Section 2.1(c). Except as expressly provided in the Escrow Agreement, in
no event shall interest be paid on any such amount.
-10-
(e) No Further Ownership Rights in Company Common Stock. From and after the
Effective Time, the stock transfer books of the Company shall be closed and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Section 2.4.
(f) Termination of Exchange Fund. Any monies furnished to the Payment Agent
which remain undistributed to the stockholders of the Company for six months
after the date they are first furnished shall be delivered to Siemens, upon
demand, and any stockholders of the Company who have not theretofore complied
with this Section 2 shall thereafter look only to Siemens (subject to abandoned
property, escheat and other similar laws) as general creditors for payment of
their claim for the merger consideration. Neither Siemens nor the Surviving
Corporation shall be liable to any holder of shares of capital stock of the
Company for cash representing the merger consideration delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
3. Representations and Warranties of the Company. Except as set forth in
the relevant Section (determined in accordance with Section 11.13) of the
disclosure schedule (the "Disclosure Schedule") delivered by the Company to
Siemens concurrently with the execution of this Agreement, the Company
represents and warrants to Acquisition and to Siemens as follows:
3.1 Organization. (a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite power and authority to carry on its business as it has been and is
now being conducted and to own, use and lease its assets and properties. The
Company is duly qualified or licensed as a foreign corporation to do business
and is in good standing in each jurisdiction where the nature of its business or
the ownership, leasing or operation of its assets and properties makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed and in good standing would not have a Material Adverse
Effect.
(b) Except for the Subsidiaries of the Company set forth in Section 3.5 of
the Disclosure Schedule and as set forth in Section 3.1(b) of the Disclosure
Schedule, the Company does not, directly or indirectly, own any equity or
similar interest in or have any other ownership right in any other Person, nor
does it have any obligation to purchase any shares of stock, other securities or
other form of investment in any other Person.
3.2 Capitalization. (a) As of the close of business on the business day
immediately preceding the date of this Agreement, the total authorized shares of
capital stock of the Company consisted solely of (i) 100,000,000 shares of
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Company Common Stock, of which 32,814,724 shares were issued and outstanding,
and (ii) 2,000,000 shares of Preferred Stock, of which no shares were issued and
outstanding. The Preferred Stock and the Company Common Stock are sometimes
collectively referred to herein as the "Company Capital Stock." At the close of
business on the business day immediately preceding the date of this Agreement,
82,500 shares of Company Common Stock were held in treasury. No shares of
Company Capital Stock were issued after the close of business on the business
day immediately preceding the date of this Agreement, other than pursuant to the
exercise of Options outstanding as of the close of business on the business day
immediately preceding the date of this Agreement. As of the close of business on
the business day immediately preceding the date of this Agreement, 9,916,681
shares of Company Common Stock were reserved for issuance of which (i) 250,855
shares were reserved for issuance upon the exercise of a warrant issued pursuant
to a Warrant Agreement, dated July 15, 1997 between the Company and IBMCC (the
"1997 IBM Warrant"); (ii) 715,230 shares were reserved for issuance upon the
exercise of a warrant issued pursuant to a Warrant Purchase Agreement, dated
November 12, 1997 between the Company and Microsoft Corp. (the "Microsoft
Warrant") (all of the Warrant Agreements referred to herein collectively being
the "Warrant Agreements"); (iii) 8,926,915 shares were reserved for issuance
upon the exercise of outstanding stock options under the Company Stock Plans;
and (iv) 23,681 shares were reserved for issuance pursuant to the 1996
Non-Employee Director Stock Plan (the "XXX Plan"). All the outstanding shares of
Company Common Stock have been duly and validly authorized and issued and are
fully paid and nonassessable. No shares of capital stock have been issued by the
Company at any time in violation of the preemptive rights of any stockholder of
the Company. All shares of capital stock previously issued by the Company were
offered, issued and sold in compliance with all applicable Federal and state
securities laws and regulations.
(b) Section 3.2 of the Disclosure Schedule sets forth a complete and
accurate listing of all options, warrants, restricted stock grants and other
rights to acquire shares of Company Common Stock outstanding as of the date of
execution and delivery of this Agreement. There are no existing agreements,
subscriptions, options, warrants, calls, commitments, trusts (voting or
otherwise), or rights of any kind whatsoever between the Company and any Person,
and none of the foregoing exist granting any interest in or the right to
purchase or otherwise acquire from the Company or granting to the Company any
interest in or the right to purchase or otherwise acquire from any Person, at
any time, or upon the occurrence of any stated event, any securities of the
Company, whether or not presently issued or outstanding. There are no other
outstanding securities of the Company or any other entity which are convertible
into or exchangeable for other securities of the Company. There are no proxies,
agreements or understandings with respect to the voting of the shares of Company
Capital Stock to which the Company is a party or, to the knowledge of the
Company, to which any other Person is a party or any agreements, subscriptions,
options, warrants, calls, commitments or rights of any kind granting to any
Person the right to purchase or otherwise acquire from the Company any
secu-
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rities so convertible or exchangeable. No Option or Warrant has an exercise
or strike price of less than $2.04 per share and each Option issued pursuant to
the Company's 1996 Performance Incentive Plan that has not been exercised as of
the Effective Time shall be exercisable solely for cash in an amount not in
excess of the Merger Price.
(c) The Company has not:
(i) since June 27, 1999, declared, set aside, made or paid any
dividend or other distribution, payable in cash, stock, property or
otherwise with respect to any of its capital stock;
(ii) since June 27, 1999, reclassified, combined, split, subdivided or
redeemed, purchased (other than pursuant to the terms of any restricted
stock award) or otherwise acquired, directly or indirectly, any of its
capital stock;
(iii) since the date of the latest balance sheet included in the
December Financial Statements, incurred any indebtedness for borrowed money
or issued any debt securities or assumed, guaranteed or endorsed, or
otherwise as an accommodation become responsible for, the obligations of
any Person, or made any loans or advances except pursuant to existing lines
of credit or other existing credit facilities in the ordinary course of
business; or
(iv) since June 27, 1999, entered into or amended any contract,
agreement, commitment or arrangement with respect to any matter set forth
in this Section 3.2(c)(iii).
(d) All amounts of outstanding indebtedness owed by the Company are
repayable at any time without requiring the payment of any premium on the part
of the Company or resulting in any penalty to the Company.
3.3 Authority. The Company has full corporate power and authority to enter
into this Agreement and, subject to obtaining the approval by its stockholders
of the adoption of this Agreement ("Stockholder Approval"), if and to the extent
required by the DGCL, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized and approved by the
Company's Board of Directors and, subject to obtaining Stockholder Approval (if
and to the extent required by the DGCL) and except for the filing of the
Certificate of Merger pursuant to the DGCL, no other corporate proceedings on
the part of the Company or its stockholders are necessary to authorize the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated
-13-
hereby. This Agreement has been duly authorized, executed and delivered by the
Company and, subject to obtaining Stockholder Approval, is the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors rights generally and by the effect of general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
3.4 No Conflicts; Governmental Requirements; SEC Documents. (a) The
execution, delivery and performance by the Company of this Agreement and the
consummation of the Merger do not, and will not, subject to obtaining the
Stockholder Approval, (i) violate or conflict with any provision of the
Certificate of Incorporation or By-Laws of the Company, (ii) violate any law,
rule, regulation, order, writ, injunction, judgment or decree of any court,
governmental authority or regulatory agency, or (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration), or require any consent, approval or notice under, any note, bond,
indenture, license, lien, franchise, mortgage, contract, lease, permit, guaranty
or other agreement, instrument or obligation listed on Section 3.12 of the
Disclosure Schedule to which the Company is a party or by which any of its
assets or properties may be bound.
(b) Except for (i) the filing with the Securities and Exchange Commission
(the "SEC") of an Information Statement pursuant to Regulation 14C under the
Exchange Act in respect of the Stockholder Approval (as amended or supplemented
from time to time, the "Information Statement"), if required, the 14(f) Material
and such reports under Section 13 of the Exchange Act, as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement, (ii) the filing of a premerger notification report by the Company
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and
the rules and regulations thereunder (the "HSR Act"), (iii) the filing of the
Certificate of Merger pursuant to the DGCL and (iv) any other consents,
approvals, authorizations, permissions, notices or filings which if not obtained
or made would not (individually or in the aggregate) have a Material Adverse
Effect or materially delay or hinder or render unlawful the consummation of the
Merger or the other transactions contemplated by this Agreement, the execution
and delivery of this Agreement by the Company do not and the performance by the
Company of this Agreement will not, require any consent, approval, authorization
or permission of, or filing with or notification to, any governmental or
regulatory authority, domestic or foreign.
(c) The Company has filed all required reports, schedules, forms,
statements and other documents with the SEC since December 3, 1997 (the "Company
SEC Documents"). All of the Company SEC Documents (other than preliminary
materials or materials that were subse-
-14-
quently amended), as of their respective filing dates, complied in all material
respects with all applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act") and the Exchange Act and, in each case, the rules
and regulations promulgated thereunder applicable to such Company SEC Documents.
None of the Company SEC Documents at the time of filing contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, except to the
extent such statements have been amended, modified or superseded by later filed
Company SEC Documents. None of the Company SEC Documents is the subject of any
confidential treatment request by the Company. Section 3.4(c) of the Disclosure
Schedule lists all of the Company SEC Documents filed with the SEC since June
27, 1999.
(d) The Company has furnished to Siemens and Acquisition copies of all
notices, documents, requests, court papers, or other materials given to or
received from any governmental agency or any other third party with respect to
the transactions contemplated by this Agreement.
3.5 Subsidiaries. Section 3.5 of the Disclosure Schedule lists the name of
each Subsidiary and all lines of business in which each Subsidiary is
participating or engaged. Each Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation identified in Section 3.5 of the Disclosure Schedule, and has all
requisite power and authority to carry on its business as it has been and is now
being conducted and to own, use and lease its assets and properties. Each
Subsidiary is duly qualified or licensed as a foreign corporation to do business
and is in good standing in each jurisdiction specified in Section 3.5 of the
Disclosure Schedule, which are the only jurisdictions in which nature of its
business or the ownership, leasing or operation of such Subsidiary's assets and
properties makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed and in good standing, would not have a
Material Adverse Effect. Section 3.5 of the Disclosure Schedule lists for each
Subsidiary the amount of its authorized capital stock, the amount of its
outstanding capital stock and the record owners of such outstanding capital
stock. All of the outstanding shares of capital stock of each Subsidiary have
been duly authorized and validly issued, are fully paid and nonassessable, and
are owned, beneficially and of record, by the Company or Subsidiaries wholly
owned by the Company free and clear of all Liens. There are no existing
agreements, subscriptions, options, warrants, calls, commitments, trusts (voting
or otherwise), or rights of any kind whatsoever between the Company or any
Subsidiary on the one hand and any Person on the other hand with respect to the
capital stock of any Subsidiary. The name of each director and officer of each
Subsidiary on the date hereof, and the position with such Subsidiary held by
each, are listed in Section 3.5 of the Disclosure Schedule.
-15-
3.6 Books and Records. The minute books and other similar records of the
Company and the Subsidiaries as made available to Siemens prior to the execution
of this Agreement contain a true and complete record, in all material respects,
of all actions taken at all meetings and by all written consents in lieu of
meetings of the stockholders, the boards of directors and committees of the
boards of directors of the Company and the Subsidiaries. The stock transfer
ledgers and other similar records of the Company and the Subsidiaries as made
available to Siemens prior to the execution of this Agreement contain true and
complete records, in all material respects, of all stock transfers related to
the Company's or any Subsidiary's capital stock. The Company has previously
furnished to Siemens true, complete and correct copies of the Certificate of
Incorporation and the By-Laws of the Company and each Subsidiary as in effect on
the date hereof.
3.7 Financial Statements. The consolidated financial statements of the
Company included in the Company SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles ("GAAP") (except, in
the case of interim financial statements, as permitted by the applicable rules
and regulations of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly presented
in all material respects, the consolidated financial position of the Company and
the Subsidiaries taken as a whole, as of the dates thereof and the consolidated
results of operations and cash flows for the periods then ended (subject, in the
case of interim financial statements, to normal year-end adjustments).
3.8 Absence of Undisclosed Liabilities. Except as reflected in the
financial statements included in the Company's Quarterly Report on Form 10-Q for
the period ended December 26, 1999 (the "December Financial Statements") or as
set forth in the Company SEC Documents filed with the SEC prior to the date of
this Agreement, neither the Company nor any of its Subsidiaries has or has
incurred any liability or obligation of any nature (whether absolute, accrued,
contingent or otherwise) other than liabilities or obligations (other than
obligations for borrowed money or in respect of capitalized leases) reasonably
incurred after December 26, 1999 in the ordinary course of business.
3.9 Operations and Obligations. Except as disclosed in the Company SEC
Documents filed with the SEC since June 27, 1999 and prior to the date of this
Agreement, since June 27, 1999:
(a) there has been no impairment, damage, destruction, loss or claim,
whether or not covered by insurance, or condemnation or other taking adversely
affecting in any respect any of the Company's or any Subsidiary's material
assets;
-16-
(b) the Company has not made any material wage or salary increase or other
compensation payable or to become payable or bonus, or material increase in any
other direct or indirect compensation, for or to any of its officers, directors,
employees, independent contractors, consultants, agents or other
representatives, or any accrual for or commitment or agreement to make or pay
the same, other than the increases made in the ordinary course consistent with
past practice;
(c) prior to the date of this Agreement, the Company has not received any
notice from any customer or group of customers with whom the Company has a
contract or agreement disclosed on Section 3.12 of the Disclosure Schedule
stating that such customer or group of customers has ceased, or will cease, to
use the products, equipment, goods or services of the Company, or has
substantially reduced or will substantially reduce, the use of such products,
equipment, goods or services at any time.
(d) the Company has not failed to pay or perform, or delayed its payment or
performance of, any obligation in a manner materially inconsistent with its past
practice; and
(e) the Company and each of its Subsidiaries have conducted its business
only in the ordinary course.
3.10 Properties. (a) Section 3.10 of the Disclosure Schedule contains a
true, complete and correct list (designating the relevant owners, lessors and
lessees) of (i) all real property owned, leased or subleased by the Company or
any Subsidiary and (ii) all equipment, fixtures and other personal property
owned, leased, subleased or managed by the Company or any Subsidiary which, in
the case of clause (ii) only, has a net book value or commitment in excess of
$50,000. Copies of all real and personal property leases and deeds of the
Company and each Subsidiary relating to the property identified on Section 3.10
of the Disclosure Schedule have been delivered or made available to Siemens by
the Company.
(b) With respect to real property leased or subleased by the Company or any
Subsidiary, the Company or such Subsidiary has a valid leasehold interest in
such real property, and the leasehold or other interest of the Company or such
Subsidiary in such real property is not subject or subordinate to any Lien.
Neither the Company nor any applicable Subsidiary is in default in any material
respect under any such lease, or sublease and, to the Company's knowledge, the
other party or parties thereto are not in default of its or their obligations
thereunder nor does any such party have the right to terminate prior to its
scheduled expiration the term of any such lease or sublease as a result of the
transactions contemplated by this Agreement.
-17-
(c) Neither the Company nor any Subsidiary has received any written notice
that the whole nor any part of any real property owned, leased, subleased, used
or occupied by the Company or any Subsidiary is subject to any pending suit for
condemnation or other taking by any public authority, and, to the Company's
knowledge, no such condemnation or other taking is currently threatened or
contemplated. The properties owned, leased or subleased by the Company and its
Subsidiaries are sufficient to conduct the operations of the Company and its
Subsidiaries as currently conducted, and the foregoing personal properties are
in good operating condition and repair, normal wear and tear excepted.
(d) Except as disclosed in the December Financial Statements, the Company
or a Subsidiary owns outright or has good and marketable fee title to or a valid
leasehold or license interest in all of its respective assets and properties
(including, without limitation, those reflected as assets on the balance sheet
included in the December Financial Statements), in each case free and clear of
any Lien. The Company, together with its Subsidiaries, has all necessary assets,
equipment and properties to engage in the business as currently conducted and
proposed to be conducted by the Company.
3.11 Accounts Receivable; Accounts Payable; Inventory. (a) All accounts
receivable of the Company and the Subsidiaries have arisen from bona fide
transactions by the Company and the Subsidiaries in the ordinary course of their
business.
(b) Section 3.11 of the Disclosure Schedule sets forth a true and correct
list of each account payable of the Company and each Subsidiary, in each case in
excess of $10,000 (and the age of such payable), as of the second business day
immediately preceding the date of this Agreement.
(c) The inventories (and any reserves with respect thereto that have been
established by the Company or a Subsidiary) of the Company and the Subsidiaries
as of the date of the latest balance sheet included in the December Financial
Statements are described in Section 3.11 of the Disclosure Schedule. All such
inventories (net of any such reserves) are (i) of such quality as to be useable
in the ordinary course of business (subject in the case of work-in-process
inventory to completion in the ordinary course of business), and (ii) are
reflected in the latest balance sheet included in the December Financial
Statements and in the books and records of the Company at the moving weighted
average based on latest purchases.
3.12 Contracts. (a) Neither the Company nor any Subsidiary nor, in the case
of (xiii) below, any Affiliate of the Company, is a party to or is bound by:
-18-
(i) any contract or commitment (other than those with respect to which
the Company has not yet received an invoice as of the close of business on
the second business day immediately preceding the date of this Agreement)
which creates an obligation on the part of the Company or any Subsidiary in
excess of $200,000;
(ii) any contract or commitment which obligates the Company or any
Subsidiary to deliver any hardware, software, technology or services or
rights related thereto and which has generated, within the twelve months
preceding the date of this Agreement, or is forecasted to generate, within
the twelve month period after the date of this Agreement, revenue
(excluding revenue from discontinued operations) in excess of $1,000,000;
(iii) any waiver or release of the Company's or any Subsidiary's
rights (other than those related to discontinued operations) against a
third party (other than immaterial rights) within the past six months;
(iv) any debt instrument, including, without limitation, any loan
agreement, line of credit, promissory note, security agreement or other
evidence of indebtedness, where the Company or any Subsidiary is a lender,
borrower or guarantor, in a principal amount in excess of $50,000;
(v) any contract or commitment restricting the Company, any Subsidiary
or, to the knowledge of the Company, any of their respective employees of
the title of Senior Vice President or higher from engaging in any activity
or line of business or competing with any Person or limiting the ability of
any Person to compete with the Company or any Subsidiary;
(vi) any alliance, cooperation, joint venture, stockholders',
partnership or similar agreement;
(vii) any research, development, distributorship, sales agency, sales
representative, marketing or reseller agreement related to the business or
technology of the Company;
(viii) any agreement, option or commitment or right with, or held by,
any third party to acquire, use or have access to any assets or properties,
or any interest therein, of the Company or any Subsidiary;
(ix) any employment, severance or consulting contract which is
material to the business of the Company or its Subsidiaries;
-19-
(x) any agreement which, if terminated, would reasonably be expected
to result in a Material Adverse Effect;
(xi) any material license, sublicense, development, support or
maintenance agreement;
(xii) any agreement relating to common or preferred stock issued by
the Company or any Subsidiary;
(xiii) any agreement which provides rights to parties other than the
Company or any Subsidiary which are contingent upon a merger, consolidation
or other "change-in-control" of the Company;
(xiv) any agreement containing confidentiality and non-disclosure
obligations from the Company which, if violated, could reasonably be
expected to result in a Material Adverse Effect; or
(xv) any other agreement that (A) involves the payment or potential
payment, pursuant to the terms of any such agreement, by or to the Company
or any Subsidiary of more than $200,000 and (B) cannot be terminated within
60 calendar days after giving notice of termination without resulting in
any material cost or penalty to the Company or any Subsidiary.
(b) The agreements listed in Section 3.12 of the Disclosure Schedule are
all the material agreements relating to the ownership or operation of the
currently conducted and contemplated business of the Company or to the property
presently held or used by the Company or any Subsidiary or to which the Company
or any Subsidiary is a party or to which it or any of its properties and assets
is subject or bound. The Company has previously delivered (or made available)
true, complete and correct copies of all such agreements (including all
amendments) to Siemens (or, in the case of oral agreements only, true, complete
and correct descriptions thereof have been set forth in Section 3.12 of the
Disclosure Schedule). Neither the Company nor any Subsidiary is or, to the
knowledge of the Company, is alleged to be, and, to the knowledge of the Company
and its Subsidiaries, no other party to any such agreement is, in default in any
material respect under any such agreement and, except as contemplated by this
Agreement, after the Merger all of such agreements will remain in full force and
effect, except for agreements which, by their terms, terminate prior to the
consummation of the Merger. No additional consideration shall be due under such
contracts as a result of the Merger and neither the Company nor any Subsidiary
is currently renegotiating any such agreement or paying liquidated damages in
lieu thereof.
-20-
3.13 [INTENTIONALLY OMITTED].
3.14 Litigation. (a) As of the date hereof: (i) there are no actions,
suits, arbitrations, legal or administrative proceedings pending or, to the
Company's knowledge, threatened against the Company or any Subsidiary which,
individually or in the aggregate, could have a Material Adverse Effect;
(i) neither the Company nor any Subsidiary is the subject of any
pending or, to the knowledge of the Company, threatened investigation by
any Governmental Entity; and
(ii) neither the Company nor any Subsidiary nor the assets, properties
or business of the Company or any Subsidiary is subject to any judgment,
order, writ, injunction or decree of any court, governmental agency or
arbitration tribunal. Neither the Company nor any Subsidiary is the
plaintiff in any such proceeding and neither the Company nor any Subsidiary
is contemplating commencing legal action against any other Person.
(b) There are no actions, suits, arbitrations, legal or administrative
proceedings pending or, to the Company's knowledge, threatened against any of
the officers or directors of the Company or any Subsidiary for which the Company
or any Subsidiary may have an obligation to provide indemnification.
3.15 Compliance with Law; Authorizations. (a) The Company and each
Subsidiary have complied in all material respects with, and is not in violation
of, in any material respect, any law, ordinance or governmental rule or
regulation (collectively, "Laws") to which it or its business is subject.
(b) The Company and each Subsidiary has obtained and currently holds all
material licenses, permits, certificates or other governmental authorizations
(collectively "Authorizations") necessary for the ownership or use of its assets
and properties and the conduct of its business.
(c) The Company and each Subsidiary has complied in all material respects
with, and is not in violation in any material respect of, any Authorization
necessary for the ownership or use of its assets and properties or the conduct
of its business.
3.16 Intellectual Property. (a) Section 3.16(a) of the Disclosure Schedule
contains a true and complete list of substantially all material Intellectual
Property owned and used in the business of the Company and its Subsidiaries
-21-
(other than the trademarks disclosed in Section 3.16(b) of the Disclosure
Schedule and the licensed software and license agreements disclosed in Section
3.12 of the Disclosure Schedule) and all known infringements by third parties of
such Intellectual Property. The Company and its Subsidiaries owns, and the
Surviving Corporation will, pursuant to the Merger, own, all right, title and
interest in and to all Intellectual Property, including that which is disclosed
in Section 3.16(a) of the Disclosure Schedule, free and clear of all Liens,
together with the right to xxx and assert claims for and recover damages and
obtain any and all other remedies available at law and in equity for any past,
present and future infringement, misappropriation or the violation of any such
Intellectual Property (and settle all such suits, actions and proceedings).
Other than the trademarks disclosed in Section 3.16(b) of the Disclosure
Schedule and the licensed software and other licensed Intellectual Property and
rights disclosed in Section 3.12 of the Disclosure Schedule, (i) the Company or
its Subsidiaries have received and hold all necessary assignments for and to
such Intellectual Property, and there is nothing which would prevent the Company
and its Subsidiaries from assigning and transferring all such Intellectual
Property to Siemens and its Affiliates or to the Surviving Corporation pursuant
to the Merger, free and clear of all Liens; (ii) the Company and its
Subsidiaries claim and own all right, title and interest in and to all copyright
rights related to all works of authorship created by its respective employees or
hires including all works made for hire; (iii) all registrations with and
applications to Governmental Entities in respect of such Intellectual Property
are valid and in full force and effect and are not subject to the payment of any
Taxes or maintenance fees or the taking of any other actions by the Company or
its Subsidiaries to maintain their validity or effectiveness or rights of
Company and its Subsidiaries therein; (iv) there are no restrictions on the
direct or indirect assignment or transfer of any contract, license, or any
interest therein, held by the Company or its Subsidiaries in respect of any
Intellectual Property or rights therein including pursuant to the Merger; (v)
the Company has delivered to Siemens prior to the date of this Agreement
documentation with respect to any invention, process, design, computer program
or other know-how or trade secret included in such Intellectual Property, which
documentation is accurate in all material respects and reasonably sufficient in
detail and content to identify and explain such invention, process, design,
computer program or other know-how or trade secret and to facilitate its full
and proper use without reliance on the special knowledge or memory of any
Person, and to allow Siemens or the Surviving Corporation, to seek statutory
protection for the same including patent or copyright protection for the same
and Siemens, Acquisition or its nominee, shall own and have pursuant to the
Merger all rights to seek protection for and so register such Intellectual
Property if such protection is available; (vi) the Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality
and value of their trade secrets; (vii) none of the Company or its Subsidiaries
is, or has received any notice that it is, in default (or with the giving of
notice or lapse of time or both, would be in default) under any contract
relating to such Intellectual Property; and (viii) to the knowledge of the
Company and its Subsidiaries, no such Intellectual Property has been or is being
infringed or has been misappropriated by any other Person. Neither the
-22-
Company nor its Subsidiaries has received notice that it is infringing or has
misappropriated any Intellectual Property of any other Person. To the knowledge
of the Company and its Subsidiaries, no claim is pending, anticipated or has
been made, to such effect that has not been resolved and none of the Company or
its Subsidiaries is infringing or has misappropriated any Intellectual Property
of any other Person.
(b) Section 3.16(b) of the Disclosure Schedule contains a true and complete
list of all trademarks owned or used by the Company and its Subsidiaries (the
"Trademarks"); while it may be possible, to the best knowledge of the Company,
there are no other trademarks which may have been adopted by any Subsidiary of
Company for use in such Subsidiary's business. The Company owns all right, title
and interest in the Trademarks free and clear of all Liens, including all rights
to xxx and assert claims for and recover damages and obtain any and all other
remedies available at law and equity for any past, present, and future
infringement, misappropriation or other violation of any such Trademarks (and
settle all such suits, actions and proceedings). In addition, (i) the Company
and its Subsidiaries have exclusive rights to use such Trademarks in the
territories wherein they are registered or where an application for registration
is pending with respect to the goods described, and have received and hold all
necessary assignments for and to such Trademarks, and to the knowledge of the
Company, there is nothing which would prevent the Company and its Subsidiaries
from assigning and transferring all right, title and interest in and to such
Trademarks, and to the knowledge of the Company, there is nothing which would
prevent the Company and its Subsidiaries from assigning and transferring all
right, title and interest in and to such Trademarks and the goodwill of the
business associated therewith, to Siemens, Acquisition or its nominee, free and
clear of all Liens and encumbrances; (ii) all registrations with and
applications to Governmental Entities are disclosed in Section 3.16(b) of the
Disclosure Schedule, including expiration and renewal dates and dates when any
affidavits or fees may be due to maintain such registrations; (iii) there are no
restrictions on the use or direct or indirect transfer of any interest therein,
and (iv) the Company has made available to Siemens prior to the date of this
Agreement documentation with respect to such Trademarks, which documentation is
sufficient and complete in all material respects and reasonably sufficient in
detail and content to identify and disclose the condition and rights of the
Company or any Persons (including material Trademark search or watch reports) in
and to such Trademarks. The Company repeats its representations and warranties
as per clauses (vi), (vii) and (viii) of paragraph (a) above with respect to the
Trademarks. Any trademark rights licensed to or by the Company are disclosed in
Section 3.12 of the Disclosure Schedule; the Company has previously provided
Siemens with copies of the written terms under which limited permission has been
given by the Company and its Subsidiaries to third parties to use a trademark of
the Company to publicize that such respective third party is actively engaged
with or by the Company to distribute, service, support and maintain the products
of the Company.
-23-
3.17 Tax Matters. (i) The Company and each Subsidiary have timely filed all
material Tax Returns required to be filed; (ii) all such Tax Returns are true,
complete and accurate in all material respects and all material Taxes shown to
be due on such Tax Returns or otherwise due have been timely paid, have been
fully reserved on the latest balance sheet included in the December Financial
Statements or will be fully reserved by the Measurement Date; (iii) neither the
Company nor any Subsidiary has waived or has been requested in writing to waive
(or agreed to any extension of) any limitations period in respect of Taxes; (iv)
no adjustment relating to such Tax Returns has been proposed in writing by any
Tax authority (insofar as it relates to the activities or income of the Company
or any Subsidiary); (v) there are no pending or, to the knowledge of the
Company, threatened actions or proceedings for the assessment or collection of
Taxes against the Company or any Subsidiary; (vi) the Company is not a party to
any Tax sharing or Tax allocation agreement, and has no obligation under any Tax
indemnity arrangement; (vii) there are no liens for Taxes upon the assets of the
Company or any Subsidiary (other than liens for property taxes not yet due and
payable); (viii) all material Taxes which the Company or any Subsidiary is
required by law to withhold or to collect for payment have been duly withheld
and collected, and have been paid or accrued, or reserved against and entered on
the books of the Company or such Subsidiary in accordance with GAAP; (ix)
neither the Company nor any Subsidiary is a party to any agreement or
arrangement that would result, separately or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code;
(x) no acceleration of the vesting schedule for any property that is
substantially unvested within the meaning of the regulations under Section 83 of
the Code will occur in connection with the transactions contemplated by this
Agreement; (xi) the Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code; and (xii)
neither the Company nor any Subsidiary has been liable for any accumulated
earnings tax penalty or personal holding company tax.
(a) The Company (i) has not agreed to and is not required to make any
adjustment pursuant to Section 481(a) of the Code; (ii) has no knowledge that
the Internal Revenue Service ("IRS") has proposed any such adjustment or change
in accounting method with respect to the Company; and (iii) does not have any
application pending with the IRS or any other tax authority requesting
permission for any change in accounting method.
(b) Neither the Company nor any Subsidiary has income reportable for a
period beginning after the Measurement Date but attributable to a transaction
which resulted in the reporting of such income for financial accounting purposes
in a period ending on or prior to the Measurement Date.
-24-
(c) (i) There are no written requests for information from any Tax
authority currently outstanding that could affect the Taxes of the Company or
any Subsidiary; (ii) there are no proposed reassessments in writing of any
property owned by the Company or any Subsidiary that could increase the amount
of any Tax to which the Company or any Subsidiary would be subject and (iii) no
power of attorney that is currently in force has been granted by the Company or
any Subsidiary with respect to any matter relating to Taxes.
(d) (i) Section 3.17 of the Disclosure Schedule contains a complete and
accurate list of the jurisdictions in which Tax Returns have been filed on the
basis of a unitary group, indicates the most recent Tax Return for each relevant
jurisdiction for which an audit has been completed and indicates all Tax Returns
that currently are the subject of audit; and (ii) the Company has delivered or
made available to Siemens correct and complete copies of all Tax Returns,
examination reports, and statements of deficiencies assessed against or agreed
to by the Company and any Subsidiary for the past three taxable years.
(e) Except in respect of the affiliated, consolidated, combined, unitary or
similar group of which the Company or any Subsidiary currently is a member,
neither the Company nor any Subsidiary (i) is or has been a member of an
affiliated group (within the meaning of Section 1504(a)(1) of the Code) or (ii)
has filed or been required to file or been included on or required to be
included on a consolidated federal income tax return or any state Tax Return on
a consolidated, combined or unitary basis.
(f) The provisions for Taxes reflected on the balance sheet included in the
December Financial Statements are sufficient to cover all liabilities in respect
of Taxes for all periods through December 31, 1999 (without regard to the
materiality thereof).
(g) Neither the Company nor any Subsidiary (i) owns an interest in any
domestic international sales corporation, foreign sales corporation, controlled
foreign corporation, or passive foreign investment company; (ii) has or is
currently projected to have an amount includable in its income for the current
taxable year under Section 951 or Section 551 of the Code, (iii) has an
unrecaptured overall foreign loss within the meaning of Section 904(f) of the
Code or (iv) has participated in or cooperated with an international boycott
within the meaning of Section 999 of the Code.
(h) Neither the Company nor any Subsidiary is a party (other than as an
investor) to any industrial development bond.
Notwithstanding anything to the contrary in this Section 3.17, the Company
makes no representation regarding the validity of any of the net operating
losses of the Company or any of its Subsidiaries or the ability of the Company
or any of its Subsidiaries to utilize such net operating losses in any pre or
post Measurement Date period.
-25-
3.18 Employee Benefit Plans. (a) Section 3.18 of the Disclosure Schedule
contains a complete and accurate list and description of all "employee pension
benefit plans" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (sometimes referred to as "Pension
Plans"), "employee welfare benefit plans" (as defined in Section 3(1) of ERISA)
(sometimes referred to as "Welfare Plans") and all other Benefit Plans (together
with the Pension Plans and Welfare Plans, the "Plans") maintained, or
contributed to, during the past two years by the Company or any Person that,
together with the Company, is treated as a single employer under Section 414(b),
(c), (m) or (o) of the Code (the Company and each such other Person, a "Commonly
Controlled Entity") for the benefit of any current or any former employees,
officers, consultants or directors of the Company. The Company has made
available to Siemens true, complete and correct copies of (i) each Plan, (ii)
the most recent annual report on Form 5500 filed with the Internal Revenue
Service with respect to each Plan (if any such report was required), (iii) the
most recent summary plan description for each Plan for which a summary plan
description is required, (iv) each trust agreement and group annuity contract
relating to any Plan and (v) all material correspondence with the IRS or the
United States Department of Labor relating to any outstanding controversy or
audit. Except as would not have a Material Adverse Effect, each Plan has been
administered in accordance with its terms. Except as would not have a Material
Adverse Effect, the Company and all Plans are in compliance with applicable
provisions of ERISA and, with respect to the Plans, the Code.
(b) Except as would not have a Material Adverse Effect, all Pension Plans
that are intended to be qualified under Section 401(a) of the Code have been the
subject of determination, opinion, notification or advisory letters from the IRS
to the effect that such Pension Plans are so qualified and are exempt from
Federal income taxes under Section 501(a) of the Code, and no such determination
letter has been revoked nor has any event occurred since the date of such Plan's
most recent determination letter that would reasonably be expected to adversely
affect its qualification.
(c) Neither the Company nor any Commonly Controlled Entity has within the
previous five years, maintained, contributed to or been obligated to contribute
to any Plan that is subject to Title IV of ERISA including, without limitation
any multi-employer plan (as defined in Section 3 (37) of ERISA).
(d) Except as would not have a Material Adverse Effect, neither the Company
nor any Subsidiary has any liability or obligation under any Welfare Plan to
provide life insurance or medical or health benefits after termination of
employment to any employee or dependent other than as required by Part 6 of
Title I of ERISA. Except as set forth on Section 3.18(d) of the Disclosure
Schedule, no Plan that provides health or medical benefits are self-insured, and
-26-
no claims for such benefits could result in an uninsured liability to the
Company, any Subsidiary, the Surviving Corporation or Siemens.
(e) Except as provided by this Agreement, no employee of the Company or any
Subsidiary will be entitled to any additional compensation or benefits or any
acceleration of the time of payment or vesting of any compensation or benefits
under any Plan as a result of the transactions contemplated by this Agreement.
(f) Except as would not have a Material Adverse Effect, neither the Company
nor any Subsidiary has engaged in any non-exempt prohibited transactions under
ERISA and there are no violations or claims relating to the Plans except in the
ordinary course of business.
(g) There is no investigation by any governmental or regulatory authority
or any proceeding or other claim, action (other than claims for benefits in the
normal operations of the Benefit Plans), suit or proceeding against or involving
any Benefit Plan or asserting any right or claim to benefits which is likely to
be adversely determined and which, if so determined, would reasonably be
expected to have a Material Adverse Effect.
(h) All contributions, premiums and other payments required by law or any
Plan or applicable collective bargaining agreement to have been made under any
such Plan or agreement to any fund, trust or account established thereunder or
in connection therewith have been made by the due date thereof.
(i) Without limiting any other provision of this Section 3.18, except as
would not have a Material Adverse Effect, no event has occurred and no condition
exists, with respect to any Plan (whether or not maintained by the Company or
the Surviving Corporation), that has subjected or could subject the Company, any
Subsidiary, the Surviving Corporation or Siemens, or any Plan or any successor
thereto, to any material tax, fine, penalty or other liability (other than, in
the case of the Company, the Subsidiaries and the Plans, a liability arising in
the normal course to make contributions or payments, as applicable, when
ordinarily due under a Plan with respect to employees or former employees of the
Company or any Subsidiary). Except as would not have a Material Adverse Effect,
no event has occurred and no condition exists, with respect to any Plan that
could subject Siemens or any of its Affiliates, or any plan maintained by
Siemens or any Affiliate thereof, to any material tax, fine, penalty or other
liability, that would not have been incurred by Siemens or any of its
Affiliates, or any such Plan, but for the transactions contemplated hereby. No
employee benefit plan other than a Plan is or will be directly or indirectly
binding on the Surviving Corporation solely by virtue of the transactions
contemplated hereby. Siemens, and its Affiliates, including on and after the
Closing, the Surviving Corporation, shall have no material liability for, under,
with respect to or otherwise in connection with any employee plan, which
liability arises under ERISA or the Code, by virtue of the Company or any
Subsidiary being aggregated in a controlled group
-27-
or affiliated service group with any Commonly Controlled Entity for purposes of
ERISA or the Code at any relevant time prior to the Closing. Each Plan may be
amended and terminated in accordance with its terms. As of the Effective Time,
no Plan will have any participants who are not employees of the Company or its
Subsidiaries.
3.19 Employee Compensation. Section 3.19 of the Disclosure Schedule
contains a complete and accurate list (organized by individual for persons whose
annual rate of compensation exceeds $75,000 and by category for all other
persons) of the titles and current annual salary rates of and bonuses paid or
payable to all present officers, employees, consultants, contractors and other
individuals who perform services for the Company or any Subsidiary
("Employees").
3.20 Employees.
(a) Except as would not have a Material Adverse Effect, (i) the Company and
each of its Subsidiaries has complied with all applicable laws, rules and
regulations respecting employment and employment practices, terms and conditions
of employment, wages and hours, and neither the Company nor any Subsidiary is
liable for any arrears of wages or any taxes or penalties for failure to comply
with any such laws, rules or regulations; (ii) the Company believes that its
relations with each of its employees is satisfactory; (iii) there are no
controversies pending or, to the knowledge of the Company, threatened between
the Company or any of its Subsidiaries and any of their respective employees;
(iv) neither the Company nor any Subsidiary is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or such Subsidiary, nor, to the knowledge of the
Company, are there any activities or proceedings of any labor union to organize
any such employees; (v) there are no unfair labor practice complaints pending
or, to the knowledge of the Company, threatened against the Company or any
Subsidiary before the National Labor Relations Board or any current union
representation questions involving employees of the Company or any Subsidiary;
(vi) there is no strike, slowdown, work stoppage or lockout existing, or, to the
knowledge of the Company, threatened, by or with respect to any employees of the
Company or any Subsidiary; (vii) no charges are pending or to the knowledge of
the Company threatened before the Equal Employment Opportunity Commission or any
state, local or foreign agency responsible for the prevention of unlawful
employment practices with respect to the Company or any Subsidiary; (viii) there
are no claims pending against the Company or any Subsidiary before any workers'
compensation board; and (ix) neither the Company nor any Subsidiary has received
notice that any federal, state, local or foreign agency responsible for the
enforcement of labor or employment laws intends to conduct an investigation of
or relating to the Company or any Subsidiary and, to the knowledge of the
Company, no such investigation is in progress.
-28-
(b) Except as would not have a Material Adverse Effect, the Company and
each Subsidiary has properly classified for all purposes (including, without
limitation, for all Tax purposes and for purposes of determining eligibility to
participate in any employee benefit plan) all employees, leased employees,
consultants and independent contractors, and has withheld and paid all
applicable Taxes and made all appropriate filings in connection with services
provided by such persons to the Company and each Subsidiary.
(c) Except as set forth on Section 3.20(c) of the Disclosure Schedule,
every Employee (with the title of Senior Vice President and more senior) has
executed a Confidentiality/Non-Solicit Agreement in substantially the form
attached as Exhibit D hereto.
(d) From September 26, 1999 through the date of this Agreement, the
annualized rate of employee resignations has not exceeded 35%.
(e) The Company has inquired of each of its employees to determine whether
they are bound by any contract or commitment which restricts them from engaging
in any activity or competing with any Person and based on that inquiry has no
reason to believe that any such employee is so bound.
3.21 Environmental Laws. Neither the Company nor any Subsidiary is in
material violation of, or materially delinquent with respect to any reporting or
other requirements under, any Environmental Law to which it or its assets,
properties, personnel or business are subject. Neither the Company nor any
Subsidiary has knowledge of any circumstances or conditions existing that may
prevent or interfere with such compliance in the future. The Company and each
Subsidiary have obtained all material permits, licenses and other authorizations
required under Environmental Laws and such permits, licenses and authorizations
are in full force and effect. There is no material Environmental Claim pending
or, to the knowledge of the Company, threatened against the Company or any
Subsidiary. There are no past or present actions, activities, circumstances,
conditions, events or incidents taken or caused by the Company or any of its
Subsidiaries, including, without limitation, the release, emission, discharge,
storage, transportation, generation, presence or disposal, or, to the knowledge
of the Company, any other Person, of any Hazardous Substance that could
reasonably be expected to result in any material Environmental Claim against the
Company or any Subsidiary. The Company has made available to Siemens all
material surveys, reports, assessments, audits, evaluations or other documents
relating to the presence, migration or disposal of any Hazardous Substance,
prepared for or at the request of the Company or any Subsidiary and relating to
the Company, any Subsidiary or any of their respective assets, properties or
businesses.
3.22 Insurance. The Company previously has delivered or made available to
Siemens a complete and accurate list of all liability, property,
-29-
workers' compensation, directors' and officers' liability, "key man" life and
other insurance policies in effect that are owned by the Company or any
Subsidiary, or under which the Company or any Subsidiary is a named insured.
Those policies and the coverage thereunder are in full force and effect. The
businesses of the Company and its Subsidiaries are adequately insured against
loss or damage in kind and in an amount customarily obtained by similar
businesses.
3.23 Bank Accounts, Letters of Credit and Powers of Attorney. Section 3.23
of the Disclosure Schedule contains a complete and accurate list of (a) all bank
accounts, lock boxes and safe deposit boxes relating to the business and
operations of each of the Company and its Subsidiaries (including the name of
the bank or other institution where such account or box is located and the name
of each authorized signatory thereto), (b) all outstanding letters of credit
issued by financial institutions for the account of the Company and each
Subsidiary (setting forth, in each case, the financial institution issuing such
letter of credit, the maximum amount available under such letter of credit, the
terms (including the expiration date) of such letter of credit and the party or
parties in whose favor such letter of credit was issued), and (c) the name and
address of each Person who has a power of attorney to act on behalf of the
Company or any Subsidiary. The Company has heretofore delivered or made
available to Siemens true, correct and complete copies of each letter of credit
and each power of attorney described on Section 3.23 of the Disclosure Schedule.
3.24 No Adverse Development. Since June 27, 1999 there has been no event,
circumstance, state of affairs, condition or development which the Company has
not disclosed to Siemens in writing which has had or could reasonably be
expected to have a Material Adverse Effect.
3.25 Transactions with Affiliates. Except for transactions for compensation
of employees or as disclosed in the Company SEC Documents, every transaction
between the Company and any of its "affiliates" or their "associates" (as such
terms are defined in the rules and regulations of the SEC), which is currently
in effect and which involves the payment, or receipt, in the aggregate, of more
than $60,000 is set forth on Section 3.25 of the Disclosure Schedule.
3.26 Information Statement; Merger Materials. None of the information
supplied or to be supplied by the Company in writing specifically for inclusion
in (i) the 14(f) Material or (ii) the Information Statement will, at the
respective times filed with the SEC and/or published, sent or given to holders
of Company Common Stock, as the case may be, and, in addition, in the case of
the Information Statement, at the date it or any amendment or supplement is
mailed to holders of Company Common Stock and at the Effective Time, contain any
untrue statement of a mate-
-30-
rial fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
3.27 Brokers. Except for Lazard Freres LLP, whose fees, commission and
expenses are the sole responsibility of the Company, all negotiations relative
to this Agreement and the transactions contemplated hereby have been carried out
by the Company directly with Siemens and Acquisition without the intervention of
any Person on behalf of the Company in such manner as to give rise to any valid
claim by any Person against Siemens, Acquisition, the Company or any Subsidiary
for a finder's fee, brokerage commission or similar payment.
4. Representations and Warranties of Siemens and Acquisition. Siemens and
Acquisition each represent and warrant to the Company as follows:
4.1 Organization. Each of Siemens and Acquisition is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all requisite corporate power and
authority to enter into and perform this Agreement and the transactions
contemplated hereby to be performed by it.
4.2 Corporate Authority. Each of Siemens and Acquisition has full power and
authority to execute, deliver and perform this Agreement. The execution,
delivery and performance of this Agreement by it has been duly authorized and
approved on the part of Siemens and Acquisition by all necessary corporate
action and, except for the filing of appropriate merger documents as required by
the DGCL, no other corporate proceedings on the part of either Siemens or
Acquisition is necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by each of Siemens and Acquisition and is the legal, valid and binding
obligation of each of Siemens and Acquisition enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors rights generally and by the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
4.3 No Breach. (a) The execution, delivery and performance by each of
Siemens and Acquisition of this Agreement and the consummation of the Merger do
not, and will not, (i) violate or conflict with any provision of the Certificate
of Incorporation or By-Laws of either Siemens or Acquisition; (ii) violate any
law, rule, regulation, order, writ, injunction, judgement or decree of any
court, governmental authority,
-31-
or regulatory agency, except for violations which, individually or in the
aggregate, will not have a material adverse effect on Siemens and Acquisition
taken as a whole; or (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of cancellation or acceleration), under, any material note, bond,
indenture, Lien, mortgage, contract, lease permit, guaranty or other agreement,
instrument or obligation to which Siemens or Acquisition is a party or by which
any of the properties of Siemens or Acquisition may be bound except for
violations which, individually or in the aggregate, will not have a material
adverse effect on Siemens and Acquisition taken as a whole.
(b) Except for (i) the filing of a premerger notification report by Siemens
under the HSR Act, (ii) the filing of the Merger Certificate pursuant to the
DGCL and (iii) any other consents, approvals, authorizations, permissions,
notices or filings which if not obtained or made would not (individually or in
the aggregate) materially impair Siemens' ability to perform its obligations
under this Agreement or have a material adverse effect on the Surviving
Corporation, the execution and delivery of this Agreement by each of Siemens and
Acquisition does not and the performance by it of this Agreement will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign.
4.4 Litigation. (a) Neither Siemens nor Acquisition is a party to any suit,
action, arbitration or legal, administrative, governmental or other proceeding
or investigation pending or to the knowledge of Siemens and Acquisition
threatened, which could adversely affect or restrict its ability to consummate
the transactions contemplated by this Agreement or to perform its obligations
hereunder.
(b) There is no judgment, order, writ, injunction or decree of any court,
governmental agency or arbitration tribunal to which Siemens or Acquisition is
subject which might adversely affect or restrict its ability to consummate the
transactions contemplated by this Agreement or to perform its obligations
hereunder.
4.5 Brokers. Except for Xxxxxx Xxxxxxx Xxxx Xxxxxx, whose fees, commission
and expenses are the sole responsibility of Siemens, all negotiations relative
to this Agreement and the transactions contemplated hereby have been carried out
by Siemens directly with the Company without the intervention of any Person on
behalf of Siemens in such manner as to give rise to any valid claim by any
Person against Siemens, Acquisition, the Company or any Subsidiary for a
finder's fee, brokerage commission or similar payment.
4.6 Information. None of the information supplied or to be supplied by
Siemens or Acquisition in writing specifically for inclusion in (i) the 14(f)
Material or (ii) the Information Statement will, at the respective times filed
with the SEC
-32-
and/or published, sent or given to holders of Company Common Stock, as the case
may be, and, in addition, in the case of the Information Statement, at the date
it or any amendment or supplement is mailed to holders of Company Common Stock
and at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
4.7 Financing. Siemens has available sufficient cash in immediately
available funds to make the payments required by Section 2 of this Agreement.
5. Covenants and Additional Agreements.
5.1 Conduct of Business. The Company covenants and agrees that at all times
from and after the date of this Agreement until the Measurement Date (except as
expressly contemplated or permitted by this Agreement, or to the extent that
Siemens otherwise shall consent in writing):
(a) The Company and the Subsidiaries shall conduct their respective
businesses only in, and shall not take any action except in, the ordinary course
of business consistent with past practice.
(b) Without limiting the generality of paragraph (a) of this Section 5.1,
(i) the Company and its Subsidiaries shall use all commercially reasonable
efforts to preserve intact in all material respects their present business
organizations and reputation, to keep available the services of their key
officers and employees, to maintain their assets and properties in good working
order and condition, ordinary wear and tear excepted, to maintain insurance on
their tangible assets and businesses in such amounts and against such risks and
losses as are currently in effect, to preserve their relationship with customers
and suppliers and others having significant business dealings with them and to
comply in all material respects with all Laws and orders of all governmental or
regulatory authorities applicable to any of them, and (ii) neither the Company
nor any of its Subsidiaries shall:
(A) amend or propose to amend its Certificate of Incorporation or
By-Laws except for amendments required by this Agreement or which do not
and will not adversely affect Siemens or Acquisition;
(B) (w) declare, set aside or pay any dividends on or make other
distributions in respect of any of its capital stock, (x) split, combine,
reclassify or take similar action with respect to any of its capital stock
or issue or authorize or propose the issu-
-33-
ance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, (y) adopt a plan of complete or partial
liquidation or resolutions providing for or authorizing such liquidation or
a merger, consolidation, restructuring, recapitalization or other
reorganization or (z) directly or indirectly redeem, repurchase or
otherwise acquire any shares of its capital stock or any option with
respect thereto (except for repurchases pursuant to outstanding stock
restriction agreements);
(C) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any option, warrant
or similar right with respect thereto other than upon exercise of an Option
or Warrant outstanding on the date of this Agreement;
(D) acquire (by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the assets of,
or by any other manner) any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets other than the acquisition of assets
in the ordinary course of business consistent with past practice;
(E) other than dispositions in the ordinary course of its business
consistent with past practice, sell, lease, grant any security interest in
or otherwise dispose of or encumber any of its assets or properties;
(F) except to the extent required by applicable law, (x) permit any
material change in (A) any pricing, marketing, purchasing, investment,
accounting, financial reporting, inventory, credit, allowance or tax
practice or policy or (B) any method of calculating any bad debt,
contingency or other reserve for accounting, financial reporting or tax
purposes or (y) make any material tax election or settle or compromise any
material income tax liability with any governmental or regulatory
authority;
(G) except as otherwise provided in this Agreement, (x) except to the
extent such incurrence would not be in violation of or require disclosure
pursuant to the terms of this Agreement, incur (which shall not be deemed
to include entering into credit agreements, lines of credit or similar
arrangements until borrowings are made under such arrangements) any
indebtedness for borrowed money or guarantee any such indebtedness or (y)
voluntarily purchase, cancel, prepay or otherwise provide for a complete or
partial discharge in advance of a scheduled repayment date with respect to,
or waive any right under, any indebtedness for borrowed money;
(H) except for the actions with respect to stock options, restricted
stock awards and the Company Stock Plans expressly provided for in this
Agreement, enter
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into, adopt, amend in any material respect (except as may be required by
applicable law) or terminate (other than in accordance with its terms) any
Benefit Plans or other agreement, arrangement, plan or policy between the
Company and one or more of its directors, officers, employees or
consultants, or increase in any manner the compensation or fringe benefits
of any director, officer, employee or consultant or pay any benefit not
required by any plan or arrangement in effect as of the date hereof;
(I) except for the amendments to the Options, the Company Stock Plans,
the Warrants and the Warrant Agreements expressly provided for in this
Agreement, enter into any contract or amend or modify any existing
contract, or engage in any new transaction outside the ordinary course of
business consistent with past practice or not on an arm's length basis,
with any affiliate of the Company;
(J) except as set forth in Section 5.1 of the Disclosure Schedule,
make any capital expenditures or commitments for additions to plant,
property or equipment constituting capital assets in excess of $50,000 with
respect to each such capital expenditure or commitment and not more than
$1,000,000 in the aggregate;
(K) waive or agree to any extension of any limitations period in
respect of Taxes;
(L) make any change in the lines of business in which it participates
or is engaged;
(M) take any action or omit to take any action which would result in a
material breach, violation or inaccuracy of any representation, warranty,
covenant or agreement of the Company made in this Agreement;
(N) enter into any material contract or agreement which would require
the consent of the other party thereto to consummate the transactions
contemplated hereby; or
(O) enter into any contract, agreement, commitment or arrangement to
do or engage in any of the foregoing.
(c) Until the Measurement Date, the Company shall confer on a regular and
frequent basis with Siemens and/or its Affiliates with respect to its business
and operations and other matters relevant to the Merger, and shall promptly
advise Siemens, orally and in writing, of any change or event, including,
without limitation, any complaint, investigation or hearing by any governmental
or regulatory authority (or communication indicating the same may be
contemplated) or the institution or threat of litigation, having, or which,
insofar as can be rea-
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sonably foreseen, could have, a Material Adverse Effect or materially and
adversely affect the ability of the Company to consummate the transactions
contemplated hereby.
5.2 No Solicitations. Until the Measurement Date, neither the Company nor
any of its Subsidiaries shall authorize or permit any officer, director,
employee, investment banker, financial advisor, attorney, accountant or other
agent or representative (each, a "Representative") retained by or acting for or
on behalf of the Company or any of its Subsidiaries to, directly or indirectly,
initiate, solicit, encourage, or, unless the Board of Directors of the Company
believes, after consultation with outside legal counsel, that the failure to
take such actions would constitute a breach of the fiduciary duties of the Board
of Directors, participate in any negotiations regarding, furnish any
confidential information in connection with, endorse or otherwise cooperate
with, assist, participate in or facilitate the making of any proposal or offer
for, or which may reasonably be expected to lead to, an Acquisition Transaction,
by any Person, or group (a "Potential Acquiror"); provided, however, that (i)
the Company may furnish or cause to be furnished information concerning the
Company and its businesses, properties or assets to a Potential Acquiror, (ii)
the Company may engage in discussions or negotiations with a Potential Acquiror,
(iii) following receipt of a proposal or offer for an Acquisition Transaction,
the Company may make disclosure to the Company's stockholders and may recommend
such proposal or offer to the Company's stockholders and (iv) following receipt
of a proposal or offer for an Acquisition Transaction, the Board of Directors
may enter into an agreement in principle or a definitive agreement with respect
to such Acquisition Transaction, but in each case referred to in the foregoing
clauses (i) through (iv) only to the extent that the Board of Directors of the
Company shall have first concluded in good faith after consultation with outside
legal counsel that such action is necessary or appropriate because failure to
take such action would constitute a breach of the fiduciary duties owed by the
Board of Directors of the Company to the Company's stockholders under applicable
law; and provided, further, that the Board of Directors of the Company shall not
take or permit the Company to take any of the foregoing actions referred to in
clauses (i) through (iv) without prior written notice to Siemens with respect to
such action. The Company shall promptly inform Siemens, orally and in writing,
of the material terms and conditions of any proposal or offer for, or which may
reasonably be expected to lead to, an Acquisition Transaction that it receives
and the identity of the Potential Acquiror. The Company will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted on or prior to the date of this Agreement heretofore
with respect to any Acquisition Transaction. As used in this Agreement,
"Acquisition Transaction" means any merger, consolidation or other business
combination involving the Company, or any acquisition in any manner of all or a
substantial portion of the equity of, or all or a substantial portion of the
assets of, the Company, whether for cash, securities or any other consideration
or combination thereof, other than pursuant to the transactions contemplated by
this Agreement.
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5.3 Access to Information; Confidentiality. (a) The Company shall,
throughout the period from the date hereof to the Measurement Date, (i) provide
Siemens and its Affiliates and their respective Representatives with full
access, upon reasonable prior notice, during normal business hours to all
officers, employees, agents, accountants and customers of the Company and its
Subsidiaries, and their respective assets, properties, books and records and
(ii) furnish promptly to such persons (x) a copy of each report, statement,
schedule and other document filed or received by the Company or any Subsidiary
pursuant to the requirements of federal or state securities laws or filed with
any other governmental or regulatory authority, and (y) all other information
and data (including, without limitation, copies of contracts, Benefit Plans and
other books and records) concerning the business, employees and operations of
the Company (including product development) and its Subsidiaries as Siemens or
any of such other persons reasonably may request. No investigation pursuant to
this paragraph or otherwise shall affect any representation or warranty
contained in this Agreement or any condition to the obligations of the parties
hereto.
(b) Until the Measurement Date, Siemens will hold, and will use its best
efforts to cause its Affiliates and their respective Representatives to hold, in
strict confidence, unless (i) compelled to disclose by judicial or
administrative process or by other requirements of applicable laws of
governmental or regulatory authorities (including, without limitation, in
connection with obtaining the necessary approvals of this Agreement or the
transactions contemplated hereby of governmental or regulatory authorities);
provided that to the extent reasonably practicable Siemens shall provide the
Company with reasonable notice of such compelled disclosure, or (ii) disclosed
in an action or proceeding brought by a party hereto in pursuit of its rights or
in the exercise of its remedies hereunder, all documents and information
concerning the Company and its Subsidiaries furnished to it by the Company or
its Representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information can
be shown to have been (w) known by Siemens, any of its Affiliates or any of
their respective Representatives prior to disclosure by the Company or its
Representatives, (x) in the public domain (either prior to or after the
furnishing of such documents or information hereunder) through no fault of
Siemens and its Representatives, (y) later acquired by Siemens, any of its
Affiliates or any of their respective Representatives from another source if
Siemens, such Affiliate or such Representative is not aware that such source is
under an obligation to the Company to keep such documents and information
confidential or (z) independently developed by Siemens or any of its Affiliates.
In the event that this Agreement is terminated without the transactions
contemplated hereby having been consummated, upon the request of the Company,
Siemens will, and will cause its Representatives to, promptly redeliver or cause
to be redelivered all copies of documents and information furnished by the
Company or its Representatives to Siemens, its Affiliates and their
Representatives in connection with this Agreement or the transactions
contemplated hereby and de-
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stroy or cause to be destroyed all notes, memoranda, summaries, analyses,
compilations and other writings related thereto or based thereon prepared by
Siemens or its Representatives.
5.4 Preparation of Information Statement; Approval of Stockholders; Siemens
Approval. As soon as practicable following the date of this Agreement, the
Company shall (i) prepare and file with the SEC a preliminary Information
Statement, in form and substance satisfactory to Siemens and (ii) prepare,
furnish to its stockholders and file with the SEC the 14(f) Material. The
Company shall use its best efforts to respond to and resolve any comments of the
staff of the SEC with respect to the Information Statement or the 14(f) Material
as promptly as practicable after such filing. The Company will notify Siemens
promptly of the receipt of any comments from the SEC and of any request by the
SEC for amendments or supplements to the Information Statement or the 14(f)
Material or for additional information, will supply Siemens with copies of all
correspondence between it or any of its Representatives and the SEC with respect
to the Information Statement or the 14(f) Material and will provide Siemens and
its representatives with a reasonable opportunity to review, comment on and
discuss all documents filed with the SEC or furnished to the Company's
stockholders pursuant to this Section 5.4, to participate in all conversations
with the SEC relating to those filings or any of the subject matter of this
Agreement and to comment on all proposed responses to or other communications
with the SEC. The form and content of the Information Statement and the 14(f)
Material shall be reasonably acceptable to Siemens. The Information Statement
and the 14(f) Material shall comply in all material respects with all applicable
requirements under all applicable laws. Whenever any event occurs which is
required to be set forth in an amendment or supplement to the Information
Statement or the 14(f) Material, the Company or Siemens, as the case may be,
shall promptly inform the other of such occurrence and cooperate in filing with
the SEC and/or mailing to the stockholders of the Company such amendment or
supplement in a form reasonably acceptable to Siemens.
(a) The Company shall, if required by applicable law and if requested by
Siemens, duly call, give notice of, convene and hold a meeting of or solicit
proxies or written consents from its stockholders for the purpose of voting on
(i) the adoption of this Agreement and (ii) the taking of such additional
corporate actions as Siemens reasonably may request or as may be necessary or
appropriate for the consummation of the Merger and the other transactions
contemplated by this Agreement, whether or not the Board of Directors of the
Company modifies or withdraws its approval of this Agreement, its declaration of
its advisability or its recommendation that the stockholders adopt it. The
Company shall take these actions and distribute the Information Statement as
soon as reasonably practicable after the date hereof.
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(b) Notwithstanding the foregoing, if Acquisition acquires at least 90% of
the issued and outstanding shares of Company Common Stock, the parties hereto
shall take all necessary and appropriate actions to cause the Merger to become
effective in accordance with Section 253 of the DGCL, as soon as reasonably
practicable, without a meeting of the stockholders of the Company and without
action by written consent of stockholders of the Company.
5.5 Regulatory and Other Approvals. Subject to the terms and conditions of
this Agreement, each of the Company and Siemens will proceed diligently and in
good faith and will use all commercially reasonable efforts to do, or cause to
be done, all things necessary, proper or advisable to, as promptly as
practicable, (i) obtain all consents, approvals or actions of, make all filings
with and give all notices to governmental or regulatory authorities or any other
public or private third parties required of Siemens or any of its Subsidiaries
or the Company to consummate the Initial Purchase and the Merger and the other
matters contemplated hereby, and (ii) provide such other information and
communications to such governmental or regulatory authorities as the other party
or such governmental or regulatory authorities may reasonably request. In
addition to and not in limitation of the foregoing, each of the parties will (x)
take promptly all actions necessary to make the filings required of Siemens and
the Company or their Affiliates under the HSR Act and under any similar or
comparable European antitrust statute or regulation (collectively, the "European
Statutes"), (y) comply at the earliest practicable date with any request for
additional information received by such party or its Affiliates from the Federal
Trade Commission (the "FTC") or the Antitrust Division of the Department of
Justice (the "Antitrust Division") pursuant to the HSR Act or from similar or
comparable European governmental authorities (the "European Authorities")
pursuant to the European Statutes, and (z) cooperate with the other party in
connection with such party's filings under the HSR Act and the European Statutes
and in connection with resolving any investigation or other inquiry concerning
the Merger or the other matters contemplated by this Agreement commenced by the
FTC, the Antitrust Division, state attorneys general or the European
Authorities.
5.6 Notice and Cure. Each of Siemens and the Company will notify the other
promptly in writing of, and contemporaneously will provide the other with true
and complete copies of any and all information or documents relating to, and
will use commercially reasonable efforts to cure before the Measurement Date,
any event, transaction or circumstance occurring after the date of this
Agreement that causes or will cause any covenant or agreement of Siemens or the
Company, as the case may be, under this Agreement to be breached or that renders
or will render untrue any representation or warranty of Siemens or the Company,
as the case may be, contained in this Agreement as if the same were made on or
as of the date of such event, transaction or circumstance. Each of Siemens and
the Company also will notify the other promptly in writing of, and will use
commercially reasonable efforts to cure, before the Measurement Date, any
violation or
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breach of any representation, warranty, covenant or agreement made by Siemens or
the Company, as the case may be, in this Agreement, whether occurring or arising
prior to, on or after the date of this Agreement. No notice given pursuant to
this Section 5.6 shall have any effect on (i) the representations, warranties,
covenants or agreements contained in this Agreement for purposes of determining
satisfaction of any condition contained herein or (ii) any right to indemnity
hereunder.
5.7 Company Stock Plans; Warrants. The Company shall take or cause to be
taken, including as appropriate by its Board of Directors or the appropriate
committee thereof, by all steps necessary, if any, to cause (i) give effect to
the provisions of Section 2.1(e) and (ii) pursuant to the Warrant Agreements or
other granting instruments, each Warrant granted to be exercisable solely for
cash in an amount not to exceed the Merger Price.
5.8 Termination of Contracts. Prior to the Measurement Date, the Company
will take all action and obtain all consents required to terminate the
agreements listed on Schedule 5.8 without liability to the Company following the
Effective Time.
5.9 Fulfillment of Conditions. Subject to the terms and conditions of this
Agreement, each of Siemens and the Company will take or cause to be taken all
commercially reasonable steps necessary or desirable and proceed diligently and
in good faith to satisfy each condition to the other's obligations contained in
this Agreement and to consummate and make effective the transactions
contemplated by this Agreement, and neither the Company nor Siemens will, nor
will it permit any of its Subsidiaries to, take or fail to take any action that
could be reasonably expected to result in the nonfulfillment of any such
condition. 5.10 Cooperation. (a) The Company hereby acknowledges and agrees
that, in the event Siemens or any of its Affiliates undertakes to redeem,
repurchase or repay all or any portion of the outstanding Notes, Debentures
and/or Promissory Note, the Company will provide full and complete access to all
books, records, files and information relating to such Notes, Debentures and
Promissory Note, including through providing access to the applicable trustee,
if any, and will assist in any manner as may reasonably be requested by Siemens
and its Affiliates and their respective Representatives with respect to any such
redemption, repurchase or repayment.
(b) Siemens hereby acknowledges and agrees that the Company may, with the
consent of Siemens (which consent shall not unreasonably be withheld), redeem,
repurchase or repay all or any portion of the outstanding Notes, Debentures
and/or Promissory Notes prior to the Measurement Date; provided, however, that
Siemens shall be reasonably satisfied that such
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purchases shall not result in any liability to the Surviving Corporation or to
Siemens or any of its Affiliates.
5.11 Director and Officer Indemnification.
(a) Siemens agrees that all rights to indemnification now existing in favor
of any current or former director or officer of the Company as provided in the
Company's Certificate of Incorporation or by-laws or in a written agreement
between any such person and the Company in effect on the date hereof shall
survive the Merger and shall continue in full force and effect until the
expiration of all applicable statutes of limitation. Siemens also agrees to
indemnify all current and former directors and officers of the Company to the
fullest extent the Company would be permitted by the DGCL to indemnify them with
respect to all acts and omissions arising out of such individuals' service as
officers or directors of the Company or any of the Subsidiaries or as trustees
or fiduciaries of any plan for the benefit of employees occurring prior to the
Effective Time. Without limitation of the foregoing, in the event any such
person is or becomes involved in any capacity in any action, proceeding or
investigation in connection with any matter, including, without limitation, the
transactions contemplated by this Agreement, occurring prior to, and including,
the Effective Time, Siemens will pay such person's reasonable legal and other
expenses of counsel selected by such person and reasonably acceptable to Siemens
(including the cost of any investigation, preparation and settlement) incurred
in connection therewith after statements therefor are received by Siemens;
provided, however, that Siemens shall not, in connection with any one such
action or proceeding or separate but substantially similar actions or
proceedings arising out of the same general allegations, be liable for
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all indemnified persons. Siemens
shall be entitled to participate in the defense of any such action or
proceeding, and counsel selected by the indemnified person shall, to the extent
consistent with their professional responsibilities, cooperate with Siemens and
any counsel designated by Siemens. Siemens shall pay all reasonable expenses,
including attorneys' fees, that may be incurred by any indemnified person in
enforcing the indemnity and other obligations provided for in this Section 5.11.
(b) Siemens agrees that the Company and, from and after the Effective Time,
the Surviving Corporation shall cause to be maintained in effect for not less
than six years from the Effective Time the current policies of directors' and
officers' liability insurance maintained by the Company; provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are no less advantageous to such
persons; and provided, further, that such substitution shall not result in any
gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time; and provided, further, that the Surviving Corporation shall not
be required to pay an annual premium in excess
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of 200% of the last annual premium paid by the Company prior to the date hereof;
and if the Surviving Corporation is unable to obtain the insurance required by
this Section 5.11(b), it shall obtain as much comparable insurance as possible
for an annual premium equal to such maximum amount.
5.12 Additional Covenants.
(a) On or prior to the Measurement Date, the Company, Siemens and Dort X.
Xxxxxxx, III shall execute a letter, substantially in the form of Exhibit L,
terminating Xx. Xxxxxxx'x employment with the Company under his employment
agreement.
(b) Subject to the other terms and provisions of this Agreement, on or
promptly following the Measurement Date, Siemens will provide funds necessary to
repay and cause to be repaid to IBM Credit Corporation all amounts owing under
that certain Fourth Amended and Restated Agreement for Wholesale Financing,
dated September 15, 1995, as amended and cause such facility to be terminated.
(c) Subject to the other terms and provisions of this Agreement, on or
promptly following the Measurement Date, Siemens will provide funds necessary to
repay and cause to be repaid the Notes.
6. Conditions to Closing.
6.1 Conditions to the Obligations of Siemens and Acquisition. The
obligation of Siemens and Acquisition to effect the Initial Purchase or, if the
Initial Purchase does not occur, the Merger, is subject to the fulfillment on or
prior to the Measurement Date of each of the following conditions (all or any of
which, other than Sections 6.1(e) and (g), may be waived by Siemens in its sole
discretion):
(a) Performance of Obligations; Representations and Warranties. The Company
shall have performed and complied in all material respects with all covenants
and agreements contained in this Agreement that are required to be performed or
complied with by it prior to or at the Measurement Date, and, each of the
Company's representations and warranties contained in Section 3 of this
Agreement shall be true and correct in all material respects (if not qualified
by materiality) and in all respects (if qualified by materiality) as of the
Measurement Date as though made on and as of the Measurement Date or in the case
of representations and warranties made as of a specified date earlier than the
Measurement Date, shall have been true and correct in all material respects (if
not qualified by materiality) and in all respects (if qualified by materiality)
on and as of such date and the Company shall have delivered to Siemens a
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certificate, dated the Measurement Date executed on behalf of the Company by its
Chairman, President or a Vice President, to such effect.
(b) Opinions of Counsel. Siemens and Acquisition shall have received the
favorable written opinions, each dated the Measurement Date, of Xxxxx X.
Xxxxxxx, Senior Vice President and General Counsel of the Company, and Xxxxxx
Xxxxxx & Xxxxxxx, counsel to the Company, as to the matters set forth on Exhibit
E and in form reasonably satisfactory to Siemens and Acquisition.
(c) Resignations. Siemens shall have received the written resignation (i)
of employment and from all offices listed of the individuals set forth on
Exhibit F-1 and (ii) from all offices listed of the individuals set forth on
Exhibit F-2 and the written resignation of all trustees of all the Benefit Plans
of the Company and its Subsidiaries, each effective at the Measurement Date.
(d) Consents. The Company shall have received or made the consents,
approvals, authorizations, permissions, notices and filings listed on Schedule
6.1(d) and all of them shall be in form and substance satisfactory to Siemens
and Acquisition.
(e) Stockholder Approval. This Agreement shall have been adopted by the
requisite vote of the stockholders of the Company (if any) required by the
Company's Certificate of Incorporation and the DGCL; provided, however, that
this condition shall not apply in respect of the Initial Purchase.
(f) Escrow Agreement. The Escrow Agreement and, if the Tax Insurance
Election has been made, the Tax Escrow Agreement, shall have been duly executed
and delivered by the parties thereto.
(g) Antitrust Waiting Periods. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated.
(h) Invoices. The Company shall have delivered to Siemens the Invoices (as
defined in Section 9.1).
(i) IRS Matter Resolution. The tax matter described on Schedule 6.1(i)
shall have been resolved in a manner satisfactory to Siemens in its sole
discretion in a manner that will result in no liability on the part of the
Company, any Subsidiary or the Surviving Corporation to federal or state Tax
authorities or, in the alternative if so elected by the Company (the "Tax
Insurance Election"), the Company shall have procured, paid in full (subject to
Section 9.1) and delivered to Siemens, insurance policies in substantially the
forms contained in Exhibit G,
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with only such changes as shall be reasonably acceptable to Siemens and in the
amounts set forth in Exhibit G.
(j) Dissenting Shares. The applicable 20-day period in Section 262(d) of
the DGCL for stockholders to demand or perfect dissenters rights pursuant to
Section 262 of the DGCL shall have expired and such rights shall not have been
exercised with respect to more than 5% of the outstanding shares of any class of
capital stock of the Company.
6.2 Conditions to the Obligations of the Company. The obligation of the
Company to effect the Merger is subject to the fulfillment at or prior to the
Measurement Date of each of the following conditions (all of which may be waived
by the Company in its sole discretion).
(a) Performance of Obligations; Representations and Warranties. Siemens and
Acquisition shall have performed and complied in all material respects with all
covenants and agreements contained in this Agreement that are required to be
performed or complied with by them prior to or at the Measurement Date and each
of the representations and warranties of Acquisition and Siemens contained in
Section 4 of this Agreement shall be true and correct, in all material respects
(if not qualified by materiality) and in all respects (if qualified by
materiality) as of the Measurement Date as though made on and as of the
Measurement Date or, in the case of representations and warranties made as of a
specified date earlier than the Measurement Date, shall have been true and
correct in all material respects (if not qualified by materiality) and in all
respects (if qualified by materiality) on and as of such date and each of
Siemens and Acquisition shall have delivered to the Company a certificate dated
the Measurement Date executed on behalf of each of them by an authorized
signatory to such effect.
(b) Opinion of Counsel. The Company shall have received the favorable
written opinion dated the Measurement Date of internal counsel to Siemens and
Acquisition, as to the matters set forth in Exhibit H and in form reasonably
satisfactory to the Company.
(c) Escrow Agreement. The Escrow Agreement and, if the Tax Insurance
Election has been made, the Tax Escrow Agreement, shall have been duly executed
and delivered by the parties thereto.
(d) Stockholder Approval. This Agreement shall have been adopted by the
requisite vote of the stockholders of the Company (if any) required by the
Company's Certificate of Incorporation and the DGCL.
(e) Antitrust Waiting Periods. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated.
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7. Survival; Indemnification; Tax Matters.
7.1 Survival. Except as otherwise provided herein, all the representations,
warranties covenants and agreements of the Company contained in or made pursuant
to this Agreement shall survive the Closing and shall remain operative and in
full force and effect for a period of 18 months after the Measurement Date (such
period being referred to as the "Escrow Indemnity Period"), regardless of any
investigation or statement as to the results thereof made by or on behalf of any
Person before or after the Closing. No claim for indemnification may be asserted
after the expiration of the Escrow Indemnity Period. Notwithstanding anything
herein to the contrary, any representation, warranty, covenant and agreement
which is the subject of a claim which is asserted in writing prior to the
expiration of the Escrow Indemnity Period shall survive with respect to such
claim or any dispute with respect thereto until the final resolution thereof.
7.2 Indemnification. Siemens, its employees, agents, directors, officers,
subsidiaries and its affiliates and the employees, agents, directors, officers
and subsidiaries of its affiliates (the "Indemnified Parties") shall be
indemnified and held harmless from and against any and all damages, claims,
losses (including loss of value), expenses, costs, obligations and liabilities,
including without limitation liabilities for all reasonable attorneys',
accountants', and experts' fees and expenses including those incurred to enforce
the terms of this Agreement or any Collateral Document (collectively, "Losses")
(provided, however, that to avoid double-counting, Losses shall be determined
after giving effect to any reserves or liabilities reflected on the final
Closing Statement, if and to the extent those reserves reduced the Closing
Liquid Net Worth), asserted against, or paid, suffered or incurred by any
Indemnified Party which, directly or indirectly, arise out of, result from, are
based upon or relate to: (i) the inaccuracy, untruth or incompleteness, as of
the date of this Agreement or the Measurement Date (or, in the case of
representations and warranties made as of a specified date earlier than the
Measurement Date, on and as of such earlier date), of any representation or
warranty made or deemed to have been made by the Company in this Agreement or
any failure by the Company to perform or fulfill any of its covenants or
agreements set forth in this Agreement; provided, however that if any such
representation or warranty (other than those representations and warranties
contained in Section 3.7, Section 3.9(a) and Section 3.24) is qualified in any
respect by materiality or Material Adverse Effect, for purposes of this
paragraph such materiality or Material Adverse Effect qualification will be in
all respects ignored; (ii) subject to Section 7.9(b), Pre-Measurement Date Tax
Liabilities; (iii) the Asset Purchase Agreement, dated as of May 10, 1999, by
and between CompuCom Systems, Inc. and the Company or any of the transactions
contemplated thereby; (iv) any action, suit or proceeding commenced prior to the
Measurement Date before any court or arbitral or
-45-
other tribunal; (v) the Tax Matters Settlement Shortfall Amount; or (vi) any
failure of the Company or any of its Subsidiaries to be Year 2000 Compliant.
7.3 Limitation of Liability; Disposition of Escrow Fund. After the Closing,
the Indemnified Parties' rights to indemnification under Section 7.2 shall be
subject to the following limitations: (i) in no event shall the aggregate amount
to be paid to the Indemnified Parties under Section 7.2 exceed the Indemnity
Amount; (ii) the Indemnified Parties shall be entitled to recover any Loss
otherwise recoverable pursuant to clauses (i), (iii), (iv) and (vi) of Section
7.2 only to the extent the aggregate of Losses otherwise recoverable pursuant
such Section exceeds $1,000,000 in the aggregate; provided, that if all such
Losses exceed $1,000,000, the Indemnified Parties shall be entitled to recover
for all such Losses; and (iii) if the inaccuracy, untruth or incompleteness of a
representation in Section 3.17 results in an increase in the taxable income of
the Company or any Subsidiary with respect to any taxable period ending after
the Measurement Date, such increase in taxable income shall not give rise to an
indemnifiable Loss to the extent such increase in taxable income is properly
offset by available net operating loss carryovers of the Company or any
Subsidiary (as the case may be) from taxable periods beginning prior to the
Measurement Date.
7.4 Stockholders' Representative. (a) The Company hereby appoints, and the
Company's stockholders shall be deemed to appoint, the Stockholders'
Representative, with full and unqualified power to delegate to one or more
Persons the authority granted to him hereunder, to act as each of their agent
and attorney-in-fact, with full power of substitution, to take all actions
called for by this Section 7 and the Escrow Agreement and, if applicable, the
Tax Escrow Agreement, on their individual and collective behalf, in accordance
with the terms of this Section 7 and the Escrow Agreement and, if applicable,
the Tax Escrow Agreement.
(b) The Stockholders' Representative shall have no liability whatsoever to
any existing or former stockholder of the Company or to any other Person arising
out of the matters contemplated by this Section 7 or the Escrow Agreement or, if
applicable, the Tax Escrow Agreement, except only to the extent of any Loss
caused exclusively by the Stockholders' Representative's willful misconduct or
bad faith. In any event, any such liability shall be limited to direct damages
resulting from such conduct and in no event shall the Stockholders'
Representative be liable for special, incidental or consequential damages
incurred or suffered by any Person. The Stockholders' Representative shall incur
no liability to any existing or former stockholder of the Company or to any
other Person with respect to any action taken or suffered by him in reliance
upon any note, direction, instruction, consent, statement or other documents
believed by him to be genuine and duly authorized. The Stockholders'
Representative may, in all questions arising under the Escrow Agreement and, if
applicable, the Tax
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Escrow Agreement, rely on the advice of counsel and for anything done, omitted
or suffered in good faith by the Stockholders' Representative based on such
advice, the Stockholders' Representative shall not be liable to any existing or
former stockholder of the Company or to any other Person.
(c) In the event of the death or permanent disability of the Stockholders'
Representative, or his resignation, a successor Stockholders' Representative
shall be appointed by a majority vote of the holders (other than Siemens and its
subsidiaries) of outstanding capital stock of the Company immediately prior to
the Effective Time, with each such stockholder (or his or her successors or
assigns) to be given a vote equal to the number of votes represented by the
shares of capital stock of the Company held by such stockholder immediately
prior to the Effective Time.
7.5 Notice of Claims. If any of the Indemnified Parties believes that it
has suffered or incurred any Loss, it shall notify the Escrow Agent and the
Stockholders' Representative promptly in writing (at their respective addresses
set forth in the Escrow Agreement), and in any event within the applicable time
period specified in Section 7.1, describing such Loss, all with reasonable
particularity and containing a reference to the provisions of this Agreement in
respect of which such Loss shall have occurred (a "Claim Notice"). If any legal
action is instituted by a third party with respect to which any of the
Indemnified Parties intend to claim indemnity under this Section, such
Indemnified Party shall promptly give a Claim Notice to notify the Escrow Agent
and the Stockholders' Representative with respect to such legal action. In any
event, a failure or delay in notifying the Escrow Agent and the Stockholders'
Representative shall not affect the Indemnified Party's right to indemnity,
except only to the extent such failure or delay materially and adversely
prejudices the ability to defend against any legal action.
7.6 Defense of Third Party Claims. Because the right to indemnity is
limited as provided herein, except as otherwise provided in the Tax Escrow
Agreement relating solely to the Tax Matters (as defined in the Tax Matters
Escrow Agreement), the Indemnified Parties shall have the right to conduct and
control, through counsel of their own choosing, reasonably acceptable to the
Stockholders' Representative, any third party legal action or other claim, but
the Stockholders' Representative may, at its election, participate in the
defense thereof at its sole cost and expense; provided, however, that if the
Indemnified Parties shall fail to defend any such legal action or other claim,
then the Stockholders' Representative may defend, through counsel of its own
choosing, such legal action or other claim, and so long as it gives Siemens at
least 15 days' notice of the terms of the proposed settlement thereof and
permits Siemens to then undertake the defense thereof, except as set forth
below, settle such legal action or other claim and recover out of the Indemnity
Amount the amount of such settlement or of any judgment and the costs and
expenses of such
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defense. Neither Siemens nor the Stockholders' Representative shall compromise
or settle any such legal action or other claim without the prior written consent
of the other, which consent shall not be unreasonably withheld, except that
under no circumstances shall Siemens be required to consent to the entry of an
order for injunctive or other non-monetary relief. All costs and expenses
reasonably incurred in defending any such third party legal action or other
claim, including the amount of any settlement or of any judgment, shall be paid
out of the Indemnity Amount.
7.7 Dispute Resolution: Negotiation, Mediation and Arbitration.
(a) The Parties shall attempt to resolve any dispute arising out of or
relating to this Agreement promptly by negotiation in good faith between
executives who have authority to settle the dispute. Any Party shall give any
other Party written notice of any dispute not resolved in the ordinary course of
business. Within 7 days after delivery of such notice, the Party receiving
notice shall submit to the other a written response thereto. The notice and the
response shall include: (i) a statement of each Party's position(s) regarding
the matters(s) in dispute and a summary of arguments in support thereof, and
(ii) the name and title of the executive who will represent that Party and any
other Person who will accompany that executive.
(b) Within 14 days after delivery of the notice, the designated executives
shall meet at a mutually acceptable time and place, and thereafter, as often as
they reasonably deem necessary, to attempt to resolve the dispute. All
reasonable requests for information made by one Party to any other shall be
honored in a timely fashion. All negotiations conducted pursuant to this Section
7.7 (and any of the Parties' submissions in contemplation hereof) shall be kept
confidential by the Parties and shall be treated by the Parties and their
representatives as compromise and settlement negotiations under the Federal
Rules of Evidence and any similar state rules.
(c) If the matter in dispute has not been resolved within 30 days after
delivery of the notice, the dispute shall be submitted to non-binding mediation
in accordance with the then-current Model Procedure for Mediation of Business
Disputes of the CPR Institute for Dispute Resolution. The mediation shall be
conducted within 30 days of the time the mediator is selected. Unless otherwise
agreed, the parties will select a mediator from the CPR Panels of Distinguished
Neutrals; provided, however, that if no mediator from that list can be mutually
agreed upon, each Party will submit to the CPR its own list of acceptable
mediators from the CPR Panels of Distinguished Neutrals and the CPR shall
appoint one of those listed as the mediator for the Parties. The costs of the
mediation, including the mediator's fees, shall be borne equally by the Parties
to the dispute.
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(d) If the matter in dispute has not been resolved within 30 days after the
selection of the mediator, either Party (the "claimant") may submit the dispute
to binding arbitration to the New York, New York office of the American
Arbitration Association ("AAA") in accordance with the procedures set forth in
the Commercial Arbitration Rules of the AAA, revised and effective July 1, 1996.
(e) The Commercial Arbitration Rules of the AAA, revised and effective July
1, 1996, as modified or revised by the provisions of this Section 7.7, shall
govern any arbitration proceeding hereunder. The arbitration shall be conducted
by three arbitrators selected pursuant to Rule 13 of the Commercial Arbitration
Rules, and prehearing discovery shall be permitted if and only to the extent
determined by the arbitrator to be necessary in order to effectuate resolution
of the matter in dispute. The arbitrator's decision shall be rendered within 30
days of the conclusion of any hearing hereunder and the arbitrator's judgment
and award may be entered and enforced in any court of competent jurisdiction.
(f) Resolution of disputes under the procedures of this Section 7.7 shall
be the sole and exclusive means of resolving disputes arising out of or relating
to this Agreement; provided, however, that nothing herein shall preclude the
Parties from seeking in any court of competent jurisdiction temporary or interim
injunctive relief to the extent necessary to preserve the subject matter of the
dispute pending resolution under this Section 7.7.
7.8 Exclusive Remedy. The indemnification provided in this Section 7 shall
be the sole and exclusive remedy available following the Closing to the
Indemnified Parties for the subject matter covered by such indemnification and
any claim arising under this Agreement.
7.9 Tax Matters. Prior to the filing of any Income Tax Return solely with
respect to the Company and/or any of its Subsidiaries due after the Measurement
Date (with regard to extensions) with respect to any taxable year or other
taxable period beginning prior to the Measurement Date, and no later than thirty
(30) days prior to the due date for filing such Tax Return, Siemens shall
provide the Stockholders' Representative with a draft of such Tax Return, and
any related work papers, for review. No later than ten (10) days prior to the
due date for filing such Tax Return, the Stockholders' Representative shall
notify Siemens with any proposed modifications to such Tax Return. Such
modifications to the Tax Return shall be made by Siemens in its reasonable
discretion prior to filing as long as there is a reasonable basis for the filing
position requested. In any event, Siemens shall file all Tax Returns due after
the Measurement Date with respect to taxable years beginning prior to the
Measurement Date consistent with the Company's past practices to the extent
permitted by applicable law. Notwithstanding the foregoing, nothing contained in
this Agreement shall permit the Stockholders' Representative to receive nor
obligate Siemens to deliver to the Stockholders' Representative any consolidated
or other Tax Return or Income
-49-
Tax Return of Siemens or any other Subsidiary or Affiliate of Siemens (other
than a Tax Return relating solely to the Company and/or any of its
Subsidiaries).
(i) Siemens shall not amend, or cause or permit the Company or any
Subsidiary to amend, any Income Tax Return filed with respect to any
taxable year or other taxable period beginning prior to the Measurement
Date without the prior written consent of the Stockholders' Representative,
which consent shall not be unreasonably withheld. Siemens and the
Stockholders' Representative agree to consult and resolve in good faith any
disagreement regarding the withholding of consent by the Stockholders'
Representative, it being understood and agreed that in the absence of any
such resolution, any and all such disagreements shall be resolved in a
manner consistent with the procedures described in Section 7.7.
(ii) Any overpayment in respect of Taxes relating to any taxable year
or other taxable period (or portion thereof, as determined below in clause
(c)) ending on or before the Measurement Date shall be for the benefit of
the Stockholders; provided that, any overpayment of Taxes attributable to
the fiscal 1994 through 1996 taxable years of the Company or its
Subsidiaries shall be for the benefit of Siemens to the extent that such
overpayments are reflected as an asset on the balance sheet (as of the
close of business on the Measurement Date) prepared pursuant to Section
2.2. Upon written notification to Siemens, the Stockholders'
Representative, at its own expense, will be permitted to pursue any
overpayment to which it is entitled; provided that any action on the part
of the Stockholders' Representative shall not increase any Tax Liability of
Siemens, the Company or any of their respective Subsidiaries in any period
ending after the Measurement Date (in which event, such action shall
require the prior written consent of Siemens, which shall not be
unreasonably withheld).
(a) Notwithstanding Section 7.2, no claim for indemnification shall be
permitted for any Losses resulting solely from the failure of Siemens or the
Company or any Subsidiary to timely file any Tax Return required to be filed
(with extensions) after the Measurement Date or timely pay any Taxes required to
be paid after the Measurement Date.
(b) Siemens and the Company (and/or the Company's Subsidiaries) will, to
the extent permitted by applicable law, elect with the relevant Tax authority to
close the taxable year of the Company and its Subsidiaries on the Measurement
Date. For purposes of this Agreement, in the case of any Taxes in respect of a
taxable period that begins on or before the Measurement Date and ends after the
Measurement Date, the portion of such Tax attributable to the pre-Measurement
Date period shall (i) in the case of real property or other similar Taxes that
are fixed and periodic in nature, be the amount of such Taxes for the entire
period multiplied by a fraction, the numerator of which is the number of days in
the period ending on the Measurement Date, and the denominator of which is the
number of days in the entire period; and
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(ii) in the case of all other Taxes, be determined on the basis of an interim
closing of the books at the end of the Measurement Date. For purposes of clause
(i) of the preceding sentence, any credits against Tax shall be prorated based
upon the fraction employed in such clause (i).
(c) Siemens shall not make an election pursuant to Section 338 of the Code
with respect to the Company or any Subsidiary without the prior written consent
of the Stockholders' Representative.
8. Termination; Effect of Termination.
8.1 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned whether prior to or after the adoption of
this Agreement by the Company's stockholders if:
(a) at any time prior to the Effective Time, by mutual written agreement of
the parties hereto; provided, however, that if such termination is to occur
after the Initial Purchase Date, such termination must be approved in accordance
with Section 1.6(c);
(b) at any time prior to the Initial Purchase Date, by either the Company
or Siemens upon notification to the non-terminating party by the terminating
party:
(i) at any time 90 days following the date of this Agreement if the
Merger shall not have been consummated on or prior to such date and such
failure to consummate the Merger is not caused by a breach of this
Agreement by the terminating party;
(ii) there has been a material breach of this Agreement on the part of
the non-terminating party and either (x) the non-terminating party fails to
cure such breach within 30 days following notification thereof by the
terminating party or (y) the breach is not reasonably capable of being
cured within 30 days after notice thereof; or
(c) at any time prior to the Initial Purchase Date, by Siemens upon the
occurrence of a Trigger Event (as defined in Section 8.2).
8.2 Effect of Termination. (a) If this Agreement is validly terminated by
either the Company or Siemens pursuant to Section 8.1, this Agreement will
forthwith become null and void and there will be no liability or obligation on
the part of either the Company, Siemens or Acquisition (or any of their
respective Repre-
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sentatives or affiliates), except (i) that the provisions of Sections 5.3(b) and
9 will continue to apply following any such termination and (ii) as provided in
this Section 8.2.
(b) If (i) Siemens terminates this Agreement pursuant to (A) Section
8.1(b)(ii) or (B) Section 8.1(c), (ii) after the date hereof and prior to such
termination, a Person other than Siemens or its Affiliates shall have made or
announced an intention to make a proposal for an Acquisition Transaction and
(iii) the Company consummates an Acquisition Transaction or enters into a
definitive agreement with respect to an Acquisition Transaction within 12 months
following such termination, then the Company shall pay to Siemens a termination
fee in the amount of $5 million upon the closing of such Acquisition Transition.
The termination fee shall be payable not later than two business days after the
closing of such Acquisition Transaction, by wire transfer of immediately
available funds to an account designated by Siemens. If the termination fee is
not paid within two business days after the due date as provided above, (i) the
termination fee will bear interest at the rate of 12% per year (or if less, the
highest legally permissible rate) from such date until paid and (ii) the Company
will pay for all attorneys' fees and expenses incurred by Siemens in connection
with collecting such overdue amounts.
(c) For purposes of this Agreement, a "Trigger Event" means any of the
following events: (i) the Company shall have entered into, or shall have
publicly announced its intention to enter into, a definitive agreement or
agreement in principle with respect to any Acquisition Transaction other than
the transactions contemplated by this Agreement; (ii) the Board of Directors of
the Company or any committee thereof shall have withdrawn its approval or
recommendation of this Agreement or the Merger, or modified its approval or
recommendation of this Agreement or the Merger in a manner adverse to Siemens or
Acquisition; (iii) the Board of Directors of the Company or any committee
thereof shall have made any recommendation with respect to an Acquisition
Transaction by any Person (other than Siemens or Acquisition) other than a
recommendation rejecting or against such Acquisition Transaction; or (iv) the
Company receives a proposal with respect to an Acquisition Transaction by any
Person (other than Siemens or Acquisition), and the Company's Board of Directors
takes a neutral position or makes no recommendation with respect to such
Acquisition Transaction after a reasonable amount of time (and in no event more
than five business days) has elapsed for the Company's Board of Directors to
review and make a recommendation with respect to such proposal consistent with
the Board's fiduciary duties.
9. Fees and Expenses.
9.1 Expenses. Subject to Section 9.2, each party hereto shall pay its own
expenses incidental to the preparation of this Agreement, the carrying out of
the provisions of this Agreement and the consummation of the transactions
contemplated hereby. In addition, (a) the unpaid fees and expenses of all
brokers, investment
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bankers, financial advisors, attorneys and accountants engaged in connection
with the preparation and negotiation of this Agreement or the transactions
contemplated hereby and whose compensation is payable by the Company shall be
reflected on invoices (the "Invoices") submitted to Siemens on or prior to the
Measurement Date, which Invoices shall include confirmation that no further
compensation beyond the amount reflected in the Invoice is or will be payable by
the Company (or the Surviving Corporation, as successor to the Company) and (b)
Siemens and the Company shall each pay one-half of the aggregate premiums and
surplus lines premium tax charged thereon for the insurance policies described
in Section 6.1(i).
9.2 Stockholders of the Company. In no event shall Siemens, Acquisition or
the Company be liable (before or after the Closing) for any fees and expenses of
the stockholders of the Company relating to the transactions contemplated by
this Agreement, including, without limitation, legal, accounting and financial
advisory fees.
10. Definitions. As used in this Agreement the terms set forth below shall
have the following meanings:
"AAA" shall have the meaning ascribed to such term in Section 7.7(d).
"Acquisition" shall have the meaning ascribed to such term in the first
paragraph hereof.
"Acquisition Price" shall have the meaning ascribed to such term in Section
2.1(c).
"Acquisition Common Stock" shall have the meaning ascribed to such term in
Section 2.1(a).
"Adjusted Acquisition Price" shall have the meaning ascribed to such term
in Section 2.1(c).
"Acquisition Transaction" shall have the meaning ascribed to such term in
Section 5.2.
"Affiliate" of a Person shall mean any other Person who directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with, such first Person.
"Agreement" shall have the meaning ascribed to such term in the first
paragraph hereof.
"Antitrust Division" shall have the meaning ascribed to such term in
Section 5.5.
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"Authorizations" shall have the meaning ascribed to such term in Section
3.15(b).
"Benefit Plan" shall mean any bonus, pension, profit sharing, deferred
compensation, written incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan or arrangement providing
benefits to any current or former employee, officer, consultant or director of
the Company or any Subsidiary.
"Call Option" shall have the meaning ascribed to such term in the Recitals
to this Agreement.
"Certificates" shall have the meaning ascribed to such term in Section
2.4(b).
"Certificate of Merger" shall have the meaning ascribed to such term in
Section 1.2.
"Claim Notice" shall have the meaning ascribed to such term in Section 7.5.
"claimant" shall have the meaning ascribed to such term in Section 7.7(d).
"Closing" shall have the meaning ascribed to such term in Section 1.3.
"Closing Date" shall have the meaning ascribed to such term in Section 1.3.
"Closing Liquid Net Worth" shall mean the amount, computed as of the
Measurement Date and in a manner consistent with the methods used in the
preparation of the financial statements of the Company at or for the period
ended September 26, 1999 and as specified in Exhibit C, equal to the Company's
current assets (net of reserves) minus all of its liabilities, including for
this purpose (whether or not required by GAAP or otherwise to be accrued) an
accrual for the full amount of all amounts due or to become due on the part of
the Company or any Subsidiary of the Company in connection with or by reason of
the transactions contemplated by this Agreement, including without limitation or
duplication (i) those related to attorneys, accountants, investment bankers,
financial advisers and other professionals, (ii) all obligations in respect of
bonuses, severance or additional compensation payable to officers, directors,
employees and consultants (it being understood that liabilities under "double
trigger" change-of-control provisions shall not be included as liabilities for
purposes of calculating Closing Liquid Net Worth unless both triggers have
occurred prior to the Measurement Date), (iii) the Notes Redemption Premium and
(iv) one-half of the aggregate premiums and the related surplus lines premium
tax payable to the insurers for the insurance policies described in Section
6.1(i).
"Closing Liquid Net Worth Adjustment" shall mean the amount by which the
Company's Closing Liquid Net Worth is less than $(165,685,000).
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral Document" shall mean any certificate or schedule delivered by a
Person or any of its respective directors, officers, employees or trustees
pursuant to this Agreement.
"Commonly Controlled Entity" shall have the meaning ascribed to such term
in Section 3.18(a).
"Company" shall have the meaning ascribed to such term in the first
paragraph hereof.
"Company Capital Stock" shall have the meaning ascribed to such term in
Section 3.2(a).
"Company Common Stock" shall have the meaning ascribed to such term in
Section 2.1(c).
"Company Designees" shall have the meaning ascribed to such term in Section
1.6(a).
"Company SEC Documents" shall have the meaning ascribed to such terms in
Section 3.4(c).
"Company Stock Plans" shall have the meaning ascribed to such term in
Section 2.1(e).
"Control" shall mean the possession of the power, directly or indirectly,
to direct or cause the direction of the management and policies of a Person
whether through the ownership of voting securities, by contract or otherwise.
"Debentures" shall mean the 5.5% Convertible Subordinated Debentures due
2007 issued and outstanding pursuant to the Indenture dated March 18, 1987, as
supplemented, between Businessland, Inc. and Security Pacific National Bank.
"December Financial Statements" shall have the meaning ascribed to such
term in Section 3.8.
"DGCL" shall have the meaning ascribed to such term in Section 1.1.
"Disclosure Schedule" shall have the meaning ascribed to such term in
Section 3.
"Dissenting Shares" shall have the meaning ascribed to such term in Section
2.1(d).
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"Drag-Along Rights" shall have the meaning ascribed to such term in the
Recitals to this Agreement.
"Effective Time" shall have the meaning ascribed to such term in Section
1.2.
"Employees" shall have the meaning ascribed to such term in Section 3.19.
"Environmental Claim" shall mean any written claim, action, investigation
or notice by any Person alleging potential liability arising out of, based on,
or resulting from (a) the presence or release into the environment, including,
without limitation, the indoor environment, of any Hazardous Substance at any
location, whether or not owned by the Company or (b) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" shall mean all applicable federal, state, local or
foreign laws, statutes, rules and regulations, orders, decrees, judgments,
arbitration awards, agreements and permits relating to protection and clean-up
of the environment and protection of human health (excluding those relating
solely to occupational health and safety), including those relating to the
generation, handling, disposal, transportation or release of Hazardous
Substances.
"Escrow Agent" shall mean ChaseMellon Shareholder Services LLC.
"Escrow Agreement" shall mean an agreement substantially in the form of
Exhibit I, executed and delivered at the Closing or, if earlier, on the Initial
Purchase Date.
"Escrow Indemnity Period" shall have the meaning ascribed to such term in
Section 7.1.
"Escrow Period" shall mean the period beginning on the Initial Distribution
Date and ending on the first date on which funds held in the escrow created
pursuant to the Escrow Agreement are permitted to be released to the Payment
Agent under the terms of the Escrow Agreement.
"ERISA" shall have the meaning ascribed to such term in Section 3.18(a).
"European Authorities" shall have the meaning ascribed to such term in
Section 5.5.
"European Statutes" shall have the meaning ascribed to such term in Section
5.5.
"Exchange Act" shall have the meaning ascribed to such term in Section
1.6(b).
"Exchange Fund" shall have the meaning ascribed to such term in Section
2.4(a).
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"14(f) Material" shall have the meaning ascribed to such term in Section
1.6(b).
"FTC" shall have the meaning ascribed to such term in Section 5.5.
"GAAP" shall have the meaning ascribed to such term in Section 3.7.
"Governmental Entity" shall mean any: (i) federal, state, local, foreign or
international government; (ii) court, arbitral or other tribunal or governmental
or quasi-governmental authority of any nature (including any governmental
agency, political subdivisions, instrumentalities, branch, department, official,
or entity); or (iii) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature pertaining to government.
"HSR Act" shall have the meaning ascribed to such term in Section 3.4(b).
"Hazardous Substances" shall mean any and all hazardous and toxic
substances, wastes or materials, any pollutants, contaminants, or dangerous
materials (including, but not limited to, polychlorinated biphenyls, friable
asbestos, volatile and semi-volatile organic compounds, oil, petroleum products
and fractions, and any materials which include hazardous constituents or become
hazardous, toxic, or dangerous when their composition or state is changed), or
any other similar substances or materials regulated under Environmental Laws.
"IRS" shall have the meaning ascribed to such term in Section 3.17(b).
"Income Taxes" shall mean Federal income taxes and all state, local and
municipal Taxes imposed on or measured by net income, or income, franchise or
similar taxes based on gross receipts.
"Income Tax Return" shall mean any Tax Return filed in respect of Income
Taxes.
"Incremental Amount" shall have the meaning ascribed to such term in
Section 2.1(c).
"Indemnified Parties" shall have the meaning ascribed to such term in
Section 7.2.
"Indemnity Amount" shall have the meaning ascribed to such term in Section
2.1(c).
"Independent Accountant" shall have the meaning ascribed to such term in
Section 2.2(c).
"Information Statement" shall have the meaning ascribed to such term in
Section 3.4(b).
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"Initial Distribution Date" shall have the meaning ascribed to such term in
Section 2.3(a).
"Initial Purchase" shall have the meaning ascribed to such term in the
Recitals to this Agreement.
"Initial Purchase Date" shall have the meaning ascribed to such term in the
Recitals to this Agreement.
"Intellectual Property" shall mean all United States and foreign
intellectual property rights arising under statutory or common law, and whether
or not perfected, including, without limitation (a) all patents, patent
applications, patent disclosures and inventions and discoveries which may be
patentable and improvements thereto owned or licensable by the Company or its
Subsidiaries, (b) registered and unregistered trademarks, service marks, trade
dress, logos, trade names and corporate names, and registrations and
applications for registration thereof, including all marks registered in the
United States Patent and Trademark Office and any foreign trademark offices, (c)
rights associated with works of authorship including copyrights and moral rights
in both published and unpublished works and registrations and applications for
registration thereof, (d) computer software, data and documentation (including
all source codes and object codes), (e) rights relating to trade secrets and
confidential business information (including ideas, formulas, compositions,
inventions (whether patentable or unpatentable and whether or not reduced to
practice), know-how, manufacturing and production processes and techniques,
research and development information, drawings, specifications, designs, plans,
charts, diagrams, proposals, technical data, data bases, copyrightable works,
financial, marketing and business data, pricing and cost information, business
and marketing plans and customer and supplier lists and information), (f) any
rights analogous to those set forth in this paragraph and any other proprietary
rights relating to intangible property and (g) copies and tangible embodiments
of any of the foregoing (in whatever form or medium) in which the Company or its
Subsidiaries has any rights, and divisions, continuations, renewals, reissues
and extensions of the foregoing (as and to the extent applicable) now existing,
or hereafter filed, issued or acquired.
"Invoices" shall have the meaning ascribed to such term in Section 9.1.
"Laws" shall have the meaning ascribed to such term in Section 3.15(a).
"Lien" shall mean any mortgage, pledge, lien, security interest,
conditional or installment sale agreement, encumbrance, charge or other claims
of third parties of any kind, except for (a) liens for Taxes or governmental
charges or claims (i) not yet due and payable or (ii) being contested in good
faith, if a reserve or other appropriate provision, if any, as shall be required
by GAAP shall have been made therefor on the December Financial Statements; (b)
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statutory liens of landlords, lien of carriers, warehousemen's, mechanics and
materialmen's and other liens imposed by law incurred in the ordinary course of
business for sums (i) not yet due and payable and (ii) being contested in good
faith, if a reserve or other appropriate provision, if any, as shall be required
by GAAP shall have been made therefor on the December Financial Statements; (c)
liens incurred or deposits made in connection with workers' compensation,
unemployment insurance and other similar types of social security programs in
each case in the ordinary course of business consistent with past practice; (d)
purchase money security interests incurred in the ordinary course of business,
consistent with past practice; (e) easements, rights-of-way, restrictions and
other similar charges or encumbrances, in each case, which do not interfere with
the ordinary conduct of the Company's operations and do not or would not
materially detract from the value of the property to which such encumbrance
relates; and (f) liens arising out of acts done or suffered to be done by, and
judgments against, Siemens or Acquisition, and those claiming by, through or
under Siemens or Acquisition; and (g) liens, security interests or encumbrances
that have been placed by any developer, landlord or other third party on
property with respect to which the Company and the applicable Subsidiary has
easement rights or leasehold interests and subordination or similar agreements
relating thereto.
"Losses" shall have the meaning ascribed to such term in Section 7.2.
"Material Adverse Effect" shall mean a material adverse effect on the
assets, business, condition (financial or otherwise) or results of operations of
the Company and its Subsidiaries taken as a whole.
"Measurement Date" shall have the meaning ascribed to such term in Section
2.2(a).
"Merger" shall have the meaning ascribed to such term in the Recitals to
this Agreement.
"Merger Price" shall have the meaning ascribed to such term in Section
2.1(c).
"Microsoft Warrant" shall have the meaning ascribed to such term in Section
3.2(a)
"1997 IBM Warrant" shall have the meaning ascribed to such term in Section
3.2(a).
"XXX Plan" shall have the meaning ascribed to such term in Section 3.2(a).
"Notes" shall mean the 12.5% Senior Subordinated Notes due 2006 issued and
outstanding pursuant to the Indenture dated July 29, 1998 among the Company, the
Subsidiary Guarantors (as defined therein) and Marine Midland Bank, N.A., as
trustee
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"Notes Redemption Premium" shall mean (i) an amount in respect of the
Debentures equal to $32.2 million less the book value of the Debentures on the
Measurement Date plus (ii) the excess of (x) the amount required to be expended
by Siemens or its Affiliates to repurchase or redeem all of the outstanding
Notes, over (y) the aggregate outstanding principal balances of the Notes on the
Measurement Date plus (iii) the reasonable costs and expenses (including fees
and expenses of advisors and legal counsel) incurred or to be incurred in
connection with repurchasing, redeeming or otherwise repaying the Notes and
Debentures. The Notes Redemption Premium shall not include any amount paid by
Siemens to repurchase any debt security that is in excess of the contractual
repurchase or redemption price for such security (including any premium or
penalty) that will be payable following the Merger.
"Notice of Disagreement" shall have the meaning ascribed to such term in
Section 2.2(c).
"Option" shall have the meaning ascribed to such term in Section 2.1(e).
"Outstanding Share Amount" shall have the meaning ascribed to such term in
Section 2.1(c).
"Party" shall mean Siemens, Acquisition, the Company and its Subsidiaries
and the Stockholders' Representative.
"Payment Agent" shall mean a bank or trust company designated as the
exchange and paying agent by Siemens and reasonably satisfactory to the Company.
"Pension Plans" shall have the meaning ascribed to such term in Section
3.18(a).
"Person" shall mean any individual, corporation, partnership, limited
partnership, limited liability company, other business organization, trust,
association or entity or government agency or authority.
"Plans" shall have the meaning ascribed to such term in Section 3.18(a).
"Potential Acquiror" shall have the meaning ascribed to such term in
Section 5.2.
"Pre-Measurement Date Tax Liabilities" shall mean all obligations for
Income Taxes owed by the Company (or the Surviving Corporation as its successor
in the Merger) and its Subsidiaries for any period ending on or prior to the
Measurement Date which are actually paid by the Company (or the Surviving
Corporation as its successor in the Merger), other than (i) any Income Taxes
directly resulting from any action taken by Siemens, the Company, their
affiliates or agents of any of the foregoing on the Measurement Date or treated
as occurring on the Measurement Date (including, for example, any Income Taxes
resulting from a Section
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338 election made with respect to the Company or any of its Subsidiaries) other
than any action taken by the Company or its Subsidiaries in the ordinary course
of business, and (ii) Income Taxes that are covered by proper accruals or
reserves on the books of the Company or its Subsidiaries on the Measurement
Date.
"Put Option" shall have the meaning ascribed to such term in the Recitals
to this Agreement.
"Remaining Escrow Balance" shall mean the amount of funds available
pursuant to the Escrow Agreement to be released after payment of all sums due
Siemens, the Stockholders' Representative and the Escrow Agent, at the end of
the Escrow Period.
"Representative" shall have the meaning ascribed to such term in Section
5.2.
"SEC" shall have the meaning ascribed to such term in Section 3.4(b).
"Secretary of State" shall have the meaning ascribed to such term in
Section 1.2.
"Securities Act" shall have the meaning ascribed to such term in Section
3.4(c).
"Siemens" shall have the meaning ascribed to such term in the first
paragraph hereof.
"Stockholder Approval" shall have the meaning ascribed to such term in
Section 3.3.
"Stockholders' Representative" shall have the meaning ascribed to such term
in Section 2.2 (a), and also includes any replacement appointed pursuant to
Section 7.4(c).
"Stockholder Representative Expense Amount" shall have the meaning ascribed
to such term in Section 2.1(c).
"Stockholders Agreement" shall have the meaning ascribed to such term in
the Recitals to this Agreement.
"Subsidiary" shall mean any corporation, partnership, joint venture or
other entity in which the Company (a) owns, directly or indirectly, 50% or more
of the outstanding voting securities or equity interests or (b) is a general
partner.
"Surviving Corporation" shall have the meaning ascribed to such term in
Section 1.1.
"Surviving Corporation Common Stock" shall have the meaning ascribed to
such term in Section 2.1(a).
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"Tax" (and, with correlative meaning, "Taxes" and "Taxable") shall mean any
and all taxes, fees, levies, duties, tariffs, imposts, and other charges in the
nature thereof (together with any and all interest, penalties, additions to tax
and additional amounts imposed with respect thereto) imposed by any government
or taxing authority, including, without limitation: taxes or other charges on or
with respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer, value
added, or gains taxes; license, registration and documentation fees; and customs
duties, tariffs, and similar charges.
"Tax Escrow Agent" shall mean ChaseMellon Shareholder Services LLC.
"Tax Escrow Agreement" shall mean an agreement substantially in the form of
Exhibit J, executed and delivered at the Closing or, if earlier, on the Initial
Purchase Date.
"Tax Escrow Amount" shall have the meaning ascribed to such term in Section
2.1(c).
"Tax Escrow Balance" shall mean the amount of funds available pursuant to
the Tax Escrow Agreement to be distributed after payment of all sums due to
Siemens and the Tax Escrow Agent at the end of the Tax Matters Escrow Period.
"Tax Insurance Election" shall have the meaning ascribed to such term in
Section 6.1(i).
"Tax Matters Escrow Period" shall mean the period beginning on the Initial
Distribution Date and ending on the business day following the first date on
which funds held in escrow pursuant to the Tax Escrow Agreement are permitted to
be delivered to the Payment Agent pursuant to the terms of the Tax Escrow
Agreement.
"Tax Matters Settlement Shortfall Amount" shall mean the amount, if any, by
which the amounts actually paid to dispose of the tax matters disclosed in
Schedule 6.1(i) and to discharge any Liability for Taxes (federal, state or
other) arising out of or in connection with those proceedings, including without
limitation, all legal, accounting and other professional fees and expenses
incurred with respect thereto, exceed the sum of (i) all amounts available under
the Tax Escrow Agreement to pay such amounts plus (ii) all funds received by
Siemens under the insurance policies described in Section 6.1(i) to pay such
amounts.
"Tax Return" shall mean any return, report or similar statement required to
be filed with respect to any Tax (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax and all federal, state, local and foreign returns,
reports and similar statements.
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"Trademarks" shall have the meaning ascribed to such term in Section
3.16(b).
"Trigger Event" shall have the meaning ascribed to such term in Section
8.2(c).
"Warrant" shall have the meaning ascribed to such term in Section 2.1(f).
"Warrant Agreements" shall have the meaning ascribed to such term in
Section 3.2(a).
"Welfare Plans" shall have the meaning ascribed to such term in Section
3.18(a).
"Year 2000 Compliant" shall mean:
(a) that (i) all of the equipment and systems used by the Company and its
Subsidiaries (other than any third party software or systems included therein);
and (ii) all of the products designed, developed, under design or development,
licensed, manufactured, supported, sold, distributed and/or maintained by the
Company and its Subsidiaries (other than any third party software or systems
included therein) do not and will not experience any premature cancellation or
expiration of contractual rights or deletion of data, or any malfunctions or
other problems in connection with the year 2000 (and all subsequent years) as
distinct from 1900's years;
(b) that no value for any current date will cause any interruption in
operation of any of the equipment, systems and/or products described in clause
(a) above;
(c) that all date-based functionality of the equipment, systems and/or
products described in clause (a) above will behave consistently for dates prior
to, during and after year 2000; and
(d) that in all interfaces and data storage of the Company and its
Subsidiaries, the century in any date must be specified either explicitly or by
unambiguous algorithms or inferencing rules.
11. Miscellaneous.
11.1 Press Releases. Except as required by law, none of Siemens,
Acquisition or the Company shall issue any press release or otherwise make
public any information with respect to the subject matter of this Agreement nor
the transactions contemplated hereby, without the prior written consent of each
of the other parties to this Agreement.
11.2 Integration. This Agreement and the agreements expressly referred to
or contemplated herein set forth the entire understanding of the parties hereto
with respect to the transactions contemplated hereby, and, except as set forth
in
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this Agreement, such other agreements, and the Exhibits hereto, there are no
representations or warranties, express or implied, made by any party to this
Agreement (or any of their Affiliates) with respect to the subject matter of
this Agreement. Any and all previous agreements and understandings between or
among the parties regarding the subject matter hereof, whether written or oral,
are superseded by this Agreement and the agreements referred to or contemplated
herein.
11.3 Assignment and Binding Effect. This Agreement may not be assigned by
either party hereto without the prior written consent of the other party;
provided, however, that Acquisition may assign its rights and obligations under
this Agreement to any directly or indirectly wholly owned subsidiary of Siemens'
ultimate parent company, Siemens Aktiengesellschaft, that is a corporation of
Delaware, any other State of the United States or the District of Columbia (and
the law of such State or the District of Columbia permits such corporation to
merge with the Company) upon written notice to the Company if the assignee shall
assume the obligations hereunder. All the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto.
11.4 Waiver. Any term or provision of this Agreement may be waived at any
time by the party entitled to the benefit thereof only by a written instrument
duly executed by such party. In the event such waiver is requested or to be made
on behalf of the Company after the Initial Purchase Date, such waiver must be
approved by the Company Designees.
11.5 Notices. Any notice, request, demand, waiver, consent, approval, or
other communication which is required or permitted to be given to any party
hereunder shall be in writing and shall be deemed given only if delivered to the
party personally or sent to the party by facsimile transmission (promptly
followed by a hard-copy delivered in accordance with this Section 11.5), by
reputable overnight courier service or by registered or certified mail (return
receipt requested), with postage and registration or certification fees thereon
prepaid, addressed to the party at its address set forth below:
If to Siemens or Acquisition:
Siemens Corporation
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
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Xxxxxxxx Chance Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxx
If to the Company:
Entex Information Services, Inc.
Xxx Xxxxxxxxxxxxx Xxxxx
Xxx Xxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
If to the Stockholders' Representative:
Dort X. Xxxxxxx, III
The Airlie Group
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
or to such other address or Person as any party may have specified in a notice
duly given to the other party as provided herein. Such notice, request, demand,
waiver, consent, approval or other communication will be deemed to have been
given as of the date so delivered.
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11.6 Amendment. This Agreement shall not be amended, modified, revised,
supplemented or terminated orally and no waiver of compliance with any provision
hereof and no consent provided for herein shall be effective other than by a
written instrument executed by all of the parties hereto. This Agreement may be
amended upon the taking of requisite corporate action by all of the parties
hereto and, if such amendment is requested or to be made after the Initial
Purchase Date, such amendment must be approved in accordance with Section
1.6(c).
11.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING
EFFECT TO ANY DELAWARE CHOICE OF LAW PRINCIPLES.
11.8 Third Party Beneficiaries. Except as provided in Section 5.11, the
representations, warranties, covenants and agreements contained in this
Agreement are for the sole benefit of the parties hereto, and their respective
successors and assigns, and they shall not be construed as conferring, and are
not intended to confer, any rights on any other Person.
11.9 Performance. In the event that any Party shall fail or refuse to
consummate the transactions contemplated by this Agreement or any default under,
or breach of, any representation, warranty or covenant of this Agreement on the
part of any Party shall have occurred that results in the failure to consummate
the transactions contemplated hereby, then in addition to the other remedies
provided in this Agreement, any other Party may seek to obtain an order of
specific performance thereof against the breaching Party from a court of
competent jurisdiction. In addition, any Party shall be entitled to obtain from
the breaching Party court costs and reasonable attorneys' fees incurred by it in
enforcing its rights hereunder.
11.10 Severability. If any term or other provision of this Agreement is
determined to be invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms and provisions of the Agreement shall
remain in full force and effect. Upon such determination, the parties hereto
shall negotiate in good faith to modify this Agreement so as to give effect to
the original intent of the parties to the fullest extent permitted by applicable
law.
11.11 Extensions. At any time prior to the Measurement Date, either party
may by appropriate action, extend the time for compliance by or waive
performance of any representation, warranty, agreement, condition or obligation
of the other party.
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11.12 Section Headings. All section headings are for convenience only and
shall in no way modify or restrict any of the terms or provisions hereof.
11.13 Exhibits; Disclosure Schedule. All Exhibits referred to herein and
the Disclosure Schedule are intended to be and hereby are specifically made a
part of this Agreement. Each exception to a representation or warranty of the
Company that is set forth in the Disclosure Schedule or is identified by
appropriate cross-referencing to, or has been grouped under a heading referring
to, a specific individual Section of this Agreement and, except as otherwise
specifically stated with respect to such exception in the Disclosure Schedule,
relates only to such Section.
11.14 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and the Company,
Siemens, and Acquisition may become a party hereto by executing a counterpart
thereof. This Agreement and any counterpart so executed shall be deemed to be
one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
duly executed this Agreement on the date first above written.
SIEMENS CORPORATION
By:/s/ Xxxxxx Xxxxxx
----------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President, Corporate Development
XXXXXX ACQUISITION CORP.
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
ENTEX INFORMATION SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
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