EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
JUNIPER NETWORKS, INC.
HOMER ACQUISITION CORPORATION
UNISPHERE NETWORKS, INC.
AND
SIEMENS CORPORATION
DATED AS OF MAY 17, 2002
TABLE OF CONTENTS
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ARTICLE I THE MERGER.............................................................................1
1.1 The Merger........................................................................1
1.2 Effective Time....................................................................2
1.3 Effect of the Merger..............................................................2
1.4 Certificate of Incorporation and Bylaws...........................................2
1.5 Directors and Officers............................................................2
1.6 Effect of Merger on the Capital Stock of the Constituent
Corporations......................................................................3
1.7 Dissenting Shares.................................................................5
1.8 Surrender of Certificates.........................................................5
1.9 No Further Ownership Rights in Company Common Stock...............................7
1.10 Lost, Stolen or Destroyed Certificates............................................7
1.11 Antidilution Provision............................................................8
1.12 Taking of Necessary Action; Further Action........................................8
ARTICLE II CERTAIN REPRESENTATIONS AND WARRANTIES OF SIEMENS.....................................8
2.1 Organization of Siemens...........................................................8
2.2 Authority.........................................................................8
2.3 No Conflict.......................................................................9
2.4 Consents..........................................................................9
2.5 Litigation........................................................................9
2.6 Brokers' and Finders' Fees........................................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SIEMENS...........................10
3.1 Organization of the Company......................................................10
3.2 Company Capital Structure........................................................10
3.3 Subsidiaries.....................................................................11
3.4 Authority........................................................................12
3.5 No Conflict......................................................................12
3.6 Consents.........................................................................12
3.7 Company Financial Statements.....................................................13
3.8 No Changes.......................................................................13
3.9 Tax Matters......................................................................15
3.10 Restrictions on Business Activities..............................................17
3.11 Title to Properties; Absence of Liens and Encumbrances; Condition
of Equipment; Customer Information...............................................17
3.12 Intellectual Property............................................................18
3.13 Material Contracts...............................................................20
3.14 Interested Party Transactions....................................................22
3.15 Governmental Authorization.......................................................22
3.16 Litigation.......................................................................22
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3.17 Minute Books.....................................................................22
3.18 Environmental Matters............................................................22
3.19 Brokers' and Finders' Fees; Third Party Expenses.................................23
3.20 Employee Benefit Plans and Compensation..........................................23
3.21 Insurance........................................................................27
3.22 Compliance with Laws.............................................................28
3.23 Warranties; Indemnities..........................................................28
3.24 Assets...........................................................................28
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.....................................28
4.1 Organization of Parent and Sub...................................................28
4.2 Authority........................................................................29
4.3 No Conflict......................................................................29
4.4 Consents.........................................................................29
4.5 Parent Capital Structure.........................................................30
4.6 Broker's and Finders' Fees.......................................................30
4.7 SEC Documents; Parent Financial Statements.......................................31
4.8 No Changes.......................................................................31
4.9 Sufficient Funds.................................................................31
4.10 Parent Stockholder Approval......................................................31
4.11 Litigation.......................................................................31
4.12 Employment Arrangements..........................................................32
ARTICLE V CONDUCT PRIOR TO THE EFFECTIVE TIME...................................................32
5.1 Conduct of Business by the Company Pending the Merger............................32
5.2 Conduct of Business by Parent Pending the Merger.................................35
5.3 Conduct of Business by Siemens Pending the Merger................................35
5.4 No Solicitation..................................................................35
ARTICLE VI ADDITIONAL AGREEMENTS................................................................36
6.1 Permit Application or Registration Statement; Stockholder Approval...............36
6.2 Registration Statement; Other Filings............................................37
6.3 Stockholders Meeting; Information Supplied.......................................38
6.4 Access to Information............................................................38
6.5 Confidentiality..................................................................39
6.6 Expenses.........................................................................39
6.7 Public Disclosure................................................................39
6.8 FIRPTA Compliance................................................................40
6.9 Reasonable Best Efforts..........................................................40
6.10 Notification of Certain Matters..................................................40
6.11 S-8 Registration.................................................................41
6.12 Affiliate Agreements.............................................................41
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6.13 Nasdaq Listing...................................................................41
6.14 Treatment of 401(k) Plans........................................................41
6.15 Resignation of Officers and Directors............................................42
6.16 Regulatory Filings...............................................................42
6.17 Termination of Warrants..........................................................42
6.18 Spreadsheet......................................................................42
6.19 Voice Transfer Agreements........................................................42
6.20 Cessation of Participation in Benefit Plans......................................42
6.21 Termination of Indebtedness......................................................43
6.22 Intellectual Property Matters....................................................43
6.23 License..........................................................................44
6.24 Equitable Remedy.................................................................45
6.25 Siemens Retained Marks...........................................................45
6.26 Company Retained Marks...........................................................45
6.27 Release of Indemnity Obligations.................................................45
6.28 Director and Officer Indemnification.............................................46
6.29 Company Options..................................................................46
6.30 Preparation of Financials........................................................47
6.31 New Employment Arrangements......................................................47
6.32 Approval of Siemens AG Supervisory Board.........................................47
6.33 Siemens AG Assignment............................................................47
ARTICLE VII CONDITIONS TO THE MERGER............................................................48
7.1 Conditions to Obligations of Each Party to Effect the Merger.....................48
7.2 Conditions to the Obligations of Parent and Sub..................................49
7.3 Conditions to Obligations of the Company and Siemens.............................50
ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY..............................51
8.1 Survival of Representations, Warranties and Covenants............................51
8.2 Indemnification..................................................................51
8.3 Claims for Indemnification.......................................................53
8.4 Maximum Payments.................................................................56
ARTICLE IX TAX MATTERS..........................................................................56
9.1 Indemnity........................................................................56
9.2 Returns and Payments.............................................................57
9.3 Refunds..........................................................................58
9.4 Contests.........................................................................58
9.5 Cooperation and Exchange of Information..........................................59
9.6 Conveyance Taxes.................................................................59
9.7 Miscellaneous....................................................................60
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ARTICLE X TERMINATION, AMENDMENT AND WAIVER.....................................................61
10.1 Termination......................................................................61
10.2 Effect of Termination............................................................62
10.3 Amendment........................................................................62
10.4 Extension; Waiver................................................................62
ARTICLE XI GENERAL PROVISIONS...................................................................62
11.1 Definitions......................................................................62
11.2 Notices..........................................................................65
11.3 Interpretation...................................................................66
11.4 Counterparts.....................................................................67
11.5 Entire Agreement; Assignment.....................................................67
11.6 No Third Party Beneficiaries.....................................................67
11.7 Severability.....................................................................67
11.8 Other Remedies...................................................................67
11.9 Governing Law....................................................................67
11.10 Rules of Construction............................................................68
11.11 WAIVER OF JURY TRIAL.............................................................68
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INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
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Exhibit A Form of Voting Agreement
Exhibit B Form of Stockholder Agreement
Exhibit C Form of Non-Competition Agreement
Exhibit D Form of Certificate of Merger
Exhibit E Form of Affiliate Agreement
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THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered into as
of May 17, 2002 by and among Juniper Networks, Inc., a Delaware corporation
("Parent"), Homer Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"), Unisphere Networks, Inc., a Delaware
corporation (the "Company"), and Siemens Corporation, a Delaware corporation
("Siemens").
RECITALS
A. The Boards of Directors of each of Parent, Sub, the Company, and
Siemens have determined that it is in the best interests of their respective
stockholders, and the Board of Directors of Sub and the Company have determined
that it is advisable, to effect a statutory merger of Sub and the Company
pursuant to this Agreement (the "Merger") and, in furtherance thereof, have
approved the Merger upon the terms and subject to the conditions set forth
herein.
B. Concurrently with the execution and delivery of this Agreement, as a
material inducement to Parent and Sub to enter into this Agreement: (i) Siemens
and certain stockholders of the Company are entering into Voting Agreements, in
substantially the form attached hereto as Exhibit A (the "Voting Agreements"),
with Parent; (ii) Siemens is entering into the Stockholder Agreement, in
substantially the form attached hereto as Exhibit B (the "Stockholder
Agreement"), with Parent; and (iii) each of the Key Employees (as defined
herein) is entering into a Non-Competition Agreement, in substantially the form
attached hereto as Exhibit C (the "Non-Competition Agreement"), with Parent.
C. The Company has entered into an Asset Purchase Agreement with Castle
Networks, Inc., dated as of April 29, 2002 (the "Asset Purchase Agreement") and
a Stock Purchase Agreement with Siemens Information and Communication Networks,
Inc. ("Siemens ICN"), dated as of April 30, 2002 (the "Stock Purchase Agreement"
and, together with the Asset Purchase Agreement, the "Voice Transfer
Agreements"), pursuant to which on the date hereof the Company transferred its
business of designing, manufacturing, marketing, and selling packet voice
network equipment for the telecommunications industry (the "Voice Business") to
an affiliate of Siemens (such transfer and the transactions contemplated by the
Voice Transfer Agreements, as such agreements exist on the date hereof (or as
such agreements may be amended with the consent of Parent), being hereinafter
referred to as the "Voice Transaction").
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations and warranties, covenants and agreements herein contained, the
Company, Siemens, Parent and Sub hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2 hereof)
and subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the General Corporation Law of the State of Delaware
("Delaware Law"), Sub shall be merged with and into the Company. As a result of
the Merger, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation") and as a wholly-owned subsidiary of Parent.
1.2 Effective Time. Unless this Agreement is earlier terminated pursuant
to Section 10.1 hereof, the closing of the Merger (the "Closing") will take
place as promptly as practicable after satisfaction or waiver of the conditions
set forth in Article VII hereof (other than those conditions which, by their
terms, are to be satisfied or waived at Closing), at the offices of Shearman &
Sterling, 599 Lexington Avenue, New York, New York, unless another time and/or
place is mutually agreed upon in writing by the parties hereto. The date upon
which the Closing actually occurs shall be referred to herein as the "Closing
Date." On the Closing Date, the parties hereto shall cause the Merger to be
consummated by filing a Certificate of Merger in substantially the form attached
hereto as Exhibit D (the "Certificate of Merger"), with the Secretary of State
of the State of Delaware, in accordance with the applicable provisions of
Delaware Law (the date and time of such filing, or such other mutually agreed
time as may be specified in the Certificate of Merger, shall be referred to
herein as the "Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, except as otherwise agreed to pursuant to the terms of this
Agreement, all the property, rights, privileges, powers and franchises of the
Company and Sub shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, restrictions, disabilities and duties of the Company
and Sub shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.
1.4 Certificate of Incorporation and Bylaws.
(a) Subject to Section 6.28, unless otherwise determined by
Parent prior to the Effective Time, at the Effective Time the certificate of
incorporation of Sub, as in effect immediately prior to the Effective Time,
shall be the certificate of incorporation of the Surviving Corporation until
thereafter amended in accordance with Delaware Law and as provided in such
certificate of incorporation; provided, however, that at the Effective Time,
Article I of the certificate of incorporation of the Surviving Corporation shall
be amended and restated in its entirety to read as follows: "The name of the
corporation is Unisphere Networks, Inc."
(b) Unless otherwise determined by Parent prior to the Effective
Time, at the Effective Time, the bylaws of Sub, as in effect immediately prior
to the Effective Time, shall be the bylaws of the Surviving Corporation until
thereafter amended in accordance with Delaware Law and as provided in the
certificate of incorporation of the Surviving Corporation and such bylaws.
1.5 Directors and Officers.
(a) Directors. Unless otherwise determined by Parent prior to
the Effective Time, the directors of Sub immediately prior to the Effective Time
shall be the initial directors of the Surviving Corporation, each to hold the
office of a director of the Surviving Corporation in accordance with the
certificate of incorporation and bylaws of the Surviving Corporation until their
respective
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successors are duly elected or appointed and qualified or until their earlier
death, resignation or removal.
(b) Officers. Unless otherwise determined by Parent prior to the
Effective Time, the officers of Sub immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the provisions of the bylaws of the Surviving Corporation.
1.6 Effect of Merger on the Capital Stock of the Constituent
Corporations.
(a) Effect on Company Common Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Sub, the
Company or holders of any of the capital stock of the Company, each outstanding
share of Company Common Stock, shall, upon the terms and subject to the
conditions set forth in this Agreement, be canceled and extinguished and be
converted automatically into the right to receive (x) such number of shares of
Parent Common Stock equal to the Stock Exchange Ratio and (y) an amount of cash
equal to the Cash Exchange Ratio. The aggregate number of shares of Parent
Common Stock to be issued to each Stockholder and the aggregate amount of cash
to be paid to each Stockholder under this Section 1.6(a) shall be calculated by
aggregating all shares of Company Common Stock held by such Stockholder, so that
(i) the aggregate number of shares of Parent Common Stock to be issued to such
Stockholder shall be equal to the number of shares of Company Common Stock held
by such Stockholder multiplied by the Stock Exchange Ratio (the "Stock
Consideration"), with fractional shares treated in the manner set forth in
Section 1.8(f) hereof; and (ii) the aggregate amount of cash to be paid to such
Stockholder shall be equal to the aggregate number of shares of Company Common
Stock held by such Stockholder, multiplied by the Cash Exchange Ratio (the "Cash
Consideration," and together with the Stock Consideration, the "Merger
Consideration"), rounded to the nearest whole cent, with $0.005 rounded up.
(b) Payment of Cash Consideration. At the Closing, Parent shall
deliver to Siemens, the aggregate amount of Cash Consideration payable to
Siemens under Section 1.6(a) hereto, by wire transfer in immediately available
funds to the bank account designated by Siemens at least two (2) business days
prior to the Closing Date.
(c) Assumption of Company Options; Treatment of Company
Warrants.
(i) As soon as practicable following the Closing but
effective as of the Effective Time, each Company Option (as defined herein)
shall be assumed by Parent as a Parent Option (as defined herein). Each Company
Option so assumed by Parent pursuant to this Section 1.6(c) shall continue to
have, and be subject to, the same terms and conditions (including vesting terms)
set forth in the Company's Second Amended and Restated 1999 Stock Incentive Plan
(the "Plan"), and the option agreements relating thereto, as in effect
immediately prior to the Effective Time, except that (i) such assumed Company
Option will be exercisable for that number of whole shares of Parent Common
Stock equal to the product of the number of shares of Company Common Stock that
were issuable upon exercise of such Company Option (whether or not then
exercisable or vested) immediately prior to the Effective Time multiplied by the
Option Exchange Ratio, rounded
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down to the nearest whole number of shares of Parent Common Stock, and (ii) the
per share exercise price for the shares of Parent Common Stock issuable upon
exercise of such assumed Company Option shall be equal to the quotient obtained
by dividing the option exercise price of the Company Option immediately prior to
the Closing Date by the Option Exchange Ratio, rounded up to the nearest whole
cent; provided, however, that in the case of any Company Option to which Section
421 of the Code applies by reason of its qualification under Section 422 of the
Code, the option exercise price, the number of shares purchasable pursuant to
such option and the terms and conditions of exercise of such option shall be
determined in order to comply with Section 424 of the Code; provided, further,
that in the case of any Company Option held by an Employee who is not employed
by the Company or a Company Subsidiary immediately prior to the Effective Time,
only vested Company Options (as determined at the Effective Time after giving
effect to any acceleration resulting from the transaction) shall be assumed by
Parent pursuant to this Section 1.6(c).
(ii) At the Effective Time, each outstanding Company
Warrant, if any, shall not be assumed by Parent and shall either be exercised or
terminated.
(iii) Prior to the Effective Time, the Company shall
take all action necessary to effect the transactions anticipated by this Section
1.6(c) under all Company Option agreements and Company Warrant agreements, if
any, and any other plan or arrangement of the Company.
(d) Withholding Taxes. The requisite number of shares of Parent
Common Stock issuable pursuant to Section 1.6(a) hereof shall be subject to, and
reduced by, the amount of any state, federal and foreign withholding taxes
incurred (and not previously paid by or on behalf of such Stockholder or the
Company) in connection with the acquisition of Company Capital Stock upon the
exercise of Company Options, upon the lapsing of repurchase rights in respect of
shares of Company Common Stock, or upon payment of a bonus in the form of
Company Common Stock, if any, to such Stockholder.
(e) Capital Stock of Sub. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Sub, the Company or
holders of any of the capital stock of Sub, each share of Common Stock of Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of Common Stock of the Surviving Corporation. Each stock
certificate of Sub evidencing ownership of any such shares shall continue to
evidence ownership of such shares of capital stock of the Surviving Corporation.
(f) Shares Subject to Vesting. If any shares of Company Common
Stock issued and outstanding immediately prior to the Effective Time are
unvested or are subject to a repurchase option, risk of forfeiture or other
condition under any applicable stock restriction agreement or other agreement
with the Company, then the Stock Consideration and Cash Consideration issued in
exchange for such shares of Company Restricted Stock (as defined herein) shall
also be unvested and subject to the same repurchase option, risk of forfeiture
or other condition (including any requirement that any unvested shares be held
in escrow). The certificate representing such shares of Parent Common Stock may
accordingly be marked with appropriate legends in the discretion of
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Parent. Such repurchase option, risk of forfeiture or other condition shall be
applied pro rata to both the Stock Consideration (with the shares of Parent
Common Stock valued at the Trading Price) and the Cash Consideration, and the
Cash Consideration payable upon conversion of each share of Company Restricted
Stock shall be subject to the same vesting schedule as the related Parent Common
Stock issued upon conversion of the corresponding share of Company Restricted
Stock and shall be paid at the same time as such Parent Common Stock vests. The
Company shall take all actions that may be necessary to ensure that, from and
after the Effective Time, Parent is entitled to exercise any repurchase option
or other right set forth in any applicable stock restriction agreement or other
agreement and retain any Cash Consideration payable with respect to shares of
Company Restricted Stock.
1.7 Dissenting Shares.
(a) Notwithstanding any other provisions of this Agreement to
the contrary, any shares of Company Common Stock outstanding immediately prior
to the Effective Time held by a holder who has demanded and perfected the right
for appraisal of those shares in accordance with the provisions of Section 262
of the Delaware Law and as of the Effective Time has not withdrawn or lost such
right to such appraisal ("Dissenting Shares") shall not be converted into or
represent a right to receive the Merger Consideration set forth in Section 1.6
hereof, but the holder shall only be entitled to such rights as are provided by
Delaware Law.
(b) Notwithstanding the provisions of Section 1.7(a) hereof, if
any holder of Dissenting Shares shall effectively withdraw or lose (through
failure to perfect or otherwise) such holder's appraisal rights under Delaware
Law, then, as of the later of the Effective Time and the occurrence of such
event, such holder's shares shall automatically be converted into and represent
only the right to receive the Merger Consideration set forth in Section 1.6
hereof, without interest thereon, upon surrender of the certificate or
certificates representing such shares.
(c) The Company shall give Parent (i) prompt notice of any
written demand for appraisal received by the Company pursuant to the applicable
provisions of Delaware Law, and (ii) the opportunity to participate in all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, voluntarily make any
payment with respect to any such demands or offer to settle or settle any such
demands.
1.8 Surrender of Certificates.
(a) Exchange Agent. Wells Fargo Bank N.A. or such other bank or
trust company designated by Parent and reasonably satisfactory to the Company
and Siemens shall serve as the exchange agent (the "Exchange Agent") for the
Merger. As of the Effective Time, Parent shall deposit, or shall cause to be
deposited, with the Exchange Agent for exchange in accordance with this Article
I the Total Cash Consideration (less the aggregate amount of Cash Consideration
paid by Parent directly to Siemens at Closing under Section 1.6(b) hereto) and
the Total Stock Consideration issuable pursuant to Section 1.6 hereof in
exchange for outstanding shares of Company Common Stock (the "Exchange Fund").
Parent agrees to make available to the Exchange Agent, from time to time as
needed, cash sufficient to pay any cash in lieu of fractional shares pursuant to
Section 1.8(f)
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hereof and any dividends and other distributions pursuant to Section 1.8(c)
hereof. The Exchange Agent shall, pursuant to irrevocable instructions, deliver
the Merger Consideration contemplated to be paid for shares of Company Common
Stock pursuant to this Agreement out of the Exchange Fund. Except as
contemplated by Sections 1.8(c) and 1.8(f) hereof, the Exchange Fund shall not
be used for any other purpose.
(b) Exchange Procedures. Promptly after the Effective Time,
Parent shall instruct the Exchange Agent to mail 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 "Company Stock
Certificates") (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Company Stock Certificates
shall pass, only upon proper delivery of the Company Stock Certificates to the
Exchange Agent and shall be in customary form) and (ii) instructions for use in
effecting the surrender of the Company Stock Certificates in exchange for the
Merger Consideration payable in respect of the shares of Company Common Stock
represented by such Company Stock Certificates. Upon surrender of a Company
Stock Certificate for cancellation to the Exchange Agent together with such
letter of transmittal, duly completed and validly executed in accordance with
the instructions thereto, the holder of such Company Stock Certificate shall be
entitled to receive in exchange therefor, the Merger Consideration payable in
respect of the shares of Company Common Stock represented by such Company Stock
Certificate and any cash in lieu of fractional shares pursuant to Section 1.8(f)
hereof and any dividends or other distributions to which such holder is entitled
pursuant to Section 1.8(c) hereof, and the Company Stock Certificate so
surrendered shall be canceled. Until so surrendered, each Company Stock
Certificate outstanding after the Effective Time shall be deemed from and for
all corporate purposes, to evidence the right to receive upon such surrender the
Merger Consideration payable in respect of the shares of Company Common Stock
represented by such Company Stock Certificate and any cash in lieu of fractional
shares pursuant to Section 1.8(f) hereof and any dividends on other
distributions to which such holder is entitled pursuant to Section 1.8(c)
hereof.
(c) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Stock, with a record date after the Effective Time,
shall be paid to the holder of any unsurrendered Company Stock Certificate until
the holder of such Company Stock Certificate shall surrender such Company Stock
Certificate. Subject to the effect of escheat, tax or other applicable law,
following surrender of any such Company Stock Certificate, there shall be paid
to such holder of the certificates representing whole shares of Parent Common
Stock issued in exchange therefor, without interest, (i) promptly, the amount of
any cash due pursuant to Section 1.6 hereof and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole shares of Parent Common Stock and (ii) at the appropriate
payment date, the amount of dividends or other distributions, with a record date
at or after the Effective Time but prior to such surrender and a payment date
subsequent to such surrender, payable with respect to such whole shares of
Parent Common Stock at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Parent Common Stock.
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(d) Transfers of Ownership. If any certificate for shares of
Parent Common Stock is to be issued in a name other than that in which the
certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance and/or delivery thereof that the certificate so
surrendered will be properly endorsed and otherwise in proper form for transfer
and that the person requesting such exchange will have paid to Parent or any
agent designated by it any transfer or other taxes required by reason of the
issuance of a certificate for shares of Parent Common Stock in any name other
than that of the registered holder of the certificate surrendered, or
established to the satisfaction of Parent or any agent designated by it that
such tax has been paid or is not payable.
(e) No Liability. Notwithstanding anything to the contrary in
this Section 1.8, neither the Exchange Agent, the Surviving Corporation, nor any
party hereto shall be liable to any holder of shares of Company Common Stock for
any such shares of Parent Common Stock (or dividends or distributions with
respect thereto) or cash from the Exchange Fund properly delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(f) No Fractional Shares. No certificates representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Company Stock Certificates. Each holder of shares of Company Common
Stock who would otherwise have been entitled to receive a fraction of a share of
Parent Common Stock (after taking into account all Certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of Parent Common Stock
multiplied by the Trading Price.
1.9 No Further Ownership Rights in Company Common Stock. The Merger
Consideration paid in respect of the surrender for exchange of Company Stock
Certificates in accordance with the terms hereof (including any cash in lieu of
fractional shares pursuant to Section 1.8(f) hereof and any dividends or
distributions paid pursuant to Section 1.8(c) hereof) shall be deemed to be full
satisfaction of all rights pertaining to such shares of Company Common Stock. At
the Effective Time, the stock transfer books of the Company shall be closed and
thereafter, there shall be no further registration of transfers on the records
of the Surviving Corporation of shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. On or after the Effective
Time, any Company Stock Certificates presented to the Exchange Agent, Parent or
the Surviving Corporation shall be converted into the Merger Consideration
payable in respect of the shares of Company Common Stock represented by such
Company Stock Certificates and any cash in lieu of fractional shares pursuant to
Section 1.8(f) hereof and any dividends or other distributions to which the
holders thereof are entitled pursuant to Section 1.8(c).
1.10 Lost, Stolen or Destroyed Certificates. If any Company Stock
Certificate shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed certificates, upon the
making of an affidavit of that fact by the holder thereof the Merger
Consideration payable in respect of the shares of Company Common Stock
represented by such Company Stock Certificates and any cash in lieu of
fractional shares pursuant to Section 1.8(f) hereof and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section
1.8(c), provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, require the Stockholder who is the owner of
such lost, stolen or destroyed certificates to either (i) deliver a bond in such
amount as it may reasonably direct or (ii) provide an
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indemnification agreement in a form and substance acceptable to Parent, against
any claim that may be made against Parent or the Exchange Agent with respect to
the Company Stock Certificates alleged to have been lost, stolen or destroyed.
1.11 Antidilution Provision. In the event Parent changes (or establishes
a record date that occurs prior to the Effective Time for changing) the number
of shares of Parent Common Stock issued and outstanding prior to the Effective
Time as a result of a stock split, stock dividend, recapitalization,
subdivision, reclassification, combination, exchange of shares or similar
transaction with respect to the outstanding shares of Parent Common Stock, the
Stock Exchange Ratio and the Option Exchange Ratio shall be proportionately
adjusted, as applicable, to reflect such stock split, stock dividend,
recapitalization, subdivision, reclassification, combination, exchange of shares
or similar transaction. In addition, in the event Parent pays (or establishes a
record date that occurs prior to the Effective Time for payment of) an
extraordinary dividend on, or makes any other extraordinary distribution in
respect of, Parent Common Stock, the Stock Exchange Ratio and the Option
Exchange Ratio shall be appropriately adjusted to reflect such dividend or
distribution.
1.12 Taking of Necessary Action; Further Action. If at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company, Parent, Sub, and the officers and directors of
the Company, Parent and Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
ARTICLE II
CERTAIN REPRESENTATIONS AND WARRANTIES OF SIEMENS Siemens hereby
represents and warrants to each of Parent and Sub as follows:
2.1 Organization of Siemens. Siemens is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Siemens has the corporate power to own or lease its properties and to carry on
its business as now being conducted. Siemens' affiliates include, without
limitation, Castle Networks, Inc., Siemens ICN and Argon Networks, Inc.
2.2 Authority. Siemens has all requisite corporate power and authority
to enter into this Agreement and any Related Agreements (as defined herein) to
which it is a party and to consummate the transactions contemplated hereby and
thereby. Subject to the approval of the Supervisory Board of Siemens AG (the
"Siemens AG Approval"), the execution and delivery of this Agreement and any
Related Agreements to which Siemens is a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Siemens, and no further action is
required on the part of Siemens to authorize the Agreement and any Related
Agreements to which it is a party and the transactions contemplated hereby and
thereby. This Agreement and each of the Related Agreements to which Siemens is a
party has been duly executed and delivered by Siemens and assuming the due
authorization, execution and delivery by the other parties hereto and thereto,
constitute the valid and binding obligations of Siemens,
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enforceable (in the case of this Agreement, the Stockholder Agreement and the
Distribution Agreement (as defined herein) only) against Siemens in accordance
with their respective terms, except as such enforceability may be subject to the
laws of general application relating to bankruptcy, insolvency, and the relief
of debtors and rules of law governing specific performance, injunctive relief,
or other equitable remedies.
2.3 No Conflict. Assuming that all the consents, waivers, approvals,
authorizations and other actions described in Section 2.4(a) and (b) have been
obtained, the execution and delivery by Siemens of this Agreement and any
Related Agreement to which Siemens is a party do not, and the consummation of
the transactions contemplated hereby and thereby will not, conflict with or
result in any violation of or default under (with or without notice or lapse of
time, or both) or give rise to a right of termination, cancellation,
modification or acceleration of any obligation or loss of any benefit (any such
event, a "Conflict") under (a) any provision of the certificate of incorporation
or bylaws of Siemens, (b) any mortgage, indenture, lease, contract or other
agreement, instrument or commitment, permit, concession, franchise or license to
which Siemens or any of its properties or assets is subject, or (c) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Siemens or any of its properties or assets, except, with respect to clauses
(b) and (c), for such Conflicts as would not prevent or materially delay
consummation of the Merger, would not be reasonably likely to result in a
material diminution in the value of the Company or would not otherwise prevent
or materially delay Siemens from performing its obligations under this
Agreement.
2.4 Consents. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with any court, administrative agency or
commission or other federal, state, county, local or other foreign governmental
authority, instrumentality, agency or commission (each, a "Governmental Entity")
or any third party is required by or with respect to Siemens in connection with
the execution and delivery of this Agreement and any Related Agreement to which
Siemens is a party or the consummation of the transactions contemplated hereby
and thereby, except (a) under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder (the "HSR Act"),
foreign and supranational antitrust and competition laws and the filing of the
Certificate of Merger as required by Delaware Law, and (b) where the failure to
obtain such consent, waiver, approval, order, authorization, registration,
declaration, or to make such filing would not prevent or materially delay
consummation of the Merger, would not be reasonably likely to result in a
material diminution in the value of the Company or would not otherwise prevent
or materially delay Siemens from performing its obligations under this
Agreement.
2.5 Litigation. There is no material action, suit, claim, investigation,
inquiry or proceeding of any nature pending, or to Siemens' Knowledge (as
defined herein), threatened, by or before any Governmental Entity, against
Siemens, its properties or any of its officers or directors, which would prevent
or materially delay consummation of the Merger, would be reasonably likely to
result in a material diminution in the value of the Company or would otherwise
prevent or materially delay Siemens from performing its obligations under this
Agreement.
2.6 Brokers' and Finders' Fees. Except for UBS Warburg LLC, Siemens has
not incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders' fees or agents'
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commissions or any similar charges in connection with the Agreement or any
transaction contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SIEMENS
Except as set forth in the Disclosure Schedule delivered by the Company to
Parent and Sub concurrently with the execution of this Agreement (the "Company
Disclosure Schedule") (which Company Disclosure Schedule shall be arranged in
sections corresponding to the numbered and lettered sections of this Article
III, and any information disclosed in any such section shall be deemed to be
disclosed only for purposes of such section, unless it is readily apparent that
the disclosure contained in such section contains enough information regarding
the subject matter of other representations and warranties contained in this
Agreement so as to clearly qualify or otherwise clearly apply to such other
representations and warranties), the Company and Siemens hereby represent and
warrant to Parent and Sub as follows (it being understood that representations
and warranties in this Article III shall not apply to the Voice Business):
3.1 Organization of the Company. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has the corporate power to own or lease its properties and
to carry on its business as now being conducted. The Company is duly qualified
or licensed to do business and in good standing as a foreign corporation in each
jurisdiction in which it conducts business, other than in such jurisdictions
where the failure to be so qualified or licensed would not, individually or in
the aggregate, have a Company Material Adverse Effect. The Company has delivered
a true and correct copy of its certificate of incorporation and bylaws, each as
amended to date and in full force and effect on the date hereof, to Parent.
Section 3.1 of the Company Disclosure Schedule lists the directors and officers
of the Company.
3.2 Company Capital Structure.
(a) As of the date hereof, the authorized capital stock of the
Company consists of 122,209,559 shares of Company Common Stock, of which
90,665,017 shares are issued and outstanding. Assuming the same total
capitalization as on the date hereof, the capitalization of the Company as of
immediately prior to the Effective Time (assuming the conversion, exercise or
exchange of all securities convertible into, or exercisable or exchangeable for,
shares of Company Common Stock based, in the case of the Siemens Note (as
defined herein), on the amount of indebtedness (including principal and
interest) outstanding on the date hereof, and the exercise of all Company
Options outstanding on the date hereof) will be as set forth in Section 3.2(a)
of the Company Disclosure Schedule. The Company Common Stock is held by the
persons with the domicile addresses and in the amounts set forth in Section
3.2(a) of the Company Disclosure Schedule. All outstanding shares of Company
Common Stock are duly authorized, validly issued, fully paid and non-assessable
and not subject to preemptive rights created by statute, the certificate of
incorporation or bylaws of the Company, or any agreement to which the Company is
a party or by
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which it is bound. All outstanding shares of Company Common Stock and Company
Options have been issued in compliance with all applicable federal, state,
foreign, or local statutes, laws, rules, or regulations, including federal and
state securities laws. There are no declared or accrued but unpaid dividends
with respect to any shares of Company Common Stock. The Company has no other
capital stock authorized, issued or outstanding. No vesting provisions
applicable to any shares of Company Restricted Stock, to Company Options, or to
any other rights to purchase Company Capital Stock will accelerate as a result
of the Merger or as a result of any other events.
(b) Except for the Plan, the Company has never adopted or
maintained any stock option plan or other plan providing for equity compensation
of any person. The Company has reserved 36,076,226 shares of Company Common
Stock for issuance to employees and directors of, and consultants to, the
Company or its affiliates upon the exercise of options granted under the Plan,
of which (i) 27,837,815 shares are issuable, as of the date hereof, upon the
exercise of outstanding, unexercised options granted under the Plan, and (ii)
1,447,850 shares have been issued, as of the date hereof, upon the exercise of
options granted under the Plan (excluding the issuance of any shares of Company
Restricted Stock). Section 3.2(b) of the Company Disclosure Schedule sets forth
for each outstanding Company Option, the name of the holder of such option, the
domicile address of such holder, the number of shares of Company Common Stock
issuable upon the exercise of such option, the exercise price of such option,
the vesting schedule for such option, including the extent vested to date and
whether the vesting of such option will be accelerated by the transactions
contemplated by this Agreement, and whether such option is intended to qualify
as an incentive stock option as defined in Section 422 of the Code. Except for
the Company Options, the Company Restricted Stock and the Siemens Note, there
are no options, warrants, calls, rights, commitments or agreements of any
character, written or oral, to which the Company is a party or by which it is
bound obligating the Company to issue, deliver, sell, repurchase or redeem, or
cause to be issued, delivered, sold, repurchased or redeemed, any shares of the
capital stock of the Company or obligating the Company to grant, extend,
accelerate the vesting of, change the price of, otherwise amend or enter into
any such option, warrant, call, right, commitment or agreement. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or other similar rights with respect to the Company. Except as
contemplated hereby, there are no voting trusts, proxies, or other agreements or
understandings with respect to the voting stock of the Company. As a result of
the Merger, Parent will be the sole record and beneficial holder of all issued
and outstanding Company Common Stock and all rights to acquire or receive any
shares of Company Common Stock, whether or not such shares of Company Common
Stock are outstanding.
3.3 Subsidiaries. Other than the subsidiaries of the Company described
in Section 3.3 of the Company Disclosure Schedule (the "Company Subsidiaries"),
the Company does not have, and has never had, any subsidiaries and does not
otherwise own, and has never otherwise owned, any shares of capital stock or any
interest in, or control, directly or indirectly, any other corporation,
partnership, association, joint venture or other business entity. All of the
outstanding capital stock of each Company Subsidiary is owned of record and
beneficially by the Company. There are no options, warrants, calls, rights,
commitments or agreements of any character, written or oral, to which any
Company Subsidiary is a party or by which any Company Subsidiary is bound,
obligating any Company Subsidiary to issue, deliver, sell, repurchase or redeem,
or cause to be issued, sold,
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repurchased or redeemed, any capital stock, or obligating any Company Subsidiary
to grant, extend, accelerate the vesting of, change the price of, otherwise
amend or enter into any such option, warrant, call, right, commitment or
agreement. There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or other similar rights with respect to any Company
Subsidiary.
3.4 Authority. The Company has all requisite corporate power and
authority to enter into this Agreement and any Related Agreements to which it is
a party and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and any Related Agreements to which the
Company is a party and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on the
part of the Company and no further action is required on the part of the Company
to authorize the Agreement and any Related Agreements to which it is a party and
the transactions contemplated hereby and thereby, other than the approval and
adoption of this Agreement by the Stockholders. The Board of Directors of the
Company, based upon the recommendation of a special committee of independent
directors of the Company, has approved by the unanimous vote of the directors
present and declared advisable this Agreement and the Merger and has recommended
that the Stockholders approve and adopt this Agreement and the Merger. This
Agreement and each of the Related Agreements to which the Company is a party has
been duly executed and delivered by the Company, and assuming the due
authorization, execution and delivery by the other parties hereto and thereto,
constitute the valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms, except as such
enforceability may be subject to the laws of general application relating to
bankruptcy, insolvency, and the relief of debtors and rules of law governing
specific performance, injunctive relief, or other equitable remedies. For all
purposes of this Agreement, the term "Related Agreements" shall mean the Voting
Agreements, Stockholder Agreement, Non-Competition Agreements, that certain
Distribution Agreement dated as of even date herewith (the "Distribution
Agreement") and the Affiliate Agreements.
3.5 No Conflict. Assuming that all the consents, waivers, approvals,
authorizations and other actions described in Section 3.6(a) and (b) have been
obtained and all filings and notifications listed in the Company Disclosure
Schedule have been made and any waiting periods thereunder have terminated or
expired, the execution and delivery by the Company of this Agreement and any
Related Agreement to which the Company is a party do not, and the consummation
of the transactions contemplated hereby and thereby will not, result in a
Conflict under (a) any provision of the certificate of incorporation or bylaws
of the Company, (b) any material mortgage, indenture, lease, contract, covenant
or other material agreement, instrument or commitment, permit, concession,
franchise or license to which the Company or any of its properties or assets is
subject, or (c) any material judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company or any of its properties or assets.
3.6 Consents. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with any Governmental Entity or any third
party is required by or with respect to the Company or any of the Company
Subsidiaries in connection with the execution and delivery of this Agreement and
any Related Agreement to which the Company or any of the Company
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Subsidiaries is a party or the consummation of the transactions contemplated
hereby and thereby, except (a) under any applicable state or federal securities
laws (including, without limitation, the issuance of an Issuance Permit (as
defined herein) by the Commissioner (as defined herein) in connection with the
Hearing (as defined herein) or the declaration of effectiveness of a
Registration Statement (as defined herein) by the SEC (as defined herein)), the
HSR Act, foreign and supranational antitrust and competition laws and the filing
of the Certificate of Merger as required by the Delaware Law and (b) where the
failure to obtain such consent, waiver, approval, order, authorization,
registration, declaration, or to make such filing would not, individually or in
the aggregate, be material to the Company.
3.7 Company Financial Statements. The Company has delivered to Parent
true and correct copies of the Company's (i) audited consolidated balance sheet
as of September 30, 2001, and the related audited consolidated statement of
income, cash flow and stockholders' equity for the fiscal year then ended (the
"Year-End Financials"), (ii) unaudited consolidated balance sheet as of March
31, 2002, and the related unaudited consolidated statement of income, cash flow
and stockholders' equity for the period then ended (the "Interim Period
Financials" and together with the Year-End Financials, the "Historical
Financials"), and (iii) unaudited consolidated pro forma balance sheet as of
March 31, 2002 and the related consolidated unaudited pro forma statement of
income, cash flow and stockholders' equity for the period then ended (such
financial statements giving effect to the Voice Transaction (the "Pro Forma
Financials" and, together with the Year-End Financials and the Interim Period
Financials, the "Financials"). The Historical Financials have been prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
in the notes thereto) throughout the periods indicated (except that the Interim
Period Financials do not contain certain presentation items (other than
footnotes) that may be required by GAAP). The Historical Financials present
fairly the Company's consolidated financial condition and operating results as
of the dates and during the periods indicated therein, subject in the case of
the Interim Period Financials to normal year-end adjustments, which could not be
material in amount or significance in any individual case or in the aggregate.
The Pro Forma Financials have been prepared in accordance with the basis of
presentation set forth in the notes thereto and in good faith using accounting
methods consistent with those used in preparation of the Historical Financials
based on the books and records of the Company. The Company's unaudited balance
sheet as of March 31, 2002 is referred to hereinafter as the "Current Balance
Sheet."
3.8 No Changes. Since March 31, 2002, except as specifically permitted
by any other provision of this Agreement, there has not been, occurred or arisen
any:
(a) amendments or changes to the certificate of incorporation or
bylaws of the Company or any of the Company Subsidiaries;
(b) capital expenditure or commitment by the Company or any
Company Subsidiary exceeding $25,000 individually or $250,000 in the aggregate;
(c) payment, discharge or satisfaction, in any amount in excess
of $25,000 in any one case, or $250,000 in the aggregate, of any liability,
indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of
any type, whether accrued, absolute, contingent, matured or
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unmatured (a "Liability"), other than payment, discharge or satisfaction in the
ordinary course of business of Liabilities reflected or reserved against in the
Current Balance Sheet;
(d) destruction of, damage to, or loss of any material assets
(whether tangible or intangible), material business of the Company or any
Company Subsidiary (whether or not covered by insurance);
(e) change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by the Company or any
Company Subsidiary other than as required by GAAP;
(f) (i) change in any material election in respect of Taxes (as
defined below), (ii) adoption or change in any accounting method in respect of
Taxes, (iii) agreement or settlement of any claim or assessment in respect of
Taxes, or (iv) extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes; provided, however, the preceding
subclauses (iii) and (iv) shall apply only to a material amount of Taxes to the
extent that Siemens Corporation has provided an indemnity to the Parent
Indemnified Parties pursuant to Section 9.1(a) of this Agreement;
(g) revaluation for accounting purposes by the Company or any
Company Subsidiary of any of their respective assets (whether tangible or
intangible);
(h) increase in the salary or other compensation payable or to
become payable by the Company or any Company Subsidiary to any of their
respective officer or directors or any of its employees with an annual base
salary in excess of $100,000, or the declaration, payment or commitment or
obligation of any kind for the payment (whether in cash or equity) by the
Company or any Company Subsidiary of a severance payment, termination payment,
bonus or other additional salary or compensation to any such person;
(i) sale, lease, license or other disposition of any of the
assets (whether tangible or intangible) or properties of the Company or Company
Subsidiary, including, but not limited to, the sale of any accounts receivable
of the Company or any Company Subsidiary, or any creation of any security
interest in such assets or properties other than (i) the sale, lease, license or
other disposition of inventory in the ordinary course of business consistent
with past practice and (ii) sales, leases, licenses or other dispositions not
involving in excess of $25,000 individually or $250,000 in the aggregate of
proceeds;
(j) loan by the Company or any Company Subsidiary to any person
or entity, incurring by the Company or any Company Subsidiary of any
indebtedness, guaranteeing by the Company or any Company Subsidiary of any
indebtedness, issuance or sale of any debt securities of the Company or any
Company Subsidiary or guaranteeing of any debt securities of others, except for
advances to employees for travel and business expenses in the ordinary course of
business consistent with past practices;
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(k) waiver or release of any right or claim of the Company or
any Company Subsidiary, including any write-off or other compromise of any
account receivable of the Company or any Company Subsidiary exceeding $25,000
individually or $250,000 in the aggregate;
(l) any Company Material Adverse Effect; or
(m) agreement by the Company or any Company Subsidiary, or any
officer or employees on behalf of the Company, to do any of the things described
in the preceding clauses (a) through (l) of this Section 3.8 (other than
negotiations with Parent and its representatives regarding the transactions
contemplated by this Agreement and the Related Agreements).
3.9 Tax Matters.
(a) Definition of Taxes. For the purposes of this Agreement, the
term "Tax" or, collectively, "Taxes" shall mean any and all federal, state,
local and foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes as well as public imposts, fees and social security
charges (including but not limited to health, unemployment and pension
insurance), together with all interest, penalties and additions imposed with
respect to such amounts. For purposes of this Agreement, the term "Income Tax"
or, collectively, "Income Taxes" shall mean any and all federal, state or local
taxes that are imposed on or measured by net income or franchise taxes imposed
in lieu thereof.
(b) Tax Returns and Audits.
(i) As of the Closing Date, all required federal, state,
local and foreign returns, estimates, information statements and reports
("Returns") relating to any and all Taxes concerning or attributable to the
Company or any Company Subsidiary (including the consolidated federal income Tax
Return of Siemens Corporation or its predecessor and any state, local or foreign
Tax Return that includes, to the extent it relates to, the Company or any
Company Subsidiary) will have been prepared and timely filed and such Returns
will be true, correct and completed in accordance with applicable law, it being
understood that no representation is being made as to the existence and amount
of any Tax attribute, including, but not limited to, any net operating loss
carryforwards, credit carryforwards or tax basis of any assets of the Company or
any Company Subsidiary except as it relates to any accuracy-related penalty
under Section 6662 of the Code imposed against Parent and attributable to such
tax basis.
(ii) As of the Closing Date, Taxes required to be paid
by, or on behalf of, the Company or any Company Subsidiary have been paid or
withheld.
(iii) There is no Tax deficiency outstanding, assessed
or proposed against the Company or any Company Subsidiary, nor has any waiver of
any statute of limitations on or extending the period for the assessment or
collection of any material Tax to which the Company or any Company Subsidiary
may be subject to been executed.
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(iv) No audit or other examination of any Return of the
Company or any Company Subsidiary is presently in progress, nor has the Company,
any Company Subsidiary, or Siemens (to the extent that it relates to the income
or operations of the Company or any Company Subsidiary) been notified of any
request for such an audit or other examination.
(v) Copies of all foreign, federal and material state
and local income and all state and local sales and use Returns (to the extent
that such Returns relate to the Company or Company Subsidiaries) for the Company
and each Company Subsidiary filed for all periods that Siemens has owned the
Company and the Company Subsidiaries have been made available to Parent or its
legal counsel.
(vi) There are (and immediately following the Effective
Time there will be) no liens, pledges, charges, claims, restrictions on
transfer, mortgages, security interests or other encumbrances of any sort
(collectively, "Liens") on the assets of the Company or any Company Subsidiary
relating to or attributable to Taxes other than Liens for Taxes not yet due and
payable.
(vii) Neither the Company nor Siemens has Knowledge of
any basis for the assertion of any claim relating or attributable to Taxes
which, if adversely determined, would result in any Lien on the assets of the
Company or any Company Subsidiary.
(viii) Neither the Company nor any Company Subsidiary
has (a) been a member of an affiliated group (within the meaning of Section
Section 1504(a) of the Code) filing a consolidated federal income Tax Return
(other than a group the common parent of which was the Company, Siemens or its
predecessor) for any taxable period for which the statute of limitations for any
Tax has not expired, (b) ever been a party to any Tax sharing, indemnification
or allocation agreement (other than the existing tax sharing agreement with
Siemens dated September 27, 2000) and (c) ever been a party to any joint
venture, partnership or other arrangement that could be treated as a partnership
for Tax purposes.
(ix) No adjustment relating to any Return filed by the
Company or any Company Subsidiary has been proposed formally or, to the
Company's or Siemens' Knowledge, informally by any tax authority to the Company
or any of its Company Subsidiary or any representative thereof.
(x) Neither the Company nor any Company Subsidiary has
any (a) income reportable for a period ending after the Closing Date but
attributable to a transaction (e.g., an installment sale) or a change in
accounting method occurring in a period ending on or prior to the Closing Date
which resulted in a deferred reporting of income from such transaction or from
such change in accounting method (other than a deferred intercompany
transaction), or (b) deferred gain or loss arising out of any deferred
intercompany transaction other than the Voice Transaction that would give rise
to a Tax liability of the Company or such Company Subsidiary for any taxable
period, or portion thereof, beginning on or after, in the case of Taxes that are
not Income Taxes, or after, in the case of Income Taxes, the Closing Date.
(c) Other Tax Matters.
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(i) None of the Company's or any Company Subsidiary's
assets is treated as "tax-exempt use property" within the meaning of Section
168(h) of the Code.
(ii) Neither the Company nor any Company Subsidiary has
filed any consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(4) of the Code apply to any disposition of a subsection (f) asset
(as defined in Section 341(f)(4) of the Code) owned by the Company or any
Company Subsidiary.
(iii) Neither the Company nor any of its Company
Subsidiary has constituted either a "distributing corporation" or a "controlled
corporation" in a distribution of stock intended to qualify for tax-free
treatment under Section 355 of the Code (x) in the two (2) years prior to the
date of this Agreement or (y) in a distribution which could otherwise constitute
part of a "plan" or "series of related transactions" (within the meaning of
Section 355(e) of the Code) in conjunction with the Merger.
3.10 Restrictions on Business Activities. There is no agreement
(non-competition or otherwise), commitment, judgment, injunction, court order or
decree to which the Company or any Company Subsidiary is a party or otherwise
binding upon the Company or any Company Subsidiary which has or may reasonably
be expected to have the effect of prohibiting or impairing in any material
respect (i) the conduct of business by the Company or any Company Subsidiary as
currently conducted, or (ii) otherwise limiting the ability of the Company or
any Company Subsidiary to engage in any line of business or to compete with any
person.
3.11 Title to Properties; Absence of Liens and Encumbrances; Condition
of Equipment; Customer Information.
(a) Neither the Company nor any Company Subsidiary owns any real
property, nor has the Company or any Company Subsidiary ever owned any real
property. Section 3.11(a) of the Company Disclosure Schedule sets forth a list
of all real property currently leased by the Company or any Company Subsidiary
or otherwise used or occupied by the Company or any Company Subsidiary for the
operation of the Company's business (the "Leased Real Property"), the name of
the lessor, the date of the lease and each amendment thereto and, with respect
to any current lease, the aggregate annual rental payable under any such lease.
(b) The Company has made available to Parent true, correct and
complete copies of all leases, lease guaranties, subleases, agreements for the
leasing, use or occupancy of, or otherwise granting a right in or relating to
the Leased Real Property, including all amendments, terminations and
modifications thereof ("Lease Agreements") and there are no other Lease
Agreements for real property affecting the real property or to which the Company
or any Company Subsidiary is bound, other than those identified in Section
3.11(a) of the Company Disclosure Schedule. All material Lease Agreements are in
full force and effect, valid and enforceable on the Company or a Company
Subsidiary party thereto, except as such enforceability may be subject to the
laws of general application relating to bankruptcy, insolvency, and the relief
of debtors and rules of law governing specific performance, injunctive relief,
or other equitable remedies, and neither the Company nor any Company Subsidiary
(nor to the Company's or Siemens' Knowledge any other party thereto) is
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in default, no rentals are past due, and no circumstance exists, which, with
notice, the passage of time or both, would constitute a default under any such
Lease Agreement. Neither the Company nor any Company Subsidiary has received any
notice of a default, alleged failure to perform, or any offset or counterclaim
with respect to any such material Lease Agreement, which has not been fully
remedied or withdrawn.
(c) The material Leased Real Property is in good operating
condition and repair in all material respects, is maintained in a manner
consistent in all material respects with standards generally followed with
respect to similar properties. To the Company's or Siemens' Knowledge, the
Leased Real Property is free from material structural, physical and mechanical
defects.
(d) The Company and Company Subsidiaries have good and valid
title to, or, in the case of leased properties and assets, valid leasehold
interests in, all of their material tangible properties and assets, personal and
mixed, used or held for use in its business, free and clear of any Liens, except
(i) as reflected in the Current Balance Sheet, (ii) Liens for Taxes not yet due
and payable, and (iii) such imperfections of title and encumbrances, if any,
which do not materially detract from the value or interfere with the present use
of the property subject thereto or affected thereby.
(e) Section 3.11(e) of the Company Disclosure Schedule lists all
material items of equipment (the "Equipment") owned or leased by the Company or
any Company Subsidiary.
3.12 Intellectual Property.
(a) Definitions. For all purposes of this Agreement, the
following terms shall have the following respective meanings:
"Intellectual Property" shall mean any or all of the
following and all rights therein, arising therefrom, or associated therewith:
(i) United States and foreign patents and applications therefor and all
reissues, divisions, reexaminations, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) inventions (whether patentable or not),
invention disclosures, and improvements; (iii) trade secrets, confidential
information, know how, processes, technology, customer lists and technical data;
(iv) copyrights, copyrights registrations and applications therefor and all
other rights corresponding thereto throughout the world; (v) industrial designs
and any registrations and applications therefor throughout the world; (vi) mask
works, mask work registrations and applications therefor, and any equivalent or
similar rights in semiconductor masks, layouts, architectures or topology; (vii)
trade names, logos, common law trademarks and service marks, trademark and
service mark registrations and applications therefor; and (viii) databases and
data collections and Web addresses, sites, and domain names, computer software
including all source code object code, firmware, development tools, files,
records, and data.
"Company Intellectual Property" shall mean any
Intellectual Property that is owned by or licensed to the Company or any Company
Subsidiary and used by the Company or any Company Subsidiary in the Business,
including, without limitation the Intellectual Property subject to Section 6.23
hereof.
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(b) Section 3.12(b) of the Company Disclosure Schedule (i) lists
all patents, patent applications (collectively, the "Patents") trademark
registrations and applications therefor, copyright registrations, and domain
names owned by, or filed in the name of, the Company or any Company Subsidiary
(the "Company Registered Intellectual Property"), and (ii) all material
proceedings or actions before any court, tribunal (including the United States
Patent and Trademark Office (the "PTO"), or equivalent authority anywhere in the
world) related to any Company Intellectual Property excluding prosecution
proceedings or actions.
(c) Each item of Company Intellectual Property owned by the
Company and the Company Subsidiaries, including all Company Registered
Intellectual Property listed in Section 3.12(b) of the Company Disclosure
Schedule, is free and clear of any Liens and all Company Intellectual Property
licensed to the Company is free and clear of any Liens arising from acts or
omissions of the Company. Parent acknowledges that Company Intellectual Property
is subject to the terms of pre-existing patent cross-license agreements entered
into between or among Siemens AG and its affiliates with third parties.
(d) Other than "shrink-wrap" and similar widely available binary
code and commercial end-user licenses, the Company Intellectual Property
constitutes all the Intellectual Property used by the Company in, or necessary
for, the conduct of the Business by the Company and the Company Subsidiaries as
it currently is conducted, including, without limitation, the design,
development, manufacture, use, import and sale of products, technology and
services. Parent acknowledges that the immediately preceding sentence does not
constitute any representation or warranty regarding any infringement or
misappropriation of the Intellectual Property of any person. Section 3.12(d) of
the Company Disclosure Schedule sets forth a list of all license agreements, to
which the Company or any Company Subsidiary is a party that are material to the
Company Intellectual Property, excluding patent cross-licenses involving Siemens
AG and its affiliates, Material Contracts, shrink-wrap and similarly available
object code or commercial end-user licenses of computer software, licenses of
Intellectual Property incident to product purchases and license agreements
entered into in the ordinary course of business. Neither the Company nor any
Company Subsidiary is in material breach of nor has the Company or any Company
Subsidiary materially failed to perform their respective obligations under, any
of the agreements listed on Section 3.12(d) of the Company Disclosure Schedule
and, to the Knowledge of Company or Siemens, no other party to any such
agreement is in material breach thereof or has materially failed to perform
thereunder.
(e) To the Knowledge of the Company or Siemens, the operation of
the business of the Company and the Company Subsidiaries as it currently is
conducted does not infringe or misappropriate the Intellectual Property of any
person. Neither the Company nor any Company Subsidiary has received any written
notice from any person claiming that such operation of the Company or any
Company Subsidiary infringes or misappropriates the Intellectual Property of any
such person, nor does Company nor Siemens have Knowledge of any basis therefor.
(f) To the Knowledge of the Company or Siemens, each item of
Company Registered Intellectual Property is valid and subsisting, and all
necessary registration, maintenance and renewal fees in connection with such
Company Registered Intellectual Property have been paid and all necessary
documents and certificates in connection with such Company Registered
Intellectual
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Property have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Company Registered Intellectual Property.
(g) Neither the Company nor Siemens has any Knowledge of any
facts or circumstances that would render any Company Intellectual Property
invalid or unenforceable.
(h) The Company does not have any currently pending claim
against any third party for infringing or misappropriating any Company
Intellectual Property and, to the Knowledge of Siemens or the Company, no person
or entity is infringing or misappropriating any Company Intellectual Property.
(i) Other than the transfers related to the Voice Transaction,
neither the Company nor any Company subsidiary has transferred ownership of, or
granted any exclusive license, exclusive right to use or joint ownership of, any
Intellectual Property that is or was Company Intellectual Property to any other
person within one year before the date hereof.
(j) The Company and the Company Subsidiaries have taken
reasonable steps that are required or necessary to protect the Company's rights
in confidential information and trade secrets of the Company or provided by any
other person to the Company and to assign to the Company or the Company
Subsidiaries all Intellectual Property developed by any employee or consultant
of the Company and the Company Subsidiaries in the course of their employment or
engagement.
(k) No Governmental Entity has any claim or right in and to the
Company Intellectual Property.
(l) No Patent which names as an inventor a person who conceived
the claimed invention in the Patent while employed or engaged as a consultant by
the Company or the Company Subsidiaries has been assigned to Siemens and its
affiliates except as pursuant to the Voice Transaction.
(m) Section 3.12(m) of the Company Disclosure Schedule sets
forth all of the Patents transferred from the Company and the Company
Subsidiaries to Siemens and its affiliates pursuant to the Voice Transaction.
3.13 Material Contracts.
(a) Section 3.13(a) of the Company Disclosure Schedule lists
each of the following written contracts and agreements of the Company and the
Company Subsidiaries (such contracts and agreements being "Material Contracts"):
(i) any fidelity or surety bond;
(ii) any lease of personal property having a value in
excess of $25,000 individually;
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(iii) any agreement, contract or commitment relating to
capital expenditures and involving future payments in excess of $25,000
individually or $250,000 in the aggregate;
(iv) any agreement, contract or commitment relating to
the disposition or acquisition of assets or any interest in any business
enterprise outside the ordinary course of the Company's business;
(v) any mortgages, indentures, guarantees, loans or
credit agreements, security agreements or other agreements or instruments
relating to the borrowing of money or extension of credit (other than extension
of trade credit in the ordinary course of business);
(vi) any purchase order or contract for the purchase of
materials having a value in excess of $25,000;
(vii) any construction contracts having a value in
excess of $5,000;
(viii) any dealer, distribution, joint marketing or
development agreement;
(ix) any sales representative, original equipment
manufacturer, manufacturing, value added, remarketer, reseller, or independent
software vendor, or other agreement for use, distribution, purchase or sale of
the Company's products, technology or services; or
(x) any other agreement, contract or commitment that
involves $25,000 individually or $250,000 in the aggregate or more and is not
cancelable without penalty within thirty (30) days.
(b) (i) Each Material Contract is valid and binding on the
Company and the Company Subsidiaries and, to the Knowledge of the Company or
Siemens, the other parties thereto (except as enforceability may be subject to
the laws of general application relating to bankruptcy, insolvency, and the
relief of debtors and rules of law governing specific performance, injunctive
relief, or other equitable remedies) and is in full force and effect, (ii)
neither the Company nor any Company Subsidiary is in breach of, or default
under, any Material Contract and (iii) to the Company's or Siemens' Knowledge,
no other party to any Material Contract is in breach thereof or in default
thereunder and neither the Company nor any Company Subsidiary has received any
written notice of termination, cancellation, breach or default under any
Material Contract.
(c) The Company has made available to Parent true and complete
copies of all Material Contracts other than those of the type described in
Sections 3.13(a)(ii) and (vi) hereof.
(d) Set forth in Section 3.13(d) of the Company Disclosure
Schedule is a complete and accurate list of all existing contracts and
agreements (other than contracts and agreements relating solely to the Voice
Business) between the Company or any Company Subsidiary, on the one
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hand, and Siemens or any affiliate of Siemens, on the other (other than the
Company or any Company Subsidiary).
3.14 Interested Party Transactions. No officer or director of the
Company or any Company Subsidiary (nor any spouse or offspring of such person,
or any trust, partnership or corporation in which any of such persons has a
controlling interest), directly or indirectly, has (i) any ownership interest in
any entity that purchases from or sells or furnishes to the Company or any
Company Subsidiary, any goods or services, or (ii) an economic interest in
excess of $50,000 in any contract to which the Company or any Company Subsidiary
is a party; provided, however, that neither (i) ownership of no more than two
percent (2%) of the outstanding voting stock of a publicly traded corporation
nor (ii) passive investment of no more than five percent (5%) of the outstanding
voting stock of a privately held corporation shall be deemed to be an "interest
in any entity" for purposes of this Section 3.14.
3.15 Governmental Authorization. Each material consent, license, permit,
grant or other authorization pursuant to which the Company or any Company
Subsidiary currently operates or holds any interest in any of its properties, or
which is required for the operation of the Company's business as currently
conducted or currently contemplated to be conducted (collectively, "Company
Authorizations") (a) has been issued or granted to the Company and or the
Company Subsidiary and (b) the Company Authorizations are in full force and
effect and constitute all Company Authorizations required to permit the Company
and the Company Subsidiary to operate or conduct their businesses or hold any
interest in their properties or assets.
3.16 Litigation. There is no action, suit, claim, investigation, inquiry
or proceeding of any nature pending, nor to the Company's or Siemens' Knowledge
is any material action, suit, claim, investigation, inquiry or proceeding
threatened, against the Company or any Company Subsidiary by or before any
Governmental Entity.
3.17 Minute Books. The minutes of the Company and each Company
Subsidiary made available to counsel for Parent are the only minutes of the
Company and each Company Subsidiary and contain accurate summaries of all
actions of the Board of Directors (or committees thereof) of the Company and
each Company Subsidiary and contain all stockholder actions since the time of
incorporation of the Company (or, in the case of a Company Subsidiary not
incorporated as a subsidiary of the Company, since the first time of Company
ownership with respect to such Company Subsidiaries).
3.18 Environmental Matters.
(a) Except as disclosed in the Company Disclosure Schedule and
except as would not, individually or in the aggregate, have a Company Material
Adverse Effect, (i) to the Company's or Siemens' Knowledge, the Company is in
compliance with all applicable Environmental Laws and has obtained and is in
compliance with all Environmental Permits, and (ii) there are no written claims
pursuant to any Environmental Law pending or, to the Company's or Siemens'
Knowledge, threatened, against the Company.
-22-
(b) Parent and Sub acknowledge that (i) the representations and
warranties contained in this Section 3.18 are the only representations and
warranties being made with respect to compliance with or liability under
Environmental Laws or with respect to any environmental, health or safety
matter, including natural resources, related in any way to the Company, the
Leased Real Property, or this Agreement or its subject matter, and (ii) no other
representation contained in this Agreement shall apply to any such matters and
no other representation or warranty, express or implied, is being made with
respect thereto.
(c) For purposes of this Section 3.18, (i) "Environmental Law"
means any federal, state, local or foreign statute, law, ordinance, regulation,
rule, code, order, consent decree or judgment, in each case in existence as of
the Closing Date, relating to pollution or protection of the environment, and
(ii) "Environmental Permit" means any permit, approval, identification number,
license or other authorization required under or issued pursuant to any
Environmental Law.
(d) Except as would not be reasonably likely to result in a
material liability to the Company or any Company Subsidiary, to the Company's or
Siemens' Knowledge, no Hazardous Materials are present in, on or under any
property, including the land and the improvements, ground water and surface
water thereof, that the Company or any Company Subsidiary has at any time owned,
operated, occupied or leased.
3.19 Brokers' and Finders' Fees; Third Party Expenses. Except for Credit
Suisse First Boston Corporation, neither the Company nor any Company Subsidiary
has incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with the Agreement or any transaction contemplated hereby. Section
3.19 of the Company Disclosure Schedule sets forth the principal terms and
conditions of any agreement, written or oral, with respect to such fees.
3.20 Employee Benefit Plans and Compensation.
(a) Definitions. For all purposes of this Agreement, the
following terms shall have the following respective meanings:
"Benefit Plan" shall mean any plan, program, policy,
practice, contract, agreement or other arrangement providing for compensation,
severance, termination pay, deferred compensation, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written, unwritten or otherwise, funded or unfunded,
including, without limitation, each "employee benefit plan," within the meaning
of Section 3(3) of ERISA, which is or has been maintained, contributed to, or
required to be contributed to, by an ERISA Affiliate (other than the Company and
the Company Subsidiaries) and under which any individual who is not an Employee
is or was eligible to participate.
"Company Employee Plan" shall mean any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, deferred compensation, performance
awards, stock or stock-related awards, fringe benefits or other employee
benefits or remuneration of any kind, whether written, unwritten or otherwise,
funded or unfunded, including without limitation, each "employee benefit plan,"
within the meaning of Section 3(3) of ERISA which is or has been maintained,
contributed to, or required to be contributed
-23-
to, by the Company or any ERISA Affiliate for the benefit of any Employee, or
with respect to which the Company or any Company Subsidiary has or may have any
liability or obligation, other than the Siemens Pension Plan and the Siemens
Savings Plan.
"COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended and as codified in Section 4980B of the
Code and Section 601 et. seq. of ERISA.
"DOL" shall mean the United States Department of Labor.
"Employee" shall mean any current or former employee,
consultant or director of the Company or any Company Subsidiary; provided,
however, that for purposes of Sections 3.20 and 8.2(a) of this Agreement, no
individual shall be considered to be an "Employee" during the time he or she was
employed by an ERISA Affiliate other than the Company or the Company
Subsidiaries.
"Employee Agreement" shall mean each management,
employment, severance, consulting or other agreement, or contract between the
Company or any Company Subsidiary and any Employee.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA Affiliate" shall mean any other person or entity
under common control with the Company within the meaning of Section 414(b), (c),
(m) or (o) of the Code, and the regulations issued thereunder.
"International Employee Plan" shall mean each Company
Employee Plan or Employment Agreement that has been adopted or maintained by the
Company or any ERISA Affiliate, whether formally or informally or with respect
to which the Company or any ERISA Affiliate will or may have any liability with
respect to Employees who perform services outside the United States.
"IRS" shall mean the United States Internal Revenue
Service.
"PBGC" shall mean the United States Pension Benefit
Guaranty Corporation.
"Pension Plan" shall mean each Company Employee Plan
which is an "employee pension benefit plan," within the meaning of Section 3(2)
of ERISA.
(b) Schedule. Section 3.20(b)(1) of the Company Disclosure
Schedule contains an accurate and complete list of each Company Employee Plan,
each Employee Agreement under each Company Employee Plan, and each Employee
Agreement. Neither the Company nor any ERISA Affiliate has made any plan or
commitment to establish any new Company Employee Plan or Employee Agreement, to
modify any Company Employee Plan or Employee Agreement (except to the extent
required by law or to conform any such Company Employee Plan or Employee
Agreement to the requirements of any applicable law, in each case as previously
disclosed to Parent in writing, or as required by this Agreement), or to enter
into any Company Employee Plan or Employee Agreement. Section 3.20(b)(3) of the
Company Disclosure Schedule sets forth a table with the name and salary of each
employee of the Company. Section 3.20(b)(3) of the Company Disclosure Schedule
sets forth each Company Employee Plan that is not a Benefit Plan and separately
lists each Company Employee Plan for which the Company is the sole sponsor and a
participating employer.
-24-
(c) Documents. The Company has provided to Parent (i) correct
and complete copies of all documents embodying each Company Employee Plan and
each Employee Agreement including, without limitation, all amendments thereto
and all related trust documents, (ii) the most recent annual reports (Form
Series 5500 and all schedules and financial statements attached thereto), if
any, required under ERISA or the Code in connection with each Company Employee
Plan, (iii) if the Company Employee Plan is funded, the most recent annual and
periodic accounting of Company Employee Plan assets, (iv) the most recent
summary plan description together with the summary(ies) of material
modifications thereto, if any, required under ERISA with respect to each Company
Employee Plan, (v) all material written agreements and contracts relating to
each Company Employee Plan, including, without limitation, administrative
service agreements and group insurance contracts, (vi) all communications
material to any employee or employees relating to any Company Employee Plan and
any proposed Company Employee Plans, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits, acceleration
of payments or vesting schedules or other events which would result in any
liability to the Company, (vii) all correspondence to or from any governmental
agency relating to any Company Employee Plan, (viii) all discrimination tests
for each Company Employee Plan for the most recent plan years, and (ix) the most
recent IRS determination or opinion letter issued with respect to each Company
Employee Plan, if applicable.
(d) Employee Plan Compliance. The Company and the Company
Subsidiaries have performed all obligations required to be performed by them
under, are not in material default or violation of, and neither the Company nor
Siemens has any Knowledge of any default or violation by any other party to, any
Company Employee Plan, and each Company Employee Plan has been established and
maintained in accordance with its terms and in compliance in all material
respects with all applicable laws, statutes, orders, rules and regulations,
including but not limited to ERISA and the Code. Siemens and its ERISA
Affiliates have performed all obligations required to be performed by them
under, are not in material default or violation of, and have no Knowledge of any
default or violation by any other party thereto, the Siemens Pension Plan and
the Siemens Savings Plan, and the Siemens Pension Plan and the Siemens Savings
Plan have been established and maintained in accordance with their terms and in
compliance in all material respects with all applicable laws, statutes, orders,
rules and regulations, including but not limited to ERISA and the Code. Any
Company Employee Plan intended to be qualified under Section 401(a) of the Code
and each trust intended to qualify under Section 501(a) of the Code (i) has
either applied for, prior to the expiration of the requisite period under
applicable Treasury Regulations or IRS pronouncements, or obtained a favorable
determination, notification, advisory and/or opinion letter, as applicable, as
to its qualified status from the IRS or still has a remaining period of time
under applicable Treasury Regulations or IRS pronouncements in which to apply
for such letter and to make any amendments necessary to obtain a favorable
determination, and (ii) incorporates or has been amended to incorporate all
provisions required to comply with the Tax Reform Act of 1986 and subsequent
legislation. For each Company Employee Plan that is intended to be qualified
under Section 401(a) of the Code there has been no event, condition or
circumstance that has adversely affected or is likely to adversely affect such
qualified status. No "prohibited transaction," within the meaning of Section
4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt
under Section 408 of ERISA, has occurred with respect to any Company Employee
Plan. There are no
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actions, suits or claims pending or, to the Company's or Siemens' Knowledge,
threatened (other than routine claims for benefits) against any Company Employee
Plan or against the assets of any Company Employee Plan. Each Company Employee
Plan can be amended, terminated or otherwise discontinued after the Effective
Time in accordance with its terms, without liability to Parent, the Company or
any Company Subsidiary (other than ordinary administration expenses). There are
no audits, inquiries or proceedings pending or to the Company's or Siemens'
Knowledge threatened by the IRS, DOL, or any other Governmental Entity with
respect to any Company Employee Plan. Neither the Company nor any Company
Subsidiary is subject to any penalty or tax with respect to any Company Employee
Plan under Section 502(i) of ERISA or Sections 4975 through 4980 of the Code.
The Company has timely made all contributions and other payments required by and
due under the terms of each Company Employee Plan.
(e) No Pension or Welfare Plans. Neither the Company nor any
Company Subsidiary has ever, with respect to an Employee, maintained,
established, sponsored, participated in, or contributed to, any (i) Pension
Plans subject to Title IV of ERISA, (ii) "multiemployer plan" within the meaning
of Section (3)(37) of ERISA or (iii) a "multiple employer plan" as defined in
ERISA or the Code, or (iv) a "funded welfare plan" within the meaning of Section
419 of the Code. No Company Employee Plan provides health benefits that are not
fully insured through an insurance contract.
(f) No Post-Employment Obligations. No Company Employee Plan or
Employment Arrangement provides, or reflects or represents any liability to
provide post-termination or retiree welfare benefits, to any person for any
reason, except as may be required by COBRA or other applicable statute, and the
Company has never represented, promised or contracted (whether in oral or
written form) to any Employee (either individually or to Employees as a group)
or any other person that such Employee(s) or other person would be provided with
post-termination or retiree welfare or other non-pension benefits, except to the
extent required by statute.
(g) Past Acquisitions. Neither the Company nor any Company
Subsidiary is currently obligated to provide an Employee with any compensation
or benefits pursuant to an agreement (for example, an acquisition agreement)
with a former employer of such Employee.
(h) Effect of Transaction. The execution of this Agreement and
the consummation of the transactions contemplated hereby will not (either alone
or upon the occurrence of any additional or subsequent events) constitute an
event under any Company Employee Plan, Employee Agreement, trust or loan that
will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any Employee (each a
"Benefit"). No Benefit could give rise to an amount that would be (i)
non-deductible to the Company under Section 280G of the Code, or (ii) subject to
excise tax under Section 4999 of the Code. The Company is not, nor has it ever
been, a party to or bound by any tax indemnity agreement or any other agreement
that will require Parent or the Surviving Corporation to "gross-up" or otherwise
compensate any Employee because of the imposition of any excise tax on a Benefit
provided to such Employee.
-26-
(i) Employment Matters. The Company and the Company
Subsidiaries: (i) have withheld and reported all amounts required by law or by
agreement to be withheld and reported with respect to wages, salaries and other
payments to Employees, (ii) are not liable for any arrears of wages or any taxes
or any penalty for failure to comply with respect to the matters described in
(i), and (iii) are not liable for any payment to any trust or other fund
governed by or maintained by or on behalf of any governmental authority, with
respect to unemployment compensation benefits, social security or other benefits
or obligations for Employees (other than routine payments to be made in the
normal course of business and consistent with past practice). There are no
pending, or to the Company's or Siemens' Knowledge, threatened claims or actions
against the Company under any worker's compensation policy or long-term
disability policy. The services provided by each of the Employees is terminable
at the will of the Company or Company Subsidiaries and any such termination
would result in no liability to the Company or to any Company Subsidiary.
(j) Labor. No work stoppage or labor strike against the Company
is pending, or to the Company's or Siemens' Knowledge, threatened. To the
Company's or Siemens' Knowledge, there are no activities or proceedings of any
labor union to organize any Employees. There are no actions, suits, claims,
labor disputes or grievances pending, or to the Company's or Siemens' Knowledge,
threatened, relating to any labor, safety or discrimination matters involving
any Employee, including, without limitation, charges of unfair labor practices
or discrimination complaints. The Company has not engaged in any unfair labor
practices within the meaning of the National Labor Relations Act. The Company
presently is not, nor has it been in the past, a party to, or bound by, any
collective bargaining agreement or union contract with respect to Employees and
no collective bargaining agreement is being negotiated by the Company.
(k) International Employee Plan. Neither the Company nor any
Company Subsidiary currently has or has it ever had the obligation to maintain,
establish, sponsor, participate in, be bound by or contribute to any
International Employee Plan.
(l) Benefit Liabilities. Neither the Company nor Parent or any
of its subsidiaries shall be responsible for liabilities or claims resulting
from or relating to (i) any Benefit Plan or (ii) any current or former employee,
consultant or director of any ERISA Affiliate who is not an Employee ("Benefit
Liabilities").
3.21 Insurance. True and complete copies of all material insurance
policies maintained by the Companies and the Company Subsidiaries have been made
available to Parent. The Company maintains insurance coverage for the operations
of the Company and the Company Subsidiaries in amounts and covering such risks
as the Company reasonably believes is necessary to conduct the Business. There
is no claim by the Company or any Company Subsidiary pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed
or that the Company or any Company Subsidiary has a reason to believe will be
denied or disputed by the underwriters of such policies or bonds. All premiums
due and payable under all such policies and bonds have been paid, (or if
installment payments are due, will be paid if incurred prior to the Closing
Date) and the Company and the Company Subsidiaries are otherwise in material
compliance with the terms of such policies and bonds (or other policies and
bonds providing substantially similar insurance coverage).
-27-
3.22 Compliance with Laws. The Company and each Company Subsidiary has
complied in all material respects with, is not in material violation of, and has
not received any notices of material violation with respect to, any foreign,
federal, state or local statute, law or regulation.
3.23 Warranties; Indemnities. The Company has made available to Parent
the standard terms and conditions upon which the Company and the Company
Subsidiaries seek to sell their products and services. To the Knowledge of the
Company and Siemens, neither the Company nor any Company Subsidiary (i) has any
material express warranty for products or services in excess of two (2) years or
(ii) is liable for any uncapped indemnity for consequential damages.
3.24 Assets. Except for Intellectual Property (which shall be covered in
Section 3.12 of this Agreement), all of the assets, properties and rights owned
by the Company or that the Company otherwise has the right to use are, and will
be immediately after the Effective Time, sufficient in all material respects to
conduct the Business as now conducted. Except as set forth in Section 6.22 and
6.23 hereof, neither Siemens nor any subsidiary or affiliate of Siemens has any
ownership, license or similar interest to any of the assets, properties or
rights of any type and description, real, personal, tangible and intangible,
used in the conduct of the Business. Siemens and its subsidiaries (other than
the Company) do not provide any products or services used in the conduct of the
Business.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Except as set forth in the Disclosure Schedule delivered by Parent and Sub to
Siemens and the Company concurrently with the execution of this Agreement (the
"Parent Disclosure Schedule") (which Parent Disclosure Schedule shall be
arranged in sections corresponding to the numbered and lettered sections of this
Article IV, and any information disclosed in any such section shall be deemed to
be disclosed only for purposes of such section, unless it is readily apparent
that the disclosure contained in such section contains enough information
regarding the subject matter of other representations and warranties contained
in this Agreement so as to clearly qualify or otherwise clearly apply to such
other representations and warranties), each of Parent and Sub hereby represents
and warrants to the Company and Siemens, as follows:
4.1 Organization of Parent and Sub. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of Parent and Sub has the corporate power to own
or lease its properties and to carry on its business as now being conducted and
is duly qualified or licensed to do business and is in good standing as a
foreign corporation in each jurisdiction in which it conducts business other
than in such jurisdictions where the failure to be so qualified or licensed
would not have, individually or in the aggregate, a Parent Material Adverse
Effect. For purposes of this Agreement, "Parent Material Adverse Effect" shall
mean any circumstance, change in or effect that is or is reasonably likely to be
materially adverse to the assets, financial condition, business or results of
operations of Parent and its subsidiaries (taken as a whole), other than any
circumstance, change in or effect on Parent and its subsidiaries arising out of
(i) circumstances, changes or effects that generally affect the industries in
which Parent and its
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subsidiaries operate or sell to or through (but which do not disproportionately
affect Parent and its subsidiaries, taken as a whole), (ii) changes in financial
or securities markets, including any movement (in and of itself) in the trading
price of Parent Common Stock, (iii) changes in general economic conditions (but
which do not disproportionately affect Parent and its subsidiaries, taken as a
whole), or (iv) any effect resulting from the announcement or pendency of the
transactions contemplated by this Agreement.
4.2 Authority. Each of Parent and Sub has all requisite corporate power
and authority to enter into this Agreement and any Related Agreements to which
it is a party and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and any Related Agreements
to which it is a party and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of Parent and Sub and no further action is required on the part of
Parent or Sub to authorize the Agreement and any Related Agreements to which it
is a party and the transactions contemplated hereby and thereby. The Board of
Directors of each of Parent and Sub, by resolutions adopted by unanimous vote,
has approved, and the Board of Directors of Sub has declared advisable, this
Agreement and the Merger. This Agreement and each of the Related Agreements to
which Parent and Sub are parties have been duly executed and delivered by Parent
and Sub and assuming the due authorization, execution and delivery by the other
parties hereto and thereto, constitute the valid and binding obligations of
Parent and Sub, enforceable (in the case of this Agreement, the Voting
Agreements, the Stockholder Agreement, the Distribution Agreement and the
Affiliate Agreements only) against each of Parent and Sub in accordance with
their terms, except as such enforceability may be subject to the laws of general
application relating to bankruptcy, insolvency, and the relief of debtors and
rules of law governing specific performance, injunctive relief, or other
equitable remedies.
4.3 No Conflict. Assuming that all the consents, waivers, approvals,
authorizations and other actions described in Section 4.4(a) and (b) have been
obtained and all filings and notifications listed in Section 4.4 have been made
and any waiting periods thereunder have terminated or expired, the execution and
delivery by Parent and Sub of this Agreement and any Related Agreement to which
Parent and Sub are parties do not, and the consummation of the transactions
contemplated hereby and thereby will not, result in a Conflict under (a) any
provision of the certificate of incorporation or bylaws of Parent or Sub, (b)
any mortgage, indenture, lease, contract or other agreement, instrument or
commitment, permit, concession, franchise or license to which Parent, Sub or any
of its properties or assets is subject, or (c) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent, Sub or any of
its properties or assets, except with respect to clause (c), for such Conflicts
as would not, individually or in the aggregate, have a Parent Material Adverse
Effect, and except, with respect to clauses (b) and (c), for such Conflicts as
would not prevent or materially delay consummation of the Merger or would not
otherwise prevent or materially delay Parent from performing its obligations
under this Agreement.
4.4 Consents. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Entity or third
party, is required by or with respect to Parent or Sub in connection with the
execution and delivery of this Agreement and any Related
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Agreements to which Parent or Sub is a party or the consummation of the
transactions contemplated hereby and thereby, except (a) under any applicable
state or federal securities laws, (including without limitation the issuance of
an Issuance Permit by the Commissioner in connection with a the Hearing or the
declaration of effectiveness of a Registration Statement by the SEC), the HSR
Act, foreign and supranational antitrust and competition laws and the filing of
the Certificate of Merger as required by Delaware law, (b) such consents,
waivers, approvals, orders, authorizations, registrations, declarations and
filings which, if not obtained or made, would not have a Parent Material Adverse
Effect and (c) where the failure to obtain such consent, waiver, approval,
order, authorization, registration, declaration, or to make such filing would
not prevent or materially delay consummation of the Merger or would not
otherwise prevent or materially delay Parent from performing its obligations
under this Agreement.
4.5 Parent Capital Structure.
(a) As of the date hereof, the authorized capital stock of
Parent consists of (i) 1,000,000,000 shares of Parent Common Stock, of which
331,552,085 shares were issued and outstanding as of May 15, 2002 and (ii)
10,000,000 shares of preferred stock, par value $0.00001 per share, of the
Company, of which no shares are issued and outstanding as of the date hereof. As
of May 15, 2002, other than Parent's 4.75% Convertible Subordinated Notes due
March 15, 2007, there were other securities convertible into 32,835 shares of
Parent Common Stock outstanding. All outstanding shares of Company Common Stock
are duly authorized, validly issued, fully paid and non-assessable and not
subject to preemptive rights created by statute, the certificate of
incorporation or bylaws of Parent, or any agreement to which Parent is a party
or by which it is bound. All outstanding shares of Parent Common Stock and
Parent Options have been issued in compliance with all applicable federal,
state, foreign, or local statues, laws, rules, or regulations, including federal
and state securities laws. There are no declared or accrued but unpaid dividends
with respect to any shares of Parent Common Stock. The Parent Common Stock that
constitutes the Stock Consideration has been duly authorized, and upon
consummation of the transactions contemplated by this Agreement, will be validly
issued, fully paid and non-assessable.
(b) Except for the Juniper Networks, Inc. Amended and Restated
1999 Stock Plan, the Juniper Networks, Inc. 2000 Nonstatutory Stock Option Plan,
the Juniper Networks 1999 Employee Stock Purchase Plan, the Micro Magic Inc.
1995 Stock Option Plan, the Micro Magic Inc. 2000 Stock Option Plan, the Pacific
Broadband Communications, Inc. 2000 Stock Incentive Plan and the Layer 5 1999
Stock Incentive Plan (the "Parent Plans"), Parent has never adopted or
maintained any stock option plan or other plan providing for equity compensation
of any person. Parent has reserved 103,635,226 shares of Parent Common Stock for
issuance to employees and directors of, and consultants to, Parent upon the
exercise of options granted under the Parent Plans of which 31,349,990 shares
are issuable, as of May 15, 2002, upon the exercise of outstanding, unexercised
options granted under the Parent Plans.
4.6 Broker's and Finders' Fees. Except for Goldman, Sachs & Co., neither
Parent nor Sub has incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any transaction contemplated
hereby.
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4.7 SEC Documents; Parent Financial Statements.
(a) A true and complete copy of each annual, quarterly and other
report, registration statement, prospectus, form, report, definitive proxy
statement, schedule and other document required to be filed by Parent under the
Securities Act or the Exchange Act, as the case may be (collectively, the
"Parent SEC Documents") is available on the Web site maintained by the
Securities and Exchange Commission (the "SEC") at http://www.sec.gov. Parent has
filed in a timely manner each annual, quarterly and other report, registration
statement, prospectus, form, report, definitive proxy statement, schedule and
other document required to be filed by it under the Securities Act or the
Exchange Act, as the case may be. As of their respective filing dates, the
Parent SEC Documents complied in all material respects with the requirements of
the Securities Act and the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Parent SEC
Documents, and none of the Parent SEC Documents contained on their filing dates
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, except to
the extent corrected by a subsequently filed Parent SEC Document.
(b) The financial statements of Parent included in the Parent
SEC Documents (the "Parent Financial Statements") complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with GAAP applied on a consistent
basis throughout the periods indicated (except as may be indicated in the notes
thereto, except in the case of pro forma statements, or, in the case of
unaudited financial statements, except as permitted under Form 10-Q under the
Exchange Act). The Parent Financial Statements presented fairly the Parent's
consolidated financial condition and operating results as of the dates and
during the periods indicated therein (subject to, in the case of unaudited
statements, normal and recurring year-end audit adjustments).
4.8 No Changes. Since the end of the period covered by Parent's
unaudited consolidated balance sheet as of March 31, 2002, except as
specifically permitted by any other provision of this Agreement, there has not
been any Parent Material Adverse Effect.
4.9 Sufficient Funds. As of the date hereof, Parent has sufficient funds
and will have at the Effective Time sufficient immediately available funds and
sufficient authorized but unissued shares or treasury shares of Parent Common
Stock to pay the Merger Consideration upon consummation of the Merger.
4.10 Parent Stockholder Approval. None of the Merger, the issuance of
shares of Parent Common Stock comprising the Stock Consideration, nor the
transactions contemplated by this Agreement, shall trigger any requirement for a
vote by the stockholders of Parent.
4.11 Litigation. There is no material action, suit, claim,
investigation, inquiry or proceeding of any nature pending, or to Parent's
Knowledge, threatened, by or before any Governmental Entity, against Parent, its
properties or any of its officers or directors, which would
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prevent or materially delay consummation of the Merger or would otherwise
prevent or materially delay Parent from performing its obligations under this
Agreement.
4.12 Employment Arrangements. As of the date hereof, Section 4.12 of the
Parent Disclosure Schedule sets forth all agreements or arrangements entered
into by Parent (or by the Surviving Corporation at Parent's request) and any of
the Company's employees.
ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 Conduct of Business by the Company Pending the Merger. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, except for specific actions
required to be taken pursuant to this Agreement or except to the extent that
Parent shall otherwise consent in writing, the Company agrees to conduct its
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, to pay the debts and Taxes of the Company when
due, to pay or perform other obligations when due, and, to the extent consistent
with such business, to preserve intact the Company's present business
organizations, keep available the services of the Company's present officers and
key employees and preserve the Company's relationships with customers,
suppliers, distributors, licensors, licensees, and others having business
dealings with it, all with the goal of preserving unimpaired the Company's
goodwill and ongoing businesses at the Effective Time. The Company and the
Siemens shall promptly notify Parent of any event or occurrence or emergency not
in the ordinary course of business of the Company and any material event
involving the Company. In addition to the foregoing, except as set forth in
Section 5.1 in the Company Disclosure Schedule or except for specific actions
required to be taken pursuant to this Agreement or pursuant to the Voice
Transaction, the Company shall not and shall not permit any Company Subsidiary
to, during the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, do any of
the following, without the prior written consent of Parent:
(a) make any capital expenditures or enter into any capital
expenditure commitment exceeding $200,000 individually or an aggregate amount
equal to the amount of capital expenditures for any quarter set forth in the
Company's budget for such quarter as provided to Parent;
(b)(i) sell, license or transfer to any person or entity any
rights to any Company Intellectual Property or enter into any agreement with
respect to any Company Intellectual Property with any person or entity, (ii) buy
or license any Intellectual Property or enter into any agreement with respect to
the Intellectual Property of any person or entity or (iii) enter into any
agreement with respect to the development of any Intellectual Property with a
third party, other than, in each case, in the ordinary course of business
consistent with past practice;
(c) enter into any new agreement that would constitute a
Material Contract of the type described in Section 3.13(a)(viii) or amend any
Material Contract of the type described in Section 3.13(a)(viii);
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(d) amend or otherwise modify (or agree to do so) in any
material respect the terms of, any of the Material Contracts;
(e) commence or settle any litigation;
(f) declare, set aside, or pay any dividends on or make any
other distributions (whether in cash, stock or property) in respect of any
Company Common Stock or capital stock of a Company Subsidiary, or split, combine
or reclassify any Company Common Stock or capital stock of a Company Subsidiary
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of Company Common Stock or capital stock
of a Company Subsidiary, or repurchase, redeem or otherwise acquire, directly or
indirectly, any shares of Company Common Stock (other than shares of Company
Restricted Stock pursuant to repurchase obligations set forth in the contract
between the Company and such holder of Company Restricted Stock) or capital
stock of a Company Subsidiary (or options, warrants or other rights exercisable
therefor) except for (i) the issuance of Company Common Stock upon the
conversion of the Siemens Note, (ii) payment of cash dividends to Stockholders
or (iii) in accordance with the agreements evidencing Company Options;
(g) issue, grant, deliver or sell or authorize or propose the
issuance, grant, delivery or sale of, or purchase or propose the purchase of,
any shares of capital stock of the Company or any Company Subsidiary or any
securities convertible into, or subscriptions, rights, warrants or options to
acquire, or other agreements or commitments of any character obligating it to
issue or purchase any such shares or other convertible securities, except for
(i) the issuance of Company Common Stock upon the conversion of the Siemens Note
or (ii) the exercise of outstanding Company Options;
(h) cause or permit any amendments to its certificate of
incorporation, bylaws or other organizational documents of the Company or any
Company Subsidiary;
(i) acquire or agree to acquire by merging or consolidating
with, or by purchasing any assets or equity securities 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 which are material, individually or in the aggregate, to the
Company's business;
(j) except with respect to Intellectual Property (which shall be
covered by subsection (b) above), sell, lease, license or otherwise dispose of
any of its properties or assets, including without limitation the sale of any
accounts receivable of the Company, except in the ordinary course of business
and consistent with past practices;
(k) incur any indebtedness for borrowed money or guarantee any
indebtedness for borrowed money or issue or sell any debt securities or
guarantee any debt securities of others, except pursuant to the Siemens Note;
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(l) grant any loans to others or purchase debt securities of
others or amend the terms of any outstanding loan agreement except for expense
advances made to employees in the ordinary course of business;
(m) grant any severance or termination pay (in cash or
otherwise) to any Employee, including any officer, except payments made pursuant
to written agreements outstanding on the date hereof and disclosed in the
Company Disclosure Schedule;
(n) adopt or amend any Company Employee Plan, enter into any
employment contract, pay or agree to pay any special bonus, special remuneration
or benefit to any director or Employee, or increase the salaries, wage rates, or
other compensation of its Employees (including, without limitation, any
extension of the post-termination exercise period of any Company Option) except
for (i) payments made pursuant to written agreements outstanding on the date
hereof or (ii) increases in salaries related to employee quarterly reviews
conducted in the ordinary course of business;
(o) waive or release any right or claim of the Company or any
Company Subsidiary or revalue for accounting purposes any of the Company's
assets, including without limitation writing down the value of inventory or
writing off notes or accounts receivable except (i) in the ordinary course of
business or (ii) as required by GAAP or the Company's accounting policies;
(p) pay, discharge or satisfy, in an amount in excess of
$100,000 in any one case any Liability, other than (A) the payment, discharge or
satisfaction in the ordinary course of business of any Liability reflected or
reserved against in the Interim Period Financials or (B) the payment, discharge
or satisfaction of the Siemens Note;
(q)(i) make or change any material election in respect of Taxes,
(ii) adopt or change any accounting method in respect of Taxes, (iii) enter into
any closing agreement, settle any claim or assessment in respect of Taxes, or
(iv) consent to any extension or waiver of the limitation period applicable to
any claim or assessment in respect of Taxes; provided, however, the preceding
subclauses (iii) and (iv) shall apply only to a material amount of Taxes to the
extent that Siemens Corporation has provided an indemnity to the Parent
Indemnified Parties pursuant to Section 9.1(a) of this Agreement;
(r) enter into any strategic alliance or joint marketing
arrangement or agreement;
(s) other than the acceleration specifically permitted by
Section 8(e) of the Plan or any award agreement under the Plan, take any action
to accelerate the vesting schedule of any of the outstanding Company Options or
Company Common Stock;
(t) hire any Employees;
(u) change any accounting methods or policies (including any
change in depreciation or amortization policies or rates) other than as required
by GAAP;
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(v) take any action that would or would reasonably be expected
to prevent, impair or materially delay the ability of Parent, the Company or
Siemens to consummate the transactions contemplated by this Agreement; or
(w) take, or agree in writing or otherwise to take, any of the
actions described in Sections 5.1(a) through (v) hereof, or any other action
that would prevent the Company from performing, or cause the Company not to
perform, its covenants hereunder.
5.2 Conduct of Business by Parent Pending the Merger. Except as
specifically permitted by any other provision of this Agreement, Parent shall
not, and shall not permit any of its subsidiaries to, during the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Effective Time, do any of the following without the prior
written consent of the Company and Siemens:
(a) cause or permit any amendments to the certificate of
incorporation or bylaws of Parent in a manner that adversely affects the rights
of holders of Parent Common Stock (including holders of the Parent Common Stock
issuable in the Merger);
(b) take any action that would or would reasonably be expected
to prevent, impair or materially delay the ability of Parent, the Company or
Siemens to consummate the transactions contemplated by this Agreement; or
(c) authorize or enter into any agreement or otherwise make any
commitment to do any of the foregoing.
5.3 Conduct of Business by Siemens Pending the Merger. During the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, except as specifically
permitted by any other provision of this Agreement, Siemens shall not, and shall
not cause any of its subsidiaries (including the Company and the Company
Subsidiaries) to, without the prior written consent of Parent, take any action
that would or would reasonably be expected to prevent, impair or materially
delay the ability of Parent, the Company or Siemens to consummate the
transactions contemplated by this Agreement.
5.4 No Solicitation. Until the earlier of (i) the Effective Time, or
(ii) the date of termination of this Agreement pursuant to the provisions of
Section 10.1 hereof, other than pursuant to the terms set forth in the Voice
Transfer Agreements, neither the Company nor Siemens shall (nor shall the
Company nor Siemens permit, as applicable, any of their respective officers,
directors, agents, representatives or affiliates to), directly or indirectly,
take any of the following actions with any party other than Parent and its
designees: (a) solicit, encourage, initiate or participate in any inquiry,
negotiations or discussions, or enter into any agreement, with respect to any
Acquisition Proposal (as defined below), (b) disclose any information not
customarily disclosed to any person concerning the Company's business,
technologies or properties, or afford to any person or entity access to its
properties, technologies, books or records, not customarily afforded such
access, (c) assist or cooperate with any person to make any Acquisition
Proposal, (d) enter into any agreement with any person providing for the
acquisition of the Company, whether by merger, purchase of assets, license,
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tender offer or otherwise or (e) make or authorize any statement, recommendation
or solicitation in support of any Acquisition Proposal. In the event that the
Company, Siemens, or any of the Company's affiliates shall receive, prior to the
Effective Time or the termination of this Agreement in accordance with Section
10.1 hereof, any offer, proposal, or request, directly or indirectly, of the
type referenced in clause (a), (c), or (d) above, or any request for disclosure
or access as referenced in clause (b) above, the Company or Siemens, as
applicable, shall promptly, and in any event within one (1) business day, notify
Parent thereof, including information as to the identity of the offeror or the
party making any such offer or proposal and the specific terms of such
Acquisition Proposal, (including a written copy of such Acquisition Proposal)
and such other information related thereto as Parent may reasonably request. The
Company and Siemens, as applicable, shall immediately cease and cause to be
terminated any contacts, negotiations or discussions with third parties relating
to any Acquisition Proposal and shall cause to be returned to the Company any
confidential information regarding the Company received by any such third
parties in such contacts, negotiations or discussions. The parties hereto agree
that irreparable damage would occur in the event that the provisions of this
Section 5.4 were not performed in accordance with their specific terms or were
otherwise breached. The parties hereto agree that the covenant contained in this
Section 5.4 is for the benefit of the Company and Parent (in the case of
covenants of Siemens) and Parent (in the case of covenants of the Company). It
is accordingly agreed by the parties hereto that Parent shall be entitled to an
immediate injunction or injunctions, without the necessity of proving the
inadequacy of money damages as a remedy and without the necessity of posting any
bond or other security, to prevent breaches of the provisions of this Section
5.4 and to enforce specifically the terms and provisions hereof in any court of
the United States or any state having jurisdiction, this being in addition to
any other remedy to which Parent may be entitled at law or in equity. For
purposes of this Agreement, "Acquisition Proposal" shall mean (i) any proposal
or offer from any person relating to any direct or indirect acquisition of (A)
all or a substantial part of the assets of the Company or of any Company
Subsidiary or (B) over 5% of the then outstanding shares of Company Common
Stock; (ii) any merger, consolidation, share exchange, business combination,
reorganization or other similar transaction involving the Company or any Company
Subsidiary, other than, in each case, the transactions contemplated by this
Agreement or pursuant to the terms set forth in the Voice Transfer Agreements.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Permit Application or Registration Statement; Stockholder Approval.
(a) As promptly as practicable after the execution of this
Agreement, Parent shall file with the Commissioner the Permit Application (as
defined herein) and a request for the Hearing (as defined herein). Each of
Siemens and the Company shall provide promptly to Parent such information
concerning its business and financial statements and affairs as, in the
reasonable judgment of Parent or its counsel, may be required for inclusion in
the Permit Application, or any amendments thereto, and to cause its counsel and
auditors to cooperate with Parent's counsel and auditors in the preparation of
the Permit Application. As soon as permitted by the Commissioner,
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the Company shall mail the Hearing Notice (as defined herein) to all
Stockholders entitled to receive such notice under the applicable provisions of
the California Corporations Code and the regulations promulgated thereunder
("California Law"). Each of Parent and the Company shall notify the other
promptly of the receipt of any comments from the Commissioner or its staff and
of any request by the Commissioner or its staff or any other government
officials for amendments or supplements to any of the documents filed with the
Permit Application or any other filing or for additional information and shall
supply the other with copies of all correspondence between either party or any
of its representatives, on the one hand, and the Commissioner or its staff (or
any other governmental officials) on the other hand, with respect to the filing.
Each of Parent, Siemens and the Company shall use its reasonable best efforts to
respond to any comments of the Commissioner or its staff and to have the
Issuance Permit issued as promptly as practicable after the filing of the Permit
Application.
(b) As promptly as practicable after the execution of this
Agreement, the Company shall prepare, with the cooperation of Parent, the
Information Statement. Whenever any event occurs that is required to be set
forth in an amendment or supplement to the Hearing Notice, Permit Application or
Information Statement or any other filing, the Company shall promptly notify
Parent of such occurrence and cooperate in filing with the Commissioner or its
staff or any other government officials, and/or mailing to Stockholders, such
amendment or supplement. The Information Statement constitutes a disclosure
document for the offer and issuance of the shares of Parent Common Stock to be
received by the Stockholders in the Merger. Each of Parent and the Company shall
use its reasonable best efforts to cause the Information Statement to comply
with the requirements of applicable federal and state securities Laws. Each of
Parent and the Company agrees to provide promptly to the other such information
concerning its business and financial statements and affairs as, in the
reasonable judgment of the providing party or its counsel, may be required or
appropriate for inclusion in the Information Statement, or in any amendments or
supplements thereto, and to cause its counsel and auditors to cooperate with the
other's counsel and auditors in the preparation of the Information Statement.
The Company shall promptly notify Parent, and Parent shall promptly notify the
Company, in writing if at any time prior to the Effective Time either Parent or
the Company shall obtain knowledge of any facts that might make it necessary or
appropriate to amend or supplement the Information Statement in order to make
the statements contained or incorporated by reference therein not misleading or
in order that the Information Statement comply with applicable law.
6.2 Registration Statement; Other Filings. In the event that the
Commissioner or its staff denies the request for the Hearing, or the Hearing
does not result in the issuance of an Issuance Permit by the Commissioner,
Parent shall, as promptly as practicable after Parent receives notice from the
Commissioner that an Issuance Permit will not be issued as a result of the
Permit Application (and in any event within 30 days after such notice), prepare
and file with the SEC the Registration Statement. Parent will use its reasonable
best efforts to have the Registration Statement declared effective under the
Securities Act as promptly as practicable after filing with the SEC. As promptly
as practicable after Parent receives notice from the Commissioner that an
Issuance Permit will not be issued as a result of the Hearing, the Company and
Parent will prepare and file any other filings required to be filed by it under
the Exchange Act, the Securities Act, or any other federal,
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foreign or blue sky or related Laws relating to the Merger and the transactions
contemplated by this Agreement (each an "Other Filing"). Parent shall notify the
Company promptly upon the receipt of any comments from the SEC or its staff or
any other government officials and of any request by the SEC or its staff or any
other government officials for amendments or supplements to the Registration
Statement or any Other Filing related to the transactions contemplated by this
Agreement or for additional information, and will supply the Company with copies
of all correspondence between Parent or any of its representatives, on the one
hand, and the SEC or its staff or any other government officials, on the other
hand, with respect to the Registration Statement, the Merger or such Other
Filing. Whenever any event occurs that is required to be set forth in an
amendment or supplement to the Registration Statement or any Other Filing,
Parent will promptly notify the Company of such occurrence and cooperate in
filing with the SEC or its staff or any other government officials, and/or
mailing to Stockholders of the Company, such amendment or supplement.
6.3 Stockholders Meeting; Information Supplied.
(a) Promptly after the issuance of the Issuance Permit by the
Commissioner (or, in the event that the filing of a Registration Statement is
required under Section 6.2, promptly after the effectiveness of the Registration
Statement), the Company shall take all action necessary in accordance with
Delaware Law and its certificate of incorporation and bylaws to convene the
Stockholders Meeting (or obtain a written consent in lieu thereof) for the
purpose of voting on the adoption of this Agreement and approval of the Merger,
including without limitation mailing the Information Statement to the
Stockholders. The Company shall use its reasonable best efforts to obtain the
consent of the Stockholders sufficient to adopt this Agreement and approve the
Merger and to enable the Closing to occur as promptly as practicable following
the date hereof. The Company shall give the Stockholders sufficient notice such
that no Stockholder will be able to exercise appraisal rights if such
Stockholder has not perfected such appraisal rights prior to Closing, pursuant
to Section 262 of Delaware Law.
(b) All information supplied by Parent and the Company for
inclusion in the Permit Application, the Hearing Notice and the Information
Statement shall not, at the time the Permit Application is filed with the
Commissioner, at the time of the mailing of the Hearing Notice, at the time of
the Hearing or at the time the Issuance Permit is issued, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. All information supplied by Parent and the Company for inclusion in
the Registration Statement, if Parent files a Registration Statement pursuant to
Section 6.2, shall not, at the time the Registration Statement is filed with the
SEC or at the time it becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading. Notwithstanding anything in this Section 6.3 to the contrary, (i)
Parent makes no representations or warranties regarding information furnished by
or related to the Company and (ii) the Company makes no representations or
warranties regarding information furnished by or related to Parent.
6.4 Access to Information.
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(a) The Company shall afford Parent and its accountants, counsel
and other representatives, reasonable access during the period from the date
hereof and prior to the Effective Time to the Company's officers, employees,
agents, properties, offices and books and records of the Company and each
Company Subsidiary and shall furnish Parent with such financial, operating and
other data and information as Parent, through its officers, employees or agents,
may reasonably request. No information or knowledge obtained in any
investigation pursuant to this Section 6.4(a) shall affect or be deemed to
modify any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger in accordance with the terms
and provisions hereof.
(b) Parent shall afford the Company and Siemens and their
respective accountants, counsel and other representatives, reasonable access,
during the period from the date hereof and prior to the Effective Time, to the
officers, employees, agents, properties, offices and books and records of
Parent, and shall furnish the Company and Siemens with such financial, operating
and other data and information as the Company or Siemens, through their
respective officers, employees or agents, may reasonably request consistent with
the scope of access provided by Parent to the Company and Siemens prior to the
date hereof in connection with the transactions contemplated hereby. No
information or knowledge obtained in any investigation pursuant to this Section
6.4(b) shall affect or be deemed to modify any representation or warranty
contained herein or the conditions to the obligations of the parties to
consummate the Merger in accordance with the terms and provisions hereof.
6.5 Confidentiality. Each of the parties hereto hereby agrees that the
information obtained in any investigation pursuant to Section 6.4 hereof, or
pursuant to the negotiation and execution of this Agreement or the effectuation
of the transactions contemplated hereby, shall be governed by the terms of the
Confidentiality and Non-Disclosure Agreement effective as of March 12, 2002 (the
"Confidential Disclosure Agreement") between Siemens and Parent.
6.6 Expenses. Whether or not the Merger is consummated, all fees and
expenses incurred in connection with the Merger including, without limitation,
all legal, accounting, financial advisory, consulting and all other fees and
expenses of third parties ("Third Party Expenses") incurred by a party in
connection with the negotiation and effectuation of the terms and conditions of
this Agreement and the transactions contemplated hereby, shall be the obligation
of the respective party incurring such fees and expenses; provided, however,
that, if the Merger is consummated, Parent agrees to pay all Third Party
Expenses incurred by the Company (other than (i) any fees and expenses of Credit
Suisse First Boston Corporation relating to the Broadsoft transaction and (ii)
any Third Party Expenses incurred by the Company in connection with the Voice
Transaction, all of which shall be paid by the Company prior to the Closing) in
connection with the transactions contemplated hereby (the "Company Expenses").
6.7 Public Disclosure. Neither Parent, on the one hand, nor the Company
and Siemens, on the other hand, nor any of their respective agents, shall issue
any press release or make any other public disclosure relating to this Agreement
or the transactions contemplated hereby without the consent of the other party
except as such press release or other public disclosure may be required by law
(including federal and state securities laws) or, by the rules or regulations of
the National
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Association of Securities Dealers, Inc. or any United States or foreign
securities exchange, in which case the party required to make the release shall
consult with the other parties hereto prior to making such public disclosure to
the extent practicable.
6.8 FIRPTA Compliance. On the Closing Date, Siemens shall deliver to
Parent a properly executed statement in a form reasonably acceptable to Parent
for purposes of satisfying Parent's obligations under Treasury Regulation
Section 1.1445-2(b).
6.9 Reasonable Best Efforts. Subject to the terms and conditions
provided in this Agreement, each of the parties hereto shall use reasonable best
efforts to take promptly, or cause to be taken, all actions, and to do promptly,
or cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated hereby, to obtain all necessary
waivers, consents and approvals and to effect all necessary registrations and
filings, including to obtain early termination of the waiting period under the
HSR Act, and to avoid the entry or remove any injunctions, temporary restraining
orders or other impediments or delays, legal or otherwise, in order to
consummate and make effective the transactions contemplated by this Agreement
for the purpose of securing to the parties hereto the benefits contemplated by
this Agreement; provided, however, that Parent shall not be required to agree to
any divestiture by Parent or the Company or any of Parent's subsidiaries or
affiliates, of shares of capital stock or of any business, assets or property of
Parent or its subsidiaries or affiliates, or of the Company, its affiliates, or
the imposition of any limitation on the ability of any of them to conduct their
businesses or to own or exercise control of such assets, properties and stock.
In addition, each of the parties hereto agrees, and agrees to instruct its
respective counsel, to cooperate with each other to facilitate and to obtain all
necessary waivers, consents and approvals, including but not limited to the
expiration or termination of the waiting period under the HSR Act, at the
earliest practicable date. Notwithstanding anything herein to the contrary, no
party hereto nor any of their representatives will communicate with any
governmental agency (except on insubstantial procedural issues) without giving
the other parties a reasonable opportunity to participate in such communication
to the extent permitted by the government agency.
6.10 Notification of Certain Matters. The Company or Siemens, on one
hand, and Parent, on the other hand, shall give prompt notice to the other party
of: (i) the occurrence or non-occurrence of any event, the occurrence or
non-occurrence of which is likely to cause any representation or warranty of
such party, contained in this Agreement to be untrue or inaccurate at or prior
to the Effective Time such that the condition in Section 7.2(a) or Section
7.3(a), as the case may be, would not be satisfied, and (ii) any failure of such
party to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder such that the condition in Section
7.2(a) or Section 7.3(a), as the case may be, would not be satisfied; provided,
however, that the delivery of any notice pursuant to this Section 6.10 shall not
(a) limit or otherwise affect any remedies available to the party receiving such
notice or (b) constitute an acknowledgment or admission of a breach of this
Agreement. No disclosure by the Company, Siemens or Parent pursuant to this
Section 6.10, however, shall be deemed to amend or supplement the Company
Disclosure Schedule or the Parent Disclosure Schedule, as applicable, prevent or
cure any misrepresentations, breach of warranty or breach of covenant.
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6.11 S-8 Registration. Not later than thirty (30) days after the Closing
Date, Parent agrees to file (to the extent available) with the Securities and
Exchange Commission a registration statement on Form S-8 registering that number
of shares of Parent Common Stock equal to the number of shares of Parent Common
Stock issuable upon the exercise of all Company Options assumed by Parent with
Parent Options pursuant to Section 1.6(a) hereof.
6.12 Affiliate Agreements. Set forth in Section 6.12 of the Company
Disclosure Schedule is a list of names of those persons who, in the Company's
reasonable judgment, are or may be "affiliates" of the Company within the
meaning of Rule 145 (each such person a "Company Affiliate") promulgated under
the Securities Act ("Rule 145"). The Company shall provide Parent such
information and documents as Parent shall reasonably request for purposes of
reviewing such list. The Company shall use reasonable best efforts to cause (i)
each Company Affiliate who is also a Key Employee to execute and deliver an
Affiliate Agreement substantially in the form attached hereto as Exhibit E (an
"Affiliate Agreement") concurrently with the execution of this Agreement and
(ii) each Company Affiliate who is not also a Key Employee to execute and
deliver an Affiliate Agreement prior to the Closing. The Company shall use
reasonable best efforts to cause each person who becomes a Company Affiliate
after the date hereof to execute and deliver an Affiliate Agreement promptly
after becoming a Company Affiliate.
6.13 Nasdaq Listing. Parent agrees to use reasonable best efforts to
authorize for listing on Nasdaq upon the Effective Time the shares of Parent
Common Stock issuable, and those required to be reserved for issuance, in
connection with the Merger, upon official notice of issuance.
6.14 Treatment of 401(k) Plans.
(a) Castle Networks, Inc. 401(k) Plan. The Company and Siemens
or its ERISA Affiliates shall take all actions necessary or appropriate so that
effective no later than immediately prior to the Effective Time: (i) Siemens or
any of its ERISA Affiliates (other than the Company and the Company
Subsidiaries) shall become the sole sponsor of the Castle Networks, Inc. 401(k)
Plan and (ii) the Company shall take, or cause to be taken, all actions
necessary to permit the transfer of the account balances relating to those
employees of the Company and the Company Subsidiaries who are transferring
employment to Parent or its affiliates at the Effective Time to the Unisphere
Networks, Inc. 401(k) Plan. On and after the Effective Time, Parent, the Company
and their affiliates shall have no liability with respect to the Castle
Networks, Inc. 401(k) Plan.
(b) Argon and Unisphere 401(k) Plans. Prior to the Effective
Time, Siemens and the Company shall take, or cause to be taken, all actions
necessary to transfer the account balances under the Argon Networks, Inc. 401(k)
Plan and the Unisphere Networks, Inc. 401(k) Plan relating to those employees of
the Company and the Company Subsidiaries who are transferring employment within
the Siemens controlled group prior to the Effective Time to another defined
contribution plan sponsored by a member of the Siemens controlled group. The
Company shall retain the sole sponsorship of the Argon Networks, Inc. 401(k)
Plan and the Unisphere Networks, Inc. 401(k) Plan after the Effective Time. On
and after the Effective Time, Siemens and its affiliates shall have no liability
with respect to such plans (except inasmuch as Losses (as defined herein) result
from a breach of representations and warranties in Article III hereof).
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(c) Cooperation. Parent shall, and shall cause its affiliates
to, cooperate in the performance of all actions deemed necessary or appropriate
to effect this Section 6.14, including, without limitation, assistance with the
preparation of any government filings, sharing of records and assistance in
performing any required non-discrimination testing.
6.15 Resignation of Officers and Directors. The Company shall use its
reasonable best efforts to obtain the resignations of such officers and
directors of the Company Subsidiaries as Parent may request, effective as of the
Effective Time. 6.16 Regulatory Filings. As soon as may be reasonably
practicable, to the extent applicable, Siemens AG, a corporation organized under
the laws of the Federal Republic of Germany and the "ultimate parent entity" (as
defined in the HSR Act) of Siemens ("Siemens AG"), and Parent each shall file,
and Siemens AG shall use reasonable best efforts to cause any applicable
Stockholder to file, with the United States Federal Trade Commission (the "FTC")
and the Antitrust Division of the United States Department of Justice ("DOJ")
Notification and Report Forms relating to the transactions contemplated herein
as required by the HSR Act as well as comparable pre-merger notification forms
required by the merger notification or control laws and regulations of any
applicable jurisdiction that Parent and Siemens have reasonably determined to be
required. The Company and Parent each shall, and Siemens shall use reasonable
best efforts to cause the Company to, promptly (a) supply the others with any
information which reasonably may be required in order to effectuate such filings
and (b) supply any additional information which reasonably may be required by
the FTC, the DOJ or the competition or merger control authorities of any other
jurisdiction and which the parties may reasonably deem appropriate; provided,
however, that Parent shall not be required to agree to any divestiture by Parent
or the Company or any of Parent's affiliates of share capital stock or of any
business, assets or property of Parent or its affiliates or of the Company or
its affiliates, or the imposition of any limitation on the ability of any of
them to conduct their businesses or to own or exercise control of such assets,
property and stock.
6.17 Termination of Warrants. The Company shall use its best efforts to
terminate all outstanding unexercised Company Warrants, if any, as of
immediately prior to the Effective Time.
6.18 Spreadsheet. The Company shall prepare a spreadsheet (the
"Spreadsheet") in form and substance reasonably acceptable to Parent, which
shall separately list, as of the Closing, (i) all Stockholders, the number of
shares of Company Capital Stock held by such persons, the Cash Exchange Ratio
and Stock Exchange Ratio applicable to each holder and the amount of cash and
the number of shares of Parent Common Stock to be issued to each holder and (ii)
all holders of Company Options and Company Warrants, if any, and the number of
shares of Company Capital Stock underlying each such Company Option and Company
Warrants, if any.
6.19 Voice Transfer Agreements. Neither Siemens nor the Company shall
take any action to amend the Voice Transfer Agreements without the prior written
consent of Parent.
6.20 Cessation of Participation in Benefit Plans. Prior to the Closing,
the Company shall cause all employees who will not be employees of an ERISA
Affiliate after the Closing to cease participation in all "employee benefit
plans," within the meaning of Section 3(3) of ERISA, policies
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and arrangements that are sponsored by the Company or any Company Subsidiaries,
including, but not limited to, any plans that will be sponsored by the Company
or any Company Subsidiaries following the Closing.
6.21 Termination of Indebtedness. The Company and Siemens shall cause
all indebtedness for borrowed money of the Company and all indebtedness for
borrowed money owed by any Stockholder to the Company to be cancelled, repaid or
converted into Company Capital Stock as of immediately prior to the Effective
Time. Immediately prior to the Effective Time, the Company shall (i) first
utilize any cash to reduce the aggregate principal amount and accrued interest
outstanding on the Siemens Note and (ii) convert the remaining aggregate
principal amount and accrued interest outstanding on the Siemens Note into
Company Common Stock. The number of shares of Company Common Stock to be issued
upon conversion of the Siemens Note shall equal the aggregate principal amount
and accrued interest outstanding on the Siemens Note immediately prior to the
Effective Time divided by the fair market value per share of the Company Common
Stock as of such date (based on the Merger Consideration).
6.22 Intellectual Property Matters.
(a) Siemens hereby agrees on behalf of itself and its applicable
affiliates to comply with the applicable provisions of the pre-existing
cross-license agreements identified in Section 6.22(a) of the Company Disclosure
Schedule (the "Cross-Licenses") to provide Parent and its affiliates, Sub,
Company and Company Subsidiaries with continuing benefits and rights from such
Cross-Licenses after the Closing to the extent available under such
Cross-Licenses. Siemens shall notify Parent of all obligations that a
Cross-License may require Parent or the Company to undertake before Parent or
Company receives the continuing benefits or rights under such Cross-License.
Parent acknowledges that Siemens and its affiliates shall have no responsibility
for Parent and its affiliates, Sub, and, following the Closing, the Company and
Company Subsidiaries' failure to meet any of their applicable obligations under
such Cross-Licenses.
(b) Siemens hereby agrees that it will not, nor will its
affiliates, assert any infringement or misappropriation claims against Parent,
Sub, Company and Company Subsidiaries and their affiliates to the extent that
Parent, Sub, Company and Company Subsidiaries and their affiliates use any
Intellectual Property owned by Siemens and its affiliates (other than the
trademarks, service marks and other source identifiers) that exists as of the
Closing in connection with the manufacture, use and sale of the product and
service lines in the Business that is conducted as of the Closing. Siemens
hereby agrees that it will not, nor will its affiliates, assert any infringement
or misappropriation claims against the customers of Parent, Sub, Company and
Company Subsidiaries and their affiliates to the extent that such customers use
any such Intellectual Property owned by Siemens and its affiliates (other than
the trademarks, service marks and other source identifiers) that exists as of
the Closing in connection with such customers' use of such product and service
lines that are sold directly or indirectly by the Parent, Sub, Company and the
Company Subsidiaries and their affiliates in the Business that is conducted as
of the Closing. The non-assert by Siemens and its affiliates in this Section
6.22(b) is non-transferable, whether by assignment, change of control or
otherwise, by Parent, Sub, Company, Company Subsidiaries and such customers.
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(c) Parent, Sub, Company and Company Subsidiaries hereby agree
that they will not assert any infringement or misappropriation claims against
Siemens and its affiliates to the extent that Siemens and its affiliates use any
Company Intellectual Property (other than the trademarks, service marks and
other source identifiers) that exists as of the Closing in connection with the
product and service lines in the businesses of Siemens and its affiliates that
are conducted as of the Closing, other than the product and service lines of the
Business conducted as of the Closing. Parent, Sub, Company and Company
Subsidiaries hereby agree that they will not assert any infringement or
misappropriation claims against the customers of Siemens and its affiliates to
the extent that such customers use any Company Intellectual Property (other than
the trademarks, service marks and other source identifiers) that exists as of
the Closing in connection with product or service lines sold directly or
indirectly by Siemens and its affiliates in the businesses of Siemens and its
affiliates that are conducted as of the Closing, other than the product and
service lines of the Business conducted as of the Closing. The non-assert by
Parent, Sub, Company and Company Subsidiaries in this Section 6.22(c) is
non-transferable, whether by assignment, change of control or otherwise, by
Siemens and its affiliates and such customers.
(d) During the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Closing, in the event that Siemens and its affiliates enter into any new patent
cross-licenses with a third party that may impact the Patents included in the
Company Registered Intellectual Property, subject to any confidentiality or
other restrictions, Siemens shall notify Parent of the identity of such third
party and reasonably describe any impact on such Patents.
6.23 License.
(a) To the extent any Intellectual Property owned by Company and
Company Subsidiaries is transferred to Siemens or its affiliates, including
without limitation Siemens ICN, Castle Networks, Inc. and Argon Networks, Inc.,
pursuant to the Voice Transaction, Siemens on behalf of itself and its
applicable affiliates hereby grants to Parent and its subsidiaries, Sub, Company
and Company Subsidiaries a sublicensable, transferable non-exclusive, perpetual,
royalty-free, irrevocable license to such transferred Intellectual Property only
to the extent used by Company and Company Subsidiaries in the Business that is
conducted as of the Closing. To the extent any Intellectual Property licensed by
Company and Company Subsidiaries is transferred to Siemens or its affiliates,
including without limitation Siemens ICN, Argon Networks, Inc. and Castle
Networks, Inc., pursuant to the Voice Transaction, Siemens on behalf of itself
and its applicable affiliates hereby grants to Parent and its subsidiaries, Sub,
Company and Company Subsidiaries, to the extent allowed under and subject to the
terms of the applicable underlying license agreement governing such transferred
Intellectual Property, a sublicensable, transferable, non-exclusive, perpetual,
royalty-free, irrevocable license to such Intellectual Property only to the
extent used by Company and Company Subsidiaries in the Business that is
conducted as of the Closing.
(b) Parent, Sub, the Company and the Company Subsidiaries hereby
grant to Siemens and its affiliates a sublicensable, transferable,
non-exclusive, perpetual, royalty-free, irrevocable license to the Company
Intellectual Property only to the extent such Company Intellectual Property is
required to be used by the Voice Business that is conducted as of the Closing.
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6.24 Equitable Remedy. Each of Siemens and Parent agrees that it would
be impossible or inadequate to measure and calculate the other party's damages
from any breach of the covenants set forth in Section 6.22 and Section 6.23.
Accordingly, each of Siemens and Parent agrees that if it breaches any provision
of Section 6.22 or Section 6.23, the other party will have available, in
addition to any right or remedy otherwise available, the right to obtain an
injunction from a court of competent jurisdiction restraining such breach or
threatened breach and to specific performance of any such provision of this
Agreement. Each of Siemens and Parent further agrees that no bond or other
security shall be required in obtaining such equitable relief, nor will proof of
actual damages be required for such equitable relief.
6.25 Siemens Retained Marks. As between the parties, Parent and Sub
hereby acknowledge that all right, title and interest in and to the name
"Siemens," together with any mark, logo or name incorporating "Siemens" (the
"Siemens Retained Marks") are owned exclusively by Siemens, and that, except as
provided below, any and all right of the Company or any Company Subsidiary to
use the Siemens Retained Marks shall terminate as of the Closing and shall
immediately revert back to Siemens. Parent and Sub further acknowledge that it
has no rights whatsoever to use the Siemens Retained Marks, except as expressly
agreed to by Siemens in writing.
6.26 Company Retained Marks. As between the parties, Siemens hereby
acknowledges that all right, title and interest in and to the name "Unisphere,"
together with any mark, logo or name incorporating "Unisphere" (the "Company
Retained Marks") are owned exclusively by the Company, and that, except as
provided below, any and all right of Siemens or Siemens affiliate to use the
Company Retained Marks shall terminate as of the Closing and shall immediately
revert back to the Company. Siemens further acknowledges that it has no rights
whatsoever to use the Company Retained Marks, except as expressly agreed to by
Parent in writing.
6.27 Release of Indemnity Obligations.
(a) Set forth in Section 6.27(a) of the Company Disclosure
Schedule is (i) a list of any and all obligations of Siemens or its affiliates
(A) to guaranty the payment or performance of the Company or any Company
Subsidiary of any Liability, or (B) to indemnify the Company or any Company
Subsidiary or otherwise hold any of them harmless pursuant to any agreement or
other arrangement entered into prior to the Closing (collectively, the "Siemens
Indemnity Obligations") and (ii) a list of any and all obligations of the
Company or its affiliates (A) to guaranty the payment or performance of Siemens
of any of its affiliates of any Liability, or (B) to indemnify Siemens or any of
its affiliates or otherwise hold any of them harmless pursuant to any agreement
or other arrangement entered into prior to the Closing (collectively, the
"Company Indemnity Obligations").
(b) Parent, the Company and Siemens shall use their reasonable
best efforts to obtain, on or prior to the Closing, (i) a release and discharge
of Siemens and its affiliates (as applicable, other than the Company or any
Company Subsidiary), in form and substance satisfactory to Siemens, from the
Siemens Indemnity Obligations set forth in Section 6.27(b) of the Company
Disclosure Schedule and (ii) a release and discharge of the Company and the
Company Subsidiaries, in form and substance satisfactory to Parent, from the
Company Indemnity Obligations set forth in Section 6.27(b) of the Company
Disclosure Schedule. At the Closing, Parent shall execute and deliver to
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Siemens, for the benefit of Siemens and its affiliates, a general release and
discharge, in form and substance satisfactory to Siemens, releasing and
discharging Siemens and its affiliates (other than the Company or any Company
Subsidiary) from any Siemens Indemnity Obligation not otherwise released or
discharged as contemplated by Section 6.27(b) hereof and Parent hereby agrees to
indemnity and hold Siemens, its officers, directors, employees, affiliates and
agents harmless from any Loss (as defined herein) arising out of or resulting
from any such Siemens Indemnity Obligation. At the Closing, Siemens shall
execute and deliver to Parent, for the benefit of Parent, the Company and all
Company Subsidiaries, a general release and discharge, in form and substance
satisfactory to Parent, releasing and discharging the Company and all Company
Subsidiaries from any Company Indemnity Obligation not otherwise released or
discharged as contemplated by Section 6.27(b) hereof and Parent hereby agrees to
indemnity and hold Parent, the Company, its officers, directors, employees,
affiliates and agents harmless from any Loss arising out of or resulting from
any such Company Indemnity Obligation.
6.28 Director and Officer Indemnification.
(a) The certificate of incorporation of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification than are set forth in Article Seventh and Eighth of the
certificate of incorporation of the Company, which provisions shall not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would affect adversely the rights thereunder
of individuals who, at or prior to the Effective Time, were directors or
officers of the Company, unless such modification shall be required by law.
(b) The Surviving Corporation shall use its reasonable best
efforts to maintain in effect for six years from the Effective Time, if
available, the current directors and officers' liability insurance policies
maintained by the Company (provided that the Surviving Corporation may
substitute therefor policies of at least the same coverage containing terms and
conditions that are not materially less favorable) with respect to matters
occurring prior to the Effective Time relating to such directors of the Company
who were, as of immediately prior to the Effective Time, neither employees of
the Company nor employees of Siemens or its affiliates; provided, however, that
in no event shall the Surviving Corporation be required to expend pursuant to
this Section 6.28(b) more than an amount per year equal to 200% of the current
annual premiums paid by the Company for such insurance (which premiums the
Company represents and warrants to be $73,042 in the aggregate).
(c) In the event the Company or the Surviving Corporation or any
of their respective successors or assigns (i) consolidates with or merges into
any other person and shall not be the continuing or surviving corporation or
entity or such consolidation or merger or (ii) transfer all or substantially all
of its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company or the
Surviving Corporation, as the case may be, or at Parent's option, Parent shall
assume the obligations set forth in this Section 6.28.
6.29 Company Options. Siemens, the Company and the Company Subsidiaries
shall use their commercially reasonable best efforts to assist Parent with the
implementation and completion
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of a repricing program, mutually agreed by Parent and Siemens, for certain of
the Company Options. Parent and Siemens hereby agree that the repricing pursuant
to such repricing program shall occur prior to the Closing (but no earlier than
one (1) business day prior to the Closing) and shall have the effect of
repricing the exercise prices of the Company Options held by all Company
employees at the time of such repricing (excluding any employees of the Voice
Business) to be equal to the fair market value of the Company Common Stock at
the time of such repricing. In the event that Parent chooses to condition such
repricing upon the waiver by such employees of certain acceleration of vesting
provisions related to such Company Options (an "Exchange Repricing"), Siemens
and the Company shall cooperate with Parent to prepare an exchange offer
disclosure document to be circulated to such employees, which disclosure
document shall be subject to Parent's final approval before any such
circulation. Pursuant to Section 8.2(c) hereof, Parent hereby agrees to
indemnify and hold Siemens harmless against all Losses (as defined herein)
incurred or sustained by Siemens as a result of such Exchange Repricing
("Exchange Repricing Losses").
6.30 Preparation of Financials.
(a) When so requested by Parent (including after the Closing),
Siemens shall, and shall use its reasonable best efforts to cause its auditors
to, assist Parent in preparing any financial statements related to the Company
and the Company Subsidiaries during the period before the Closing required, or
in Parent's reasonable judgment advisable, to be included in any annual,
quarterly or other report, registration statement, prospectus, form, report,
proxy statement, schedule or other document to be filed by Parent with the SEC,
any foreign regulatory authority or stock exchange. Siemens shall use its
reasonable best efforts to cause its auditors to deliver any necessary consent
in connection with such financial statements for the purposes of such filing.
(b) When so requested by Siemens (including after the Closing),
Parent shall, and shall use its reasonable best efforts to cause its auditors
to, assist Siemens in preparing any financial statements related to the Company
and the Company Subsidiaries during the period before the Closing required, or
in Siemens' reasonable judgment advisable, to be included in any annual,
quarterly or other report, registration statement, prospectus, form, report,
proxy statement, schedule or other document to be filed by Siemens with the SEC,
each in the form required by the Securities Act or the Exchange Act or the rules
promulgated thereunder. Parent shall use its reasonable best efforts to cause
its auditors to deliver any necessary consent in connection with such financial
statements for the purposes of such filing.
6.31 New Employment Arrangements. Parent shall promptly notify Siemens
of all agreements or arrangements entered into after the date hereof by Parent
(or by the Surviving Corporation at Parent's request) and any of the Company's
employees.
6.32 Approval of Siemens AG Supervisory Board. No later than seven (7)
days after the date hereof, Siemens shall have obtained the Siemens AG Approval.
6.33 Siemens AG Assignment. In the event that Parent reasonably
determines that either or both of the agreements which were assigned to Siemens
AG and acknowledged in the consents set forth on Section 3.12(d) of the Company
Disclosure Schedules (collectively, the "Siemens AG
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Agreements") are used in the Business as of the date hereof and Parent requests
that such Siemens AG Agreements be assigned to Parent, the Company or an
affiliate thereof, Siemens shall use its reasonable best efforts to cause
Siemens AG to assign such Siemens AG Agreements (or otherwise provide the
benefits under such Siemens AG Agreements to Parent, the Company, or any
affiliate thereof) as set forth in Parent's notice, including, but not limited
to, soliciting Next Level Communications to provide consent to such assignment.
ARTICLE VII
CONDITIONS TO THE MERGER
7.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of the parties hereto to effect the Merger and the other
transactions contemplated herein shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions, any or all of which may
be waived, in whole or in part, if Siemens and Parent so agree:
(a) No Order. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and which has the effect of making the Merger illegal or
otherwise restricting, preventing or prohibiting consummation of the Merger.
(b) HSR Act. The applicable waiting periods, together with any
extensions thereof, under the HSR Act relating to the transactions contemplated
hereby shall have expired or been terminated and all foreign antitrust approvals
that Parent and Siemens jointly reasonably determine to be required to be
obtained prior to the Merger in connection with the transactions contemplated
hereby have been obtained.
(c) Permit or Registration Statement. The Commissioner shall
have issued an Issuance Permit in connection with the Hearing or the
Registration Statement shall have been declared effective under the Securities
Act and shall not be the subject of any stop order or proceedings seeking a stop
order.
(d) Approval of Siemens AG Supervisory Board. Siemens shall have
obtained the Siemens AG Approval.
(e) Nasdaq Listing. The shares of Parent Common Stock issuable
to the Stockholders in the Merger and such other shares of Parent Common Stock
reserved for issuance in connection with the Merger shall have been approved for
listing on Nasdaq, subject to official notice of issuance.
(f) Stockholder Approval. Stockholders holding a sufficient
number of shares of Company Common Stock as required under the Company's
certificate of incorporation, bylaws and Delaware Law shall have approved this
Agreement, the Merger and the transactions contemplated hereby.
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7.2 Conditions to the Obligations of Parent and Sub. The obligations of
Parent and Sub to effect the Merger and the other transactions contemplated
herein shall be subject to the satisfaction at or prior to the Effective Time of
the following conditions, any or all of which may be waived, in whole or in
part, exclusively by Parent and Sub:
(a) Representations and Warranties of the Company and Siemens.
(i) The representations and warranties of the Company and Siemens contained in
this Agreement (other than the representations and warranties set forth in
Section 3.2 (Company Capital Structure) and Section 3.4 (Authority)) shall be
true and correct on the day they were made and on and as of the Closing Date as
though such representations and warranties were made on and as of such time
(other than the representations and warranties of the Company and Siemens as of
a specified date, which shall continue to be so true and correct as of such
date) except for any such failure to be true and correct as would not,
individually or in the aggregate, have a Company Material Adverse Effect (except
that for the purposes of this section references to materiality or Company
Material Adverse Effect contained in such representations and warranties shall
be disregarded) and (ii) the representations and warranties set forth in Section
3.2 (Company Capital Structure) and Section 3.4 (Authority), which shall be true
and correct in all material respects on the day they were made and on and as of
the Closing Date (other than the representations and warranties of the Company
and Siemens as of a specified date, which shall continue to be so true and
correct as of such date).
(b) Representations and Warranties of Siemens. The
representations and warranties of Siemens contained in Article II of this
Agreement shall be true and correct in all material respects on the day they
were made and on and as of the Closing Date as though such representations and
warranties were made on and as of such time (other than the representations and
warranties of Siemens as of a specified date, which shall continue to be so true
and correct as of such date).
(c) Covenants of the Company and Siemens. The Company and
Siemens have performed in all material respects all of their respective
obligations under this Agreement to be performed by them on or prior to the
Closing and they are not in material breach of any covenant or agreement
contained in this Agreement; provided, however, that the failure of the Company
or Siemens to perform the obligations set forth in Sections 6.15 and 6.18 of
this Agreement shall not be deemed a failure of the condition set forth in this
Section 7.2(c) to be satisfied.
(d) Governmental Litigation. There shall be no action, suit,
claim, order, injunction or proceeding of any nature pending, or overtly
threatened, by a Governmental Entity against Parent or the Company, their
respective properties or any of their respective officers or directors arising
out of, or in any way connected with, the Merger or the other transactions
contemplated by the terms of this Agreement.
(e) Third Party Consents. Company shall have delivered to Parent
all consents, waivers and approvals of parties to any Contract as are required
thereunder in connection with the Merger or for any such Contract to remain in
full force and effect without limitation, modification or alteration after the
Effective Time except for any such consents, waivers or approvals which, if not
obtained, would not have a Company Material Adverse Effect.
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(f) Legal Opinions. Parent shall have received a legal opinion
from in-house legal counsel to the Company and to Siemens, each in customary
form reasonably acceptable to Parent.
(g) Non-Competition Agreement. Each Non-Competition Agreement
with each Key Employee shall be in full force and effect.
(h) Certificates of the Company and Siemens. Parent shall have
received a certificate, validly executed by either the Chief Executive Officer
or Chief Financial Officer of the Company for and on its behalf, to the effect
that, as of the Closing, the conditions set forth in Sections 7.2(a), (c), (d),
(e) and (k) hereof have been satisfied. Parent shall have received a
certificate, validly executed by an officer of Siemens for and on its behalf
that, as of the Closing, the condition set forth in Section 7.2(b) hereof has
been satisfied.
(i) Stockholder Agreement. Siemens shall have executed and
delivered the Stockholder Agreement and such agreement shall be in full force
and effect.
(j) Distribution Agreement. The Company and Siemens AG shall
have executed and delivered the Distribution Agreement, and such agreement shall
be in full force and effect.
(k) Termination of Indebtedness. The Company, Siemens and the
Stockholders shall have taken all necessary actions to cause all outstanding
indebtedness for borrowed money of the Company to Siemens or any Stockholder to
be cancelled, repaid or converted into Company Common Stock according to its
terms.
7.3 Conditions to Obligations of the Company and Siemens. The
obligations of the Company and Siemens to effect the Merger and the transactions
contemplated herein shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions, any or all of which may be waived,
in whole or in part, exclusively by Siemens:
(a) Representations and Warranties of Parent and Sub. (i) The
representations and warranties of Parent and Sub contained in this Agreement
(other than the representations and warranties set forth in Section 4.2
(Authority) and Section 4.5 (Parent Capital Structure)) shall be true and
correct on the day they were made and on and as of the Closing Date as though
such representations and warranties were made on and as of such time (other than
the representations and warranties of Parent and Sub as of a specified date,
which shall continue to be so true and correct as of such date) except for any
such failure to be true and correct as would not, individually or in the
aggregate, have a Parent Material Adverse Effect (except that for the purposes
of this section references to materiality or Parent Material Adverse Effect
contained in such representations and warranties shall be disregarded) and (ii)
the representations and warranties set forth in Section 4.2 (Authority) and
Section 4.5 (Parent Capital Structure), which shall be true and correct in all
material respects on the day they were made and on and as of the Closing Date
(other than the representations and warranties of Parent and Sub as of a
specified date, which shall continue to be so true and correct as of such date).
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(b) Covenants of Parent and Sub. Parent and Sub have performed
in all material respects all of their respective obligations under this
Agreement to be performed by them on or prior to Closing and Parent and Sub are
not in material breach of any covenant or agreement contained in this Agreement.
(c) Stockholder Agreement. Parent shall have executed and
delivered the Stockholder Agreement and such agreement shall be in full force
and effect.
(d) Distribution Agreement. Parent shall have executed and
delivered the Distribution Agreement, and such agreement shall be in full force
and effect.
(e) Certificate of Parent and Sub. The Company and Siemens shall
have each received a certificate executed on behalf of Parent and Sub, in each
case by Parent's Chief Financial Officer to the effect that, as of the Closing,
the condition set forth in Section 7.3(a) hereof was satisfied.
(f) Legal Opinion. The Company and Siemens shall have received a
legal opinion from in-house legal counsel to Parent in customary form reasonably
acceptable to Siemens.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY
8.1 Survival of Representations, Warranties and Covenants. The
representations and warranties of the Company and Siemens contained in this
Agreement, or in any certificate or other instrument delivered pursuant to this
Agreement, shall survive for a period of nine (9) months following the Closing
Date (the expiration of such period, the "Survival Date"). The representations
and warranties of Parent and Sub contained in this Agreement, or in any
certificate or other instrument delivered pursuant to this Agreement, shall
survive until the Survival Date.
8.2 Indemnification.
(a) Siemens agrees to indemnify and hold Parent and its
officers, directors, and affiliates, including the Surviving Corporation, (the
"Parent Indemnified Parties"), harmless against all claims, losses, liabilities,
damages, deficiencies, costs and expenses, including reasonable attorneys' fees
and expenses of investigation and defense (hereinafter individually a "Loss" and
collectively "Losses") incurred or sustained by the Parent Indemnified Parties,
or any of them, directly or indirectly, as a result of (i) any breach or
inaccuracy of a representation or warranty of the Company and/or Siemens
contained in this Agreement or in any certificate or other instrument delivered
pursuant to this Agreement, (ii) any failure by the Company and/or Siemens to
perform or comply with any covenant applicable to any of them contained in this
Agreement; or (iii) any Benefit Liabilities. Subject to Section 8.2(f) hereof,
Siemens shall not have any right of contribution from the Company hereunder with
respect to any Loss claimed by a Parent Indemnified Party.
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(b) Notwithstanding any provision to the contrary in the Voice
Transaction Agreements, Siemens hereby agrees from and after the Closing, to
indemnify and hold the Parent Indemnified Parties harmless for any and all
Losses incurred or sustained by the Parent Indemnified Parties, or any of them,
directly or indirectly as a result of the Voice Business, the Voice Transfer
Agreements, the Voice Transaction, or the employment or service of any
individual whose employment or service related primarily to the Voice Business,
including without limitation compensation or benefits owed to any such
individual (collectively, the "Voice Losses").
(c) Parent agrees to indemnify and hold Siemens and its
officers, directors, and affiliates (other than the Surviving Corporation, the
Company, the Company Subsidiaries and Parent) (the "Siemens Indemnified
Parties"), harmless against all Losses incurred or sustained by them, or any of
them, directly or indirectly, as a result of (i) any breach or inaccuracy of a
representation or warranty of the Parent and/or Sub contained in this Agreement
or in any certificate or other instrument delivered pursuant to this Agreement,
(ii) failure by Parent or the Surviving Corporation to perform any of its
obligations under this Agreement required to be performed after the Closing,
(iii) any Exchange Repricing Losses, (iv) any of the Company's Third Party
Expenses, (v) any Company Benefit Plan or (vi) Parent's employment of the
Employees on or after the Closing Date (except with respect to clauses (v) and
(vi), inasmuch as such Losses arise as a result of claims for benefits under any
Benefit Plan, result from a breach of representations and warranties in Article
III hereof or result from the plan referred to in Section 6.14(a)hereof).
(d) Notwithstanding any other provision to the contrary, no
party liable for indemnification (an "Indemnifying Party") pursuant to Section
8.2(a)(i) or Section 8.2(c)(i) shall be required to indemnify and hold the party
seeking such indemnification (the "Indemnified Party") harmless for any and all
Losses unless and until the aggregate amount of Losses recoverable under such
section or sections exceeds $3,500,000 (the "Deductible"), in which case the
Indemnified Party shall be entitled to recover all Losses in excess of the
Deductible.
(e) For the purposes of determining the amount of a Loss
recoverable pursuant to Section 8.2(a)(i) hereof (but not for the purpose of
determining the existence of a breach or inaccuracy pursuant to such Section
8.2(a)(i)), all references to materiality and Company Material Adverse Effect in
such representation or warranty shall be disregarded. For the purposes of
determining the amount of a Loss recoverable pursuant to Section 8.2(c) hereof
(but not for the purpose of determining the existence of a breach or inaccuracy
pursuant to such Section 8.2(c)), all references to materiality and Parent
Material Adverse Effect in such representation or warranty shall be disregarded.
(f) In the case of a specific Loss giving rise to
indemnification hereunder (other than any Loss which is itself a Tax or a Loss
in respect of a Tax which is otherwise subject to Article IX), if an Indemnified
Party (i) shall receive any amount of money (A) received by an insured from an
insurance carrier, (B) paid by an insurance carrier on behalf of an insured, in
either case net of any applicable deductible, retention or cost of reserve paid
or held by or for the benefit of such insured (the "Insurance Proceeds") in
relation to such Loss or (C) received any indemnity, contribution or other
similar payment from any third party with respect to such Loss, or (ii) shall
actually realize any Tax savings that would not have been so realized but for
such Loss ("Tax Savings Actually
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Realized"), then (x) at any time subsequent to the actual receipt from the party
liable for such indemnification (an "Indemnifying Party") of a payment in full
of indemnification of such Loss hereunder, such Indemnified Party shall
reimburse the Indemnifying Party for any such indemnification payment made up to
the amount of such Insurance Proceeds or other amounts actually received or Tax
Savings Actually Realized or (y) at any time prior to the receipt of any
indemnification payment in respect of such Loss hereunder, the indemnification
to be paid shall be paid net of the amount of any such Insurance Proceeds or
other amounts actually received or Tax Savings Actually Realized. The
Indemnified Parties shall use reasonable efforts to seek and recover any
Insurance Proceeds, Tax Savings Actually Realized and any indemnity,
contribution or similar payments available to each of them with respect to any
Loss for which such Indemnified Party seeks indemnification pursuant to this
Article VIII. Notwithstanding anything in this section, nothing herein shall
permit an Indemnifying Party to delay or refrain from making any payment to any
Indemnified Party because of the availability or alleged availability of any
insurance policy or Insurance Proceeds or Tax savings.
(g) To the extent that any Parent Indemnified Party would be
entitled to indemnity for any individual Loss under more than one of Sections
8.2(a) or (b) hereof, such Parent Indemnified Party shall be entitled in its
sole discretion to choose one of such sections under which to recover for
indemnity, which choice shall be binding on all Parent Indemnified Parties and
no Parent Indemnified Party may recover for indemnification for such Loss under
any other such Section; provided, however, that no Parent Indemnified Party
shall be permitted to make claims indemnity under more than one of Sections
8.2(a) or (b) hereof unless such claims are made to the Indemnifying Party at
the same time; provided, however, that no claim for any Loss under Section 8.2
(a)(ii) or (iii) or 8.2(b) shall be considered for the purposes of determining
whether the Deductible has been exceeded.
8.3 Claims for Indemnification.
(a) Any Indemnified Party seeking indemnification pursuant to
Article VIII shall give prompt notice in writing to the Indemnifying Party of
any matter which any such Indemnified Party has determined has given rise to a
right of indemnification under this Agreement, stating the amount of the Loss,
if known, and method of computation thereof (the "Claim Notice"); provided,
however, that the failure to provide such notice shall not release the
Indemnifying Party from any of its obligations hereunder, except to the extent
such Indemnifying Party is materially prejudiced by such failure. Except as set
forth below, upon notice duly given by a Parent Indemnified Party to an
Indemnifying Party of a Claim Notice, such Indemnifying Party shall pay the
Parent Indemnified Party as promptly as practicable: (i) an amount in cash equal
to the Cash Portion (as defined herein) of such Losses and (ii) a number of
shares of Parent Common Stock equal to the Stock Portion (as defined herein) of
such Losses (with such shares valued at the Indemnification Price (as defined
herein)). Except as set forth below, upon notice duly given by a Siemens
Indemnified Party to an Indemnifying Party of a Claim Notice, such Indemnifying
Party shall pay the Siemens Indemnified Party as promptly as practicable an
amount in cash equal to such Losses. If the Indemnifying Party does not dispute
its obligation to indemnify the Indemnified Party against any Losses set forth
in the Claim Notice, within 30 days after receipt of such notice, such
Indemnifying Party shall be deemed
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to have irrevocably acknowledged that the Indemnified Party is entitled to the
full amount of the Losses set forth in such notice. For purposes of this
Agreement, "Cash Portion" shall mean the percentage (rounded up to the nearest
whole number) that the Cash Consideration represents of the Total Consideration
(with the Stock Consideration valued at the Trading Price) as of the Closing
Date, and "Stock Portion" shall mean the percentage (rounded down to the nearest
whole number) that the Stock Consideration (as valued at the Trading Price)
represents of the Total Consideration as of the Closing Date. For purposes of
this Agreement, "Indemnification Price" shall mean the average closing sale
price of one share of Parent Common Stock as reported on Nasdaq for the ten (10)
consecutive trading days ending three (3) trading days immediately preceding the
date it is determined that such claim for indemnification is owed by the
Indemnifying Party.
(b) Resolution of Conflicts; Arbitration.
(i) If, within 30 days after notice duly given to the
Indemnifying Party of such a Claim Notice, such Indemnifying Party disputes its
obligations to indemnify the Indemnified Party against any Losses set forth in
such notice and such Indemnifying Party notifies the Indemnified Party in
writing of such dispute, the Indemnified Party and the Indemnifying Party hereby
agree to negotiate in good faith in an attempt to resolve such dispute.
(ii) If such dispute is not resolved within 30 days
after notice duly given to the Indemnified Party of such dispute, the
Indemnified Party may demand arbitration of such dispute unless the amount of
the Loss relates to a Third Party Claim, in which event arbitration shall not be
commenced until such amount is ascertained or both parties agree to arbitration,
and in either such event the matter shall be settled by arbitration conducted by
one arbitrator mutually agreeable to Indemnified Party and the Indemnifying
Party. In the event that, within 30 days after submission of any dispute to
arbitration, Indemnified Party and the Indemnifying Party cannot mutually agree
on one arbitrator, then, within 15 days after the end of such 30 day period, the
Indemnified Party and the Indemnifying Party shall each select one arbitrator.
The two arbitrators so selected shall select a third arbitrator. If the
Indemnifying Party fails to select an arbitrator during this 15 day period, then
the parties hereto agree that the arbitration will be conducted by one
arbitrator selected by the Indemnified Party.
(iii) Any such arbitration shall be held in New York,
New York, under the rules then in effect of the American Arbitration
Association. The arbitrator(s) shall determine how all expenses relating to the
arbitration shall be paid, including without limitation, the respective expenses
of each party, the fees of each arbitrator and the administrative fee of the
American Arbitration Association. The arbitrator or arbitrators, as the case may
be, shall set a limited time period and establish procedures designed to reduce
the cost and time for discovery while allowing the parties an opportunity,
adequate in the sole judgment of the arbitrator or majority of the three
arbitrators, as the case may be, to discover relevant information from the
opposing parties about the subject matter of the dispute. The arbitrator, or a
majority of the three arbitrators, as the case may be, shall rule upon motions
to compel or limit discovery and shall have the authority to impose sanctions,
including attorneys' fees and costs, to the same extent as a competent court of
law or equity, should the arbitrators or a majority of the three arbitrators, as
the case may be, determine that discovery was sought without substantial
justification or that discovery was refused or objected to
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without substantial justification. The decision of the arbitrator or a majority
of the three arbitrators, as the case may be, as to the validity and amount of
any claim in such dispute shall be final, binding, and conclusive upon the
parties hereto. Such decision shall be written and shall be supported by written
findings of fact and conclusions which shall set forth the award, judgment,
decree or order awarded by the arbitrator(s). Within thirty (30) days of a
decision of the arbitrator(s) requiring payment by one party to another, such
party shall make the payment to such other party.
(iv) Judgment upon any award rendered by the
arbitrator(s) may be entered in any court having jurisdiction.
(c) Notices and Defense of Actions.
(i) The obligations and Liabilities of the Indemnifying
Party under this Article VIII with respect to Losses arising from claims of any
third party which are subject to the indemnification provided for in this
Article VIII ("Third Party Claims") shall be governed by and contingent upon the
additional terms and conditions set forth in this Article VIII. If an
Indemnified Party shall receive notice of any Third Party Claim in writing, the
Indemnified Party shall give the Indemnifying Party prompt notice of such Third
Party Claim in writing; provided, however, that the failure to provide such
notice shall not release the Indemnifying Party from any of its obligations
hereunder, except to the extent such Indemnifying Party is materially prejudiced
by such failure.
(ii) The Indemnifying Party shall have the right to
assume and control the defense of such Third Party Claim at its expense and
through counsel of its choice if (i) it gives notice of its intention to do so
to the Indemnified Party within 30 days of the duly given notice from the
Indemnified Party and (ii) it acknowledges in writing that such Third Party
Claim is a claim subject to indemnification hereunder. In the event the
Indemnifying Party exercises the right to undertake any such defense against any
such Third Party Claim as provided above, the Indemnified Party may participate
in such defense, but the expenses of the Indemnified Party shall be paid by the
Indemnified Party. The Indemnified Party shall cooperate with the Indemnifying
Party in such defense and make available to the Indemnifying Party all
witnesses, pertinent records, materials and information in the Indemnified
Party's possession or under the Indemnified Party's control relating thereto as
is reasonably required by the Indemnifying Party, and the Indemnifying Party
shall reimburse the Indemnified Party for all its reasonable out-of-pocket
expenses in connection therewith. Notwithstanding anything to the contrary
contained in the foregoing, if the Indemnifying Party exercises the right to
undertake such defense against any such Third Party Claim and the Indemnifying
Party and the Indemnified Party have adverse or potentially adverse interests in
the Third Party Claim, the Indemnified Party may participate in such defense and
employ separate counsel, at the Indemnifying Party's expense, but the
Indemnifying Party shall control such defense. No such Third Party Claim may be
settled by the Indemnifying Party without the written consent of the Indemnified
Party, which consent shall not be unreasonably withheld, unless such settlement
involves only the payment of money (which payment obligation is borne
exclusively by the Indemnifying Party), involves a full and unconditional
release of the Indemnified Party and does not contain any prohibitions,
limitations or restrictions on the conduct of the Indemnified Party's business.
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(iii) If the Indemnifying Party shall fail to undertake
any such defense, the Indemnified Party shall have the right to assume and
control the defense thereof, at the Indemnifying Party's expense, and through
counsel of the Indemnified Party's choice. In the event the Indemnified Party is
conducting the defense against any such Third Party Claim, the Indemnifying
Party (i) may participate in such defense, but the expenses of the Indemnifying
Party shall be paid by the Indemnifying Party and (ii) shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party at
the Indemnifying Party's expense, all such witnesses, records, materials and
information in the Indemnifying Party's possession or under the Indemnifying
Party's control relating thereto as is reasonably required by the Indemnified
Party. If the Indemnified Party assumes the defense against any such Third Party
Claim, such Indemnified Party agrees to keep the Indemnifying Party informed as
to the status of such Third Party Claim. If the Indemnified Party assumes the
defense against any such Third Party Claim and proposes to settle such claim or
proceeding prior to a final judgment thereon or to forego any appeal with
respect thereto, then the Indemnified Party shall give the Indemnifying Party
prompt written notice thereof and shall not settle any such Third Party claim
without the written consent of the Indemnifying Party (which consent shall not
be unreasonably withheld).
8.4 Maximum Payments.
(a) The maximum amount a Parent Indemnified Party may recover
from Siemens for Losses pursuant to Section 8.2(a) hereof shall be limited to an
amount equal to twenty-five percent (25%) of the Total Consideration (with the
Stock Consideration valued at the Trading Price).
(b) The maximum amount a Siemens Indemnified Party may recover
from Parent for Losses pursuant to Section 8.2(c) hereof shall be limited to an
amount equal to twenty-five percent (25%) of the Total Consideration (with the
Stock Consideration valued at the Trading Price).
ARTICLE IX
TAX MATTERS
9.1 Indemnity.
(a) Siemens Corporation agrees to indemnify and hold harmless
Parent and its officers, directors, and affiliates, including the Surviving
Corporation (the "Parent Indemnified Parties") against the following Income
Taxes and, except as otherwise provided in Section 9.4, against any loss,
damage, liability or expense, including reasonable fees for attorneys and other
outside consultants, incurred in contesting or otherwise in connection with any
such Income Taxes: (i) Taxes imposed on the Company or any Company Subsidiary
with respect to taxable periods ending on or before the Closing Date (including
but not limited to the Taxes attributable to the Voice Transaction); (ii) with
respect to taxable periods beginning on or before the Closing Date and ending
after the Closing Date, Taxes imposed on the Company or any Company Subsidiary
which are allocable, pursuant to Section 9.1(b), to the portion of such period
ending on the Closing Date; and (iii) Taxes imposed on any member of any
affiliated group with which any of the Company and the Company Subsidiaries file
or have filed a Return on a consolidated or combined basis for a taxable
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period ending on or before the Closing Date. Parent shall be responsible for
Taxes and associated expenses not allocated to Siemens pursuant to the first
sentence hereof.
(b) In the case of Taxes that are payable with respect to a
taxable period that begins before the Closing Date and ends after the Closing
Date, the portion of any such Tax that is allocable to the portion of the period
ending on the Closing Date shall be:
(i) in the case of Taxes that are either (x) based upon
or related to income or receipts, or (y) imposed in connection with any sale or
other transfer or assignment of property (real or personal, tangible or
intangible) deemed equal to the amount which would be payable if the taxable
year ended with the Closing Date; and
(ii) in the case of Taxes imposed on a periodic basis
with respect to the assets of the Company or any Company Subsidiary, or
otherwise measured by the level of any item, deemed to be the amount of such
Taxes for the entire period (or, in the case of such Taxes determined on an
arrears basis, the amount of such Taxes for the immediately preceding period),
multiplied by a fraction the numerator of which is the number of calendar days
in the period ending on the Closing Date and the denominator of which is the
number of calendar days in the entire period.
9.2 Returns and Payments.
(a) From the date of this Agreement through and after the
Closing Date, Siemens shall prepare and file or otherwise furnish in proper form
to the appropriate Governmental Entity (or cause to be prepared and filed or so
furnished) in a timely manner all Tax returns, reports and forms ("Returns")
relating to the Company and its Company Subsidiaries that are due on or before
or relate to any taxable period ending on or before the Closing Date (and Parent
shall do the same with respect to any taxable period ending after the Closing
Date). Returns of the Company and its Company Subsidiaries not yet filed for any
taxable period that begins before the Closing Date shall be prepared in a manner
consistent with past practices employed with respect to the Company and its
Company Subsidiaries. With respect to any Return required to be filed by Parent
or Siemens with respect to the Company and its Company Subsidiaries and as to
which an amount of Tax is allocable to the other party under Section 9.1(b), the
filing party shall provide the other party and its authorized representatives
with a copy of such completed Return and a statement certifying the amount of
Tax shown on such Return that is allocable to such other party pursuant to
Section 9.1(b), together with appropriate supporting information and schedules
at least 10 business days prior to the due date (including any extension
thereof) for the filing of such Return, and such other party and its authorized
representatives shall have the right to review and comment on such Return and
statement prior to the filing of such Return.
(b) Siemens shall pay or cause to be paid when due and payable
all Taxes with respect to the Company and each Company Subsidiary which are the
responsibility of Siemens under this Article IX and Parent shall so pay or cause
to be paid Taxes for any taxable period after the Closing Date which are the
responsibility of Parent under this Agreement (subject to its right of
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indemnification from Siemens for Taxes attributable to the portion of any Tax
period that includes the Closing Date pursuant to Section 9.1(a) and Section
9.1(b).
9.3 Refunds. Any Tax refund (including any interest with respect
thereto) relating to the Company or any Company Subsidiary for any taxable
period ending on or before the Closing Date shall be the property of Siemens,
and if received by Parent, the Company or any Company Subsidiary, shall be paid
over promptly to Siemens. Parent shall not, and shall not cause or permit any of
the Company or its Company Subsidiaries to, carryback any net operating loss,
capital loss, Tax credit or other similar Tax attribute attributable to Parent
or any of the Company or its Company Subsidiaries from a taxable period ending
after the Closing Date into a taxable period ending on or prior to the Closing
Date of Siemens or the Company and its Company Subsidiaries, without Siemens'
prior written consent, which consent may be withheld in Siemens' sole and
absolute discretion. In the absence of Siemens' prior written consent, Siemens
shall not be required to pay to Parent or any Company or its Company Subsidiary
any refund or credit of Taxes that results from the carryback to any taxable
period ending on or prior to the Closing Date of any net operating loss, capital
loss, Tax credit or other similar Tax attribute attributable to Parent or any of
the Company or its Company Subsidiaries from a taxable period ending after the
Closing Date.
9.4 Contests.
(a) After the Closing, Parent will promptly notify within 10
days Siemens in writing of any written notice of a proposed assessment or claim
in an audit or administrative or judicial proceeding of Parent or of the Company
or any Company Subsidiary which, if determined adversely to the taxpayer, would
be grounds for indemnification under this Article IX; provided, however, that a
failure to give such notice will not affect Parent's right to indemnification
under this Article IX except to the extent that such that failure effectively
precluded Siemens from avoiding all or a portion of the Tax liability in
question.
(b) In the case of an audit or administrative or judicial
proceeding that relates to periods ending on or before the Closing Date,
provided that Siemens acknowledges in writing its liability under this Agreement
to hold Parent, the Company and its Company Subsidiaries harmless against the
full amount of any adjustment which may be made as a result of such audit or
proceeding that relates to periods ending on or before the Closing Date (or, in
the case of any taxable year that includes the Closing Date, against an
adjustment allocable under Section 9.1(b) to the portion of such year ending on
or before the Closing Date), Siemens shall have the right at its expense to
participate in and control the conduct of such audit or proceeding but only to
the extent that such audit or proceeding relates solely to a potential
adjustment for which Siemens could be held liable hereunder; Parent also may
participate in any such audit or proceeding and, if Siemens does not assume the
defense of any such audit or proceeding, Parent may defend the same in such
manner as it may deem appropriate, including, but not limited to, settling such
audit or proceeding after giving ten business days' prior written notice to
Siemens setting forth the terms and conditions of settlement.
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(c) With respect to issues relating to a potential adjustment
for which both Siemens and Parent or the Company or any Company Subsidiary could
be liable, each party may participate in the audit or proceeding.
(d) Neither Parent nor Siemens shall enter into any compromise
or agree to settle any claim pursuant to any Tax audit or proceeding which would
adversely affect the other party for such year or a subsequent year without the
written consent of the other party, which consent may not be unreasonably
withheld. Parent and Siemens agree to cooperate, and Parent agrees to cause the
Company and its Company Subsidiaries to cooperate, in the defense against or
compromise of any claim in any audit or proceeding.
9.5 Cooperation and Exchange of Information. Siemens and Parent will
provide each other with such cooperation and information as either of them
reasonably may request of the other (and Parent shall cause the Company and its
Company Subsidiaries to provide such cooperation and information) in filing any
Tax return, report or form, amended Tax return or claim for refund, determining
any liability for Taxes or a right to a refund of Taxes or participating in or
conducting any audit or other proceeding in respect of Taxes relating to the
Company and its Company Subsidiaries. Such cooperation and information shall
include providing copies of relevant Tax returns or portions thereof, together
with accompanying schedules and related work papers and documents relating to
rulings or other determinations by taxing authorities. Siemens shall make its
employees available, and Parent shall make its employees available (and shall
cause the employees of the Company and its Company Subsidiaries to be available)
on a mutually convenient basis to provide explanations of any documents or
information provided hereunder. Parent will retain and will cause the Company
and its Company Subsidiaries to retain all Tax returns, schedules and work
papers and all material records or other documents in its possession relating to
Tax matters of the Company and its Company Subsidiaries for the taxable period
first ending after the Closing Date and for all prior taxable periods until the
later of (i) the expiration of the statute of limitations of the taxable periods
to which such Tax returns and other documents relate, without regard to
extensions, or (ii) seven years following the due date (without extension) for
such Tax returns. After such time, before Parent shall dispose of any such
documents, Parent shall, by 90 days' prior written notice to Siemens, give
Siemens the opportunity (at Siemens' expense) to remove and retain all or any
part of such documents as Siemens may select. Any information obtained under
this Section 9.5 shall be kept confidential, except as may be otherwise
necessary in connection with the filing of returns or claims for refund or in
conducting an audit or other proceeding.
9.6 Conveyance Taxes. Siemens and Parent shall each pay one half of any
real property transfer or gains, sales, use, transfer, value added, stock
transfer, and stamp taxes, any transfer, recording, registration, and other
fees, and any similar Taxes which become payable in connection with the
transactions contemplated by this Agreement, and shall file such applications
and documents as shall permit any such Tax to be assessed and paid on or prior
to the Closing Date in accordance with any available per sale filing procedure.
Parent shall execute and deliver all instruments and certificates necessary to
enable Siemens to comply with the foregoing.
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9.7 Miscellaneous.
(a) Siemens and Parent agree to treat all payments made by
either of them to or for the benefit of the other (including any payments to the
Company or any Company Subsidiary) under this Article IX, under other indemnity
provisions of this Agreement (including, without limitation, Article VIII) and
for any misrepresentations or breaches of warranties or covenants as adjustments
to the purchase price or as capital contributions for Tax purposes and that such
treatment shall govern for purposes hereof except to the extent that the Laws of
a particular jurisdiction provide otherwise, in which case such payments shall
be made in an amount sufficient to indemnify the relevant party on an after-Tax
basis.
(b) Any indemnifiable amount otherwise payable by Siemens shall
be reduced by any Tax benefit actually realized by Parent, the Company or any of
its Company Subsidiaries in a taxable period or portion thereof ending after the
Closing Date (a "Post-Closing Date Tax Benefit") as a result of either an
adjustment to Taxes for which Siemens is responsible under Article IX (such as a
timing adjustment resulting in a Tax deduction for the Company or any Company
Subsidiary for a period after the Closing Date) or a Tax deduction resulting
from an indemnifiable payment. If a payment is made by Siemens in accordance
with its indemnification obligation, and if in a subsequent taxable year a
Post-Closing Date Tax Benefit that was not previously taken into account
pursuant to the preceding sentence to reduce an amount otherwise payable by
Siemens is actually realized by Parent, the Company or any Company Subsidiary,
Parent shall pay to Siemens at the time of such realization the amount of such
Post-Closing Date Tax Benefit to the extent that the Post-Closing Date Tax
Benefit would have resulted in a reduction in the amount paid by Siemens if the
Post-Closing Date Tax Benefit had been obtained in the year of such payment. A
Post-Closing Date Tax Benefit will be considered to be realized for purposes of
this Section 9.7(b) at the time that it is reflected on a Tax return of Parent,
the Company or any Company Subsidiary.
(c) Any tax sharing agreement or arrangement between Siemens and
any of the Company or Company Subsidiaries shall be terminated in its entirety
immediately prior to the Closing and neither Company nor any Company Subsidiary
will have any liability or obligation under such agreement or arrangement after
the Closing.
(d) Notwithstanding any provision in this Agreement to the
contrary, the obligations of Siemens to indemnify and hold harmless Parent, the
Company and its Company Subsidiaries pursuant to this Article IX shall terminate
at the close of business on the day following the expiration of the applicable
statute of limitations with respect to the Tax liabilities in question (giving
effect to any waiver, mitigation or extension thereof).
(e) From and after the Closing Date, Siemens shall not without
the prior written consent of Parent (which may, in its sole and absolute
discretion, withhold such consent) make, or cause or permit to be made, any
material Tax election that would affect any of the Company or any Company
Subsidiaries.
(f) To the extent any provision of Article VIII is inconsistent
with the provisions of this Article IX, the provisions of this Article IX shall
govern.
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For purposes of this Article IX, "Parent" and "Siemens," respectively,
shall include each member of the affiliated group of corporations of which it is
or becomes a member (other than the Company and its Company Subsidiaries, except
to the extent expressly referenced).
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. Except as provided in Section 10.2 hereof, this
Agreement may be terminated and the Merger abandoned at any time prior to the
Closing:
(a) by unanimous agreement of Siemens and Parent;
(b) by Parent or Siemens if the Closing Date shall not have
occurred by September 30, 2002 (or, in the event of the use of a Registration
Statement for the Stock Consideration, December 31, 2002); provided, however,
that the right to terminate this Agreement under this Section 10.1(b) shall not
be available to any party whose action or failure to act has been a principal
cause of or resulted in the failure of the Merger to occur on or before such
date and such action or failure to act constitutes breach of this Agreement;
(c) by Parent or Siemens if: (i) there shall be a final
non-appealable order of a federal or state court in effect preventing
consummation of the Merger, or (ii) there shall be any statute, rule, regulation
or order enacted, promulgated or issued or deemed applicable to the Closing by
any Governmental Entity that would make consummation of the Merger illegal;
(d) by Parent if there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Merger by any Governmental Entity, which would: (i) prohibit
Parent's ownership or operation of any portion of the business of the Company or
(ii) compel Parent or the Company to dispose of or hold separate all or any
portion of the business or assets of the Company or Parent as a result of the
Merger;
(e) by Parent if there has been a breach of any representation,
warranty, covenant or agreement of the Company or Siemens contained in this
Agreement such that the conditions set forth in Section 7.2(a) hereof would not
be satisfied and such breach has not been cured within twenty (20) calendar days
after written notice thereof to the Company and Siemens; provided, however, that
no cure period shall be required for a breach which by its nature cannot be
cured;
(f) by Siemens if there has been a breach of any representation,
warranty, covenant or agreement contained in this Agreement such that the
conditions set forth in Section 7.3(a) hereof would not be satisfied and such
breach has not been cured within twenty (20) calendar days after written notice
thereof to Parent; provided, however, that no cure period shall be required for
a breach which by its nature cannot be cured; or
(g) by Parent if there has been a breach of the provisions of
Section 6.32 hereof and such breach has not been cured within one (1) business
day after written notice thereof to Siemens.
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10.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 10.1 hereof, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of Parent,
the Company or Siemens, or their respective officers, directors or stockholders,
if applicable; provided, however, that each party hereto shall remain liable for
any willful breaches of this Agreement prior to its termination; and provided
further, however, that, the provisions of Sections 6.5, 6.6 and 6.7 hereof,
Article XI hereof and this Section 10.2 shall remain in full force and effect
and survive any termination of this Agreement pursuant to the terms of this
Article X.
10.3 Amendment. This Agreement may be amended by the parties hereto at
any time by execution of an instrument in writing signed by or on behalf of the
parties hereto.
10.4 Extension; Waiver. At any time prior to the Closing, Parent, on the
one hand, and the Company and Siemens, on the other hand, may, to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE XI
GENERAL PROVISIONS
11.1 Definitions. For all purposes of this Agreement, the following
terms shall have the following respective meanings:
(a) "affiliate" of a specified person shall mean any person who,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified person.
(b) "Business" shall mean the business conducted by the Company
and all of its subsidiaries and business divisions, including without
limitation, the manufacture, development and sale of the Company's products as
currently manufactured, developed and sold by the Company, and excluding the
Voice Business.
(c) "Cash Exchange Ratio" shall mean an amount equal to the
quotient obtained by dividing (x) the Total Cash Consideration by (y) the Total
Outstanding Shares, rounded to the nearest thousandth ($0.001) (with amounts of
0.0005 and above rounded up).
(d) "Commissioner" shall mean the California Commissioner of
Corporations, or the staff of the California Department of Corporations on his
or her behalf.
(e) "Company Common Stock" shall mean shares of common stock,
par value $0.01 per share, of the Company.
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(f) "Company Material Adverse Effect" shall mean any
circumstance, change in or effect that is or is reasonably likely to be
materially adverse to the assets, financial condition, business or results of
operations of the Company and the Company Subsidiaries (taken as a whole), other
than any circumstance, change in or effect on the Company or any Company
Subsidiary arising out of (i) circumstances, changes or effects that generally
affect the industries in which the Company and the Company Subsidiaries operate
or sell to or through (but which do not disproportionately affect the Company
and the Company Subsidiaries, taken as a whole), (ii) changes in financial or
securities markets, (iii) changes in general economic, legal, regulatory or
political conditions (but which do not disproportionately affect the Company and
the Company Subsidiaries, taken as a whole), or (iv) any effect resulting from
the announcement or pendency of the transactions contemplated by this Agreement.
(g) "Company Options" shall mean all issued and outstanding
options or other rights (including commitments to grant options or other rights,
but excluding Company Warrants) to purchase or otherwise acquire Company Capital
Stock (whether or not vested) held by any person or entity.
(h) "Company Restricted Stock" shall mean shares of Company
Common Stock subject to a right of repurchase by the Company.
(i) "Company Warrants" shall mean all issued and outstanding
warrants to purchase Company Common Stock held by any person or entity.
(j) "GAAP" shall mean United States generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated.
(k) "Hearing" shall mean the hearing held by the Commissioner to
consider the terms, conditions and fairness of the transactions contemplated
hereby pursuant to Section 25142 of the California Corporate Securities Law of
1968, as amended.
(l) "Hearing Notice" shall mean the notice sent to the
Stockholders pursuant to, and meeting the requirements of, Article 2 and
Subchapter 1 of the California Administrative Code, Title 10, Chapter 3,
Subchapter 2, as amended concerning the Hearing.
(m) "Information Statement" shall the information statement
delivered to the Stockholders in connection with the Stockholders Meeting.
(n) "Issuance Permit" shall mean the permit issued by the
Commissioner at or after the Hearing.
(o) "Key Employees" shall mean the employees listed in Schedule
11.1(o) of the Company Disclosure Schedule.
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(p) "Knowledge" of any person which is not an individual shall
mean, with respect to any specific matter, the actual knowledge of such person's
executive officers and any other officer having primary responsibility for such
matter
(q) "Option Exchange Ratio" shall mean an amount equal to the
quotient obtained by dividing (x) the sum obtained by adding the Total Cash
Consideration plus the product obtained by multiplying (A) the Trading Price by
(B) the Total Stock Consideration by (y) the product obtained by multiplying the
Total Outstanding Shares by the Trading Price.
(r) "Parent Common Stock" shall mean shares of the common stock,
par value $0.00001 per share, of Parent.
(s) "Parent Option" shall mean any option to purchase shares of
Parent Common Stock issued pursuant to the terms of Section 1.6(c) hereof in
connection with the assumption of a Company Option.
(t) "Permit Application" shall mean the application to issue
securities by permit filed with the Commissioner.
(u) "Registration Statement" shall mean a registration statement
on Form S-4 (or any successor form) with respect to the shares of Parent Common
Stock to be issued in the Merger, if necessary, as contemplated by Section 6.2.
(v) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(w) "Siemens Note" shall mean the Convertible Promissory Note
issued by the Company in favor of Siemens Corporation, dated January 10, 2001,
as amended and restated on February 8, 2001, November 15, 2001 and May 14, 2002.
(x) "Stock Exchange Ratio" shall mean an amount equal to the
quotient obtained by dividing (x) the Total Stock Consideration, by (y) the
Total Outstanding Shares, rounded to the nearest thousandth (0.001) (with
amounts 0.0005 and above rounded up).
(y) "Stockholder" shall mean any holder of any Company Capital
Stock immediately prior to the Effective Time.
(z) "Stockholders Meeting" shall mean the special meeting of the
Stockholders (or written consent in lieu thereof) contemplated by Section
6.3(a).
(aa) "subsidiary" or "subsidiaries" of a person shall mean an
affiliate controlled by such person, directly or indirectly, through one or more
intermediaries.
(bb) "Total Cash Consideration" shall mean $375,000,000.
(cc) "Total Consideration" shall mean the Total Cash
Consideration and the Total Stock Consideration.
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(dd) "Total Outstanding Shares" shall mean the aggregate number
of shares of Company Common Stock (including any other rights whether vested or
unvested convertible into, exercisable for or exchangeable for, shares of
Company Common Stock on an as-converted, exercised or exchanged basis, but
excluding Company Options) issued and outstanding immediately prior to the
Effective Time. For the avoidance of doubt, the definition of "Total Outstanding
Shares" includes the aggregate number of shares of Company Common Stock issuable
upon conversion of that portion of the Siemens Note (including accrued interest
thereon) outstanding immediately prior to the Effective Time.
(ee) "Total Stock Consideration" shall mean 36,500,000 shares of
Parent Common Stock.
(ff) "Trading Price" shall mean the average closing sale price
of one share of Parent Common Stock as reported on Nasdaq for the ten (10)
consecutive trading days ending three (3) trading days immediately preceding the
Closing Date.
11.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
messenger or courier service, or mailed by registered or certified mail (return
receipt requested) or sent via facsimile (with acknowledgment of complete
transmission) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice); provided, however,
that notices sent by mail will not be deemed given until received:
(a) if to Parent or Sub, to:
Juniper Networks, Inc.
1194 N. Mathilda Avenue
Sunnyvale, California 94089
Attention: General Counsel
Telephone No.: (408) 745-2000
Facsimile No.: (408) 745-8910
with copies to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: Katharine A. Martin, Esq.
Telephone No.: (650) 493-9300
Facsimile No.: (650) 493-6811
and
Wilson Sonsini Goodrich & Rosati
Professional Corporation
One Market, Spear Tower, Suite 3300
San Francisco, California 94105
Attention: Steve L. Camahort, Esq.
Telephone No.: (415) 947-2000
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Facsimile No.: (415) 947-2099
(b) if to the Company, to:
Unisphere Networks, Inc.
10 Technology Park Drive
Westford, Massachusetts 01886
Attention: Chief Executive Officer
Telephone No.: (978) 589-5000
Facsimile No.: (978) 589-0099
with a copy to:
Choate Hall & Stewart
Exchange Place
Boston, Massachusetts 02109
Attention: Robert Rothberg, Esq.
Telephone No.: (617) 248-5000
Facsimile No.: (617) 248-4000
(c) if to Siemens Corporation, to:
Siemens Corporation
153 East 53rd Street
New York, New York 10022
Attention: Senior Vice President and General Counsel
Telephone No.: (212) 258-4488
Facsimile No.: (212) 258-4490
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Stephen M. Besen, Esq.
Telephone No.: (212) 848-4000
Facsimile No.: (212) 848-7179
11.3 Interpretation. The words "include," "includes" and "including"
when used herein shall be deemed in each case to be followed by the words
"without limitation." The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. All references to dollars in this
agreement shall be mean U.S. dollars. The parties agree that it is understood
that representations and warranties in Article III do not apply to the Voice
Business (the "Voice Exclusion"), except that the Voice Exclusion will not apply
to representations and warranties for which application of the Voice Exclusion
would result in Parent and Sub not having recourse under either Section
8.2(a)(i) or 8.2(b) with respect to Losses suffered as a result of breaches or
inaccuracies of such representations and warranties arising out of or relating
to the Voice Business or the Voice Transaction.
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11.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
11.5 Entire Agreement; Assignment. This Agreement, the Exhibits hereto,
the Related Agreements, the Confidential Disclosure Agreement, the Company
Disclosure Schedule and the documents and instruments and other agreements among
the parties hereto referenced herein: (i) constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings both written and oral, among the parties with
respect to the subject matter hereof, (ii) are not intended to confer upon any
other person (other than any Indemnified Party) any rights or remedies
hereunder, and (iii) shall not be assigned by operation of law or otherwise,
except that Parent may assign its rights and delegate its obligations hereunder
to its wholly-owned subsidiaries as long as Parent remains ultimately liable for
all of Parent's obligations hereunder.
11.6 No Third Party Beneficiaries. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their permitted
assigns and nothing herein, express or implied is intended to or shall confer
upon any other person any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
11.7 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
11.8 Other Remedies. Any and all remedies herein expressly conferred
upon a party will be deemed cumulative with and not exclusive of any other
remedy conferred hereby, or by law or equity upon such party, and the exercise
by a party of any one remedy will not preclude the exercise of any other remedy.
11.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
Prior to the Effective Time, all actions and proceedings arising out of or
relating to this Agreement shall be heard and determined exclusively in any
court of chancery in the State of Delaware. The parties hereto hereby (a) submit
to the exclusive jurisdiction of any court of chancery in the State of Delaware
for the purpose of any action arising out of or relating to this Agreement
brought by any party hereto, and (b) irrevocably waive, and agree not to assert
by way of motion, defense, or otherwise, in any such action, any claim that it
is not subject personally to the jurisdiction of the above-named courts, that
its property is exempt or immune from attachment or execution, that the action
is brought in an inconvenient forum, that the
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venue of the action is improper, or that this Agreement or the transactions
contemplated herein may not be enforced in or by any of the above- named courts.
11.10 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefor, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
11.11 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AND ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Parent, Sub, the Company and Siemens have caused this
Agreement to be signed, all as of the date first written above.
JUNIPER NETWORKS, INC. UNISPHERE NETWORKS, INC.
By: /s/ Lisa C. Berry By: /s/ James A. Dolce, Jr.
Name: Lisa C. Berry Name: James A. Dolce, Jr.
Title: Vice President, General Title: President & CEO
Counsel and Secretary
HOMER ACQUISITION CORPORATION SIEMENS CORPORATION
By: /s/ Lisa C. Berry By: /s/ E.R. Lupone
Name: Lisa C. Berry Name: E.R. Lupone
Title: Secretary and Director Title: Vice President, General Counsel
and Secretary
By: /s/ William G. Moran
Name: William G. Moran
Title: Vice President, Mergers
and Acquisitions
SIGNATURE PATE TO AGREEMENT AND PLAN OF MERGER