UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 18, 1994
3COM CORPORATION
(Exact name of registrant as specified in its charter)
California 0-12867 94-2605794
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer)
incorporation or organization) Identification No.)
5400 Bayfront Plaza 95052
Santa Clara, California
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 764-5000
Item 2. Acquisition or Disposition of Assets
(a) On October 18, 1994, pursuant to an Asset Purchase
Agreement dated September 18, 1994 (the "Agreement") among 3Com
Corporation (the "Company"), NiceCom, Ltd., an Israeli corporation
("NiceCom"), Nice Systems, Ltd., an Israeli corporation and the parent
company of NiceCom ("Nice Systems"), Nice Software, Ltd., an Israeli
corporation affiliated with Nice Systems, and Nachman Shelef and Avinoam
Rubinstein, as such Agreement was amended on October 17, 1994, the Company
and 3Com Israel, Ltd., an Israeli corporation and wholly-owned subsidiary
of the Company ("Sub"), purchased substantially all the assets and assumed
substantially all the liabilities of NiceCom (the "Acquisition"). The
negotiated value for the purchase of the assets and liabilities of NiceCom
was approximately $53.0 million. Such $53.0 million amount was paid using
funds from the Company's working capital and the issuance of 93,162 shares
of Common Stock of the Company, with an aggregate value of approximately
$3.5 million that was issued to Messrs. Shelef and Rubinstein. Under the
terms of the Agreement, a portion of such cash and stock was deposited into
an escrow account as security for the indemnification of the Company by
NiceCom for breaches of the representations, warranties and covenants of
NiceCom set forth in the Agreement. Except with respect to breaches of
certain representations and warranties, such account is the sole and
exclusive source of any claim or remedy by the Company against NiceCom or
its stockholders in connection with the Acquisition. Subject to reduction
based on outstanding or resolved claims, the cash and stock in such account
will be distributed to NiceCom and Messrs. Shelef and Rubinstein in the
future. In addition to the purchase price for the assets, 3Com assumed
all outstanding options held by NiceCom employees with an aggregate value
of approximately $5.5 million.
Prior to the Acquisition, no material relationship existed between
the Company and NiceCom or any of its affiliates, any director or officer
of the Company, or any associate of any such director or officer.
NiceCom is engaged in the business of developing, manufacturing,
marketing and servicing computer networking equipment. The Company intends
to continue developing and integrating the NiceCom product technology
into the Company's business.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) It is currently impracticable to provide audited
financial statements of NiceCom for the year ended
December 31, 1993. The Company intends to file the
required financial statements on or before January 2,
1995.
(b) It is currently impracticable to provide any pro forma
financial information of NiceCom that would be required
pursuant to Article 11 of Regulation S-X. The Company
intends to file all required pro forma financial
information on or before January 2, 1995.
(c) The following exhibits are attached hereto and filed
herewith:
7.1* Asset Purchase Agreement dated September 18, 1994
among 3Com Corporation, NiceCom, Ltd., Nice
Systems, Ltd., Nice Software, Ltd., and Nachman
Shelef and Avinoam Rubinstein.
7.2 First Amendment to Asset Purchase Agreement dated
October 17, 1994 between 3Com Corporation and
NiceCom, Ltd.
* Confidential treatment has been requested as to a
portion of this Exhibit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
3COM CORPORATION
November 1, 1994 By: \s\ Christopher B. Paisley
_______________________________
Christopher B. Paisley
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit Document
7.1* Asset Purchase Agreement dated
September 18, 1994 among 3Com Corporation,
NiceCom, Ltd., Nice Systems, Ltd., Nice Software, Ltd.,
and Nachman Shelef and Avinoam Rubinstein
7.2 First Amendment to Asset Purchase Agreement
dated October 17, 1994 between 3Com Corporation
and NiceCom, Ltd.
* Confidential treatment has been requested as to a portion of this Exhibit.
ASSET PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 18, 1994
BY AND AMONG
NICECOM, LTD., AS SELLER,
3COM CORPORATION, AS PURCHASER,
NICE SYSTEMS, LTD., NICE SOFTWARE, LTD.
AND NACHMAN SHELEF AND AVINOAM RUBINSTEIN
TABLE OF CONTENTS
ARTICLE I - Purchase and Sale; Purchase Price, Manner of Payment and Closing
1.1 Purchase and Sale
1.2 Purchase Price
1.3 Cash Consideration and Stock Consideration
1.4 Issuance of Restricted Shares
1.5 Manner of Payment of the Purchase Price
1.6 Time and Place of Closing
ARTICLE II - Purchase and Sale of Assets
2.1 Agreement to Purchase and Sell
2.2 Enumeration of the Purchased Assets
2.3 Excluded Assets
2.4 Sale of the Purchased Assets to Purchaser and
Certain of its Affiliates
ARTICLE III - Assumption of Liabilities
3.1 Agreement to Assume
3.2 Definition of Assumed Liabilities
3.3 Excluded Liabilities
3.4 No Expansion of Third Party Rights
ARTICLE IV - Representations and Warranties
4.1 General Statement
4.2 Purchaser's Representations and Warranties
4.3 Seller's Representations and Warranties
4.4 Nice Systems' Representations and Warranties
ARTICLE V - Conduct Prior to the Closing
5.1 General
5.2 Seller's Obligations
5.3 Purchaser's Rights and Obligations
5.4 Joint Obligations
5.5 Key Shareholders' Obligations
ARTICLE VI - Conditions to Closing
6.1 Conditions to Seller's Obligations
6.2 Conditions to Purchaser's and Sub's Obligations
ARTICLE VII - Closing
7.1 Form of Documents
7.2 Purchaser's Deliveries
7.3 Seller's Deliveries
ARTICLE VIII - Post-Closing Agreements
8.1 Post-Closing Agreements
8.2 Inspection of Records
8.3 Benefits of Nonassignable Rights
8.4 Fibronics Agreement
8.5 Use of Trade Secrets
8.6 Use of Trademarks
8.7 Payments of Accounts Receivable
8.8 Third Party Claims
8.9 Further Assurances
8.10 Non-Assignment
ARTICLE IX - Indemnification
9.1 General
9.2 Seller's Indemnification Covenants
9.3 Escrow Fund
9.4 Limitations on Seller's Indemnification
Obligations
9.5 Purchaser's Indemnification Covenants
9.6 Limitations on Purchaser's Indemnification
Obligations
9.7 Third Party Claims
ARTICLE X - Effect of Termination/Proceeding
10.1 General
10.2 Right to Terminate
10.3 Certain Effects of Termination
10.4 Remedies
10.5 Right to Damages
ARTICLE XI - Miscellaneous
11.1 Investment Banking Fee
11.2 Expenses
11.3 Sales and Transfer Taxes
11.4 Definition of Best Efforts and Seller's
Knowledge
11.5 Publicity
11.6 Notices
11.7 Entire Agreement
11.8 Non-Waiver
11.9 Counterparts
11.10 Severability
11.11 Applicable Law; Jurisdiction and Venue
11.12 Binding Effect; Benefit
11.13 Assignability
11.14 Amendments
11.15 Headings
11.16 Governmental Reporting
11.17 Waiver of Trial by Jury
TABLE OF EXHIBITS
Exhibit 2.2(b) -List of Excluded Equipment
Exhibit 2.2(g)-List of Excluded Supply Agreements
Exhibit 2.2(h)-List of Excluded License Agreements
Exhibit 2.3(c)-List of Excluded Assets
DEFINED TERMS
Defined Term Section Where Defined
Accounts Receivable 2.2(d)
Acquisition Recital B
Affiliate 2.1
Aggregate Consideration 1.2
Agreement Preamble
Ancillary Agreements 4.2(b)
Assumed Liabilities 3.1
Assumed Options 6.1(g)
Business Recital A
Cash Consideration 1.3
Closing 1.6
Closing Date 1.6
Confidential Information 8.11
Confidentiality Agreement 4.2(b)
Disclosing Party 8.11
Disclosure Schedule 4.1
Employee 5.3(d)
Environmental Law 4.3(y)
Equipment 2.2(b)
Escrow Agreement 1.5(b)
Escrow Fund 1.5(b)
Excluded Assets 2.1
Excluded Liabilities 3.1
Expiration Date 5.4(b)
Financial Statements 4.3(h)
Incentive Plan 5.3(e)
Indemnified Party 9.7(a)
Indemnifying Party 9.7(a)
Key Employees 6.2(i)
Key Employee Agreement 4.2(b)
Key Shareholders Preamble
Material Adverse Effect 4.3(c)
Material Consents 6.2(h)
Nice Systems Preamble
OCS 5.4(c)
Option Assumption Agreement 6.1(g)
Pension Plans 4.3(t)
Proprietary Rights 4.3(ab)
Purchaser Indemnities 9.2
Purchased Assets Recital B
Purchaser Preamble
Purchaser Closing Price 1.3
Receiving Party 8.11
Restricted Shares 1.3
Restricted Stock Agreements 6.1(h)
Rubinstein Preamble
SEC Documents 4.2(g)
Seller Preamble
Seller Components 4.3(ad)
Seller Indemnities 9.5
Seller Intellectual Property Rights 2.2(i)
Seller Option 6.1(g)
Shelef Preamble
Software Products 2.2(n)
Stock Consideration 1.3
Sub 1.1
Subsidiary 2.2(r)
Third Party Claim 9.7(a)
Third Party Licenses 4.3(ab)
Third Party Technology 4.3(ab)
Value of the Stock Consideration 1.3
Welfare Plans 4.3(t)
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT ("Agreement") is made as of
September 18, 1994 by and among NICECOM, LTD., a company
organized under the laws of Israel ("Seller"), 3COM CORPORATION,
a California corporation ("Purchaser"), and for the purposes of
Sections 4.4, 5.4(b), 5.5 and Article IX only, Nice Systems, Ltd.
("Nice Systems"), Nice Software, Ltd., Nachman Shelef ("Shelef")
and Avinoam Rubinstein ("Rubinstein") (Nice Systems, Nice
Software and Messrs. Shelef and Rubinstein are sometimes
collectively referred to herein as the "Key Shareholders").
RECITALS
A. Seller is engaged in, among other businesses, the
business of designing, developing, manufacturing, distributing,
marketing and selling a variety of ATM local area networking
(LAN) products and applications. Such business is referred to
herein as the "Business".
B. Seller desires to sell substantially all of its assets
of the Business (as further identified in Section 2.2(c) below)
to Purchaser or to a Purchaser Affiliate (as herein defined), and
such other of its assets relating primarily to the Business as
are specifically identified in this Agreement, to Purchaser or to
a Purchaser Affiliate. The assets of Seller to be sold hereunder
are referred to herein as the "Purchased Assets." Purchaser
desires to purchase, and to cause certain of its Affiliates to
purchase, the Purchased Assets from Seller, all on the terms and
subject to the conditions contained in this Agreement. Such
purchase and sale of the Purchased Assets is sometimes referred
to herein as the "Acquisition."
C. In consideration of Purchaser's obligations hereunder,
the Key Shareholders have agreed to vote in favor of the
transactions contemplated by this Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I
Purchase and Sale; Purchase Price, Manner of Payment and Closing
1.1 Purchase and Sale. Purchaser or a subsidiary of
Purchaser ("Sub") shall purchase the Purchased Assets and assume
the Assumed Liabilities (both as defined below) at the Closing in
exchange for the Aggregate Consideration (as defined below).
1.2 Purchase Price. In consideration of the sale,
conveyance, assignment, transfer and delivery of the Purchased
Assets, Purchaser shall (a) pay, or cause Sub to pay, to Seller,
the Aggregate Consideration (as herein defined) and (b) assume,
or cause Sub to assume, the Assumed Liabilities. As used herein,
"Aggregate Consideration" means Fifty Three Million Thirty-Seven
Thousand U.S. Dollars ($53,037,312) in value comprised of the
Cash Consideration and the Stock Consideration determined as
follows.
1.3 Cash Consideration and Stock Consideration. "Cash
Consideration" shall mean the cash consideration to be paid to
Seller as consideration for the Purchased Assets, which shall be
Fifty Three Million Thirty-Seven Thousand Three Hundred and
Twelve U.S. Dollars ($53,037,312) minus the Value of the Stock
Consideration. "Stock Consideration" shall mean the Purchaser
Common Stock to be issued by Purchaser and delivered to Shelef
and Rubinstein pursuant to Section 1.4 (the "Restricted Shares").
The Stock Consideration shall be allocated as follows (where the
dollar amounts are the value of Purchaser stock subject to such
stock rights): an aggregate of $3,519,817 in Restricted Shares to
Shelef and Rubinstein distributed in proportion to their
respective stock held in Seller. The "Value of the Stock
Consideration" shall be equal to the Purchaser Closing Price
multiplied by the number of Restricted Shares. "Purchaser
Closing Price" shall mean the average of the closing prices of a
share of Purchaser's common stock on the ten (10) consecutive
trading days up to and including the second trading day prior to
the Closing Date. Seller shall be responsible for distributing
the Stock Consideration to Shelef and Rubinstein in proportion to
their equity interests in Seller.
1.4 Issuance of Restricted Shares. Purchaser shall issue
for distribution to Shelef and Rubinstein an aggregate number of
shares of Purchaser Common Stock equal to $3,519,817 divided by
the Purchaser Closing Price. [ ] of
the number of shares so issued shall be delivered to Seller for
distribution to Shelef and Rubinstein at the Closing. [
] of the number of shares so issued will be
held in the Escrow Fund pursuant to the Escrow Agreement as set
forth in Section 1.5(c). Such Restricted Shares shall be subject
to the following restrictions: (a) such shares shall be issued
pursuant to the terms and conditions of Purchaser's Restricted
Stock Plan (or terms substantially similar thereto), and (b) such
shares shall be subject to vesting over two years in equal annual
increments (i.e., one-half of such shares shall vest on the first
anniversary of the Closing Date and one-half shall vest on the
second anniversary of the Closing Date), provided that Shelef and
Rubinstein are employed by Purchaser on such anniversaries,
provided further, that such shares shall vest if Shelef and
Rubinstein are terminated for Purchaser's convenience and not for
"cause" as such term is defined in the agreement regarding the
Restricted Shares.
1.5 Manner of Payment of the Purchase Price. The Purchase
Price shall be payable as follows:
(a) At the Closing, (i) Purchaser shall deliver to
Seller the Cash Consideration, less [ ] of
the Cash Consideration to be delivered into escrow pursuant to
Section 1.5(b), by wire transfers or immediately available funds,
(ii) Purchaser or Sub shall assume the Assumed Liabilities, and
(iii) Purchaser shall issue the Restricted Shares as provided in
Section 1.4 less [ ] of the Stock
Consideration to be delivered into escrow pursuant to Section
1.5(c). Said wire transfers shall be made to such bank accounts
as Seller shall specify by written notice to Purchaser delivered
at least five (5) business days before the Closing Date. For
purposes of paying the Cash Consideration, all amounts paid to
Seller shall be paid in U.S. dollars.
(b) Subject to the applicable provisions of Israel's
currency control regulations, the parties shall establish an
escrow account maintained by a mutually agreeable escrow agent
located in the United States into which Purchaser shall deposit
on the Closing Date [ ] of the
Cash Consideration pursuant to Section 1.5(a) (the "Escrow
Fund"). The escrow deposits shall be made in accordance with a
mutually agreed escrow agreement (the "Escrow Agreement").
(c) Purchaser shall deposit on the Closing Date with
the Escrow Agent under the Escrow Agreement [ ] of
the Stock Consideration.
1.6 Time and Place of Closing. Subject to the remaining
provisions of this Section 1.6, the transactions contemplated by
this Agreement shall be consummated (the "Closing") at 4:00 p.m.
Israel time, at the offices of Seller on October 17, 1994 or on
such later date that the conditions of Closing set forth in
Sections 6.1 and 6.2 hereof are satisfied or waived, provided
that neither party has exercised its right to terminate this
Agreement under Section 10.2(b), or on such other date, or at
such other place, as shall be mutually agreed upon by Seller and
Purchaser. The date on which the Closing shall be scheduled to
occur in accordance with the preceding sentence is referred to in
this Agreement as the "Closing Date". If the Closing shall
occur, it shall be deemed to be effective at 12:01 a.m. on the
Closing Date at each place where the Purchased Assets are
located.
ARTICLE II
Purchase and Sale of Assets
2.1 Agreement to Purchase and Sell. On the terms and
subject to the conditions contained in this Agreement, Purchaser
agrees to purchase or to cause Sub to purchase, and Seller agrees
to sell the Purchased Assets as of the Closing Date, wherever
situated and located. Specifically excluded from the Purchased
Assets are the items described in Section 2.3 hereof (the
"Excluded Assets"). The word "conduct" as used herein in the
phrase "conduct of the Business" means active or inactive
conduct. As used herein, an "Affiliate" is any person or entity
which controls a party to this Agreement, which that party
controls, or which is under common control with that party. The
word "control" means the power, direct or indirect, to direct or
cause the direction of the management and policies of a person or
entity through voting securities, through contract or otherwise.
2.2 Enumeration of the Purchased Assets. The Purchased
Assets shall include all of the assets of Seller, including, but
not limited to, the following, if any, but excluding the Excluded
Assets:
(a) all product-related inventory, wherever located,
held for use primarily in the conduct of the Business, including,
without limitation, raw materials, work in process, finished
goods, service parts and supplies (including, without limitation,
all supplies which have been expensed), and all claims and rights
with respect thereto, including, without limitation, all rights
against suppliers thereof under warranties;
(b) all furniture, fixtures, equipment, machinery,
parts, tools, dies, jigs, patterns, molds, automobiles, trucks
and other motor vehicles (including, without limitation, that
which has been fully depreciated), all claims and rights with
respect thereto, including, without limitation, all rights
against suppliers thereof under warranties, and any leaseholds
therein, except as enumerated in Exhibit 2.2(b) - List of
Excluded Equipment (collectively, the "Equipment");
(c) all leasehold interests and leasehold improvements
created by those leases for Seller's Tel Aviv, Israel facilities;
(d) all trade accounts receivable arising from the
sale or lease of the products of the Business (collectively the
"Accounts Receivable");
(e) all cash, cash equivalents, securities, notes
payable or other debts owed to Seller and deposits and rights
with respect to the Purchased Assets, and all lock-box accounts
which are used in the conduct of the Business, located in, or
arising under the laws of (i) Israel; or (ii) the United States,
as enumerated in the Disclosure Schedule (as defined below);
(f) all licenses, permits and operating rights which
relate primarily to the conduct of the Business in each case to
the extent they are legally transferable by Seller;
(g) all supply agreements, contract manufacturing
agreements, service agreements, technical service agreements and
other contracts to which Seller is a party, and all purchase
orders, purchase contracts, quotations and bids, relating to the
manufacture, acquisition, supply and servicing of the products of
the Business, or of any parts, components or materials thereof,
to the extent they are legally transferable by Seller, except as
enumerated in Exhibit 2.2(g) - List of Excluded Supply
Agreements;
(h) all license agreements, distribution agreements,
sales representative agreements, service agreements, supply
agreements, franchise agreements and technical service
agreements, and all rights under all sales orders and sales
contracts, relating to the distribution, marketing and sale of
the products of the Business, in each case to the extent they are
legally transferable by Seller, and except as enumerated in
Exhibit 2.2(h) - List of Excluded License Agreements;
(i) all intellectual property rights, whether held by
Seller as owner or as licensee, associated with the conduct of
the Business, including, without limitation, patents and
applications therefor, know-how, unpatented inventions, trade
secrets, secret formulas, business and marketing plans, mask work
rights, industrial property rights, copyrights, copyright
registrations and applications therefor, trademarks and
applications therefor, service mark registrations and
applications therefor, unregistered trademarks and service marks,
trade names and applications therefor, and all names and slogans
used by Seller in the conduct of the Business, (all of the
foregoing being referred to as "Seller Intellectual Property
Rights");
(j) originals of all tangible records of intellectual
property and registrations thereof, customer lists, customer
records and similar information relating to the ongoing conduct
of the Business, including, without limitation, blueprints,
drawings and other technical papers, accounts receivable and
payable, inventory, maintenance, and asset records;
(k) copies of all books and records relating primarily
to the prior conduct of the Business, including, without
limitation, tax returns, payroll, employee benefit, accounts
receivable and payable, inventory, maintenance, and asset history
records, ledgers, and books of original entry;
(l) all rights in connection with prepaid expenses
relating to the Purchased Assets;
(m) management insurance policies or such other
policies or funds as are in place for each employee who accepts
employment from Purchaser as to whom such policy is maintained by
Seller;
(n) all proprietary software associated with the
Business (the "Software Products");
(o) all computer software and hardware used in the
conduct of the Business including all documentation and source
codes with respect to such software, to the extent they are
legally transferable by Seller;
(p) all sales and promotional materials, catalogues
and advertising literature relating to the Business;
(q) all rights of indemnification, claims or causes of
action to the extent they arise out of or relate to the conduct
of the Business whether before or after the Closing Date,
including, without limitation, those against any person under any
purchase or other agreement pursuant to which Seller or any of
its Affiliates acquired any portion of the Business or those
arising by operation of law or equity or otherwise to the extent
such rights are transferable; and
(r) the stock or other securities of NiceCom Inc., a
Delaware corporation ("Subsidiary"), held by Seller, and
Subsidiary's corporate charters, minutes and stock record books
and corporate seals (or equivalent), it being agreed that the
amount allocated to this asset is $10,000.
2.3 Excluded Assets. All assets of the Seller that are not
specified within Section 2.2, read together with the Exhibits
referenced therein, are referred to herein as "Excluded Assets".
Excluded Assets include, but are not limited to, the following:
(a) Seller's corporate charters, minute and stock
record books and corporate seals (or equivalent);
(b) that certain agreement dated November 2, 1993
between Seller and ESL; and
(c) all assets identified as excluded from purchase
under Exhibit 2.3(c) - List of Excluded Assets.
2.4 Sale of the Purchased Assets to Purchaser and Certain
of its Affiliates. The Purchased Assets shall be sold,
transferred, assigned and conveyed by Seller to Purchaser and
certain of its Affiliates pursuant to a Bill of Sale and such
other documents as may be necessary to transfer title thereto.
ARTICLE III
Assumption of Liabilities
3.1 Agreement to Assume. At the Closing, Purchaser shall
assume and agree to discharge and perform when due, or shall
cause Sub to assume and agree to discharge and perform when due,
the liabilities and obligations of Seller and the Subsidiary with
respect to the Business which are defined in Section 3.2 hereof
(the "Assumed Liabilities"). All claims against and liabilities
of Seller described in Section 3.3 hereof are collectively
referred to herein as the "Excluded Liabilities". Purchaser and
Sub shall not assume, and Seller and its Affiliates shall remain
liable for, the Excluded Liabilities.
3.2 Definition of Assumed Liabilities. The Assumed
Liabilities shall consist of all of the liabilities and
obligations of Seller with respect to the Business or the
Purchased Assets, including, but not limited to, the liabilities
and obligations set forth in this Section 3.2, but shall not
include the liabilities and obligations set forth in Section 3.3:
(a) all accounts payable (but only to the extent
reflected in the Financial Statements or as otherwise disclosed
in the Disclosure Schedule) or incurred after June 30, 1994 in
the ordinary course of business (as such terms are defined
herein);
(b) all accrued holiday (as distinguished from
vacation) pay, vacation pay and severance amounts which are owed
or contingently payable to employees or other representatives of
the Business (but, in each case, only to the extent reflected in
the Financial Statements or as otherwise disclosed in the
Disclosure Schedule or accrued in the ordinary course of business
after June 30, 1994, and only with respect to those employees who
accept employment with Purchaser at the time of the Closing);
(c) those liabilities and obligations arising after
the Closing Date, whether or not reflected on the balance sheet
contained in the Financial Statements (as herein defined) or
Disclosure Schedule, under any written purchase order, sales
order, lease, agreement or commitment of any kind to which Seller
is bound on the Closing Date and under permits, licenses,
governmental approvals, orders, directives and agreements
provided, in each case, such items are assigned to Purchaser or
Sub pursuant to this Agreement under Section 2.2;
(d) product warranty liabilities and obligations
relating to the replacement or repair of products of the Business
shipped prior to the Closing Date, which Seller represents are
not significant and are not in excess of industry standards for
similar products.
3.3 Excluded Liabilities. The Excluded Liabilities shall
consist solely of the liabilities and obligations of Seller with
respect to the Business or the Purchased Assets set forth in this
Section 3.3:
(a) that certain agreement dated November 2, 1993
between Seller and ESL. Purchaser or Sub shall grant Nice
Systems a nonexclusive license to manufacture the products
subject to the contract on commercially reasonable terms,
including a royalty payable to Purchaser or Sub of approximately
ten percent (10%) on products manufactured by or for Nice Systems
from and after the Closing. Purchaser shall provide on a
contract basis at its then current rates second-line support and
software resources for bug fixes (but not for future enhancements
of such products); and
(b) all legal, accounting, investment banking,
broker's and finder's fees incurred by Seller and/or its
shareholders with respect to the negotiation, execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby.
3.4 No Expansion of Third Party Rights. The assumption by
Purchaser or Sub of the Assumed Liabilities, and the transfer
thereof by Seller, shall in no way expand the rights or remedies
of any third party against Purchaser or Sub or Seller, as the
case may be, as compared to the rights and remedies which such
third party would have had against Seller had Purchaser not
assumed or caused Sub to assume such liabilities.
ARTICLE IV
Representations and Warranties
4.1 General Statement. The parties hereto make the
representations and warranties to each other which are set forth
in this Article IV. All such representations and warranties
shall survive the Closing, and none shall merge into any
instrument of conveyance. All representations and warranties of
the Seller are made subject to the exceptions which are noted in
the schedule delivered by the Seller to the Purchaser
concurrently herewith and identified as the Disclosure Schedule
(the "Disclosure Schedule").
4.2 Purchaser's Representations and Warranties. Purchaser
represents and warrants to Seller that, except as set forth in
the Disclosure Schedule:
(a) Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of California. As
of the Closing Date, Sub will be a corporation duly existing
under the laws of its place of incorporation.
(b) Purchaser has full corporate power and authority
to enter into and perform this Agreement, the Escrow Agreement,
the Bill of Sale, that certain Mutual Nondisclosure Agreement
dated June 30, 1994 by and between Seller and Purchaser (the
"Confidentiality Agreement") and the key employee agreements to
be entered into pursuant to Section 6.2(i) (the "Key Employee
Agreements" and together with the Restricted Stock Agreements
defined in Section 6.1(h), the Escrow Agreement, the
Confidentiality Agreement and such other agreements
contemporaneously entered herewith, the "Ancillary Agreements")
and all other documents, agreements, certificates and instruments
to be delivered by it pursuant to this Agreement or the Ancillary
Agreements. As of the Closing Date, Sub will have the full power
and authority under applicable corporate law and its
organizational documents to enter into and perform the Agreement,
Ancillary Agreements to which it is a party and all documents,
agreements, certificates and instruments to be delivered by it
pursuant to this Agreement or the Ancillary Agreements to which
it is a party. This Agreement has been duly executed and
delivered by a duly authorized officer of Purchaser. On the
Closing Date, each of the Ancillary Agreements and all documents,
agreements, certificates and instruments to be delivered by
Purchaser or Sub pursuant to this Agreement or the Ancillary
Agreements will be duly executed and delivered by a duly
authorized officer of Purchaser or Sub, as the case may be. This
Agreement is valid, binding and enforceable against Purchaser,
and each of the Ancillary Agreements and documents, agreements,
certificates and instruments to be delivered by Purchaser or Sub
pursuant to this Agreement or the Ancillary Agreements will be
valid, binding and enforceable against Purchaser or Sub, as the
case may be, in accordance with their terms (except to the extent
that enforcement thereof is affected by laws pertaining to
bankruptcy, reorganization, insolvency, and creditors' rights and
by the availability of injunctive relief, specific performance
and other equitable remedies).
(c) No consent, authorization, order or approval of,
or filing or registration with, any governmental authority or
other person is required for the execution and delivery of this
Agreement and the consummation by Purchaser and Sub of the
transactions contemplated by this Agreement and the Ancillary
Agreements.
(d) Neither the execution and delivery of this
Agreement by Purchaser, nor the execution and delivery of the
Ancillary Agreements by Purchaser or Sub, nor the consummation by
Purchaser or Sub of the transactions contemplated hereby and
thereby, will conflict with or result in a breach of any of the
terms, conditions or provisions of Purchaser's and Sub's
respective Articles of Incorporation or By-laws, or similar
organizational documents, or of any statute or administrative
regulation, or of any order, writ, injunction, judgment or decree
of any court or governmental authority or of any arbitration
award.
(e) Neither Purchaser nor Sub is a party to, or bound
by, any material unexpired, undischarged or unsatisfied written
or oral contract, agreement, indenture, mortgage, debenture, note
other instrument under the terms of which performance by
Purchaser and Sub according to the terms of this Agreement and
the Ancillary Agreements will be a default or an event of
acceleration, or whereby timely performance by Purchaser and Sub
according to the terms of this Agreement and the Ancillary
Agreements may be prohibited, prevented or delayed.
(f) With the exception of Morgan Stanley & Co.
Incorporated, neither Purchaser nor any of its Affiliates
(including Sub) has dealt with any person, firm or corporation
who is or may be entitled to a broker's commission, finder's fee,
investment banker's fee or similar payment for arranging the
transactions contemplated hereby or introducing the parties to
each other.
(g) Purchaser had made available to Seller true,
accurate and complete copies of Purchaser's most recent reports
on Forms 10-K, 10-Q and any report on Form 8-K filed since the
most recent 10-Q (collectively, the "SEC Documents"). As of
their respective filing dates, the SEC Documents complied in all
material respects with the requirements of the Securities and
Exchange Act of 1934, as amended, or the Securities Act of 1933,
as amended, and taken together, the SEC Documents contained no
untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances in
which they were made, not misleading except to the extent
corrected by subsequently filed SEC Documents.
(h) There is no litigation or proceeding, in law or in
equity, and there are no proceedings or governmental
investigations before any commission or other administrative
authority, pending, or to Purchaser's knowledge, threatened
against Purchaser which, if decided adversely to Purchaser, would
have a material adverse effect on the business of Purchaser and
which is not set forth in the SEC Documents.
4.3 Seller's Representations and Warranties. Seller
represents and warrants to Purchaser that, except as set forth in
the Disclosure Schedule:
ORGANIZATION
(a) Seller is a corporation duly existing under the
laws of its place of incorporation. Seller has all necessary
power and authority under applicable corporate law and its
organizational documents to conduct the Business as the Business
is now being conducted.
(b) The authorized capital stock of Seller consists of
20,000,000 shares of common stock, par value NIS 0.01, of which
14,201,942 shares are issued and outstanding as of the date
hereof and held of record by Seller's respective stockholders as
set forth and identified in the stockholder lists provided to
Purchaser or its representatives. All of such shares have been
duly authorized and are validly issued, fully paid and
nonassessable.
As of the date hereof, 1,509,831 shares of Seller common
stock are available or reserved for issuance under Seller's stock
option plan, 1,031,834 of which are subject to duly authorized
and outstanding options granted in January 1994, 200,000 of which
are subject to duly authorized and outstanding options granted in
April 1994 and 278,000 of which Seller intends to grant prior to
the Closing Date in accordance with Section 6.2(p). Menachem
Kenan does not hold any rights to acquire stock or other
securities of Seller, and has no rights against the Seller.
Except for a warrant to purchase 457,028 shares of Seller
common stock, which warrant will be exercised or terminated on or
before the Closing, and except as otherwise set forth in the
Disclosure Schedule, Seller does not have any other shares of its
capital stock issued or outstanding and does not have any other
outstanding subscriptions, options, warrants rights or other
agreements or commitments obligating Seller to issue shares of
its capital stock or other securities.
(c) The Subsidiary is the sole subsidiary of Seller
and has qualified as a foreign corporation and is in good
standing, under the laws of all jurisdictions where the nature of
the Business or the nature or location of the assets which are
used primarily in the Business by such Subsidiary requires such
qualification and where the failure to so qualify would have a
Material Adverse Effect (as herein defined). As used herein,
"Material Adverse Effect" means a material adverse effect on the
business, financial condition, operations, assets or liabilities
of the Business, taken as a whole.
(d) No consent, authorization, order or approval of,
or filing or registration with, any governmental authority or
other person is required for the execution and delivery of this
Agreement and the consummation by Seller of the transactions
contemplated by this Agreement and the Ancillary Agreements to
which it is a party.
(e) Seller has full corporate power and authority to
enter into and perform this Agreement and all other documents,
agreements, certificates and instruments to be delivered by it
pursuant to this Agreement or the Ancillary Agreements to which
it is a party. This Agreement has been duly executed and
delivered by a duly authorized officer of Seller. On the Closing
Date, each of the Ancillary Agreements and all documents,
agreements, certificates and instruments to be delivered by
Seller or the Subsidiary, pursuant to this Agreement or the
Ancillary Agreements will be duly executed and delivered by a
duly authorized officer of Seller or such Subsidiary, as the case
may be. This Agreement is valid, binding and enforceable against
Seller, and each of the Ancillary Agreements and documents,
agreements, certificates and instruments to be delivered by
Seller pursuant to this Agreement or the Ancillary Agreements
will be valid, binding and enforceable against Seller or the
Subsidiary, as the case may be, in accordance with their terms
(except to the extent that enforcement thereof is affected by
laws pertaining to bankruptcy, reorganization, insolvency and
creditors' rights and by the availability of injunctive relief,
specific performance and other equitable remedies).
(f) Neither the execution and delivery of this
Agreement by Seller, nor the execution and delivery by Seller of
the Ancillary Agreements to which it is a party nor the
consummation by Seller of the transactions contemplated hereby
and thereby, will conflict with or result in a breach of any of
the terms, conditions or provisions of Seller's Articles of
Incorporation or By-laws, or similar organizational documents, or
of any statute or administrative regulation, or of any order,
writ, injunction, judgment or decree of any court or any
governmental authority or of any arbitration award.
FINANCIAL
(g) The audited balance sheets of the Business as of
December 31, 1993 and the audited consolidated statements of
earnings of the Business for the years then ended, complete and
accurate copies of which are attached to the Disclosure Schedule,
present fairly the consolidated financial position of the
Business as of the dates of said balance sheets, and the
consolidated results of operations of the Business for the
periods covered by said statements of earnings, in accordance
with Israeli GAAP consistently applied.
(h) The unaudited balance sheet of the Business as of
June 30, 1994 and the unaudited statement of earnings of the
Business for the six-month period, a complete and accurate copy
of which is attached to the Disclosure Schedule, present fairly
the consolidated financial position of the Business as of the
date of said balance sheet, and the results of operations of the
Business for the period covered by said statement of earnings, in
accordance with Israeli GAAP applied in a manner consistent with
the audited financial statements as of December 31, 1993, except
for the omission of footnote disclosures required by Israeli GAAP
and except for the omission of normal accruals generally made at
year end. The financial statements described in paragraph (g) of
this Section 4.3 and this paragraph (h) are referred to in this
Agreement as the "Financial Statements". All taxes which Seller
has been required to collect or withhold have been duly withheld
or collected and, to the extent required, have been paid to the
proper taxing authority. Seller is not a party to any tax-
sharing agreement or similar arrangement with any other party.
Seller will not be required to include any material adjustment in
taxable income for any tax period (or portion thereof) ending
after the Closing Date pursuant to any provision of the tax laws
of any jurisdiction requiring tax adjustments as a result of a
change in method of accounting implemented by Seller prior the
Closing Date for any tax period (or portion thereof) ending on or
before the Closing Date or pursuant to the provisions of any
agreement entered into by Seller prior to the Closing Date with
any taxing authority with regard to the tax liability of Seller
for any tax period (or portion thereof) ending on or before the
Closing Date. The Financial Statements include adequate reserves
appropriate under Israeli GAAP for the liabilities of Seller as
of the respective dates thereof. There are no reserves for
warranty or inventory.
(i) There are no liabilities of Seller except as (i)
reflected in the Financial Statements, (ii) disclosed in the
Disclosure Schedule, (iii) incurred after June 30, 1994 in the
ordinary course of business or (iv) under contracts assumed
hereunder and not required to be disclosed in the Disclosure
Schedule.
(j) Seller and the Subsidiary have good title to, and
the corporate power and authority to sell, the Purchased Assets,
free and clear of any liens, claims, encumbrances, mortgages,
pledges, restrictions and security interests, except for: (i)
liens for taxes not yet delinquent; (ii) statutory liens of
landlords, liens of carriers, warehousemen, mechanics and
materialmen incurred in the ordinary course of business for sums
not yet due; (iii) liens incurred or deposits made in the
ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds, and similar
obligations; and (iv) minor irregularities of title which do not
in the aggregate materially detract from the value or use of the
Purchased Assets. No unreleased mortgage, trust deed, chattel
mortgage, security agreement, financing statement or other
instrument encumbering any of the Purchased Assets has been
recorded, filed, executed or delivered.
(k) Seller has properly completed and filed all tax
returns (including, if applicable, income, excise, payroll,
capital stock, intangible, sales and use, value added,
employment, property and, without limitation by specific
enumeration of the foregoing, all other tax returns of every kind
and nature) which have heretofore been required to have been
filed by Seller and the Subsidiary. No extensions of time in
which to file any such returns are in effect. All taxes of the
type herein referred to (whether or not requiring the filing of
returns) relating to the Business, including all deficiency
assessments, additions to tax, penalties and interest of which
notice has been received which shall accrue prior to the Closing
Date, have been paid by Seller and the Subsidiary to the extent
due or are being contested by Seller and the Subsidiary in the
manner permitted by applicable law, and to the extent such taxes
are not yet due, they have been properly accrued for on Seller's
books and records as required by Israeli GAAP. There is no
action, suit, proceeding, investigation, audit or claim now
pending regarding any taxes relating to the income, properties or
operations of the Business for any period prior to the Closing.
All taxes which Seller and the Subsidiary are respectively
required by law to withhold and collect have been duly withheld
and collected, and have been paid to the proper authorities to
the extent due and payable.
CONDUCT OF BUSINESS
(l) Since June 30, 1994, neither Seller nor the
Subsidiary has, with respect to the Business:
(i) leased, licensed, sold, transferred or
encumbered any material assets, intellectual property rights or
other property associated with the Business, except for sales of
inventory in the usual and ordinary course of business;
(ii) suffered any loss, or interruption in use, of
any of its assets or properties, which is material to the
Business, taken as a whole (whether or not covered by insurance),
on account of fire, flood, riot, strike or other hazard or act of
God;
(iii) made any material change in the conduct
or nature of the Business (neither the foregoing representation
and warranty nor any other representation and warranty herein
contained shall be deemed to be breached by virtue of the entry
of Seller into this Agreement or its consummation of the
transactions contemplated hereby);
(iv) waived any material rights arising out of the
conduct of, or with respect to, the Business;
(v) paid any Affiliate or been charged by any
Affiliate any amounts whether for goods sold or services to be
rendered by their respective businesses in connection with the
Business or otherwise; except for the following in the ordinary
course and consistent with past practice: payments under the
Services Agreement between Nice Systems and Seller, or
adjustments in inter-company accounts relating to payments to
third parties;
(vi) made or committed to make any capital
expenditure in an amount in excess of $50,000;
(vii) without limitation by the enumeration of
any of the foregoing, entered into any material transaction with
respect to the Business other than in the usual and ordinary
course of business;
(viii) incurred any liabilities with respect to
the Business, other than in the ordinary course of business; or
(ix) suffered or been threatened with any change
with respect to the business or financial condition of the
Business which would have a Material Adverse Effect (other than
changes affecting the Business' industry generally).
CONTRACTS
(m) Seller has fully performed its development
obligations under (i) the agreement #658802 with ESL regarding
the development of an FDDI bridge product and (ii) the Joint
Development Agreement dated May 1, 1992 with Retix, as amended on
May 24, 1994 and supplemented by the Cooperation and Funding
Agreement with BIRD, and Seller has no further obligations under
such agreements other than support, warranty or similar
obligations, none of which are substantial.
(n) Seller has no further obligations (other than
support, warranty or similar obligations, none of which are
substantial) under the ESL manufacturing agreement #657915 (as
amended) unless Seller determines, in its discretion, to accept
additional purchase orders from ESL in which event the terms of
such agreement may be controlling.
(o) Seller has no obligation to make any payment to
BIRD Foundation pursuant to either the development agreement with
Tekelec, Inc. or the development agreement with Retix, including,
but not limited to, any obligation to make payments in the event
Tekelec or Retix fail to make payment to the BIRD Foundation of
amounts due pursuant to such contracts; provided, however, that
if Purchaser or Sub sell products developed under such agreements
to third parties or if Purchaser or Sub executes the agreement in
negotiation with Tekelec for the FTM 100 and sells such product
to Tekelec, claims may be made by BIRD Foundation that royalties
may be due to such foundation.
(p) Neither Seller nor the Subsidiary is, in
connection with the conduct of the Business, a party to, or bound
by, any undischarged written or oral:
(i) contract for the employment for any period of
time whatsoever, or restricting the employment, of any employee
of the Business;
(ii) consulting agreement;
(iii) collective bargaining agreement;
(iv) plan or contract or arrangement (whether
statutory or otherwise), other than the Pension Plans and Welfare
Plans (as defined in Section 4.3(t)), providing for bonuses
(other than an oral understanding to pay a one-time two-month
bonus in certain cases), options, deferred compensation,
incentive compensation, stock purchase, severance or termination
pay, supplemental unemployment benefits, retirement payments,
profit sharing, medical and dental insurance benefits or the
like;
(v) contract or agreement restricting in any
manner Seller's right to compete with any other person or
restricting Seller's right to sell to or purchase from any other
person;
(vi) agreement with any employee, director, parent
or Affiliate of Seller for or with respect to the purchase or
sale of goods, the performance of services or the loaning of
money and Seller has no other obligations to Nice Systems;
(vii) contract for the payment or receipt of
license fees or royalties to or from any person, firm or
corporation in an annual amount in excess of $10,000;
(viii) contract of agency, representation,
distribution, or franchise or consulting or services agreement
which cannot be canceled by Seller without payment or penalty
upon notice of sixty (60) days or less;
(ix) guaranty, performance, bid or completion
bond, or surety or indemnification agreement or guaranty of any
obligation of any third party;
(x) lease or sublease, either as lessee or
sublessee, lessor or sublessor, of personal property or
intangibles to be assigned to the Purchaser or Sub pursuant to
this Agreement or the Ancillary Agreements, where the lease or
sublease (A) provides for an annual rent in excess of $50,000 or
(B) has a remaining term as of the Closing Date in excess of two
(2) years; or
(xi) any other contract which is to be assigned to
the Purchaser or Sub pursuant to this Agreement or the Ancillary
Agreements which provides for the receipt or expenditure by
Purchaser or Sub after the Closing Date of more than $50,000,
except sales and purchase orders accepted by the Business in the
ordinary course of business.
All contracts, leases, subleases and other instruments of the
type referred to in this Section 4.3(p) and described in the
Disclosure Schedule are in full force and effect, are binding
upon Seller or a Subsidiary and, to Seller's knowledge, are
binding on the other parties thereto. No default by Seller or a
Subsidiary has occurred thereunder and, to Seller's knowledge, no
default by the other contracting parties has occurred thereunder
and Seller is not aware of any claim of any such default or of a
valid basis for any such claim.
(q) No cash or other consideration will be required to
be paid by Purchaser in order to obtain the consent of the
employees of Seller to the assignment of the employment
agreements required to be entered into pursuant to Sections
6.1(g) and 6.2(i).
(r) With the exception of provisions in contracts,
agreements, leases, licenses, approvals, permits and other
instruments which prohibit the assignment of Seller's or a
Subsidiary's rights thereunder without the consent of the other
party thereto, all of which contracts are listed in the
Disclosure Schedule, neither Seller or the Subsidiary is a party
to, or bound by, any material unexpired, undischarged or
unsatisfied written or oral contract, agreement, license,
approval, indenture, mortgage, debenture, note or other
instrument under the terms of which performance by Seller and the
Subsidiary according to the terms of this Agreement and the
Ancillary Agreements will be a default or an event of
acceleration, which default or acceleration would have a Material
Adverse Effect, or whereby timely performance by Seller and the
Subsidiary according to the terms of this Agreement and the
Ancillary Agreements may be prohibited, prevented or delayed.
(38 The Disclosure Schedule contains a list of every
material license, permit or governmental or other regulatory
approval, order, directive and agreement applied for, pending,
issued or given to Seller with respect to the Business. Seller
possesses all licenses, permits and governmental or other
regulatory approvals and authorizations which are required in
order for Seller and the Subsidiary to operate the Business as
presently conducted, where the failure to possess or be in
compliance with such licenses, permits and approvals would have a
Material Adverse Effect, and each of them is in compliance in all
material respects with all such licenses, permits, approvals and
authorizations. All fees required in connection with any of the
foregoing items have been paid in full.
EMPLOYEES
(t) The Disclosure Schedule, together with the forms
of employee contracts listed therein, describe, if applicable:
(i) all employee pension or savings benefit plans eligible to
receive tax preferred status under applicable laws which Seller
or the Subsidiary maintains, administers or contributes to for
the benefit of employees of the Business (the "Pension Plans")
and (ii) all employee health benefit plans (including, without
limitation, medical, dental and vision plans), disability plans
(including, short-term disability), life insurance, dependent
care assistance plans and educational reimbursement programs
which Seller and the Subsidiary maintain, administer or
contribute to for the benefit of employees of the Business (the
"Welfare Plans"). Seller has made sufficient provision for such
Pension Plans and Welfare Plans in accordance with Israeli GAAP
to recognized provident funds, pension funds, severance pay funds
and/or insurance companies under "Managers Insurance Policies".
(u) The Disclosure Schedule contains a list of all
salaried employees of Seller and the Subsidiary employed in
connection with the Business and their annual salaries. Said
list correctly reflects, in all material respects, their
salaries, other compensation (other than under the Pension Plans,
the Welfare Plans and other employee benefits), dates of
employment, positions and birthdates. All employees of Seller
have entered into an employment agreement in one of the three (3)
forms provided by Seller to Purchaser and Seller shall deliver
copies thereof prior to Closing.
LITIGATION AND CLAIMS
(v) There is no litigation or proceeding, in law or in
equity, and there are no proceedings or governmental
investigations before any commission or other administrative
authority, pending, or to Seller's knowledge threatened or likely
to be asserted, against Seller or the Subsidiary which relates to
the conduct of the Business, the consummation of the transactions
contemplated hereby, or the use of the Purchased Assets (whether
by Purchaser or Sub after the Closing or by Seller prior
thereto).
(w) Neither Seller nor the Subsidiary is a party to
any decree, order or arbitration award (or agreement entered into
in any administrative, judicial or arbitration proceeding with
any governmental authority) with respect to the properties,
assets, personnel or business activities of the Business.
(x) Except for laws, rules and regulations relating to
the environment (which are exclusively provided for in
Section 4.3(y) hereof), Seller is not in material violation of,
or delinquent in respect to, any decree, order or arbitration
award or law, statute, or regulation of, or agreement with, or
any license or permit from, any governmental authority to which
the properties, assets, personnel or business activities of the
Business are subject or to which Seller or the Subsidiary,
itself, is subject, including, without limitation, laws, rules
and regulations relating to occupational health and safety, equal
employment opportunities, fair employment practices, and sex,
race, religious and age discrimination.
(y) In connection with the operation of the Business,
Seller is not in violation of, or delinquent in respect to, any
material decree, order or arbitration award or law, statute, or
regulation of or agreement with, or any license or permit from,
any Israeli governmental authority to which it or its properties,
assets, personnel or Business are subject (or to which any of
them is itself subject) and which relates to the environment
(including, without limitation, laws, statutes, rules and
regulations and the common law of Israel relating to
environmental matters and contamination of any type whatsoever
("Environmental Laws")). Seller has obtained all permits,
licenses and other authorizations required under Environmental
Laws. Environmental Laws include laws, statutes, rules and
regulations relating to: (A) treatment, storage, disposal,
generation and transportation of industrial, toxic or hazardous
substances or solid or hazardous waste; (B) air, water and noise
pollution; (C) soil or ground water contamination; (D) the
release or threatened release into the environment of industrial,
toxic or hazardous substances, or solid or hazardous waste,
including, without limitation, emissions, discharges, injections,
spills, escapes, or dumping of pollutants, contaminants or
chemicals; (E) the protection of wildlife, marine sanctuaries and
wetlands; (F) the protection of natural resources; (G) storage
tanks, vessels and related equipment; (H) abandoned or discarded
barrels, containers and other closed receptacles; (I) health and
safety of employees and other persons; and (J) otherwise relating
to the manufacture, processing, use, distribution, treatment,
storage, disposal, transportation, or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous
substances or solid or hazardous waste.
REAL ESTATE
(z) Seller does not own, and the Purchased Assets do
not include, any fee or other comparable interests in any of the
real estate used primarily in the conduct of the Business.
(aa) The premises leased by Seller in Tel Aviv, Israel
and the premises leased in Lexington, Massachusetts are leased to
Seller or the Subsidiary, as the case may be, pursuant to written
leases, true and correct copies of which are identified in the
Disclosure Schedule. Neither Seller nor Subsidiary, as the case
may be, is in default under any material term of such leases. To
Seller's knowledge, there are no condemnation proceedings pending
or threatened with respect to any portion of the premises covered
by such leases.
PROPRIETARY RIGHTS
(ab) Seller owns all right, title and interest in and
to all patents, copyrights, technology, software, software tools,
know-how, processes, trade secrets, trademarks, service marks,
trade names and other proprietary rights used in or necessary for
the conduct of the Business as conducted to the date hereof or
contemplated, free and clear of all liens, claims and
encumbrances (including without limitation distribution rights)
(all of which are referred to as "Proprietary Rights") and Seller
has the right to transfer all such rights to Purchaser, except
for rights under Third Party Licenses (as hereinafter defined)
specified in the Disclosure Schedule. The foregoing
representation as it relates to Third Party Technology (as
hereinafter defined) is limited to Seller's interest pursuant to
the Third Party Licenses, all of which are valid and enforceable
and in full force and effect and which grant Seller such right to
Third Party Technology as are employed in or necessary to the
business of Seller as conducted or proposed to be conducted. The
Disclosure Schedule contains an accurate and complete list of (i)
all patents, trademarks (with separate listings of registered and
unregistered trademarks), tradenames, and registered copyrights
in or related to the Business, all applications and registration
statements therefor, and a list of all licenses and other
agreements relating thereto, and (ii) a list of all licenses and
other agreements with third parties (the "Third Party Licenses")
relating to any software, technology, know-how, or processes that
Seller is licensed or otherwise authorized by such third parties
to use, market, distribute or incorporate into products
distributed by Seller (such software, technology, know-how and
processes are collectively referred to as the "Third Party
Technology"). All of Seller's trademark or tradename
registrations related to the Business and all of Seller's
copyrights are valid and in full force and effect; and
consummation of the transactions contemplated hereby will not
alter or impair any such rights. No claims have been asserted
against Seller (and Seller is not aware of any claims which are
likely to be asserted against Seller or which have been asserted
against others) by any person challenging Seller's use or
distribution of any patents, trademarks, tradenames, copyrights,
trade secrets, software, technology, know-how or processes
utilized by Seller (including, without limitation, the Third
Party Technology) or challenging or questioning the validity or
effectiveness of any license or agreement relating thereto
(including, without limitation, the Third Party Licenses). To
Seller's knowledge, the use by Seller of Third Party Technology
is in conformance with the terms of the Third Party Licenses, and
there is no valid basis for any claim of the type specified in
the immediately preceding sentence which could interfere with the
continued enhancement and exploitation by Seller of any of its
products. To Seller's knowledge, none of its present or
contemplated products nor the use of any patents, trademarks,
tradenames, copyrights, software, technology, know-how or
processes by Seller in the Business infringes on the rights of,
constitutes misappropriation of, or in any way involves unfair
competition with respect to, any proprietary information or
intangible property right of any third person or entity,
including without limitation any patent, trade secret, copyright,
trademark or tradename.
(ac) Seller has not granted any third party any right
to manufacture, reproduce, distribute, market or exploit any of
its products or any adaptations, translations, or derivative
works based on any of Seller's Products or any portion thereof.
Except with respect to the rights of third parties to the Third
Party Technology, no third party has any right to manufacture,
reproduce, distribute, market or exploit any works or materials
of which any of the Seller's products are a "derivative work" as
that term is defined in the United States Copyright Act, Title
17, U.S.C. Section 101.
(ad) With the exception of Third Party Technology
described in Section 4.3(ab) above, all designs, drawings,
specifications, source code, object code, documentation, flow
charts and diagrams incorporating, embodying or reflecting any of
the Seller products at any stage of their development (the
"Seller Components") were written, developed and created solely
and exclusively by employees of Seller without the assistance of
any third party or entity or were created by third parties who
assigned ownership of their rights to Seller in valid and
enforceable consultant confidentiality and invention assignment
agreements. Seller has at all times used commercially reasonable
efforts to treat its products and Seller Components as containing
trade secrets and has not dealt with such items in such a manner
as to cause the loss of such trade secrets by release into the
public domain.
(ae) To Seller's knowledge, no employee of Seller is in
violation of any term of any employment contract, patent
disclosure agreement or any other contract or agreement relating
to the relationship of any such employee with Seller or, to the
best of Seller's knowledge, any other party because of the nature
of the business conducted by Seller or proposed to be conducted
by Seller.
(af) Each person presently or previously employed by
Seller (including independent contractors, if any) with access to
confidential information has executed a confidentiality and
non-disclosure agreement pursuant to the form of agreement
previously provided to Buyer or its representatives. Such
confidentiality and non-disclosure agreements constitute valid
and binding obligations of Seller and such person, enforceable in
accordance with their respective terms. To the best of Seller's
knowledge, neither the execution or delivery of such agreements,
nor the carrying on of Seller's business as employees by such
persons, nor the conduct of Seller's business as currently
anticipated, will conflict with or result in a breach of the
terms, conditions or provisions of or constitute a default under
any contract, covenant or instrument under which any of such
persons is obligated.
(ag) No product liability or warranty claims which
individually or in the aggregate could exceed $50,000 have been
communicated to or threatened against Seller nor, to the best of
Seller's knowledge, is there any specific situation, set of facts
or occurrence that provides a basis for such claim. Seller has
delivered to Purchaser its most recent list of bugs in its
products and Seller believes that such list is substantially
accurate.
GENERAL
(ah) The Purchased Assets together with the Excluded
Assets include all assets employed in the Business as conducted
by Seller and its Affiliates in the past.
(ai) The copies of all documents furnished by Seller to
Purchaser pursuant to the terms of this Agreement are materially
complete and accurate. The Disclosure Schedule contains complete
and accurate copies of all documents referred to therein.
(aj) Except for Broadview Associates, neither Seller
nor any of its Affiliates has dealt with any person, firm or
corporation who is or may be entitled to a broker's commission,
finder's fee, investment banker's fee or similar payment for
arranging the transactions contemplated hereby or introducing the
parties to each other.
(ak) The Disclosure Schedule lists the names and
locations of all banks, trusts, companies or other financial
institutions at which accounts are maintained by or for the
benefit of Seller or the Subsidiary and the names of persons
authorized to draw thereon. The Disclosure Schedule lists all
policies of fire liability or other forms of insurance maintained
by Seller, all of which are in full force and effect.
(al) No statement by Seller in this Agreement, the
Disclosure Schedule or any Ancillary Agreement to Purchaser
contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
contained herein and therein, when read together, not misleading.
(am) The inventory described in Section 2.2(a) is
saleable in the ordinary course of business and the Equipment
described in Section 2.2(b) is in good condition, normal wear and
tear excepted. SELLER MAKES NO WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE AS TO THE PURCHASED ASSETS.
4.4 Nice Systems' Representations and Warranties. Nice
Systems represents that it has transferred to Seller, or caused
its Affiliates to transfer to Seller, all intellectual property
rights related to the Business held by Nice Systems or its
Affiliates, and that Nice Systems and such Affiliates hold no
other assets related to the Business, other than financial,
administrative and operations assets used jointly by Nice Systems
and its Affiliates.
ARTICLE V
Conduct Prior to the Closing
5.1 General. Seller and Purchaser shall have the rights
and obligations with respect to the period between the date
hereof and the Closing Date (or such longer period as is
specified) which are set forth in the remainder of this
Article V.
5.2 Seller's Obligations. The following are Seller's
obligations:
(a) Seller shall abide by and cause its Affiliates and
other parties subject thereto to abide by the Confidentiality
Agreement.
(b) Upon receipt of reasonable prior notice from
Purchaser, Seller shall give, and shall cause the Subsidiary to
give, to Purchaser's officers, employees, agents, attorneys,
consultants and accountants reasonable access during normal
business hours to all of the properties, books, contracts,
documents, records and personnel of Seller relating to the
Business and shall furnish, to Purchaser such information
relating to the Business as Purchaser may at any time and from
time to time reasonably request.
(c) Seller shall carry on the Business, in the usual
and ordinary course of business in accordance with past
practices.
(d) Seller and Purchaser shall cooperate in seeking
the assignment to Purchaser or Sub of the agreements set forth in
this Section 5.2(d) to which Seller is a party.
(i) As to the following agreements, Seller agrees
that it shall either obtain the consent to such assignment of the
parties to such agreements (whether before or after the Closing
Date), or during the term of such agreement obtain for Purchaser
the benefits to Seller under such agreements. Provided that such
benefits can be obtained, Purchaser shall perform the obligations
of Seller under such agreements. By way of example, if an
agreement calls for a payment to Seller of $100,000 and such
agreement cannot be assigned to Purchaser or Sub, Seller shall
arrange for the payment to Purchaser of such amount without
offset or deduction. Such agreements shall consist solely of:
1. That certain Agreement dated August 21,
1990 by and between Taas-Mor Industrial Centre Ltd. and H.I.T.
Hermes Intelligent Technologies Ltd. as assigned to Seller
pursuant to an amendment dated February 24, 1994 (i.e., the lease
for Seller's principal place of business).
2. That certain Agreement dated August 1,
1994 by and between Seller and Eliezer Acker (i.e., the lease for
an apartment at 5 De-Lerina Street, Tel Aviv).
3. That certain Joint Development Agreement
dated May 1, 1992 with Retix, as amended.
4. Those certain agreements with Tekelec in
effect as of the date hereof. Seller covenants that it shall not
execute the agreement currently under negotiation with Tekelec
and that it shall cooperate with Purchaser in any negotiations
with Tekelec regarding such agreement either before or after the
Closing.
(ii) As to the following agreements, Seller and
Purchaser shall cooperate to seek the assignment of such
agreements or, if such assignment can not be readily obtained, to
arrange with the other party to such contracts to include the
benefits of such agreements in agreements with Purchaser (either
in amendments to existing agreements with Purchaser or in new
agreements with Purchaser). In all cases the parties shall seek
to minimize the cost to Seller in connection with such assignment
or other arrangement. The contracts covered by this subclause
(ii) are those contracts with Epilogue and Trillium.
(e) Without the prior written consent of Purchaser,
and without limiting the generality of any other provision of
this Agreement, Seller shall not, with respect to the Business do
or commit to do any of the following:
(i) incur any capital expenditures in excess of
$50,000 in the aggregate;
(ii) lease, license, sell, transfer or encumber
any asset, intellectual property right or other property
associated with the Business (including sales or transfers to
Affiliates), except for sales of inventory in the usual and
ordinary course of business and except for cash applied in
payment of Seller's liabilities in the usual and ordinary course
of business;
(iii) make any increase in the level of
compensation to its respective officers, or increase the level of
compensation payable to other full-time employees;
(iv) borrow any money which borrowings exceed in
the aggregate $50,000 except for borrowings between Seller and
Subsidiary;
(v) incur any liability other than in the
ordinary and usual course of business or in connection with the
performance or consummation of this Agreement;
(vi) encumber or permit to be encumbered any of
its assets except in the ordinary course of its business;
(vii) enter into any lease or contract for the
purchase or sale of any property, real or personal, except in the
ordinary course of business;
(viii) fail to maintain its equipment and other
assets in good working condition and repair according to the
standards it has maintained up to the date of this Agreement,
subject only to ordinary wear and tear;
(ix) pay any bonus, increased salary, or special
remuneration to any officer or employee, including any amounts
for accrued but unpaid salary or bonuses;
(x) change accounting methods;
(xi) declare, set aside or pay any cash or stock
dividend or other distribution in respect of capital, or redeem
or otherwise acquire any of its capital stock, provided that
Subsidiary may repay a loan in the amount of $50,000 made by an
Affiliate of Nice Systems;
(xii) amend or terminate any contract,
agreement or license to which it is a party except in the
ordinary course of business;
(xiii) loan any amount to any person or entity,
or guaranty or act as a surety for any obligation except for
borrowings between Seller and Subsidiary;
(xiv) waive or release any right or claim,
except in the ordinary course of business;
(xv) issue or sell any shares of its capital stock
of any class or any other of its securities, or issue or create
any warrants, obligations, subscriptions, options, convertible
securities, or other commitments to issue shares of capital stock
(except for options to purchase an aggregate of 278,000 shares of
Seller's capital stock to be granted to certain employees of
Seller pursuant to a list provided to Purchaser);
(xvi) split or combine the outstanding shares
of its capital stock of any class or enter into any
recapitalization affecting the number of outstanding shares of
its capital stock of any class or affecting any other of its
securities;
(xvii) merge, consolidate or reorganize with
any entity;
(xviii) amend its charter documents; or
(xix) make or change any election, change any
annual accounting period, adopt or change any accounting method,
file any amended tax return, enter into any closing agreement,
settle any tax claim or assessment relating to Seller, surrender
any right to claim refund of taxes, consent to any extension or
waiver of the limitation period applicable to any tax claim or
assessment relating to Seller, or take any other action or omit
to take any action, if any such election, adoption, change,
amendment, agreement, settlement, surrender, consent or other
action or omission would have the effect of increasing the tax
liability of Seller or Purchaser.
5.3 Purchaser's Rights and Obligations. The following are
Purchaser's rights and obligations:
(a) Purchaser shall abide by and cause its Affiliates
and other parties subject thereto to abide by the Confidentiality
Agreement.
(b) In the event that any license, permit or operating
right which is to be assigned to the Purchaser or Sub is not
assignable, and the Purchaser or Sub need such permit in order to
operate the portion of the Business conducted by Seller and the
Subsidiary pursuant thereto, Purchaser shall use its best efforts
and make every good faith attempt (and Seller shall use its best
efforts in cooperation with Purchaser) to obtain such a permit.
(c) Purchaser and its Affiliates shall use reasonable
efforts for a period of two years after the Closing Date to
ensure that it will not actively solicit for employment any
employees of Nice Systems or its Affiliates. Further, if Seller
advises Purchaser that Purchaser or any Affiliate is engaged in
such solicitation, Purchaser shall cease, or cause its Affiliate
to cease, such solicitation, provided such notice is received
prior to extension of a formal offer of employment.
(d) On or before the Closing Date, Purchaser shall
offer, or cause Sub to offer, to employ as of the Closing Date
substantially all of Seller's employees in positions, at
compensation, with benefits and upon terms and conditions which
are substantially identical to those offered by Seller. Each
such person who is so employed by Purchaser or Sub is hereinafter
referred to individually as an "Employee" and collectively as the
"Employees".
(e) Purchaser shall establish a bonus pool plan (the
"Incentive Plan") for Employees pursuant to which aggregate
bonuses of up to $1,000,000 will be payable at Closing or based
upon the timely development and introduction of certain products,
which products are identified in the Incentive Plan. A copy of
the Incentive Plan will be provided to Seller simultaneous with
the execution of this Agreement.
5.4 Joint Obligations. The following shall apply with
equal force to Seller and Purchaser:
(a) Without implication that such laws apply to this
transaction, the parties to this Agreement shall not comply with
the provisions of any laws relating to bulk sales or transfers.
(b) From the date hereof until the Closing, or such
earlier date as Seller and Purchaser have mutually agreed to
discontinue discussion of the Acquisition (the "Expiration
Date"), Seller will not (and it will use its best efforts to
assure that its officers, directors, employees, agents and
affiliates do not on its behalf) take any action to solicit,
initiate, seek, encourage or support any inquiry, proposal or
offer from, furnish any information to, or participate in any
negotiations with, any corporation, partnership, person or other
entity or group (other than Purchaser) regarding any acquisition
of Seller, any merger or consolidation with or involving Seller,
or any acquisition of any material portion of the assets of
Seller. Seller shall not enter into any agreement contemplating
any of the foregoing. Seller agrees to indemnify Purchaser, its
representatives and agents from and against any claims by any
party to such negotiations based upon or arising out of the
negotiation or consummation of the Acquisition, as contemplated
by this Agreement based upon any pre-existing negotiations or
arrangements with a third party. Purchaser agrees that during
the date hereof until the Expiration Date, it shall not initiate
or continue any discussions with any corporation, partnership,
person or other entity or group primarily engaged in the area of
ATM technology regarding any acquisition of, any merger or
consolidation with or involving, or any acquisition of any
material portion of the assets of such corporation, partnership,
person or other entity or group.
(c) Seller and Purchaser shall cooperate in planning
and entering into discussions with the Office of Chief Scientist
(the "OCS") and other appropriate administrative entities and use
their best efforts in order to satisfy the condition set forth in
Section 6.2(m).
(d) Neither party to this Agreement shall
intentionally perform any act which, if performed, or omit to
perform any act which, if omitted to be performed, would prevent
or excuse the performance of this Agreement by such party or by
its Affiliates as herein provided or which would result in any
representation or warranty herein contained of said party being
untrue in any material respect as if originally made on and as of
the Closing Date.
(e) In the event the Acquisition is not consummated,
Purchaser and Seller will each use its reasonable efforts to
ensure for eighteen (18) months after negotiations of the
Acquisition have been terminated in writing that neither will
actively solicit for employment any employee or employees of the
other party who has or have been involved in the discussions or
due diligence conducted in connection with the Acquisition, or as
to whom one party has provided information to the other. This
provision shall not apply to Dono Van Mierop.
5.5 Key Shareholders' Obligations.
(a) The Key Shareholders agree, to the extent a vote
is required with respect hereto, to vote in favor of the
transactions contemplated by this Agreement, as shareholders of
Seller and (if such Key Shareholders are or control directors of
Seller or Nice Systems) as directors of Seller and Nice Systems,
and to take such other steps as are reasonable on their
respective parts to cause Seller to perform its obligations
hereunder, including (i) promoting the transactions contemplated
hereby to other shareholders of Seller and (ii) not taking any
action in violation of Section 5.4(b).
(b) For a period of three (3) years from the Closing
Date, Seller and Nice Systems will not, and will each cause its
Affiliates to not (i) compete, directly or indirectly, with
Purchaser or Purchaser's Affiliates in the Business and (ii)
without Purchaser's consent solicit for employment or hire any
former employees of Seller unless such person's employment was
terminated by Purchaser.
(c) Nice Systems agrees it shall abide by and cause
its Affiliates and other parties thereto to abide by the
provisions of Section 8.11 (with the Confidential Information of
Seller deemed to be Confidential Information of Purchaser after
the Closing).
ARTICLE VI
Conditions to Closing
6.1 Conditions to Seller's Obligations. The obligation of
Seller to close the transactions contemplated hereby is subject
to fulfillment of all of the following conditions precedent on or
prior to the Closing Date:
(a) All obligations of Purchaser and Sub to be
performed hereunder through, and including on, the Closing Date
(including, without limitation, all obligations which Purchaser
and Sub would be required to perform at the Closing if the
transactions contemplated hereby were consummated) shall have
been performed in all material respects, and Seller shall receive
a certificate from Purchaser to such effect signed by the
President or a Vice President of Purchaser and Sub, respectively.
(b) The representations and warranties of Purchaser
and Sub set forth in Article IV shall be true in all material
respects on and as of the Closing with the same force and effect
as if they had been made at the Closing, and Seller shall receive
a certificate to such effect from the President or a Vice
President of Purchaser and Sub, respectively.
(c) No litigation or proceeding shall be threatened or
pending against Purchaser or Sub with the probable effect of
enjoining or preventing the consummation of any of the
transactions contemplated by this Agreement, and Seller shall
receive a certificate to such effect signed by the President or a
Vice President of Purchaser and Sub, respectively.
(d) Seller shall have received from Purchaser and Sub
written evidence that the execution, delivery and performance of
Purchaser and Sub's obligations under this Agreement have been
duly and validly approved and authorized by the Board of
Directors of Purchaser and Sub, respectively.
(e) There shall have been obtained at or prior to the
date of Closing such permits or authorizations, and there shall
have been taken such other action, as may be required by any
regulatory authority having jurisdiction over the parties and the
subject matter and the actions herein proposed to be taken.
(f) Purchaser shall have delivered to Seller the
written opinion of Gray Cary Ware & Freidenrich, counsel for
Seller, in the form reasonably satisfactory to counsel for
Seller.
(g) Purchaser shall have delivered to Seller documents
satisfactory to Seller evidencing Purchaser's assumption of the
options to acquire Seller stock held by Seller employees who
accept employment with Purchaser or Sub as of the Closing Date
(the "Assumed Options"), and the issuance (or obligation to
issue) of the Restricted Shares to Shelef and Rubinstein. In
addition, Purchaser shall enter into an agreement with each
Seller employee who holds an option to acquire Seller Stock (a
"Seller Option") providing for the assumption by Purchaser of the
obligations of Seller under such Seller Option (the "Option
Assumption Agreement"). Each Option Assumption Agreement shall
provide that, conditional upon the Closing occurring, the Seller
Option assumed by Purchaser thereby will continue to be
exercisable on the terms and conditions set forth in the option
agreement evidencing such Seller Option, except that: (a) the
Seller Option shall be exercisable for a number of shares of
Purchaser Common Stock equal to the number of shares of Seller
common stock subject to such Seller Option immediately prior to
the Closing Date multiplied by a fraction, the denominator of
which is 1,509,831 (i.e, the maximum number of shares subject to
Seller Options to be outstanding as of the Closing) multiplied by
the Purchaser Closing Price and the numerator of which is
$5,462,688 (with the resulting number of shares of Purchaser
Common Stock rounded down to the nearest whole number), (b) the
per share exercise price shall be an amount equal to the
aggregate exercise price of the Seller Option prior to the
Closing Date, divided by the number of shares of Purchaser Common
Stock subject to such Option rounded to the nearest whole cent,
(c) continuous employment with Seller, Sub or Purchaser, whether
occurring before or after the Closing Date, shall be credited to
an optionee for purposes of determining the number of shares
subject to exercise, vesting or repurchase after the Closing
Date, (d) if the option is not exercised within ninety (90) days
after termination of the optionee's employment with Purchaser,
all rights to acquire shares shall expire, and (e) [
]
(h) Purchaser and each of Messrs. Shelef and
Rubinstein shall have entered into a restricted stock agreement
(the "Restricted Stock Agreements") for the issuance of the
Restricted Shares under Purchaser's Restricted Stock Plan in
accordance with Section 1.4.
6.2 Conditions to Purchaser's and Sub's Obligations. The
obligation of Purchaser and Sub to close the transactions
contemplated hereby is subject to the fulfillment of all of the
following conditions precedent on or prior to the Closing Date:
(a) All obligations of Seller to be performed
hereunder through, and including on, the Closing Date (including,
without limitation, all obligations which Seller would be
required to perform at the Closing if the transactions
contemplated hereby were consummated) shall have been performed
in all material respects, and Purchaser shall receive a
certificate from Seller to such effect signed by the President
and Chief Financial Officer of Seller.
(b) The representations and warranties of Seller set
forth in Article IV shall be true in all material respects on and
as of the Closing with the same force and effect as if they had
been made at the Closing, and Purchaser shall receive a
certificate to such effect executed by the President and Chief
Financial Officer of Seller.
(c) No litigation or proceeding shall be threatened or
pending against Seller for the purpose or with the probable
effect of enjoining or preventing the consummation of any of the
transactions contemplated by this Agreement, or which would have
a material adverse effect on the business, liabilities, income,
property, operations or prospects of Seller subsequent to the
Closing, and Purchaser shall receive a certificate from Seller to
such effect signed by the President and Chief Financial Officer
of Seller.
(d) Seller shall have delivered to Purchaser the
written opinion of Ben-Ze'ev, Hacohen & Co. Advocates, Israeli
counsel for Seller, in the form reasonably satisfactory to
counsel for Purchaser.
(e) All program managers and eighty-five percent (85%)
of all other engineers of Seller shall have accepted employment
with Purchaser or Sub and such employees will have executed
documents evidencing consent to assignment to Purchaser or Sub of
their employment agreements with Seller.
(f) Purchaser shall have received from Seller written
evidence that (i) the execution, delivery and performance of this
Agreement and the Ancillary Agreements to which it or the
Subsidiary is a party, as the case may be, have been duly and
validly approved and authorized by the Board of Directors of Nice
Systems, the Board of Directors of Seller and by the stockholders
of Seller (such approval to include, if required, the approval of
the Seller stockholders and Shelef and Rubinstein to any
distribution of the Aggregate Consideration which is not in
conformance with Seller's charter documents or other applicable
agreements), and (ii) the approval of the member of Seller's
board representing the outside investors.
(g) There shall not have been any material adverse
changes in the financial condition, results of operations, assets
liabilities, business or prospects of Seller since the date of
this Agreement.
(h) Purchaser shall have received all written
consents, assignments, waivers, authorizations or other
certificates reasonably deemed necessary by Purchaser's legal
counsel to provide for the assignment to Purchaser of Seller's
agreements with [ ] and the quote to Seller from [
] (as to which quote a letter from [ ] stating that it
will supply Purchaser with the products on the terms as provided
in such quote shall be satisfactory). Such consents etc. are
sometimes referred to herein as the "Material Consents."
(i) Messrs Shelef, Rubinstein and Arik Ramon (the "Key
Employees") shall have entered into Key Employee Agreements.
(j) There shall have been obtained at or prior to the
date of Closing such permits or authorizations and there shall
have been taken such other action, as may be required by any
regulatory authority having jurisdiction over the parties and the
subject matter and the actions herein proposed to be taken,
including, but not limited to, compliance with applicable
securities laws.
(k) The Board of Directors of Purchaser shall have
received from Morgan Stanley & Co. Incorporated a written opinion
dated the Closing Date, in form and substance satisfactory to
Purchaser, stating that the terms of the Acquisition are fair to
the shareholders of Purchaser from a financial point of view.
Purchaser represents that, as of the date of this Agreement and
based upon information received from Morgan Stanley & Co.,
Incorporated, it believes such condition will be satisfied as of
the Closing.
(l) Purchaser shall have received reasonable assurance
from Purchaser's advisors that the entity purchasing the
Purchased Assets and assuming the Assumed Liabilities will be
able to obtain "approved enterprise" status under Israeli tax
laws similar to that held by Seller after the Acquisition without
extraordinary payment to the Israeli government if the products
developed by Seller were manufactured in Israel and the Purchaser
continues the Business in substantially the same manner as Seller
before the Acquisition.
(m) Purchaser shall have received reasonable assurance
of its advisors that no laws or regulations will limit (except as
provided in this Section 6.2(m)) Purchaser's right to manufacture
outside of Israel products containing technology developed by
Seller or limit in any other material way the operation by
Purchaser of the Business from and after the Closing, including,
but not limited to, laws or regulations of the OCS. The OCS
shall have indicated preliminary approval to an arrangement under
which the limitations imposed by the OCS as a result of grants
made by the OCS to Seller will be satisfied if Purchaser is
required, as to the ATM Chassis Switch as identified in the
Incentive Plan, only to do final testing and assembly in Israel.
Purchaser represents that as of the date of this Agreement, it
believes such condition will be satisfied, based upon information
provided by its counsel, except as to the OCS, as to which no
representation is made.
(n) Purchaser shall be satisfied in its discretion
that Purchaser will be able to account for the Acquisition as an
acquisition of "in process" research and development and write-
off at least ninety percent (90%) of the purchase price of the
Acquisition as "in process" technology at or about the time of
the Closing. Purchaser represents that, as of the date of this
Agreement and based upon information provided by its outside
auditors, it believes such condition will be satisfied as of the
Closing.
(o) Purchaser shall have made arrangements with Nice
Systems satisfactory to Purchaser for the interim provision of
administrative support services for a transition period following
the Closing. Purchaser represents that, as of the date of this
Agreement, based on information provided by Seller, it believes
such condition will be satisfied as of the Closing.
(p) Seller shall have granted options to acquire
138,000 shares of Seller common stock to employees and options to
acquire 140,000 shares of Seller common stock to Messrs. Shelef
and Rubinstein.
(q) Purchaser and each of Messrs. Shelef and
Rubinstein shall have entered into a Restricted Stock Agreement
for the issuance of the Restricted Shares under Purchaser's
Restricted Stock Plan in accordance with Section 1.4.
(r) All rights to acquire Seller securities held by
nonemployees of Seller shall have been exercised and the funds
due upon exercise deposited in an account of Seller which is
included in the Purchased Assets, or the Cash Consideration shall
have been reduced by Six Hundred Thousand U.S. Dollars
($600,000), or if partially exercised, in a proportionate amount.
ARTICLE VII
Closing
7.1 Form of Documents. At the Closing, the parties shall
deliver the documents, and shall perform the acts, which are set
forth in this Article VII. All documents which Seller shall
deliver or cause to be delivered shall be in form and substance
reasonably satisfactory to Purchaser. All documents which
Purchaser shall deliver or cause to be delivered shall be in form
and substance reasonably satisfactory to Seller. The transfer of
funds hereunder shall be carried out in accordance with
applicable provisions of Israel's currency control regulations.
7.2 Purchaser's Deliveries. Subject to the fulfillment or
waiver of the conditions set forth in Section 6.2 hereof,
Purchaser shall execute and/or deliver to Seller, and/or shall
cause Sub to execute and/or deliver to Seller, all of the
following:
(a) (i) the Cash Consideration due upon Closing, of
which an amount equal to [ ] of the Cash
Consideration shall be delivered into escrow in accordance with
the Escrow Agreement, and (ii) executed counterpart signature
pages to the Restricted Stock Agreements; provided that [
] of the Restricted Shares shall be delivered into
escrow in accordance with the Escrow Agreement.
(b) an executed copy of the Escrow Agreement;
(c) incumbency and specimen signature certificates
with respect to the officers of Purchaser and Sub executing this
Agreement and the Ancillary Agreements, and any other document
delivered hereunder or thereunder, on behalf of Purchaser and
Sub;
(d) certified copies of resolutions of Purchaser's and
Sub's respective boards of directors and, if necessary,
stockholders, authorizing, as appropriate, the execution,
delivery and performance of this Agreement and the Ancillary
Agreements;
(e) a closing certificate executed by the President of
Purchaser (or any other officer of Purchaser specifically
authorized to do so), on behalf of Purchaser, pursuant to which
Purchaser represents and warrants to Seller that Purchaser's
representations and warranties to Seller are true and correct in
all material respects as of the Closing Date as if then
originally made (or, if any such representation or warranty is
untrue in any material respect, specifying the respect in which
the same is untrue), that all covenants required by the terms
hereof to be performed by Purchaser on or before the Closing have
been so performed, and that all documents to be executed and
delivered by Purchaser at the Closing have been executed by duly
authorized officers or agents of Purchaser or a Purchaser
Affiliate, as the case may be;
(f) counterpart signature pages of the Ancillary
Agreements, executed by Purchaser and Sub, as the case may be;
and
(g) such other documents from Purchaser and Sub as may
reasonably be required in order to effectuate the transactions
contemplated hereby and by the Ancillary Agreements.
7.3 Seller's Deliveries. Subject to the fulfillment or
waiver of the conditions set forth in Section 6.1 hereof, Seller
shall deliver to Purchaser and Sub, physical possession of all
tangible Purchased Assets, and shall execute (where applicable in
recordable form) and/or deliver to Purchaser, and/or shall cause
the Subsidiary to execute and/or deliver to Purchaser, all of the
following:
(a) incumbency and specimen signature certificates
with respect to the officers of Seller and the Subsidiary
executing this Agreement and the Ancillary Agreements, and any
other document delivered hereunder or thereunder, on behalf of
Seller and the Subsidiary;
(b) certified copies of the resolutions of Seller's
boards of directors and, as necessary, stockholders, authorizing,
as appropriate, the execution, delivery and performance of this
Agreement and the Ancillary Agreements;
(c) a closing certificate duly executed by the
President of Seller (or any other officer of Seller specifically
authorized to do so), on behalf of Seller, pursuant to which
Seller represents and warrants to Purchaser that Seller's
representations and warranties to Purchaser are true and correct
in all material respects as of the Closing Date as if then
originally made (or if any such representation or warranty is
untrue in any material respect, specifying the respect in which
the same is untrue), that all covenants required by the terms
hereof to be performed by Seller on or before the Closing Date
have been so performed, and that all documents to be executed and
delivered by Seller at the Closing have been executed by a duly
authorized officer of Seller or a Subsidiary, as the case may be;
(d) copies of the Material Consents;
(e) certificates of title or origin (or like
documents) with respect to all vehicles included in the Purchased
Assets and other equipment for which a certificate of title or
origin is required in order for title thereto to be transferred
to Purchaser or one of Sub;
(f) counterpart signature pages of the Ancillary
Agreements, executed by Seller, and counterpart signature pages
to the Restricted Stock Agreements executed by Messrs. Shelef and
Rubinstein;
(g) assignments of Seller Intellectual Property Rights
(in recordable form, where appropriate); and
(h) such other documents as may be reasonably required
by Purchaser in order to effectuate the transactions contemplated
hereby and by the Ancillary Agreements.
ARTICLE VIII
Post-Closing Agreements
8.1 Post-Closing Agreements. From and after the Closing,
the parties shall have the respective rights and obligations
which are set forth in the remainder of this Article VIII.
8.2 Inspection of Records. Each party shall make the books
and records of Seller and Subsidiary related to the period prior
to the Closing Date available for inspection by the other party,
or by such other party's duly accredited representatives, for
reasonable business purposes at all reasonable times during
normal business hours, for a seven (7) year period after the
Closing Date, with respect to all transactions occurring prior to
and relating to the Closing, the historical financial condition,
results of operations and changes in financial position of the
Business or the obligations of the Business which are assumed by
Purchaser and Sub. Such records shall be made available at such
disclosing party's principal offices. As used in this
Section 8.2, the right of inspection includes the right to make
extracts or copies. The representatives inspecting the records
shall be reasonably satisfactory to such disclosing party, as the
case may be. In addition, in connection with lawsuits or other
proceedings by third parties, each party shall use reasonable
efforts to make available at the other party's expense, personnel
(for reasonable periods of time) of such disclosing party, as the
case may be, for purposes of depositions and testimony.
Purchaser shall give reasonable assistance to Seller and the
Subsidiary, in order for Seller to record entries relating to the
closing of Seller's books relating to the Business.
8.3 Benefits of Nonassignable Rights. Seller and Nice
Systems will use their best efforts to provide such assistance as
is necessary to pass through the benefits of any warranty, right
of indemnification, claim, cause of action, etc. which cannot be
assigned to Purchaser as required under Section 2.2(q) herein.
8.4 Fibronics Agreement. The Fibronics Agreement will
not be assigned until Seller has renegotiated the terms thereof,
in consultation with Purchaser. Upon completion of such
renegotiation to the satisfaction of Purchaser, such agreement
shall be assigned to Purchaser. If such agreement cannot be
renegotiated within a reasonable time, Seller shall terminate
such agreement, and Seller and Purchaser shall each pay one half
of the termination payment as specified in the Fibronics
Agreement.
8.5 Use of Trade Secrets. Seller shall cease, and shall
cause its Affiliates to cease, to use any trade secret, secret
formula or other confidential information related to the Business
among the Purchased Assets.
8.6 Use of Trademarks. Seller shall cease, and shall cause
its Affiliates to cease, to use any name or trademark which is
similar or deceptively similar to any of the names or trademarks
which are included among the Purchased Assets. The foregoing
notwithstanding, Purchaser acknowledges the use of the word
"Nice" as a trademark of Nice Systems and agrees to the use of
the word "Nice" in any trademark by Seller and its Affiliates as
long as such mark is not otherwise substantially identical to the
existing trademarks of Seller.
8.7 Payments of Accounts Receivable. Following the Closing
Date, Purchaser and its Affiliates shall use their best efforts,
consistent with the historical collection practices of Seller and
the Subsidiary, to collect the Accounts Receivable. In the event
Seller or any of its Affiliates shall receive any instrument of
payment with respect to any of such uncollected Accounts
Receivable, Seller shall forthwith deliver it to Purchaser, or
cause it to be delivered to Purchaser forthwith, at the address
of Purchaser specified in Section 11.6 hereof, endorsed where
necessary, without recourse, in favor of Purchaser.
8.8 Third Party Claims. The parties shall cooperate with
each other with respect to the defense of any claims or
litigation made or commenced by third parties subsequent to the
Closing Date which are not subject to the indemnification
provisions contained in Article IX hereof, provided that the
party requesting cooperation shall reimburse the other party for
the other party's reasonable out-of-pocket costs and expenses of
furnishing such cooperation.
8.9 Further Assurances. The parties shall execute and/or
cause to be executed such further documents, and perform such
further acts, as may be necessary to transfer and convey the
Purchased Assets to Purchaser and Sub, on the terms herein
contained, and to otherwise comply with the terms of this
Agreement and consummate the transactions contemplated hereby.
8.10 Non-Assignment. Notwithstanding any provision to the
contrary contained herein, Seller shall not be obligated to
assign or cause the Subsidiary to assign to Purchaser or Sub any
contract, purchase order, sales order, license, lease, permit,
approval or other instrument which provides that it may not be
assigned, or under applicable law may not be assigned, without
the consent of the other party thereto and for which such consent
is not obtained, but in any such event, Seller shall cooperate
with Purchaser in any reasonable arrangement designed to provide
the benefits thereof to Purchaser and Sub.
8.11 Confidentiality. Each party acknowledges that in the
course of the performance of this Agreement, it may obtain the
Confidential Information (as defined below) of the other parties.
The Receiving Party (as defined below) shall, at all times, both
during the term of this Agreement and thereafter, keep in
confidence and trust all of the Disclosing Party's (as defined
below) Confidential Information received by it. The Receiving
Party shall not disclose the Confidential Information of the
Disclosing Party other than as expressly permitted under the
terms of this Agreement or by a separate written agreement and
shall not use any confidential information that constitutes
Proprietary Rights. The Receiving Party shall take all
reasonable steps to prevent unauthorized disclosure or use of the
Disclosing Party's Confidential Information and to prevent it
from falling into the public domain or into the possession of
unauthorized persons. The Receiving Party shall not disclose
Confidential Information of the Disclosing Party to any person or
entity other than its officers or employees (or outside legal or
accounting advisors) who need access to such Confidential
Information in order to effect the intent of this Agreement and
who have entered into confidentiality agreements with such
person's employer or who are subject to ethical restrictions on
disclosure which protects the Confidential Information of the
Disclosing Party. The Receiving Party shall immediately give
notice to the Disclosing Party of any unauthorized use or
disclosure of Disclosing Party's Confidential Information. The
Receiving Party agrees to assist the Disclosing Party to remedy
such unauthorized use or disclosure of its Confidential
Information. These obligations shall not apply to the extent
that Confidential Information includes information which:
(a) is already known to the Receiving Party at the
time of disclosure, which knowledge the Receiving Party shall
have the burden of proving;
(b) is, or, through no act or failure to act of the
Receiving Party, becomes publicly known;
(c) is received by the Receiving Party from a third
party without restriction on disclosure (although this exception
shall not apply if such third party is itself violating a
confidentially obligation by making such disclosure);
(d) is independently developed by the Receiving Party
without reference to the Confidential Information of the
Disclosing Party, which independent development the Receiving
Party will have the burden of proving;
(e) is approved for release by written authorization
of the Disclosing Party; or
(f) is required to be disclosed by a government agency
to further the objectives of this Agreement or by a proper order
of a court of competent jurisdiction; provided, however that the
Receiving Party will use its best efforts to minimize such
disclosure and will consult with and assist the Disclosing Party
in obtaining a protective order prior to such disclosure.
"Confidential Information" shall mean confidential information of
a party ("Disclosing Party") which is disclosed to another party
("Receiving Party"). Confidential Information shall include, but
not be limited to, trade secrets, know-how, inventions,
techniques, processes, algorithms, software programs, schematics,
designs, contracts, customer lists, financial information, sales
and marketing plans and business information. For purposes of
this Section 8.11, Confidential Information of Seller shall be
deemed to be Confidential Information of Purchaser for purposes
of Nice Systems' obligations hereunder after the Closing.
ARTICLE IX
Indemnification
9.1 General. From and after the Closing, the parties shall
indemnify each other as provided in this Article IX.
9.2 Seller's Indemnification Covenants. Subject to the
provisions of Section 9.4 hereof, Seller and the Key Shareholders
shall indemnify, save and keep Purchaser, its Affiliates and
their respective successors and permitted assigns (the "Purchaser
Indemnitees"), harmless against and from all liability, demands,
claims, actions or causes of action, assessments, losses, fines,
penalties, costs, damages and expenses, including reasonable
attorneys' fees, sustained or incurred by any of the Purchaser
Indemnitees as a result of or arising out of or by virtue of:
(a) any inaccuracy in a representation or breach of a
warranty made by Seller to Purchaser herein or in any document
delivered to Purchaser in connection herewith;
(b) the failure of Seller or the Subsidiary to comply
with, or the breach by Seller or the Subsidiary of, any of the
covenants of this Agreement, or of any document delivered at the
Closing pursuant to the provisions of this Agreement, to be
performed by Seller or a Subsidiary;
(c) the failure of Seller or the Subsidiary to
discharge any liabilities of Seller and the Subsidiary, other
than the Assumed Liabilities;
(d) the failure of Seller or the Subsidiary to
discharge any liability or perform any obligation under any
agreement or commitment referenced in Section 4.3 above and
arising prior to the Closing Date, whether or not asserted at
that time;
(e) any obligation to the OCS in excess of [
]
required to be paid by Purchaser or Sub in order to obtain the
rights required by Purchaser as specified in Section 6.2(m). In
calculating such amount, the parties shall include any amount of
funding which has been recognized in the Financial Statements but
which Purchaser elects not to receive from the OCS or which the
OCS determines not to provide. Such amount shall not be subject
to the deductible provided for below (i.e., Purchaser shall be
entitled to be paid from the Escrow Fund on any such amount in
excess of [ ] whether or not the deductible amount has
been met).
In addition to the foregoing, Purchaser shall be entitled to make
claims against the Escrow Fund for any claims arising out of the
failure of Seller or Nice Systems to perform their obligations
pursuant to Section 6.2(h) and 5.2(d), including any amounts
charged by the parties to any of the contracts referred to in
Section 5.2(d) for the assignment of such contracts. Any such
claims by Purchaser shall not be subject to the [ ]
amount described in Section 9.4(a). In addition to the
foregoing, to the extent that the Seller or stockholders of
Seller have not made arrangements to pay the fees described in
Section 3.3(b) and such fees are paid by Purchaser, and if any
portion of the Escrow Fund is available for release on the first
anniversary of the Closing, such portion (in an amount equal to
such fees paid by Purchaser) shall be withheld from release from
the Escrow Fund, and Purchaser shall be entitled to an offset
against the Escrow with no minimum amount of claim.
9.3 Escrow Fund. Except as provided below, the Escrow Fund
shall be the sole and exclusive source of any claim or remedy by
Purchaser Indemnitees under Section 9.2 as a result of or arising
out of or by virtue of any inaccuracy in a representation or
breach of warranty made by Seller or the Key Shareholders to
Purchaser herein. [ ] of the Escrow Fund (to the extent
it is not subject to an indemnification claim) shall be released
on [
] to Seller and an amount equal to an additional [
] of the total amount originally subject to the Escrow Fund plus
any interest earned thereon (to the extent it is not subject to
an indemnification claim) shall be distributed to Seller on the
date [
] The remaining amount subject to the Escrow
Fund (to the extent it is not subject to an indemnification
claim) shall be distributed to Seller on [
] All such amounts shall include a proportionate
number of the Restricted Shares held in the Escrow Fund and shall
be distributed by Seller to the stockholders entitled to receive
such amounts. Any claim of intentional misrepresentation or
fraud by Seller or the Key Shareholders shall not be subject to
the limitations in time or amount set forth above, provided,
however, that as to any such claims attributable solely to the
fraud of Nice Systems or of a Key Shareholder, the liability of
Nice Systems and the Key Shareholders shall be several and not
joint and such fraud shall not be attributable to the other
party. After [
]
Purchaser may not make claims against the Escrow Fund except for
breach of the representations in [
] In the event it appears there would be tax
withholding on the payment of any amount under the Escrow
Agreement, the parties agree to discuss in good faith alternate
arrangements to minimize or avoid the consequences thereof.
9.4 Limitations on Seller's Indemnification Obligations.
Seller's obligations pursuant to the provisions of Section 9.2
hereof are subject to the following limitations:
(a) Except as provided in Section 9.2, the Purchaser
Indemnitees shall not be entitled to recover under Section 9.2
hereof until the total amount which Purchaser Indemnitees would
recover under Section 9.2 hereof, but for this Section 9.4(a),
exceeds [ ] and then only to the extent of the
recoverable amount in excess of [ ]
(b) the Purchaser Indemnitees shall not be entitled to
recover under Section 9.2(a) hereof unless a claim has been
asserted by written notice, specifying in reasonable detail the
alleged misrepresentation or breach of warranty, and is delivered
to Seller; and to be valid, any such notice must be received on
or prior to the date one year after the Closing (except with
respect to claims relating to those matters set forth in the next
to last sentence of Section 9.3, as to which the notice shall be
delivered on or prior to the date two years after the Closing).
9.5 Purchaser's Indemnification Covenants. Purchaser shall
indemnify, save and keep Seller, its Affiliates (including the
Subsidiary) and their respective successors and permitted assigns
(the "Seller Indemnitees"), harmless against and from all
liability, demands, claims, actions or causes of action,
assessments, losses, fines, penalties, costs, damages and
expenses, including reasonable attorneys' fees, sustained or
incurred by the Seller Indemnitees, as a result of or arising out
of or by virtue of:
(a) any inaccuracy in a representation or breach of a
warranty made by Purchaser to Seller herein or in any document
delivered to Seller in connection herewith;
(b) the failure of Purchaser or any of Sub to comply
with, or the breach by Purchaser or any of Sub of, any of the
covenants of this Agreement, or of any documents delivered at the
Closing pursuant to the provisions of this Agreement, to be
performed by Purchaser or any of Sub;
(c) the operation by Purchaser and its Affiliates of
the Business after the Closing;
(d) the failure of Purchaser and Sub to discharge any
of the Assumed Liabilities; or
(e) any employee benefit to the extent attributable to
service with Purchaser or any of its Affiliates from and after
the Closing Date.
9.6 Limitations on Purchaser's Indemnification Obligations.
Purchaser's obligations pursuant to the provisions of Section 9.5
hereof are subject to the following limitations:
(a) the Seller Indemnitees shall not be entitled to
recover under Section 9.5(a) hereof until the total amount which
Seller Indemnitees would recover under Section 9.5(a) hereof, but
for this Section 9.6(a), exceeds [ ] and then only to the
extent of the recoverable amount in excess of [ ] and
(b) the Seller Indemnitees shall not be entitled to
recover under Section 9.5(a) hereof unless a claim has been
asserted by written notice, specifying in reasonable detail the
alleged misrepresentation or breach of warranty.
The foregoing notwithstanding, if the OCS makes a claim
against Seller for amounts due which are the responsibility of
Purchaser or Sub, such claims shall not be subject to any
deductible.
9.7 Third Party Claims.
(a) Forthwith following the receipt of notice of a
claim, action or proceeding brought by a third party, including a
governmental agency, as to which a party desires to receive
indemnification under this Article IX (a "Third Party Claim"),
the party receiving the notice of the Third Party Claim (a) shall
notify the other party of its existence, setting forth with
reasonable specificity the facts and circumstances of which such
party has received notice and (b) if the party giving such notice
is a person entitled to indemnification under this Article IX (an
"Indemnified Party"), specifying the basis hereunder upon which
the Indemnified Party's claim for indemnification is asserted.
The Indemnified Party may, upon reasonable notice, tender the
defense of a Third Party Claim to the party having an obligation
of indemnification under this Article IX (an "Indemnifying
Party") or the Indemnifying Party may elect to accept the defense
of a Third Party Claim. If the defense of a Third Party Claim is
so tendered and such tender is accepted by the Indemnifying
Party, or if the Indemnifying Party shall acknowledge in writing
delivered to the Indemnified Party the Indemnifying Party's
obligation to indemnify the Indemnified Party with respect to the
Third Party Claim, then the Indemnifying Party shall have the
exclusive right to contest, defend and litigate the Third Party
Claim and shall have the exclusive right, in its discretion
exercised in good faith and upon the advice of counsel, to settle
any such matter, either before or after the initiation of
litigation, at such time and upon such terms as it deems fair and
reasonable, provided that at least ten (10) days prior to any
such settlement, it shall give written notice of its intention to
settle to the Indemnified Party. All expenses (including,
without limitation, attorneys' fees) incurred by the Indemnifying
Party in connection with the foregoing shall be paid by the
Indemnifying Party. The Indemnified Party shall have the right
to be represented by counsel at its own expense in any defense
conducted by the Indemnifying Party. Notwithstanding the
foregoing, in connection with any settlement negotiated by an
Indemnifying Party, no Indemnified Party shall be required to (x)
enter into any settlement that does not include the delivery by
the claimant or plaintiff to the Indemnified Party of a release
from all liability in respect of such claim or litigation or (y)
consent to the entry of any judgment that does not include a full
dismissal of the litigation or proceeding against the Indemnified
Party with prejudice.
(b) In any case where an Indemnifying Party is
handling the defense of a claim as a result of its election to do
so, if the Indemnifying Party negotiates a settlement thereof,
the Indemnified Party may elect not to enter into such
settlement, provided that the Indemnified Party thereafter
assumes the defense of such claim and if the Indemnified Party
does so, then the maximum liability of the Indemnifying Party to
the Indemnified Party for such Third Party Claim shall be the
amount of such proposed settlement. No failure by an
Indemnifying Party to acknowledge in writing its indemnification
obligations under this Article IX shall relieve it of such
obligations to the extent they exist. If, in accordance with the
foregoing provisions of this Section 9.7 an Indemnified Party
shall be entitled to indemnification against a Third Party Claim,
and if (i) the Indemnified Party shall not tender the defense of
the Third Party Claim, (ii) the Indemnifying Party shall fail to
accept the defense of a Third Party Claim which has been tendered
pursuant to this Section 9.7 or (iii) the Indemnifying Party
shall fail to so acknowledge its obligation of indemnification,
the Indemnified Party shall have the right, without prejudice to
its right of indemnification hereunder, in its discretion
exercised in good faith and upon the advice of counsel, to
contest, defend and litigate such Third Party Claim, and may
settle such Third Party Claim, either before or after the
initiation of litigation, at such time and upon such terms as the
Indemnified Party deems fair and reasonable, provided that at
least ten (10) days prior to any such settlement, written notice
of its intention to settle is given to the Indemnifying Party.
If, pursuant to this Section 9.7, the Indemnified Party so
defends or settles a Third Party Claim for which it is entitled
to indemnification hereunder, as hereinabove provided, the
Indemnified Party shall be reimbursed by the Indemnifying Party
for the reasonable attorneys' fees and other expense of defending
the Third Party Claim which are incurred from time to time,
forthwith following the presentation to the Indemnifying Party of
itemized bills for said attorneys' fees and other expenses. All
payments to counsel shall be treated as indemnity amounts
hereunder. This Section 9.7 deals only with procedural matters
and nothing herein shall be construed to expand either parties'
obligations under Sections 9.1 to 9.6. All expenses incurred by
an Indemnifying Party in defending any Third Party Claim as to
which it has assumed the defense shall be treated for all
purposes as indemnification payments hereunder.
ARTICLE X
Effect of Termination/Proceeding
10.1 General. The parties shall have the rights and
remedies with respect to the termination and/or enforcement of
this Agreement which are set forth in this Article X.
10.2 Right to Terminate. Anything to the contrary herein
notwithstanding, this Agreement and the transactions contemplated
hereby may be terminated by delivery of notice as provided in
Section 11.6 hereof:
(a) by mutual written agreement of Seller and
Purchaser; or
(b) by either Seller or Purchaser, if the Closing has
not taken place on or prior to November 30, 1994; provided,
however, that the right to terminate this Agreement pursuant to
this Section 10.2(b) shall not be available to a party whose
failure to fulfill any of its obligations under this Agreement
has been the cause of, or resulted in, the failure of the Closing
to occur on or prior to the aforesaid date.
10.3 Certain Effects of Termination. In the event of the
termination of this Agreement by either Seller or Purchaser as
provided in Section 10.2 hereof:
(a) each party, if so requested by the other party,
will (i) return promptly every document (other than documents
publicly available) furnished to it by the other party (or any
subsidiary, division, associate or affiliate of such other party)
in connection with the transactions contemplated hereby, whether
so obtained before or after the execution of this Agreement, and
any copies thereof which may have been made, and will cause its
representatives and any representatives of financial institutions
and investors and others to whom such documents were furnished
promptly to return such documents and any copies thereof any of
them may have made, or (ii) destroy such documents and cause its
representatives and such other representatives to destroy such
documents, and such party shall deliver a certificate executed by
its president or vice president stating to such effect; and
(b) Seller and Purchaser shall continue to abide by
the provisions of the Confidentiality Agreement. This
Section 10.3 shall survive any termination of this Agreement.
10.4 Remedies. No party shall be limited to the termination
right granted in Section 10.2 hereto by reason of the
nonfulfillment of any condition to such party's closing
obligations but may, in the alternative, elect to do one of the
following:
(a) proceed to close despite the nonfulfillment of any
closing condition, it being understood that consummation of the
transactions contemplated hereby shall be deemed a waiver of any
misrepresentation or breach of warranty or covenant and of any
party's rights and remedies with respect thereto to the extent
that the other party shall have actual knowledge of such
misrepresentation or breach and the Closing shall nonetheless
take place; or
(b) decline to close, terminate this Agreement as
provided in Section 10.2 hereof, and thereafter seek damages to
the extent permitted in Section 10.5 hereof.
10.5 Right to Damages. If this Agreement is terminated
pursuant to Section 10.2 hereof, neither party hereto shall have
any claim against the other except if the circumstances giving
rise to such termination were caused by the other party's wilful
failure to comply with a material covenant set forth herein, in
which event termination shall not be deemed or construed as
limiting or denying any legal or equitable right or remedy of
said party, and said party shall be entitled to recover its costs
and expenses which are incurred in pursuing its rights and
remedies (including reasonable attorneys' fees).
ARTICLE XI
Miscellaneous
11.1 Investment Banking Fee. Purchaser shall be solely
responsible for payment of, and shall pay, all fees and expenses
due to Morgan Stanley & Co. Incorporated which arise by virtue of
the consummation of the transactions contemplated hereby.
11.2 Expenses. Each party shall pay all of its own costs
and expenses incurred with respect to the negotiation, execution
and delivery of this Agreement, including all legal and
accounting fees and expenses, whether or not the Acquisition is
consummated, and any actions taken by either party in reliance on
the Letter dated September 2, 1994 by and between Seller and
Purchaser shall be at such party's sole risk and expense.
11.3 Sales and Transfer Taxes. Purchaser and Sub shall pay
all V.A.T., sales, use, transfer and conveyance taxes arising in
connection with the sale and transfer of the Purchased Assets to
Purchaser and Sub pursuant to this Agreement and the Ancillary
Agreements. Such payment shall be delivered to Seller, in
addition to the Aggregate Consideration, and Seller shall
promptly deliver such amount to the taxation authority.
11.4 Definition of Best Efforts and Seller's Knowledge.
Except as otherwise specifically provided in this Agreement, for
purposes of this Agreement, the phrases "best efforts" and "best
efforts to cause," when used with reference to efforts to be made
by a party hereto or any of its Affiliates:
(a) shall not require such party or any of its
Affiliates to pay or transfer any money, property or other thing
of value to any other party except nominal and routine charges
for filing or recording fees, and courier and other communication
services;
(b) shall require such party and its Affiliates to act
with all reasonable promptness and dispatch with respect thereto;
and
(c) shall require the other party and its Affiliates
to act with all reasonable promptness and dispatch and to
cooperate in all material respects with the first party's and its
Affiliates' efforts in connection therewith.
Seller's knowledge shall mean the actual knowledge of the
Chairman, the President and the Chief Financial Officer of Nice
Systems and the Vice President, Hardware and the President of
Seller, after reasonable internal inquiry.
11.5 Publicity. Until the Closing, unless otherwise
required by applicable law or stock exchange rules, press
releases concerning the transactions contemplated hereby shall be
made only with the prior agreement of the Seller and Purchaser,
which agreement shall not be unreasonably withheld.
11.6 Notices. All notices required or permitted to be given
hereunder shall be in writing and shall be deemed given when
delivered in person or sent by confirmed facsimile, or when
received if given by Federal Express or other internationally
recognized overnight courier service, or five (5) business days
after being deposited in the mail, postage prepaid, registered or
certified airmail, addressed to the applicable party as follows:
if to Seller, addressed to Seller:
NiceCom, Ltd.
3 Tevout Ha'aretz Street
P.O. Box 24057
Tel Aviv, 61240 Israel
Fax: 972-3-494342
with a copy to:
David Ben-Ze'ev
Ben-Ze'ev, Hacohen & Co. Advocates
Jerusalem, 18 Abrabonel St., Rehavia
P.O.B. 7685 Zip 91076
Fax: 972-2-634872
if to Purchaser, addressed to Purchaser:
3Com Corporation
5400 Bayfront Plaza
P.O. Box 58145
Santa Clara, CA 95052-8145
Attention: General Counsel
Fax: 408-764-6434
with a copy to:
Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attn: [ ] Esq.
Fax: 415-327-3699
and/or to such other respective addresses and/or addressees as
may be designated by notice given in accordance with the
provisions of this Section 11.6.
11.7 Entire Agreement. This Agreement and the Ancillary
Agreements and the other documents delivered on the date hereof
constitute the entire agreement between the parties and their
respective Affiliates and shall be binding upon and inure to the
benefit of the parties hereto and their respective legal
representatives, successors and permitted assigns. Each exhibit,
and the Disclosure Schedule, shall be considered incorporated
into this Agreement. Any matter which is disclosed in any
portion of the Disclosure Schedule is deemed to have been
disclosed for the purposes of all relevant provisions of this
Agreement and the Ancillary Agreements. The inclusion of any
item in the Disclosure Schedule is not evidence of the
materiality of such item for the purposes of this Agreement and
the Ancillary Agreements. The parties and their respective
Affiliates make no representations or warranties to each other,
except as contained in this Agreement and the Ancillary
Agreements, and any and all prior representations and statements
made by any party or its representatives, whether verbally or in
writing, are deemed to have been merged into this Agreement and
the Ancillary Agreements, it being intended that no such
representations or statements shall survive the execution and
delivery of this Agreement and the Ancillary Agreements.
Purchaser acknowledges that it has conducted an independent
investigation of the financial condition, assets, liabilities,
properties and projected operations of the Business, with the
assistance of Israeli counsel and accountants, in making its
determination as to the propriety of the transactions
contemplated by this Agreement and the Ancillary Agreements, and
in entering into this Agreement and the Ancillary Agreements has
relied solely on the results of said investigation and on the
representations and warranties of Seller expressly contained in
this Agreement and in the closing documents delivered by Seller
pursuant to the provisions of this Agreement.
11.8 Non-Waiver. The failure in any one or more instances
of a party to insist upon performance of any of the terms,
covenants or conditions of this Agreement or any of the Ancillary
Agreements, to exercise any right or privilege in this Agreement
or any of the Ancillary Agreements conferred, or the waiver by
said party of any breach of any of the terms, covenants or
conditions of this Agreement or any of the Ancillary Agreements,
shall not be construed as a subsequent waiver of any such terms,
covenants, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such
forbearance or waiver had occurred. Except as provided in
Section 10.4(a) hereof, no waiver shall be effective unless it is
in writing and signed by an authorized representative of the
waiving party.
11.9 Counterparts. This Agreement and the Ancillary
Agreements may be executed in counterparts, each of which shall
be deemed to be an original, and all such counterparts shall
constitute but one instrument.
11.10 Severability. The invalidity of any provision of
this Agreement or any of the Ancillary Agreements or portion of a
provision hereof or thereof shall not affect the validity of any
other provision of this Agreement or any of the Ancillary
Agreements or the remaining portion of the applicable provision.
11.11 Applicable Law; Jurisdiction and Venue. This
Agreement and the Ancillary Agreements shall be governed and
controlled as to validity, enforcement, interpretation,
construction, effect and in all other respects by the internal
laws (excluding conflicts of law rules) of the State of
California applicable to contracts made and performed in that
State (except with respect to the Key Employee Agreements, which
shall be governed and controlled as to validity, enforcement,
interpretation, construction, effect and in all other respects by
the internal laws (excluding conflicts of law rules) of Israel).
Except as otherwise provided in the Key Employee Agreements, the
Superior Court of Santa Clara County and/or the United States
District Court for the Northern District of California shall have
exclusive jurisdiction and venue over all controversies in
connection herewith. Each party consents to the personal
jurisdiction of each such court. The parties exclude in its
entirety the application to this Agreement of the United Nations
Convention on Contracts for the International Sale of Goods.
11.12 Binding Effect; Benefit. This Agreement and the
Ancillary Agreements shall inure to the benefit of and be binding
upon the parties hereto and thereto, respectively, and their
successors and permitted assigns. Nothing in this Agreement,
express or implied, is intended to confer on any person other
than the parties hereto and thereto, respectively, and their
respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this
Agreement or any of the Ancillary Agreements, including, without
limitation, third party beneficiary rights.
11.13 Assignability. Neither this Agreement nor any of
the Ancillary Agreements shall be assignable by either party
hereto or thereto without the prior written consent of the other
party, except that Purchaser may assign this Agreement or any of
the Ancillary Agreements to one or more subsidiaries of
Purchaser, but such assignment shall not relieve Purchaser of any
of its liabilities or obligations hereunder.
11.14 Amendments. This Agreement shall not be modified,
amended or supplemented, except pursuant to an instrument in
writing executed and delivered on behalf of each of the parties
hereto.
11.15 Headings. The headings contained ln this
Agreement are for convenience of reference only and shall not
affect the meaning or interpretation of this Agreement.
11.16 Governmental Reporting. Each party agrees to
cooperate with the other party in the preparation and/or filing
of forms, statements and/or reports required by law with any
governmental authority pursuant to or in connection with the
transactions contemplated hereby, and to furnish the other party
with copies of all such forms, statements and reports prepared in
draft form, within a reasonable period before the filing due
date. Anything to the contrary in this Agreement
notwithstanding, nothing in this Agreement shall be construed to
mean that a party hereto or other person must make or file, or
cooperate in the making or filing of, any form, statement or
report to any governmental authority that such person or such
party reasonably believes or reasonably is advised is not in
accordance with law.
11.17 Waiver of Trial by Jury. Each of the parties
hereto waives the right to a jury trial in connection with any
suit, action or proceeding seeking enforcement of such party's
rights under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
NICECOM, LTD. NICE SYSTEMS, LTD.
By: \s\ David Arzi By: \s\ David Arzi
Title: Director Title: Chairman
By: \s\ Nachman Shelef By: \s\ Hanan Miron
Title: President Title: Vice President, CFO
NICE SOFTWARE, LTD.
By: David Arzi \s\ Nachman Shelef
Nachman Shelef
Title: Chairman
By: \s\ Hanan Miron \s\ Avinoam Rubinstein
Avinoam Rubinstein
Title: Vice President, CFO
3COM CORPORATION
By: \s\ Eric Benhamou
Title: Chairman & CEO
EXHIBIT 2.2(b) - LIST OF EXCLUDED EQUIPMENT
None.
EXHIBIT 2.2(g) - LIST OF EXCLUDED SUPPLY AGREEMENTS
Agreement with ESL dated November 2, 1993.
EXHIBIT 2.2(h) - LIST OF EXCLUDED LICENSE AGREEMENTS
Agreement with ESL dated November 2, 1993.
EXHIBIT 2.3(c) - LIST OF EXCLUDED ASSETS
Fibronics Agreement subject to the late assignment provisions of
Section 8.4.
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
("Amendment") is made as of October 17, 1994 by and among
NICECOM, LTD., a company organized under the laws of Israel
("Seller") and 3COM CORPORATION, a California corporation
("Purchaser") each of which are parties to an ASSET PURCHASE
AGREEMENT ("Agreement") dated September 18, 1994.
RECITALS
A. Seller and Purchaser desire to amend certain provisions
of the Agreement regarding the method of payment of the purchase
price.
B. There are certain other parties to the Agreement but
such parties are not deemed to be parties for purposes of the
sections to be amended, and therefore no consent of such parties
hereto is required.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Defined Terms; No Other Amendment. Unless otherwise defined
herein, all capitalized terms shall have the same meanings as
provided in the Agreement. Except as specifically amended
hereby, all other terms of the Agreement shall continue in affect
without amendment, and this Amendment shall be deemed to be a
part of the Agreement.
2. Manner of Payment of the Purchase Price. The parties have
determined that the Purchase Price should be reduced in an amount
equivalent to an amount of cash or cash equivalents to be
retained by Seller. As a result Purchaser will reduce the
amount of the Cash Consideration to be paid by wire transfer by
an amount equivalent to the value of such cash and cash
equivalents, and Purchaser agrees that such cash and cash
equivalents shall not be a part of the assets to be acquired.
Seller shall convert all securities held by it to cash, and shall
retain a portion of such cash as determined below. All other
cash shall be transferred by Seller to Sub at the Closing by
instruction to Seller bank to transfer such amount to an account
established by Sub. To effect this change the parties agree that
the following sections of the Agreement shall be amended as
follows:
a. Section 1.2 shall read in full as follows:
"Purchase Price. In consideration of the sale, conveyance,
assignment, transfer and delivery of the Purchased Assets,
Purchaser shall (a) pay, or cause Sub to pay, to Seller, the
Aggregate Consideration (as herein defined) and (b) assume, or
cause Sub to assume, the Assumed Liabilities. As used herein,
"Aggregate Consideration" means Fifty Three Million Thirty Seven
Thousand Three Hundred and Twelve U.S. Dollars ($53,037,312),
less an amount of U.S. Dollars equal to (i) Four Million Seven
Hundred Thousand (NIS4,700,000) Israeli Shekels multiplied by
(ii) the exchange rate obtained by 3Com upon the exchange of U.S.
dollars for Israeli Shekels on the Closing Date with respect to
the exchange necessary to obtain Shekels to pay the portion of
the purchase price to be paid by Sub.
b. The first sentence of Section 1.3 shall read in
full as follows:
"Cash Consideration" shall mean the cash consideration to be paid
to Seller as consideration for the Purchased Assets, which shall
be an amount equal to the Aggregate Consideration in U.S. Dollars
minus the Value of the Stock Consideration.
c. Section 1.5 is amended to add a new subsection
(a), and existing subsections (a), (b) and (c) (and all
references in the Agreement to such subsections) are redesignated
as (b), (c) and (d).
d. Section 1.5 is amended to add a new subsection (a)
to read in full as follows:
"(a) A portion of the Purchase Price is attributable to the
Purchased Assets to be transferred to Sub, which shall be an
Israeli corporation, and such portion of the Purchase Price shall
be as set forth in the bill of sale for such Purchased Assets to
be delivered at the Closing. The remaining portion of the
Purchase Price shall be attributable to the Purchased Assets to
be transferred to Purchaser. The portion of the Purchase Price
attributable to the Purchased Assets to be transferred to Sub
shall be paid to Seller either in U.S. dollars or in Israeli
shekels."
e. Section 1.5(b) is amended to add the following
sentence at the end thereof:
" For purposes of paying the Cash Consideration, a portion of the
Cash Consideration shall be payable in Israeli shekels, as
determined in Section 1.5(a) and the remaining amount paid to
Seller shall be paid in U.S. dollars."
f. Section 2.2 (e) is amended to read in full as
follows: "(e) all cash, cash equivalents, securities, notes
payable or other debts owed to Seller and deposits and rights
with respect to the Purchased Assets, and all lock-box accounts
which are used in the conduct of the Business, located in, or
arising under the laws of (i) Israel; or (ii) the United States,
as enumerated in the Disclosure Schedule (as defined below),
provided however, that an amount of cash or cash equivalents with
a value of 4,700,000 shekels shall not be a Purchased Asset;"
g. Section 2.3 is amended to include as an Excluded
Asset a certain amount of cash and an additional contract by
amending subsection (c) thereof to read in full as follows: "(c)
an amount of cash or cash equivalents with a value of 4,700,000
shekels, the Epilogue Agreement referred to in Section 5.2(d)
(ii), and all assets identified as excluded from purchase under
Exhibit 2.3(c) - List of Excluded Assets."
h. The definition of "Purchaser Closing Price in
Section 1.3 of the Agreement shall be revised to read in full as
follows "Purchaser Closing Price" shall mean the average of the
closing prices of a share of Purchaser's common stock on the ten
(10) consecutive trading days up to and including the third
trading day prior to the Closing Date.
3. VAT Payment Date. Purchaser and Sub have been advised that
pursuant to Section 20 of the VAT law of the Israel, the director
of VAT has approved the payment by Sub of any VAT that is due
directly to such director. The parties agree that VAT payments
with respect to the transaction are not required to be paid until
November 15, 1994, and, further, that such payments will not be
paid by Seller, and are not due from Sub to Seller, but will be
paid directly by Sub. Purchaser agrees to cause Sub to make such
payment and to indemnify Seller against any claims which may be
made against it by the director of VAT in respect of the
transaction.
4. Calculation of Escrow Amounts. The foregoing amendments
notwithstanding, all calculations of the amounts to be deposited
in Escrow shall be based upon the Aggregate Consideration and the
Cash Consideration as defined in the Agreement prior to this
Amendment.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
NICECOM, LTD.
By: \s\ Hanan Miron
Title: Vice President, CFO
By: \s\ Nachman Shelef
Title: President
3COM CORPORATION
By: \s\ Mark D. Michael
Title: VP, General Counsel
and Secretary
