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AGREEMENT AND PLAN OF REORGANIZATION
by and among
VOICESTREAM WIRELESS CORPORATION,
OMNIPOINT FINANCE, LLC,
OMNIPOINT TECHNOLOGY HOLDINGS, INC.
XIRCOM, INC.
and
OTHI ACQUISITION CO.
Dated as of June 12, 2000
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TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS.................................................. 1
Section 1.1. Definitions......................................... 1
ARTICLE 2 merger; effective date....................................... 7
Section 2.1. The Merger.......................................... 7
Section 2.2. Filing of Agreement of Merger; Effective Date....... 7
Section 2.3. Certificate of Incorporation and By-Laws............ 7
Section 2.4. Directors and Officers.............................. 8
Section 2.5. Property and Liabilities of Constituent
Corporations....................................... 8
ARTICLE 3 CAPITAL STOCK OF THE SURVIVING CORPORATION................... 8
Section 3.1. Stock of Xircom Merger Sub.......................... 8
Section 3.2. Stock of OTHI....................................... 9
Section 3.3. Exchange of Stock Certificate....................... 9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE VOICESTREAM
PARTIES.................................................. 9
Section 4.1. Organization of the VoiceStream Parties; Authority.. 9
Section 4.2. Authorization; No Breach............................ 9
Section 4.3. Organization of the Company and its Subsidiary...... 10
Section 4.4. Capitalization of the Company and its Subsidiary.... 11
Section 4.5. Share Ownership..................................... 12
Section 4.6. Governmental Consents; Permits...................... 12
Section 4.7. Financial Matters................................... 13
Section 4.8. Absence of Certain Changes.......................... 13
Section 4.9. Undisclosed Liabilities............................. 14
Section 4.10. Title to Assets; Encumbrances....................... 15
Section 4.11. Tangible Personal Property and Real Property........ 15
Section 4.12. Intellectual Property............................... 16
Section 4.13. Compliance with Law and Agreements.................. 19
Section 4.14. Tax Matters......................................... 20
Section 4.15. Litigation.......................................... 21
Section 4.16. Contracts........................................... 22
Section 4.17. ERISA; Employee Benefits............................ 23
Section 4.18. Labor Matters....................................... 24
Section 4.19. Insurance........................................... 25
Section 4.20. Environmental Matters............................... 25
Section 4.21. Books and Records................................... 27
Section 4.22. Customers and Suppliers............................. 27
Section 4.23. Brokers and Intermediaries.......................... 27
Section 4.24. Acquisition of Shares............................... 27
Section 4.25. Transactions with Certain Persons................... 28
Section 4.26. Certain Business Practices.......................... 28
Section 4.27. Bank Accounts....................................... 29
Section 4.28. Material Misstatements or Omissions................. 29
Section 4.29. Limitation.......................................... 29
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF XIRCOM..................... 29
Section 5.1. Organization of Xircom; Authority................... 29
Section 5.2. Authorization; No Breach............................ 30
Section 5.3. Capitalization...................................... 30
Section 5.4. SEC Filings; Financial Statements................... 31
Section 5.5. Absence of Certain Changes.......................... 32
Section 5.6. Governmental Consents............................... 32
Section 5.7. Xircom Shares....................................... 33
Section 5.8. Litigation.......................................... 33
Section 5.9. Undisclosed Liabilities............................. 33
Section 5.10. Brokers and Intermediaries.......................... 33
Section 5.11. Limitation.......................................... 33
ARTICLE 6 CERTAIN PRE-CLOSING COVENANTS AND AGREEMENTS OF THE PARTIES... 34
Section 6.1. Access and Information.............................. 34
Section 6.2. Conduct of the Business............................. 34
Section 6.3. Xircom Commitments.................................. 36
Section 6.4. Insurance........................................... 36
Section 6.5. Announcements....................................... 36
Section 6.6. Further Actions..................................... 37
Section 6.7. No Solicitation or Negotiation...................... 37
Section 6.8. Expenses............................................ 38
Section 6.9. Certain Liabilities and Affiliate Agreements........ 38
Section 6.10. Limitation on Liabilities........................... 38
ARTICLE 7 OTHER COVENANTS AND AGREEMENTS OF THE PARTIES................ 39
Section 7.1. Employee Matters.................................... 39
Section 7.2. Access to Books and Records......................... 41
Section 7.3. Tax Matters......................................... 42
Section 7.4. Employee Stock Options.............................. 45
Section 7.5. Omnipoint Marks..................................... 46
Section 7.6. Leasehold Matters................................... 46
Section 7.7. Transfer of Intellectual Property Rights............ 46
Section 7.8. Further Assurances.................................. 46
Section 7.9. Notification of Certain Matters..................... 47
Section 7.10. Tax Covenant........................................ 47
ARTICLE 8 CONDITIONS PRECEDENT OF THE VOICESTREAM PARTIES.............. 47
Section 8.1. Representations and Warranties...................... 47
ii
Section 8.2. Agreements.......................................... 48
Section 8.3. Xircom Certificate.................................. 48
Section 8.4. Compliance with Law................................. 48
Section 8.5. Consents............................................ 48
Section 8.6. Opinions of Counsel to Xircom....................... 48
Section 8.7. Release of OTI Employees............................ 48
Section 8.8. Related Agreements.................................. 49
Section 8.9. No Material Adverse Effect.......................... 49
Section 8.10. Other Deliveries.................................... 49
ARTICLE 9 CONDITIONS PRECEDENT OF XIRCOM................................ 49
Section 9.1. Representations and Warranties...................... 49
Section 9.2. Agreements.......................................... 50
Section 9.3. Sellers' Certificates............................... 50
Section 9.4. Compliance with Law................................. 50
Section 9.5. Consents............................................ 50
Section 9.6. Related Agreements.................................. 50
Section 9.7. Other Deliveries.................................... 50
Section 9.8. No Material Adverse Effect.......................... 51
Section 9.9. Opinion of Counsel to the VoiceStream Parties....... 51
ARTICLE 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.. 51
Section 10.1. Survival of Representations and Warranties.......... 51
Section 10.2. Indemnification of Xircom........................... 51
Section 10.3. Indemnification of the VoiceStream Parties.......... 52
Section 10.4. Claims.............................................. 52
Section 10.5. Limitation of Liability............................. 53
ARTICLE 11 TERMINATION.................................................. 54
Section 11.1. Grounds for Termination............................. 54
Section 11.2. Effect of Termination............................... 54
ARTICLE 12 MISCELLANEOUS................................................ 54
Section 12.1. GOVERNING LAW....................................... 54
Section 12.2. Notices............................................. 54
Section 12.3. Entire Agreement.................................... 55
Section 12.4. Amendments.......................................... 55
Section 12.5. Headings; References................................ 56
Section 12.6. Counterparts........................................ 56
Section 12.7. Parties in Interest; Assignment..................... 56
Section 12.8. Severability: Enforcement........................... 56
Section 12.9. Jurisdiction; Venue; Waiver of Jury Trial........... 56
Section 12.10. Waiver.............................................. 57
Section 12.11. Disclosure Schedules................................ 57
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AGREEMENT AND PLAN OF REORGANIZATION BY AND among
VOICESTREAM WIRELESS CORPORATION,
OMNIPOINT FINANCE, LLC,
OMNIPOINT TECHNOLOGY HOLDINGS, INC.,
XIRCOM, INC., AND OTHI ACQUISITION CO.
AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), dated as of June
12, 2000, among VoiceStream Wireless Corporation, a Delaware corporation
("VoiceStream"), Omnipoint Finance, LLC, a Delaware limited liability company
("Omnipoint Finance" and together with VoiceStream, the "VoiceStream Parties"),
Omnipoint Technology Holdings, Inc., a Delaware corporation ("OTHI" or the
"Company") and Xircom, Inc., a California corporation ("Xircom") and OTHI
Acquisition Co., a Delaware corporation ("Xircom Merger Sub" and together with
Xircom, the "Xircom Parties").
W I T N E S S E T H :
WHEREAS, VoiceStream is the indirect owner of all the issued and
outstanding membership interests in Omnipoint Finance which is the owner of all
the issued and outstanding shares of capital stock of OTHI which is the owner of
all the issued and outstanding shares of capital stock of Omnipoint
Technologies, Inc., a Delaware corporation ("OTI");
WHEREAS, Xircom is the owner of all the issued and outstanding shares of
capital stock of Xircom Merger Sub;
WHEREAS, the respective Boards of Directors of each of the VoiceStream
Parties, OTHI and the Xircom Parties have approved this Agreement and deem it
advisable and in the best interest of their respective stockholders to
consummate the merger of Xircom Merger Sub with and into OTHI (the "Merger")
upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, for United States federal income tax purposes, it is intended that
the Merger contemplated by this Agreement qualify as a "reorganization" within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), and the rules and regulations promulgated thereunder;
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
conditions and promises hereinafter set forth, the parties hereby agree as
follows:
ARTICLE 1
DEFINITIONS
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Section 1.1. Definitions
-----------
"Affiliate" means, with respect to any Person, any other Person directly or
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indirectly controlling, controlled by, or under common control with such other
Person.
For the purposes of this definition, "control" (including, with correlative
meaning, the terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or by contract
or otherwise.
"Business Day" means a day other than a Saturday, Sunday or other day on
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which commercial banks in New York City are authorized or required to close.
"Closing Price" means, $41.6292, as adjusted for share splits, share
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dividends, recapitalizations and other comparable transactions with respect to
the Xircom Common Stock.
"Company Marks" means the Marks of the Company or its Subsidiary, as set
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forth on Schedule 4.12(a) hereto.
"Company Patents" means the Patents of the Company or its Subsidiary, as
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set forth on Schedule 4.12(b) hereto.
"Disclosure Schedule" means the Disclosure Schedule of the VoiceStream
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Parties or the Xircom Parties, as the case may be, delivered pursuant to this
Agreement.
"DGCL" means the General Corporation Law of the State of Delaware.
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"Encumbrance" means any charge, claim, community property interest,
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condition, encumbrance, equitable interest, lien, option, pledge, security
interest, right of first refusal, or restriction or right of others of any kind,
including any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership.
"Environmental Law" means the Comprehensive Environmental Response,
-----------------
Compensation, and Liability Act, the Resource Conservation and Recovery Act, the
Emergency Planning and Community Right to Know Act, the Clean Water Act, the
Safe Drinking Water Act, the Clean Air Act, any so-called "Superfund" or
"Superlien" law, or any other federal, state or local statute, law, ordinance,
code, rule , regulation, Order, decree or other requirement of any Governmental
Body regulating, relating to or imposing liability or standards of conduct
concerning, health, safety and any Hazardous Substance, in each case as of the
Effective Date.
"Environmental Permits" means, with respect to any Person, all permits,
---------------------
licenses, franchises, certificates, approvals and other similar authorizations
of any Governmental Body relating to or required by Environmental Laws and
affecting, or relating in any way to, the business of such Person or any of its
Subsidiaries as currently conducted.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"GAAP" means generally accepted accounting principles in the United States.
----
2
"Governmental Body" means any domestic or foreign national, state, multi-
-----------------
state or municipal or other local government, any subdivision, agency,
commission or authority thereof, any court, or any quasi-governmental or private
body exercising any regulatory or taxing authority thereunder.
"Hazardous Substance" means any hazardous substance, hazardous or toxic
-------------------
waste, hazardous material, pollutant or contaminant, as those or similar terms
are used in the Environmental Laws, including, without limitation, asbestos and
asbestos-related products, chlorofluorocarbons, oils or petroleum-derived
compounds, polychlorinated biphenyls, pesticides and radon.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
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as amended.
"Intellectual Property Agreement" means the Intellectual Property
-------------------------------
Agreement, dated as of the Effective Date, in the form of Exhibit A hereto.
"Intellectual Property Rights" means intellectual property rights arising
----------------------------
from or in respect of the following, whether protected, created or arising under
the laws of the United States or any other jurisdiction:
(A) fictional business names, trade names, trademarks and service
marks (whether registered or unregistered, including any applications for
registration of any of the foregoing), logos, internet domain names, trade dress
rights and general intangibles of a like nature, together with the goodwill
associated with any of the foregoing (collectively, "Marks");
(B) patents and applications therefor, including continuation,
divisional, continuation-in-part, or reissue patent applications and patents
issuing thereon (collectively, "Patents");
(C) copyrights and registrations and applications therefor
(collectively, "Copyrights");
(D) proprietary and confidential information which constitute trade
secrets such as proprietary and confidential know-how, inventions, discoveries,
concepts, ideas, methods, processes, designs, formulae, algorithms and models
not embodied in software, technical data, drawings, specifications, and data
bases in each case excluding any of the foregoing to the extent the rights
therein comprise or are protected by Copyrights or Patents (collectively, "Trade
Secrets"); and
(E) moral rights, publicity rights and any other intellectual,
proprietary or similar intangible rights of any kind or nature that do not
comprise or are not protected by Marks, Patents, Copyrights, or Trade Secrets
(collectively, "Other IP Rights").
3
"Knowledge", "aware of" and similar terms means the actual knowledge of
--------- --------
those executive officers of the respective parties as set forth on Exhibit B
hereto.
"Laws" means statutes, laws, regulations and rules of any Governmental
----
Body.
"License" means a license, permit, certificate of authority, waiver,
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approval, certificate of public convenience and necessity, registration or other
authorization, consent or clearance to construct or operate a facility, or
otherwise to conduct the business of a Person, in each case issued or granted by
a Governmental Body.
"Litigation" means any action, arbitration, audit, hearing, investigation,
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litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Material Adverse Effect" means a material adverse change in, or effect on,
-----------------------
the business, operations, prospects, assets, liabilities or results of
operations or financial condition of the Company and its Subsidiary taken as a
whole.
"Merger Consideration" means the number of Xircom Shares multiplied by the
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Closing Price.
"NASDAQ" means The NASDAQ National Market.
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"Nondisclosure Agreement" means that certain Mutual Confidentiality, Non-
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Disclosure and Non Solicitation Agreement between Xircom and VoiceStream dated
May 5, 2000.
"Person" means an individual, corporation, limited liability company,
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partnership, trust, unincorporated organization or other entity, or a
Governmental Body.
"Related Agreements" means the Shareholder Agreement and the Intellectual
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Property Agreement.
"Returns" means any return, report, estimate, declaration, information
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return, claim for refund, written statement of any nature with respect to Taxes,
any declarations of estimated Tax or any Tax reports, including any schedule or
attachment thereto and any amendment thereof.
"Seller Parties" means each of the VoiceStream Parties, OTHI and OTI.
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"Shareholder Agreement" means the Shareholder Agreement, dated as of the
---------------------
Effective Date, in the form of Exhibit C hereto.
"Software" means any and all computer programs, including any and all
--------
software implementations of algorithms, models and methodologies, whether in
source code or object code and all documentation, including user manuals and
training software, relating
4
to any of the foregoing, in each case developed by or licensed to the Company or
its Subsidiary, or used in or necessary for the conduct of their respective
businesses.
"Subsidiary" means, with respect to any Person, any entity of which
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securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at any time directly or indirectly owned by such Person.
"Tax" (including with correlative meaning, the terms "Taxes" and "Taxable")
---
means all federal, state, local, foreign and other net income, gross income,
gross receipts, sales, use, value added, ad valorem, transfer, franchise,
profits, license, lease, service, service use, withholding, payroll, social
security (or similar) employment, unemployment, excise, severance, stamp,
occupation, premium, real or personal property, windfall profits, customs,
alternative or add-on minimum, capital stock, disability, environmental,
(including taxes under Code (S)59A), estimated, registration or other taxes,
together with any interest and any penalties, additions to tax or additional
amounts with respect thereto,
"Transactions" means the transactions contemplated by this Agreement and
------------
the Related Agreements.
"VoiceStream Common Stock" means the common stock, without par value, of
------------------------
VoiceStream.
"Xircom Common Stock" means the common stock, par value $0.001 per share,
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of Xircom.
"Xircom Material Adverse Effect" means a material adverse change in, or
------------------------------
effect on, the business, operations, prospects, assets, results of operations or
financial condition of Xircom and its Subsidiaries taken as a whole.
Any reference in this Agreement to a statute shall be to such statute, as
amended from time to time, and to the rules and regulations promulgated
thereunder.
(a) Each of the following terms is defined in the Section set forth opposite
such term:
"Benefit Plans".......................................... 4.17(a)
"Code"................................................... Preamble
"Company"................................................ Preamble
"Company Employees"...................................... 7.1(b)
"Company Financial Statements............................ 4.7(a)
"Constituent Corporation"................................ 2.1
"Consultants"............................................ 4.17(a)
"Copyrights"............................................. 1.1
"Damages"................................................ 10.2
"Directors".............................................. 4.17(a)
"Effective Date"......................................... 2.2(c)
5
"Employees".............................................. 4.17(a)
"ERISA Affiliate"........................................ 4.17(c)
"ERISA Affiliate Plan"................................... 4.17(c)
"Exchange Act"........................................... 5.4(a)
"Final List"............................................. 7.1(b)
"Indemnifying Party"..................................... 10.4
"Indemnitee"............................................. 10.4
"Independent Accountants"................................ 6.10
"Interim Financial Statements"........................... 4.7(c)
"Leased Property"........................................ 4.11(c)
"Leases"................................................. 4.11(c)
"Marks".................................................. 1.1
"Merger"................................................. 2.1
"Omnipoint Marks"........................................ 7.5
"Other IP Rights"........................................ 1.1
"OTHI"................................................... Preamble
"OTHI Shares"............................................ 3.2
"OTI".................................................... Preamble
"OTI Employees".......................................... 7.1(a)
"Owned Trade Secrets..................................... 4.12(c)
"Patents"................................................ 1.1
"qualifying event"....................................... 7.1(h)
"SEC".................................................... 5.4(a)
"Securities Act"......................................... 5.4(a)
"Significant Contracts".................................. 4.16(a)
"Significant Party"...................................... 6.3
"Split Period"........................................... 7.3(a)(i)
"Supplemental Effective Date Balance Sheet............... 6.10
"Surviving Corporation".................................. 2.1
"Tax Arbitrator"......................................... 7.3(f)
"Third Party Claims"..................................... 10.4
"Trade Secrets".......................................... 1.1
"VoiceStream"............................................ Preamble
"VoiceStream Parties".................................... Preamble
"Xircom"................................................. Preamble
"Xircom's Adjustment Notice"............................. 6.10
"Xircom SEC Reports"..................................... 5.4(a)
"Xircom Shares".......................................... 3.2
"Xircom Merger Sub"...................................... Preamble
"Xircom Parties"......................................... Preamble
(b) Unless the context otherwise requires, the terms defined in this
Article 1 or elsewhere in this Agreement shall have the meanings herein
specified for all purposes of this Agreement, applicable to both the singular
and plural forms of any of the terms defined herein. When a reference is made in
this Agreement to a Section, such reference
6
shall be to a Section of this Agreement unless otherwise indicated. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." The use of any
gender herein shall be deemed to included the neuter, masculine and feminine
genders wherever necessary or appropriate.
ARTICLE 2
MERGER; EFFECTIVE DATE
----------------------
Section 2.1. The Merger
----------
Subject to the terms and conditions hereof and in reliance upon the
representations, warranties, covenants and agreements herein contained, on the
Effective Date, Xircom Merger Sub shall, pursuant to the DGCL, be merged (the
"Merger") with and into OTHI (Xircom Merger Sub and OTHI are sometimes
hereinafter referred to individually as a "Constituent Corporation" and
collectively as the "Constituent Corporations"), which shall be the surviving
corporation (the "Surviving Corporation") and whose name shall be changed to
Xircom Holdings, Inc.
Section 2.2. Filing of Agreement of Merger; Effective Date
---------------------------------------------
(a) Xircom, as the sole stockholder of Xircom Merger Sub, and Xircom
Merger Sub, by their execution and delivery of this Agreement, hereby confirm
and acknowledge that they have approved and adopted this Agreement in accordance
with the DGCL and the Certificate of Incorporation and By-Laws of Xircom Merger
Sub, and represent that any and all actions required to approve and adopt this
Agreement and the Merger upon the terms and conditions herein set forth under
the DGCL or such Certificate of Incorporation or By-Laws have been or will be,
on or prior to the Effective Date, taken.
(b) Omnipoint Finance, as the sole stockholder of OTHI on the date
hereof and OTHI, by their execution and delivery of this Agreement, hereby
confirm and acknowledge that they have approved and adopted this Agreement in
accordance with the DGCL and the Certificate of Incorporation and By-Laws of
OTHI, and represent that any and all actions required to approve and adopt this
Agreement and the Merger upon the terms and conditions herein set forth under
the DGCL or such Certificate of Incorporation or By-Laws have been or will be,
on or prior to the Effective Date, taken.
(c) Xircom Merger Sub and OTHI shall file a Certificate of Merger in
accordance with the DGCL on the later to occur of (i) June 27, 2000 and (ii) the
first Business Day on which the conditions precedent in Sections 8.5 and 9.5 are
satisfied (or waived), or at such other time, date and place as Xircom and
VoiceStream shall agree in writing (the "Effective Date").
Section 2.3. Certificate of Incorporation and By-Laws
----------------------------------------
On the Effective Date, the Certificate of Incorporation of OTHI shall be
amended in its entirety to read as set forth in the Certificate of Incorporation
of Xircom Merger Sub
7
in effect immediately prior to the Effective Date, and said Certificate of
Incorporation as so amended shall, from and after the Effective Date, be, and
continue to be, the Certificate of Incorporation of the Surviving Corporation
until further amended as provided by law. On the Effective Date, the By-Laws of
Xircom Merger Sub in effect immediately prior to the Effective Date shall
automatically become the By-Laws of the Surviving Corporation until altered,
amended or repealed.
Section 2.4. Directors and Officers
----------------------
The directors and officers of Xircom Merger Sub in office as of the
Effective Date shall be the directors and officers of the Surviving Corporation
and shall continue to act as such and shall hold office until their successors
have been elected and have qualified in accordance with law and the By-Laws of
the Surviving Corporation.
Section 2.5. Property and Liabilities of Constituent Corporations
----------------------------------------------------
When the Merger shall have become effective, the separate existence of
Xircom Merger Sub shall cease and Xircom Merger Sub shall be merged with and
into OTHI which as the Surviving Corporation shall possess all the rights,
privileges, powers and franchises as well of a public as of a private nature,
and be subject to all the restrictions, disabilities and duties of each of the
Constituent Corporations; and all and singular, the rights, privileges, powers
and franchises of each of the Constituent Corporations, and all property, real,
personal and mixed, tangible and intangible, and all debts due to either of the
Constituent Corporations on whatever account, as well for stock subscriptions as
all other things in action or belonging to each of such corporations shall be
vested in the Surviving Corporation; and all property, rights, privileges,
powers and franchises, and all and every other interest shall be thereafter as
effectually the property of the Surviving Corporation as they were of the
several and respective Constituent Corporations, and the title to any real
estate vested by deed or otherwise, under the Laws of Delaware, in either of the
Constituent Corporations, shall not revert or be in any way impaired; but all
rights of creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities and
duties of the respective Constituent Corporations shall thenceforth attach to
the Surviving Corporation and may be enforced against it to the same extent as
if said debts, liabilities and duties had been incurred or contracted by it.
ARTICLE 3
CAPITAL STOCK OF THE SURVIVING CORPORATION
------------------------------------------
Section 3.1. Stock of Xircom Merger Sub
--------------------------
Each share of capital stock of Xircom Merger Sub issued and outstanding
immediately prior to the Effective Date shall upon the Effective Date, by virtue
of the Merger and without any action on the part of the holder thereof, be
exchanged for and converted into one validly issued, full paid and nonassessable
share of Common Stock of the Surviving Corporation. Each share certificate of
Xircom Merger Sub evidencing
8
ownership of any such shares shall evidence, from and after the Effective Date,
ownership of such shares of the Surviving Corporation.
Section 3.2. Stock of OTHI
-------------
All of the shares of Capital Stock of OTHI which are issued and outstanding
immediately prior to the Effective Date (the "OTHI Shares"), all of which shall
on the Effective Date be owned by Omnipoint Finance (excluding, if applicable,
shares of OTHI held by OTHI as treasury stock, which shares shall be canceled
and extinguished on the Effective Date), shall, in the aggregate, upon the
Effective Date, by virtue of the Merger and without any action on the part of
the holder thereof, be exchanged for and converted into an aggregate of
1,201,079 shares (as adjusted for share splits, share dividends,
recapitalizations and other comparable transactions which shall occur after the
date hereof and before the Effective Date with respect to the Xircom Common
Stock) of validly issued, fully paid and nonassessable shares of Xircom Common
Stock (the "Xircom Shares").
Section 3.3. Exchange of Stock Certificate
-----------------------------
On the Effective Date Omnipoint Finance shall surrender to the Surviving
Corporation all outstanding certificates theretofore representing the OTHI
Shares, together with the stock powers duly endorsed in blank with signatures
appropriately guaranteed, and shall thereupon receive, in the aggregate for all
OTHI Shares, in exchange therefor certificates representing the Xircom Shares.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE VOICESTREAM PARTIES
---------------------------------------------------------
Each VoiceStream Party jointly represents and warrants to the Xircom
Parties that, except as disclosed in the VoiceStream Parties' Disclosure
Schedule (which exceptions shall specifically identify a Section, Subsection or
clause of a single Section or Subsection hereof, as applicable, to which such
exception relates):
Section 4.1. Organization of the VoiceStream Parties; Authority
--------------------------------------------------
Each of the VoiceStream Parties is a corporation or limited liability
company duly organized, validly existing and in good standing under the laws of
the state of its organization, with the corporate or limited liability company
power and authority to enter into this Agreement and the Related Agreements to
which it is a party and to perform its obligations hereunder and thereunder.
Section 4.2. Authorization; No Breach
------------------------
(a) The execution, delivery and performance of this Agreement, the Related
Agreements to which it is a party and the consummation of the Transactions have
been duly authorized by all requisite corporate or limited liability company
action on the part of each Seller Party. This Agreement has been duly executed
and delivered by each
9
VoiceStream Party and the Company and, as of the Effective Date, the Related
Agreements to which each Seller Party is a party will be duly executed and
delivered by it and the Agreement and each such Related Agreement constitutes,
or will constitute upon execution and delivery, as applicable, a valid and
binding obligation of such Seller Party, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights and to general equitable principles.
(b) The execution, delivery and performance of and compliance with this
Agreement and the applicable Related Agreements by each Seller Party and the
consummation of the Transactions will not, except to the extent that would not,
or be reasonably likely to, result in any cost, loss or damage to the Company or
its Subsidiary in excess of $100,000 in any individual case or have a Material
Adverse Effect individually or in the aggregate or prevent the consummation of
the Merger, (i) violate any provision of any foreign or domestic Laws applicable
to or binding upon any Seller Party, (ii) violate any foreign or domestic order,
judgment or decree applicable to any Seller Party, (iii) conflict with, or
result in a breach of or default under, any term or condition of the Certificate
of Incorporation (or Certificate of Formation, as may be applicable) or By-Laws
(or Operating Agreement, as may be applicable) of any Seller Party, or (iv)
violate, conflict with, result in a breach of any provision of, or constitute a
default (or an event that, with notice or lapse of time or both, would
constitute a default) under, any material agreement to which any Seller Party is
bound or result in the termination or in a right of termination or cancellation
of, or accelerate the performance required by, any note, bond, mortgage,
indenture, deed of trust, lease, contract or agreement to which the interest of
Omnipoint Finance in the Company or to which any of the Company's or its
Subsidiary's properties may be bound or to which any Seller Party is a party, or
result in the creation of any Encumbrance upon any of the properties of the
Company or its Subsidiary.
Section 4.3. Organization of the Company and its Subsidiary
----------------------------------------------
The Company and its Subsidiary are corporations duly organized, validly
existing and in good standing under the laws of the state of Delaware, with all
requisite corporate authority to own or lease the properties and assets they now
own or hold under lease, to carry on their respective businesses as currently
conducted and to enter into and perform their respective obligations under this
Agreement and the Related Agreements to which they are parties. The Company and
its Subsidiary are duly qualified to do business and are in good standing in
jurisdictions where the nature of the properties owned or leased by them or the
activities conducted by them make such qualification necessary, except where the
failure to be so qualified and in good standing would not have a Material
Adverse Effect. The copies of the Certificate of Incorporation (or comparable
organizational documents) and By-Laws of the Company and its Subsidiary
heretofore delivered to Xircom are complete and correct copies of such
instruments as presently in effect. Complete and correct copies of all board
and shareholder minutes and consents of the Company and its Subsidiary have been
made available to Xircom.
10
Section 4.4. Capitalization of the Company and its Subsidiary
------------------------------------------------
(a) Schedule 4.4 sets forth the name, jurisdiction of incorporation and
authorized capitalization of the Company and its Subsidiary and the
jurisdictions in which each such entity is organized and qualified to do
business.
(b) All the issued and outstanding capital stock of the Company and its
Subsidiary is owned of record and beneficially in the manner set forth on
Schedule 4.4, free and clear of any Encumbrances. All of the outstanding shares
of capital stock of the Company and its Subsidiary have been duly authorized,
validly issued, fully paid and non-assessable and not subject to preemptive
rights. No claim has been made or threatened to the Company or its Subsidiary
asserting that any Person other than a Person listed on Schedule 4.4 is the
holder or beneficial owner of, or has the right to acquire beneficial ownership
of, any stock of, or any other voting, equity or ownership interest in the
Company or its Subsidiary.
(d) Neither the Company nor its Subsidiary holds any stock in their
respective treasuries. There are no outstanding subscriptions, options,
warrants, rights or convertible or exchangeable securities issued by the Company
or its Subsidiary or other agreements or commitments to which the Company or its
Subsidiary is a party of any character relating to the issued or unissued
capital stock or other securities of the Company or its Subsidiary, including
any agreement or commitment obligating the Company or its Subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, shares of capital
stock or other securities of the Company or its Subsidiary, to grant, extend or
enter into any subscription, option, warrant, right or convertible or
exchangeable security or other similar agreement or commitment with respect to
the Company or its Subsidiary or obligating the Company or its Subsidiary to
make any payments pursuant to any stock based or stock related plan or award.
Neither the Company nor its Subsidiary has any obligation, including without
limitation any obligation to issue any common stock, option or other securities
or to make any payment, under any equity incentive plan or comparable
arrangement. There are no preemptive rights, rights of first refusal, rights of
first offer or any similar rights granted with respect to the securities or any
assets the Company or its Subsidiary. There are no (i) securities of the Company
or its Subsidiary reserved for issuance for any purpose, (ii) agreements
pursuant to which registration rights in the capital stock of the Company or its
Subsidiary have been granted, (iii) shareholders agreements, whether written or
verbal, among any current and former shareholders of the Company or its
Subsidiary, including any agreements among the shareholders of Company or its
Subsidiary with respect to the voting or transfer of capital stock of the
Company or its Subsidiary or with respect to any other aspect of the Company's
or its Subsidiary's affairs, (iv) agreements or undertakings obligating the
Company or its Subsidiary to repurchase, redeem or otherwise acquire or make any
payment in respect of any shares of capital stock of the Company or its
Subsidiary or (v) irrevocable proxies with respect to the shares of capital
stock of the Company or its Subsidiary.
11
(e) Neither the Company nor its Subsidiary has violated any applicable
federal or state securities laws in connection with the offer, sale or issuance
of any of its capital stock.
(f) Neither the Company nor its Subsidiary has any ownership interest in
any Person except for the Subsidiary. There are no agreements or undertakings
obligating the Company or its Subsidiary to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other entity.
Section 4.5. Share Ownership
---------------
Omnipoint Finance is the record and beneficial owner of the OTHI Shares
free and clear of any Encumbrances. On the Effective Date, Omnipoint Finance
will transfer to Xircom the OTHI Shares free and clear of any Encumbrances.
Section 4.6. Governmental Consents; Permits
------------------------------
(a) Except as contemplated by this Agreement and the Related Agreements, no
notice, consent, license, approval, order, waiver, expiration of waiting period
or authorization of, or filing, application, registration, qualification or
declaration with, any Governmental Body is required to be obtained or made by
the Seller Parties in connection with the execution, delivery and performance of
this Agreement, the Related Agreements and the consummation of the Transactions,
other than those the failure of which to obtain would not have, or be likely to
have, a Material Adverse Effect.
(b) Schedule 4.6 sets forth a complete list of all Permits used in the
operation of the businesses or otherwise held by the Company or any of its
Subsidiary in connection with their respective businesses except for Permits the
absence of which would not have a Material Adverse Effect. All Permits listed on
Schedule 4.6 are, as of the date hereof, and will be, as of the Effective Date,
in full force and effect. The Company and its Subsidiary have, and at all times
have had, all Permits required for the operation of their respective businesses
in the ordinary course, except for such permits the absence of which would not
have a Material Adverse Effect, and each of the Company and its Subsidiary owns
or possesses such Permits free and clear of all Encumbrances. Neither the
Company nor any of its Subsidiary is in material default, nor received any
notice of any claim of default, with respect to any such Permit. Except for
Permits the absence of which would not have a Material Adverse Effect, all such
Permits are renewable by their terms or in the ordinary course of business
without the need to comply with any special qualification procedures or to pay
any amounts other than routine filing fees and will not be adversely affected by
the completion of the transactions contemplated by this Agreement. Except as set
forth on Schedule 4.6(b), no present or former shareholder, director, officer,
employee or Affiliate of the Company or its Subsidiary owns or has any
proprietary, financial or other interest (direct or indirect) in any Permit
which the Company or any of its Subsidiary owns, possesses or uses.
12
Section 4.7. Financial Matters
-----------------
(a) Attached hereto as Schedule 4.7(a) are true and correct copies of
balance sheets and the income statements of the Company and its Subsidiary for
the fiscal years ended December 31, 1999 and December 31, 1998 (collectively,
the "Company Financial Statements").
(b) The balance sheets of the Company and its Subsidiary included in the
Company Financial Statements fairly present the consolidated financial position
of the Company and its Subsidiary as of the respective dates thereof and the
income statements included in the Company Financial Statements fairly present
the financial condition and results of operations of the Company and its
Subsidiary for the periods set forth therein, in each case in accordance with
GAAP consistently applied throughout the period involved.
(c) Attached hereto as Schedule 4.7(c) are true and correct copies of
the consolidated balance sheet and the statements of income of the Company and
its Subsidiary for the three-month periods ended March 31, 2000 and March 31,
1999 (the "Interim Financial Statements") and such three-month financial
statements fairly present the financial condition and results of operations of
the Company and its Subsidiary as of and for the period set forth therein, in
each case in accordance with GAAP consistently applied, subject to normal and
recurring year-end adjustments.
Section 4.8. Absence of Certain Changes
--------------------------
Since March 31, 2000 there have been no changes, events or conditions that
individually or in the aggregate have resulted in, or could reasonably be
expected to result in, a Material Adverse Effect, except for changes occurring
before the date of this Agreement and specifically described in Schedule 4.8 or
occurring after the date of this Agreement and in each case generally affecting
other Persons engaged in the same business as the Company and its Subsidiary.
Since March 31, 2000, (a) the business of the Company and its Subsidiary has
been operated in the ordinary course of business consistent with past practice,
(b) neither the Company nor its Subsidiary has entered into, or agreed to enter
into, any transaction not in the ordinary course of business and (c) neither the
Company nor its Subsidiary has made any changes in its accounting principles or
practices.
Since March 31, 2000, neither the Company nor its Subsidiary has:
(i) declared or paid any dividends, or authorized or made any
redemption or other distribution upon or with respect to any class or
series of their respective capital stock;
(ii) incurred or guaranteed any indebtedness for money borrowed,
incurred any other liabilities outside the ordinary course of business,
increased the amount of all intercompany accounts owed by the Company or
its Subsidiary to VoiceStream or any of its Affiliates (other than the
Company or its Subsidiary), net
13
of intercompany accounts owed by VoiceStream or any of its Affiliates
(other than the Company or its Subsidiary) to the Company or its Subsidiary
by over $100,000, or created any lien on any asset other than in the
ordinary course of business, consistent with past practices;
(iii) made any loans or advances to, or investments in, any Person,
other than in the ordinary course of business, consistent with past
practices;
(iv) sold, exchanged or otherwise disposed of any material assets or
rights other than the sale of inventory in the ordinary course of business;
(v) entered into any transactions with any of its officers,
directors or employees or any entity controlled by any of such individuals
(other than employment, stock option, confidentiality, non-competition and
intellectual property rights agreements entered into in the ordinary course
of business and disclosed on Schedule 4.8 hereto) or made any material
change in any compensation arrangement or agreement with any present or
prospective employee, contractor or director outside the ordinary course of
business, consistent with past practices;
(vi) entered into, or made any material change or amendment to a
Significant Contract, except for changes or amendments in the ordinary
course of business, consistent with past practices;
(vii) suffered any damage, destruction or other casualty loss with
respect to any asset or property owned, leased or otherwise used by the
Company and its Subsidiary except for any damage, destruction or other
casualty loss that individually or in the aggregate has not and would not
reasonably be expected to have a Material Adverse Effect; or
(viii) made any commitment or entered into any agreement to do any of
the things described in the preceding clauses (i) through (vii) (other than
in connection with this Agreement and the Related Agreements).
Section 4.9. Undisclosed Liabilities
-----------------------
Neither the Company nor its Subsidiary has any liabilities or obligations,
matured or unmatured, contingent or fixed (other than liabilities or obligations
arising from contracts entered into by the Company or its Subsidiary in the
ordinary course of business), except liabilities or obligations that (a) are
fully reflected as liabilities or reserved for on the balance sheet as of March
31, 2000 contained in the Interim Financial Statements, (b) have been incurred
in the ordinary course of business consistent with past practice by the Company
since March 31, 2000, (c) are disclosed in Schedule 4.9 hereto, (d) arise out of
facts or events that are within the scope of the subject matter of any other
representation or warranty contained in this Article 4 and would have required
disclosure but for the Knowledge, time or materiality limitation contained in
the relevant
14
representation or warranty, (e) have been incurred in connection with the
execution of this Agreement and the Related Agreements, or (f) have been
incurred in the ordinary course of business that are not required to be set
forth in the Interim Financial Statements or the Company Financial Statements or
the notes thereto under GAAP and that individually or in the aggregate would not
have a Material Adverse Effect.
Section 4.10. Title to Assets; Encumbrances
-----------------------------
The Company or its Subsidiary is the sole and exclusive owner of, and has
good and valid title to (or, in the case of leased properties or properties held
under license, a good and valid leasehold or license interest in) their
respective properties and assets, free and clear of any Encumbrances including
all properties and assets reflected in the Interim Financial Statements. Such
assets constitute all of the assets used by the Company and its Subsidiary in
connection with the operation and conduct of their respective businesses.
Section 4.11. Tangible Personal Property and Real Property
--------------------------------------------
(a) Schedule 4.11(a) contains a true, correct and complete listing of
all of the furniture, fixtures and equipment owned by the Company and its
Subsidiary (using generic groupings, e.g. "five chairs", where appropriate). All
property owned, leased or used by the Company or its Subsidiary is in usable
working condition except for normal wear and tear and is adequate for the
conduct of their respective businesses in substantially the same manner as has
heretofore been conducted. None of the personal property owned, leased or used
by the Company or its Subsidiary is located anywhere other than at the Company's
principal place of business.
(b) Neither the Company nor its Subsidiary has fee ownership of any real
property.
(c) The leases (the "Leases") of all real property and personal property
leased by the Company or its Subsidiary ("Leased Property") are in full force
and effect, other than those the loss of which in the aggregate would not have a
Material Adverse Effect. The Company and its Subsidiary enjoy peaceful and
undisturbed possession under each such Lease and is not in default in any
material respect under any of such Leases and, to the Knowledge of the Seller
Parties, no condition exists which with notice or lapse of time or both would
constitute such a default thereunder and none of the Seller Parties is aware of
any default in any material respect by any other party to any such Lease. True
and correct copies of all material Leases and subleases are listed on Schedule
4.11(c) and have heretofore been made available to Xircom. There are no consents
required for any material Lease to be in full force and effect, without breach
or default, following the consummation of the Transactions. No condemnation,
expropriation, eminent domain or similar proceeding is pending or, to the
Knowledge of the Seller Parties, contemplated with respect to any of such Leased
Property. All Leased Property has adequate utilities, access and parking for the
current use and operation thereof.
15
Section 4.12. Intellectual Property
---------------------
(a) Marks
-----
(i) Schedule 4.12(a) sets forth a list of the Marks owned by or
licensed to the Company or its Subsidiary (or made available to them by the
VoiceStream Parties or their Affiliates) and material to the conduct of their
businesses, including a summary of the registration status of Company Marks in
each country where the VoiceStream Parties, the Company or its Subsidiary has
registered such Company Marks;
(ii) The Company or its Subsidiary (or, prior to the Effective Date,
one of the VoiceStream Parties) is the owner of all right, title and interest in
and to the registrations and pending applications for the Company Marks in the
countries in which such registrations were obtained or applications are pending
within the scope of use set forth in such registrations or applications (as
applicable), free and clear of any and all Encumbrances;
(iii) None of the Seller Parties is aware of any material pending claim
(whether written or oral) challenging the validity or enforceability of the
Company Marks or suggesting that any other Person has any claim of legal or
beneficial ownership with respect thereto;
(iv) To the Knowledge of the Seller Parties, the registrations for the
Company Marks are legally valid and enforceable without material qualification,
limitation or restriction on their respective uses with respect to the goods or
services specified in the registration in the applicable jurisdiction covered by
the registrations referred to in Schedule 4.12(a), except to the extent the
Company Marks are not in use in such jurisdiction;
(v) The Seller Parties have taken reasonable steps to protect their
respective rights in and to the Company Marks in each case in accordance with
standard industry practice;
(vi) None of the Seller Parties has granted to any Person any right,
license or permission to use the Company Marks other than in the ordinary course
of business except for licenses to Company Marks implied by law and which are
not Known to the Seller Parties;
(vii) The Company Marks are not subject to cancellation in any
opposition or proceeding and, to the Knowledge of the Seller Parties, no such
action is threatened with the respect to the Company Marks; and
(viii) to the Knowledge of the Seller Parties, there is no trademark or
service ▇▇▇▇ or application therefor of any other Person that is conflicting
with the Company Marks and the use of the Company Marks in the manner used by
the
16
Company or its Subsidiary as of the date hereof does not create a
likelihood of confusion with any trade name, trademark or service ▇▇▇▇ of
any other Person;
(b) Patents
-------
(i) Schedule 4.12(b) sets forth a list of the Patents owned or
licensed to the Company or its Subsidiary (or made available to them by the
VoiceStream Parties or their Affiliates) and material to the conduct of
their business, including a summary of the application and prosecution
status of such Company Patents in each country where the Seller Parties
have applied for and/or received a patent;
(ii) The Company or its Subsidiary (or prior to the Effective Date
one of the VoiceStream Parties) is the owner of all right, title and
interest in and to the Company Patents in the countries in which such
patents were obtained or applications are pending, free and clear of any
and all Encumbrances;
(iii) None of the Seller Parties is aware of any notice or claim
(whether written or oral) challenging the validity or enforceability of the
Company Patents, challenging the Company's or its Subsidiary's complete and
exclusive ownership of such rights in the Company Patents or suggesting
that any other Person has any claim of legal or beneficial ownership with
respect thereto;
(iv) To the Knowledge of the Seller Parties, the Company Patents are
legally valid and enforceable;
(v) The Seller Parties have taken reasonable steps to protect their
respective rights in and to the Company Patents, in each case in accordance
with standard industry practice;
(vi) None of the Seller Parties has granted to any Person any right,
license or permission to use the Company Patents, except for licenses to
Company Patents implied by law and which are not Known to the Seller
Parties;
(vii) All maintenance fees, annuities, and the like due on the
Company Patents have been timely paid; and
(viii) The Company Patents are not now involved in any opposition or
cancellation proceeding and, to the Knowledge of the Seller Parties, no
such action is threatened with the respect to the Company Patents.
(c) Trade Secrets. The Company and its Subsidiary have taken reasonable
-------------
precautions in accordance with standard industry practice to protect the
secrecy, confidentiality and value of all other Trade Secrets of the Company and
its Subsidiary (collectively, "Owned Trade Secrets"). Except as may be set forth
in Schedule 4.12(c):
(i) To the Knowledge of the Seller Parties, the Company and its
Subsidiary own all of the Owned Trade Secrets and none of the Owned Trade
17
Secrets are subject to any Encumbrances or other adverse claims or
interests of any kind or nature, and none of the Seller Parties has
received any written notice or claim challenging its ownership of any of
the Owned Trade Secrets;
(ii) with respect to each Owned Trade Secret, the documentation
relating thereto is current, accurate and sufficient in detail and content
to identify and explain it and to allow its full and proper use without
reliance on the special knowledge or memory of others;
(iii) to the Knowledge of the Seller Parties, no other Person is
currently misappropriating any of the Owned Trade Secrets.
(d) Infringement. Except as may be set forth in Schedule 4.12(d), no
------------
Seller Party is a party to any legal action or proceeding, nor is (nor during
one-year period prior to date hereof has there been) any legal action or
proceeding been threatened in writing, that involves or involved a claim of
infringement, misappropriation or other wrongful use or exploitation, either (i)
by any Seller Party against any other Person or (ii) by any Person against any
Seller Party, with respect to any Intellectual Property Right used or exploited
by the Company or its Subsidiary. Except as may be set forth in Schedule
4.12(d), to the Knowledge of the Seller Parties the use or other exploitation by
the Company or its Subsidiary of the Company Patents, does not conflict with,
infringe upon, violate, result in a misappropriation of, or otherwise involve
any material wrongful use or exploitation of, any patent, copyright, trade
secret or other Intellectual Property Right or other right of any Person, nor is
any of the foregoing subject to any outstanding order, judgment, decree,
stipulation or agreement materially restricting the use thereof by the Company
or its Subsidiary or restricting the sale, transfer, assignment or licensing
thereof by the Company or its Subsidiary to any Person. Except as may be set
forth in Schedule 4.12(d), the Company and its Subsidiary have the exclusive
right to bring actions against any Person that is infringing the Company
Patents, and to retain for itself any damages recovered in any such action.
(e) Employee Assignment Agreements. Except as set forth in Schedule
------------------------------
4.12(e), all current and former employees and consultants of any Seller Party,
whose duties or responsibilities relate to the development of Intellectual
Property Rights owned or to be owned by the Company or its Subsidiary have
entered into assignment and proprietary information agreements with the Company
or its Subsidiary (or with a Seller Party and assigned or to be assigned to the
Company or its Subsidiary on the Effective Date) in substantially the form
provided to Xircom. To the Knowledge of the VoiceStream Parties, no employee or
consultant of the Company or its Subsidiary is obligated under any agreement
(including licenses, covenants or commitments of any nature) or subject to any
judgment, decree or order of any court or administrative agency, or any other
restriction that would interfere with the use of his or her best efforts to
carry out his or her duties for the Company or its Subsidiary or to promote the
interests of the Company or its Subsidiary or that would conflict with their
respective businesses. Except as set forth in Schedule 4.12(e), to the Knowledge
of the Seller Parties it will not be necessary to utilize any intellectual
property of any employees of the Company or its
18
Subsidiary (or Persons the Company or its Subsidiary currently intends to hire)
acquired prior to their employment by the Company or its Subsidiary in order to
continue to use and exploit any of the Intellectual Property Rights used or
exploited (or anticipated to be used or exploited) by the Company or its
Subsidiary after the Effective Date.
(f) Software. To the Knowledge of the Seller Parties, the Company or
its Subsidiary is the owner or licensee of right, title and interest in and to
all Software necessary for the conduct of their businesses, free and clear of
any and all Encumbrances, and none of the Seller Parties is aware of any notice
or claim (whether written, oral or otherwise) challenging the Company's or its
Subsidiary's ownership or right to use such Software. To the Knowledge of the
Seller Parties, none of the Software developed by or for the Company or its
Subsidiary contains any Software that embodies Intellectual Property Rights of
any person other than the Company or its Subsidiary, except for such Software
obtained by the Company or its Subsidiary from third parties that make such
Software generally available to all interested purchasers or end-users on
standard commercial terms and that have expressly licensed the Company or its
Subsidiary to utilize such Software in the manner they have been utilized. To
the Knowledge of the Seller Parties, the Company and its Subsidiary have
lawfully acquired the right to use the Software licensed to them, as it is used
in the conduct of their respective businesses as presently conducted, and have
not exercised any rights in respect of any licensed Software, including without
limitation any reproduction, distribution or derivative work rights, outside the
scope of any license expressly granted by the person from which the right to use
such licensed Software was obtained. To the Knowledge of the Seller Parties, the
Company and its Subsidiary have taken all actions customary in the software
industry to document the Software used by it and its operation, such that the
Software, including the source code and documentation, may be understood,
modified and maintained by reasonably competent programmers.
(g) Sufficiency of Owned and Licensed Intellectual Property. To the
-------------------------------------------------------
Knowledge of the Seller Parties, except as set forth in Schedule 4.12(g), the
Marks, Patents, Trade Secrets and Intellectual Property Rights owned by or
licensed to the Company and its Subsidiary, including without limitation the
foregoing to the extent they apply to any Software, constitute all of the
Intellectual Property Rights necessary for the conduct of the respective
businesses of the Company and its Subsidiary as presently conducted and
constitute all of the Intellectual Property Rights necessary to operate such
businesses after the Closing in substantially the same manner as such businesses
heretofore has been operated by the Company and its Subsidiary.
Section 4.13. Compliance with Law and Agreements
----------------------------------
Neither the Company nor its Subsidiary is currently in violation, breach or
default of (i) any term of their respective organizational documents or bylaws,
(ii) any term or provision of any mortgage, indenture, contract, agreement or
instrument to which the Company or its Subsidiary is a party or by which any of
them may be bound, or (iii) any provision of any foreign or domestic state or
federal Law, judgment, decree, order, applicable to or binding upon the Company
or its Subsidiary except for such violations,
19
breaches or defaults that, individually or in the aggregate, have not had, and
could not reasonably be expected to have, a Material Adverse Effect. None of the
Seller Parties, the Company or its Subsidiary has received any notice to the
effect that, or otherwise been advised that, the Company or its Subsidiary is
not in compliance with any Law, and the Company does not know of any existing
circumstances that are likely to result in violations of any of the foregoing in
any instance, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
Section 4.14. Tax Matters
-----------
(a) Except to the extent indicated in Schedule 4.14, and except as would
not have a Material Adverse Effect
(i) All Returns that are required to be filed by or with respect
to the Company and its Subsidiary through the Effective Date have been or
will be duly and timely filed and are or will be accurate, complete and
correct in all material respects and do not contain a disclosure statement
under Section 6662 of the Code (or any predecessor provision or comparable
provision of state, local or foreign law);
(ii) all Taxes of the Company and its Subsidiary which are due
and payable have been or will be paid in full;
(iii) there is no dispute or claim concerning any liability with
respect to Taxes of the Company or its Subsidiary that has been claimed or
raised by any Tax authority in writing;
(iv) neither the Company nor its Subsidiary is now subject to a
claim for the assessment of Taxes or examination by any taxing authority,
(v) no extensions or waivers of statutes of limitation have been
given by or requested with respect to any Taxes of the Company or its
Subsidiary;
(vi) there are no Encumbrances with respect to Taxes, other than
Encumbrances for Taxes not yet due and payable;
(vii) no claim has been made in writing by any taxing authority in
any jurisdiction where the Company does not file Tax Returns that it is or
may be subject to Tax by that jurisdiction; and
(viii) each of the Company and its Subsidiary has withheld and paid
all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(b) No Tax is required to be withheld pursuant to Section 1445 of the
Code as a result of the transfer of shares contemplated by this Agreement and
neither the
20
Company, nor its Subsidiaries has been a United States real property holding
corporation within the meaning of Code (S)897(c)(2) during the applicable period
specified in Code (S) 897(c)(1)(A)(ii).
(c) As a result of this Agreement or Xircom's acquisition of the Company
and its Subsidiary (including, without limitation, termination of employment
prior to or following the Merger), none of Xircom, the Company or their
respective Subsidiaries will be obligated to make a payment to an individual
that would be an "excess parachute payment" to a "disqualified individual", as
those terms are defined in Section 280G of the Code, without regard to whether
such payment is reasonable compensation for personal services performed or to be
performed in the future.
(d) Neither the Company, nor its Subsidiary is party to or bound by any
tax indemnity, tax sharing or tax allocation agreement.
(e) Neither the Company, nor its Subsidiary is party to or bound by any
closing agreement or offer in compromise with any taxing authority.
(f) Neither the Company nor its Subsidiary has filed a consent pursuant
to the collapsible corporation provisions of Section 341(f) of the Code (or any
corresponding provision of state, local or foreign income Tax law) or agreed to
have Section 341(f)(2) of the Code (or any corresponding provision of state,
local or foreign income Tax law) apply to any disposition of any asset owned by
it.
(g) Neither the Company nor its Subsidiary has been a personal holding
company under Section 542 of the Code.
(h) Neither the Company nor its Subsidiary has agreed to make, nor is
any of them required to make, any adjustment under Sections 481(a) or 263A of
the Code or any comparable provision of state or foreign tax laws by reason of a
change in accounting method or otherwise.
(i) Schedule 4.14(i) sets forth all foreign jurisdictions in which the
Company and its Subsidiary are subject to tax, is engaged in business or has a
permanent establishment.
Section 4.15. Litigation
----------
Schedule 4.15 sets forth a list of all Litigation pending against the
Company and its Subsidiary. There is no Litigation pending or, to the Knowledge
of the Seller Parties, threatened against the VoiceStream Parties, the Company
or its Subsidiary or their respective activities, properties or assets which,
individually or in the aggregate, could materially impair the ability of the
VoiceStream Parties, the Company or its Subsidiary to consummate the
Transactions or which Litigation could be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect. Neither the
Company nor its Subsidiary is party to or subject to the provisions of any court
order, writ, injunction, judgment or decree of any Governmental Body that,
individually or in the aggregate, could
21
prevent, enjoin, alter or materially delay consummation of any of the
Transactions or has had, or could reasonably be expected to have, a Material
Adverse Effect.
Section 4.16. Contracts
---------
(a) As of the date hereof, all agreements, contracts, leases, licenses,
instruments, commitments or understandings (oral or written) to which the
Company or its Subsidiary is a party or by which it is bound that (i) are
material to the conduct and operations of their respective businesses and
properties, (ii) involve any of the officers, consultants, directors, employees
or shareholders of the Company or its Subsidiary or (iii) obligate the Company
or its Subsidiary to develop any product or technology (the "Significant
Contracts") are listed in Schedule 4.16. For purposes of this Section 4.16,
"material" or "significant" shall mean any agreement, contract, indebtedness,
liability or other obligation either (x) having an aggregate value, cost or
amount in excess of $100,000 or (y) not terminable upon less than thirty days'
notice.
(b) Each Significant Contract is in full force and effect, paid
currently, and is valid, binding and enforceable in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting enforcement of creditors'
rights generally and except insofar as the availability of equitable remedies
may be limited by applicable law. The Company and its Subsidiary are not in
default in any material respect with any Significant Contract and, to the
Knowledge of the Seller Parties, no condition exists which with notice or lapse
of time or both would constitute a default under the Significant Contracts. None
of the Seller Parties is aware of any default in any material respect by any
other party to a Significant Contract. True, correct and complete copies of all
Significant Contracts have heretofore been made available Company to Xircom.
There are no consents required for any Significant Contracts to be in full force
and effect, without default or breach, following the consummation of the
Transactions. None of the VoiceStream Parties, the Company, or the Subsidiaries
are aware of any intent by any party to any Significant Contract to terminate or
amend the terms thereof or to refuse to renew any such Significant Contract upon
expiration of its term. The Company and its Subsidiary are not contractually
restricted from carrying out their respective businesses anywhere in the world.
(c) Except as set forth in Schedule 4.16, neither the Company nor any of
its Subsidiary is a party to any (i) individual written employment agreement or
consulting agreement that either (A) obligates the Company and its Subsidiary to
pay aggregate annual compensation, or provide annual services, as the case may
be, in excess of $100,000 or (B) is not terminable by the Company or its
Subsidiary upon ninety (90) days notice or less, (ii) license agreement or other
arrangement that limits or restrains the Company or its Subsidiary from engaging
or competing in any business or conveys to any other party exclusive rights in
any jurisdiction to use proprietary assets of the Company or its Subsidiary,
(iii) indenture, mortgage, note, installment obligation, agreement or other
instrument relating to the borrowing of money by the Company or any of its
Subsidiary or the guaranty of any obligation for the borrowing of money by the
Company or any of its Subsidiary or any third party, (iv) agreement that creates
a partnership, joint venture,
22
teaming arrangement or similar arrangement or (v) indemnification agreements
currently in effect between the Company or its Subsidiary and any of its past or
present officers, directors or employees.
Section 4.17. ERISA; Employee Benefits
------------------------
(a) Schedule 4.17(a) contains a complete and accurate list of all
existing bonus, incentive, deferred compensation, pension, retirement, profit-
sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase,
restricted stock, stock option, severance, health, vacation, insurance, welfare
and fringe benefit plans, employment or severance agreements and all similar
practices, policies and arrangements, written or oral (each, a "Benefit Plan")
in which any employee or former employee (the "Employees"), consultant or former
consultant (the "Consultants") or director or former director (the "Directors")
of the Company or its Subsidiary participates or to which any such Employees,
Consultants or Directors are a party (the "Company Benefit Plans"). Neither the
Company nor its Subsidiary has any commitment to create any additional material
Benefit Plan or to modify or change any existing Company Benefit Plan in any
material respect. With respect to each Company Benefit Plan, if applicable, the
Company has provided or made available to Xircom true and complete copies of
existing: (i) documents pertaining to such Company Benefit Plan and amendments
thereto; (ii) trust agreements, (iii) the most recent annual report and
actuarial report, if required, (iv) the most recent summary plan description;
(v) the most recent determination letter issued by the IRS and accompanying
schedule, if any; and (vi) Forms 5500 as filed with the IRS for the most recent
three years.
(b) None of the Company or its Subsidiary has contributed, or been
obligated to contribute, to any Benefit Plans which are "multiemployer plans"
(within the meaning of Sections 3(37) or 4001(a)(3) of ERISA) or "multiple
employer plans" (within the meaning of Section 413(c) of the Code or 4063 or
4064 of ERISA). All Company Benefit Plans have been maintained and operated in
material accordance with their terms and are in compliance with applicable law
in all material respects, including but not limited to ERISA and the Code. No
Company Benefit Plan is covered by Title IV of ERISA. Each Company Benefit Plan
which is intended to be qualified under Section 401(a) of the Code is so
qualified and the trusts maintained thereunder are exempt from taxation under
Section 501(a) of the Code, and each such Company Benefit Plan has received a
favorable determination letter from the IRS or intends to apply for such a
letter within the applicable remedial period.
(c) No liability under Title IV of ERISA has been or is expected to be
incurred by the Company or its Subsidiary with respect to any ongoing, frozen or
terminated "single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by either of them, or the single-
employer plan of any entity (an "ERISA Affiliate") which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA Affiliate Plan").
23
(d) All contributions required to be made under the terms of any Company
Benefit Plan or ERISA Affiliate Plan have been timely made. All contributions
accrued through the Effective Date with respect to any Company Benefit Plan will
be paid by the Company prior to the Effective Date. Neither the Company nor its
Subsidiary has any obligation to make contributions to, or reimburse any
VoiceStream Party with respect to, any Benefits Plans of any VoiceStream
Parties.
(e) To the Knowledge of the VoiceStream Parties neither the Company nor
any ERISA Affiliate has engaged in a transaction with respect to any Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
could subject the Company or its Subsidiary to a tax or penalty imposed by
either Sections 4975 or 4976 of the Code or Sections 409 or 502(i) of ERISA, and
neither the Company nor any ERISA Affiliate has incurred any liability for any
excise tax arising under Sections 4970B or 4972 of the Code and no facts exists
that are reasonably likely to give rise to any such liability.
(f) To the Knowledge of the VoiceStream Parties there are no pending,
threatened or anticipated claims by or on behalf of any Benefit Plan, by any
employee or beneficiary covered under any such Benefit Plan, or otherwise
involving any such Benefit Plan (other than routine claims for benefits).
(g) No Benefit Plan provides medical, surgical, hospitalization, death
or similar benefits (whether or not insured) for employees or former employees
of the Company or any Subsidiary for periods extending beyond their retirement
or other termination of service, other than coverage mandated by applicable law,
or benefits the cost of which is borne by the current or former employee (or his
beneficiary).
Section 4.18. Labor Matters
-------------
(a) Neither the Company, nor its Subsidiary is bound by or subject to
(and none of their respective assets or properties are bound by or subject to)
any written or oral, express or implied, contract, commitment or arrangement
with any labor union (including, without limitation, any collective bargaining
agreements), and no labor union has requested or, to the Knowledge of the Seller
Parties, has sought to represent any of the employees, representatives or agents
of Company or its Subsidiary. There is no unfair labor practice complaint
against the Company or its Subsidiary pending, or to the Knowledge of the Seller
Parties, threatened before the National Labor Relations Board or other similar
forum or, to the Knowledge of the Seller Parties, efforts to organize with
respect to employees of the Company or its Subsidiary. There is not now, nor has
there been within the last three years, any labor strike, slowdown or stoppage
actually pending or threatened against the Company or its Subsidiary. No
grievance which would have a Material Adverse Effect nor any arbitration
proceeding arising out of or under collective bargaining agreements is pending
and no claim therefor exists.
(b) Schedule 4.18(b) sets forth the names of each of the key, exempt
employees (i.e., those employees whose annual cash compensation exceeds
$50,000 and who are considered "exempt" from the payment of overtime) of
the Company or its
24
Subsidiary, and also sets forth the base payment made to such key employee each
pay period as of the date hereof and projections for the current fiscal year of
other incentive compensation (including bonuses) for each person named therein.
Neither the Company nor its Subsidiary is aware that any officer or key
employee, or that any group of key employees, intends to terminate his or her
employment with the Company or its Subsidiary. Schedule 4.18(b) also sets forth
all employment, consulting, severance pay, continuation pay, termination pay or
indemnification agreements, nondisclosure agreements, noncompetition agreements,
agreements with commission agents or other similar agreements, written or oral,
between the Company and its Subsidiary and any of their respective Directors,
Employees or Consultants. There are no such agreements under which the
Transactions will require any payment by the Company or any Subsidiary, or any
consent or waiver from any person or will result in any change in the nature of
any rights of any person thereunder. To the Knowledge of the Seller Parties, no
Employee or Director of the Company or its Subsidiary is a party to, or is
otherwise bound by, any nondisclosure, confidentiality, noncompetition,
proprietary rights, employment, consulting or similar agreement, between such
Employee or Director and any other Person that materially adversely affects or
will affect the performance of his or her duties as an Employee or Director of
the Company or its Subsidiary.
Section 4.19. Insurance
---------
Schedule 4.19 sets forth a complete and correct list of all insurance
policies of the Company and its Subsidiary of any kind currently in force or in
force within the last three years, or under which claims may currently be
pending, and also sets forth for each insurance policy the type of coverage, the
name of the insureds, the insurer, the premium, the expiration date, the
deductibles and loss retention amounts and the amounts of coverage. VoiceStream
or the Company has made available to Xircom true and complete copies of all
insurance policies relating to the business or assets of the Company and its
Subsidiary, such policies remain in full force and effect as of the date hereof
and no notice of cancellation or termination has been received with respect to
any such policy. All insurance coverage applicable to the Company and its
Subsidiary and their respective businesses insures the Company and its
Subsidiary in reasonably sufficient amounts against all risks usually insured
against by persons operating similar businesses or properties of similar size in
the localities where such businesses or properties are located. Except as set
forth on Schedule 4.19, neither the Company, nor its Subsidiary has self-
insurance or co-insurance programs (including programs supported or provided by
the VoiceStream Parties), and the reserves set forth on the March 31, 2000
balance sheet included in the Interim Financial Statements are adequate to cover
all anticipated liabilities with respect to any such self-insurance or co-
insurance programs.
Section 4.20. Environmental Matters
---------------------
(a) During the period that the Company or its Subsidiary has owned or
leased its properties and facilities, (i) there have been no disposals, releases
or threatened releases of Hazardous Substances on, from or under such properties
or facilities in violation of any Environmental Laws or which would require
remedial action under any Environmental
25
Law and (ii) neither the Company, its Subsidiary, nor, to the Knowledge of
Seller Parties, any third party, has used, generated, manufactured or stored on,
under or about such properties or facilities or transported to or from such
properties or facilities any Hazardous Substances. None of the Seller Parties
has Knowledge of any presence, disposals, releases or threatened releases of
Hazardous Substances on, from or under any of such properties or facilities,
which may have occurred prior to the Company or its Subsidiary having taken
possession of any of such properties or facilities. For purposes of this
Agreement, the terms "disposal," "release" and "threatened release" shall have
the definitions assigned thereto by the U.S. Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et
seq., as amended.
(b) Except as have not had and would not have, individually or in the
aggregate, a Material Adverse Effect:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed,
no penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review (or any basis therefor) is pending or, to the
Knowledge of the Seller Parties, is threatened by any Governmental Body or
other Person relating to or arising out of any Environmental Law;
(ii) each of the Company and its Subsidiary is and has been in
compliance with all Environmental Laws and all Environmental Permits; and
(iii) to the Knowledge of the Seller Parties, there are no
liabilities of or relating to the Company or its Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise arising under or relating to any Environmental Law and to the
Knowledge of Seller Parties, there are no facts, conditions, situations or
set of circumstances that could reasonably be expected to result in or be
the basis for any such liability.
(iv) there have been no environmental assessments, investigations,
studies, audits, tests, reviews or other analyses conducted (collectively,
"Environmental Reports") of which the Seller Parties has Knowledge in
relation to the current or prior business of the Company or its Subsidiary
or any property or facility now or previously owned or leased by the
Company or its Subsidiary that reveal matters that, individually or in the
aggregate, have had or would reasonably be expected to have a Material
Adverse Effect.
(v) For purposes of this Section 4.20, the terms Company and its
Subsidiary shall include any entity that is, in whole or in part, a
predecessor of the Company or its Subsidiary.
26
Section 4.21. Books and Records
-----------------
The Company has made and will make available for inspection by Xircom the
true, correct and complete books of account relating to the business of the
Company and its Subsidiary which, in reasonable detail, accurately and fairly
reflect the activities of the Company and its Subsidiary. The books of account
of the Company and its Subsidiary reflect the transactions and other matters
required to be set forth under GAAP applied on a consistent basis. The minute
books of the Company and its Subsidiary previously made available to Xircom
accurately and adequately reflect in all material respects all action previously
taken by their respective shareholders, boards of directors and committees of
the board of directors. The copies of the stock book records of the Company and
its Subsidiary previously made available to Xircom are true, correct and
complete, and accurately reflect all transactions effected in the stock of the
Company and its Subsidiary through and including the date hereof.
Section 4.22. Customers and Suppliers
-----------------------
(a) Schedule 4.22 sets forth a true and correct list of the ten largest
customers of the Company and its Subsidiary in terms of revenues during the year
ended December 31, 1999 and during the quarter ended March 31, 2000 showing the
approximate total products sold or services performed by the Company and its
Subsidiary to or for each such customer during each such period.
(b) To the Knowledge of the Seller Parties, no material supplier or
customer of the Company or its Subsidiary has canceled or otherwise terminated
or materially decreased, or made any written threat to the Company or to its
Subsidiary to cancel or otherwise terminate or materially decrease, for any
reason, including the consummation of the Transactions, its relationship with
the Company or its Subsidiary or to change its current business relationship
with the Company or its Subsidiary.
Section 4.23. Brokers and Intermediaries
--------------------------
None of the Seller Parties has employed any broker, finder, adviser
consultant or intermediary in connection with the Transactions which would be
entitled to a broker's, finder's or similar fee or commission in connection
therewith or upon the consummation thereof.
Section 4.24. Acquisition of Shares
---------------------
(a) The Xircom Shares are being acquired by Omnipoint Finance for its own
account solely for the purpose of investment without the view to, or for sale in
connection with, any distribution thereof in violation of federal or state
securities laws and with no present intention of distributing or reselling any
part thereof. Omnipoint Finance will not so distribute or resell any Xircom
Shares in violation of any such law.
(b) The VoiceStream Parties acknowledge that they have had an opportunity
to discuss the business, affairs and current prospects of Xircom with the
officers of
27
Xircom. The VoiceStream Parties further acknowledge having had access to
information about Xircom that it has requested. VoiceStream acknowledges that it
is able to fend for itself in the transactions contemplated by this Agreement
and has the ability to bear the economic risks of holding Xircom Shares pursuant
to this Agreement.
(c) The VoiceStream Parties acknowledge that the Xircom Shares being issued
are not registered. The VoiceStream Parties acknowledge that each certificate
representing the Xircom Shares and any other securities issued in respect of the
Xircom Shares upon any stock split, stock dividend, recapitalization, merger or
similar event shall be stamped or otherwise imprinted with a legend
substantially in the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THAT CERTAIN SHAREHOLDER AGREEMENT, DATED AS OF JUNE
__, 2000, BY AND AMONG XIRCOM, INC, VOICESTREAM WIRELESS CORPORATION
AND OMNIPOINT FINANCE, LLC, THE ACT AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
Section 4.25. Transactions with Certain Persons
---------------------------------
Schedule 4.25 sets forth a list of all agreements between the Company or
its Subsidiary and VoiceStream or any of its Affiliates (other than the Company
or its Subsidiary). Except as set forth in Schedule 4.25, no Affiliate of the
Company and no officer or director of the Company or its Subsidiary has had,
either directly or indirectly, a material interest in: (a) any person or entity
which purchases from or sells, licenses or furnishes to the Company or its
Subsidiary any goods, property, technology, intellectual or other property
rights or (b) any contract or agreement to which the Company or its Subsidiary
is a party or by which it may be bound or affected. Each Affiliate agreement
set forth on Schedule 4.25 shall be terminated on or prior to the Effective Date
without any liability to the Company or its Subsidiary.
Section 4.26. Certain Business Practices
--------------------------
None of the directors, officers, agents or employees of the Company or its
Subsidiary or any of their Affiliates has, in each case in connection with the
respective businesses of the Company or its Subsidiary, (a) used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses,
including without limitation, expenses related to political activity, or (b)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political
28
parties or campaigns, made any bribes or kickback payments or violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended.
Section 4.27. Bank Accounts
-------------
Schedule 4.27 contains a true, correct and complete list of all bank
accounts maintained by the Company and its Subsidiary, including each account
number and the name and address of each bank and the name of each person who has
signature power with respect to each such account.
Section 4.28. Material Misstatements or Omissions
-----------------------------------
No representations or warranties by any of the Seller Parties in this
Agreement, nor any written statement or certificate or other instrument
furnished to the Xircom Parties pursuant hereto, including, without limitation
the Schedules hereto, contains or will contain any untrue statement of a
material fact or, when considered as a whole, omits or will omit to state any
material fact necessary to make the statements or facts contained therein not
misleading.
Section 4.29. Limitation
----------
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT,
THE VOICESTREAM PARTIES MAKE NO OTHER REPRESENTATIONS OR WARRANTIES AND HEREBY
DISCLAIM ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY THE
VOICESTREAM PARTIES OR THE COMPANY OR ITS SUBSIDIARY OR ANY OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES, WITH RESPECT TO THE
COMPANY AND ITS SUBSIDIARY, THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE
RELATED AGREEMENTS OR THE TRANSACTIONS, NOTWITHSTANDING THE DELIVERY OR
DISCLOSURE TO XIRCOM OR ITS REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER
INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF XIRCOM
----------------------------------------
Each of the Xircom Parties jointly represents and warrants to the
VoiceStream Parties that, except as disclosed in the Xircom Parties' Disclosure
Schedule (which exceptions shall specifically identify a Section, Subsection or
clause of a single Section or Subsection hereof, as applicable, to which such
exception relates):
Section 5.1. Organization of Xircom; Authority
---------------------------------
Each of the Xircom Parties is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of its incorporation,
with the corporate power and authority to (i) enter into this Agreement and the
Related Agreements to which it is a
29
party and to perform its obligations hereunder and thereunder and (ii) own or
lease the properties and assets it now owns or holds under lease and to carry on
its business as currently conducted. Each of the Xircom Parties is duly
qualified to do business and is in good standing in jurisdictions where the
nature of the properties owned or leased by it or the activities conducted by it
make such qualification necessary, except where the failure to be so qualified
and in good standing would not have a Xircom Material Adverse Effect.
Section 5.2. Authorization; No Breach
------------------------
The execution, delivery and performance of this Agreement, and the Related
Agreements to which it is a party and the consummation of the Transactions have
been duly authorized by all requisite corporate action on the part of the Xircom
Parties. This Agreement has been duly executed and delivered by each of the
Xircom Parties, and, as of the Effective Date, the Related Agreements to which
it is a party will be duly executed and delivered by it and the Agreement, and
each such Related Agreement constitutes or will constitute upon execution and
delivery, as applicable, a valid and binding obligation of each Xircom Party,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditor's rights and to general
equitable principles.
The execution, delivery and performance of and compliance with this
Agreement and the applicable Related Agreements by each Xircom Party and the
consummation of the Transactions will not, except to the extent that would not,
or be reasonably likely to, have a Material Adverse Effect, individually or in
the aggregate or prevent the consummation of the Merger, (a) violate any
provision of any foreign or domestic laws applicable to or binding on Xircom or
any of its Subsidiaries (b) violate any foreign or domestic order, judgment or
decree applicable to Xircom or any of its Subsidiaries, (c) conflict with, or
result in a breach of or default under, any term or condition of the Certificate
of Incorporation or By-Laws of Xircom or any of its Subsidiaries or (d) violate,
conflict with, result in a breach of any provision of, or constitute a default
(or an event that, with notice or lapse of time or both, would constitute a
default) under, any agreement to which Xircom or any of its Subsidiaries are
bound or result in the termination or in a right of termination or cancellation
of, or accelerate the performance required by, any note, bond, mortgage,
indenture, deed of trust, lease, contract or agreement to which Xircom or any of
its Subsidiaries, or any of their respective properties may be bound, or to
which Xircom or any of its Subsidiaries are a party, or result in the creation
of any Encumbrance upon any of the properties of Xircom or any of its
Subsidiaries.
Section 5.3. Capitalization
--------------
(a) The authorized capital stock of Xircom consists of 125,000,000 shares
of Xircom Common Stock and 2,000,000 shares of Xircom Preferred Stock. As of the
close of business on June 9, 2000, there were outstanding (i) 29,898,663 shares
of Xircom Common Stock (inclusive of all shares of restricted stock granted
under any compensatory plans or arrangements), (ii) stock options to purchase an
aggregate of 4,781,754 shares of
30
Xircom Common Stock, (iii) no phantom shares or stock units issued under any
stock option, compensation or deferred compensation plan or arrangement, (iv) no
warrants to purchase shares of Xircom Common Stock, and (v) no shares of Xircom
Preferred Stock. All outstanding shares of capital stock of Xircom have been,
and all shares that may be issued pursuant to any compensatory plan or
arrangement will be, when issued in accordance with the respective terms
thereof, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights.
(b) Except as set forth in Section 5.3(b), there are no outstanding
subscriptions, options, warrants, rights or convertible or exchangeable
securities issued by Xircom or its Subsidiaries, or other agreements or
commitments to which Xircom or its Subsidiaries is a party of any character
relating to the issued or unissued capital stock or other securities of Xircom
or its Subsidiaries, including any agreement or commitment obligating Xircom or
its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, shares of capital stock or other securities of Xircom or its Subsidiaries,
to grant, extend or enter into any subscription, option, warrant, right or
convertible or exchangeable security or other similar agreement or commitment
with respect to Xircom or its Subsidiaries or obligating Xircom or its
Subsidiaries to make any payments pursuant to any stock-based or stock-related
plan or award. There are no preemptive rights, rights of first refusal, rights
of first offer or any similar rights granted with respect to the securities or
any assets of Xircom or its Subsidiaries. There are no (i) agreements pursuant
to which registration rights in the capital stock of Xircom or its Subsidiaries
have been granted or (ii) to the Knowledge of Xircom, shareholder agreements,
whether written or verbal, among any current or former shareholders of Xircom or
its Subsidiaries, including any agreements between the shareholders of Xircom or
its Subsidiaries with respect to the voting or transfer or capital stock of
Xircom or its Subsidiaries or with respect to any other aspect of Xircom's or
its Subsidiaries' affairs.
Section 5.4. SEC Filings; Financial Statements
---------------------------------
(a) Xircom has filed all forms, reports, exhibits and other documents
required to be filed with the Securities and Exchange Commission ("SEC") since
September 30, 1998 and has made available to VoiceStream (i) its Annual Report
on Form 10-K for the period ended September 30, 1999 and its Quarterly Report on
Form 10-Q for the periods December 31, 1999, and March 31, 2000 respectively,
(ii) all proxy statements relating to Xircom's meetings of stockholders (whether
annual or special) held since September 30, 1999, (iii) all other reports or
registration statements (other than reports on Forms 3, 4 or 5 filed on behalf
of affiliates of Xircom) filed by Xircom with the SEC since September 30, 1999,
and (iv) all amendments and supplements to all such reports and registration
statements filed by Xircom with the SEC (collectively, the "Xircom SEC
Reports"). As of their respective filing dates, the Xircom SEC Reports (i) were
prepared, in all material respects, in accordance with the requirements of the
Securities Act of 1933, as amended, and the SEC rules thereunder (the
"Securities Act") or the Securities Exchange Act of 1934, as amended, and the
SEC's rules thereunder (collectively, the "Exchange Act"), as the case may be,
and (ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any
31
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, except to the
extent corrected by a subsequently filed Xircom SEC report. No subsidiary is
required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Xircom SEC Reports was prepared in
accordance with GAAP applied on a consistent basis throughout the period
involved (except as may be indicated in the notes thereto) and each fairly
presents the consolidated financial position of Xircom and its Subsidiaries as
of the respective dates thereof and the consolidated statements of income,
shareholder's equity and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments.
(c) Other than as has been disclosed to VoiceStream in writing, to the
Knowledge of Xircom no event has occurred since March 31, 2000 which would
require Xircom to file a Form 8-K with the SEC.
Section 5.5. Absence of Certain Changes
--------------------------
Since March 31, 2000 there have been no changes, events or conditions that
individually or in the aggregate have resulted in, or could reasonably be
expected to result in a Xircom Material Adverse Effect, except for changes
occurring before the date of this Agreement and specifically described in
Schedule 5.5 or occurring after the date of this Agreement and in each case
generally affecting other Persons engaged in the same business as Xircom and its
Subsidiaries. Since March 31, 2000, (a) the business of the Xircom and its
Subsidiaries has been operated in the ordinary course of business consistent
with past practice, (b) neither the Xircom nor its Subsidiaries has entered
into, or agreed to enter into, any transaction not in the ordinary course of
business and (c) neither Xircom nor its Subsidiaries has made any changes in its
accounting principles or practices
Section 5.6. Governmental Consents
---------------------
Except as contemplated by this Agreement and the Related Agreements, no
notice, consent, license, approval, order, waiver, expiration of waiting period
or authorization of, or filing, application, registration, qualification or
declaration with, any Governmental Body is required to be obtained or made by
the Xircom Parties in connection with the execution, delivery and performance of
this Agreement, the Related Agreements and the consummation of the Transactions,
other than those the failure of which to obtain would not have, or be likely to
have, a Xircom Material Adverse Effect.
32
Section 5.7. Xircom Shares
-------------
The Xircom Shares have been duly and validly authorized for issuance and,
when issued and delivered in accordance with the terms of this Agreement, will
be duly and validly issued and fully paid and non-assessable, and will be free
of restrictions on transfer other than restrictions on transfer under this
Agreement, the Related Agreements and under applicable state and federal
securities laws.
Section 5.8. Litigation
----------
There is no Litigation pending or, to the Knowledge of the Xircom Parties,
threatened against the Xircom Parties or their Subsidiaries, or their respective
activities, properties or assets which, individually or in the aggregate, could
materially impair the ability of the Xircom Parties or their Subsidiaries to
consummate the Transactions or which Litigation could be reasonably expected to
have, individually or in the aggregate, a Xircom Material Adverse Effect.
Neither Xircom nor its Subsidiaries are party to or subject to the provisions of
any court order, writ, injunction, judgment or decree of any Governmental Body
that, individually or in the aggregate, could prevent, enjoin, alter or
materially delay consummation of any of the Transactions or has had, or could
reasonably be expected to have, a Xircom Material Adverse Effect.
Section 5.9. Undisclosed Liabilities
-----------------------
Neither Xircom nor its Subsidiaries have any liabilities or obligations
(other than liabilities or obligations arising from contracts entered into by
Xircom or its Subsidiaries in the ordinary course of business), except
liabilities or obligations that (a) are fully reflected as liabilities or
reserved for on the balance sheet contained in the SEC Reports, (b) have been
incurred in the ordinary course of business consistent with past practice by the
Company since March 31, 2000, (c) are disclosed in Schedule 5.9 hereto, (d)
arise out of facts or events that are within the scope of the subject matter of
any other representation or warranty contained in this Article 5 and would have
required disclosure but for the Knowledge, time or materiality limitation
contained in the relevant representation or warranty, or (e) individually or in
the aggregate would not have a Xircom Material Adverse Effect.
Section 5.10. Brokers and Intermediaries
--------------------------
Xircom has not employed any broker, finder, advisor, consultant or
intermediary in connection with the Transactions which would be entitled to a
broker's, finder's or similar fee or commission in connection therewith or upon
the consummation thereof.
Section 5.11. Limitation
----------
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT,
XIRCOM MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, AND HEREBY DISCLAIMS ANY
OTHER REPRESENTATIONS OR WARRANTIES MADE BY XIRCOM OR ANY OF ITS OFFICERS,
DIRECTORS,
33
EMPLOYEES, AGENTS OR REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY
OF THIS AGREEMENT, THE RELATED AGREEMENTS OR THE TRANSACTIONS, NOTWITHSTANDING
THE DELIVERY OR DISCLOSURE TO THE VOICESTREAM PARTIES, THE COMPANY OR ITS
SUBSIDIARIES, OR THEIR REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION
WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
ARTICLE 6
CERTAIN PRE-CLOSING COVENANTS
AND AGREEMENTS OF THE PARTIES
-----------------------------
Section 6.1. Access and Information
----------------------
(a) Between the date of this Agreement and the Effective Date, VoiceStream
shall, and shall cause the Company to, (i) give Xircom and its authorized
representatives full and complete access to all properties, personnel,
facilities and offices of the Company and its Subsidiary and to the books and
records of the Company and its Subsidiary (and permit Xircom to make copies
thereof), (ii) permit Xircom to make inspections thereof and (iii) cause its
officers and employees to furnish Xircom with such financial information and
operating data and other information with respect to the business and properties
of the Company and its Subsidiary, and to discuss with Xircom and its authorized
representatives the affairs of the Company and its Subsidiary, all as Xircom may
from time to time reasonably request for the purposes of this Agreement during
normal business hours and with reasonable notice to VoiceStream and the Company
and its Subsidiary. Notwithstanding the foregoing, Xircom acknowledges that with
respect to certain confidential information, any disclosure to be made to Xircom
may be subject to the rights of third parties and VoiceStream, the Company or
its Subsidiary may be prohibited from providing such information to Xircom or
giving Xircom access to such information without the prior consent of such third
parties.
(b) Xircom shall and shall cause its officers and directors and shall cause
all its other employees, auditors, attorneys, consultants, advisors and agents,
to hold in strict confidence, unless compelled to disclose by judicial or
administrative process or, in the opinion of its counsel, by other requirements
of law, all non-public confidential information of the VoiceStream Parties or
the Company and its Subsidiary furnished to Xircom, by or on behalf of
VoiceStream, the Company or its Subsidiary, or their respective representatives
in connection with the Transactions, pursuant to the terms and conditions of,
and subject only to the exceptions set forth in, the Nondisclosure Agreement.
Section 6.2. Conduct of the Business
-----------------------
Except as expressly permitted by this Agreement, between the date of this
Agreement and the Effective Date, VoiceStream shall cause the Company to conduct
the Company's and its Subsidiary's business only in the ordinary course and use
its reasonable
34
efforts to preserve intact its present business organization, maintain its
properties in good operating condition and repair, keep available the services
of its present officers and employees and preserve in all material respects its
present business relationships and goodwill. Further, and without limiting the
generality of the foregoing, from the date hereof until the Effective Date,
without the prior written consent of Xircom, the VoiceStream Parties shall not
permit the Company nor its Subsidiary to:
(a) amend its Certificate of Incorporation or By-Laws other than an
amendment which changes the name of the Company or its Subsidiary;
(b) purchase, redeem, issue, sell or otherwise acquire or dispose of,
either directly or indirectly, any of the OTHI Shares, or reclassify, split,
declare or pay any dividends on or make any other distribution upon or with
respect to, or otherwise change any of the OTHI Shares or the shares of the
capital stock of any of the Company's Subsidiaries or grant or enter into any
options, warrants, puts or calls or other rights to purchase, sell or convert
any obligation into any of the OTHI Shares or the shares of the capital stock of
any of the Company's Subsidiaries;
(c) (i) enter into any transactions with any of its officers, directors or
employees or any entity controlled by any of such individuals, (ii) enter into
any employment or severance agreements or make or grant any increase in the
compensation (whether salary, commission, bonus, benefits (retirement, severance
or other) or other direct or indirect remuneration) of Employees or enter into
any contract or other binding commitment in respect of any such increase, (iii)
amend, adopt or terminate any 401(k) or health and welfare plan covering
Employees in any way that materially affects Employees of the Company or its
Subsidiary, or (iv) enter into any negotiations in respect of any collective
bargaining agreement covering Employees, except in each case in the ordinary
course of business.
(d) sell, assign, transfer, pledge, encumber or otherwise dispose of, or
purchase or otherwise acquire, or agree to sell, assign, transfer, pledge,
encumber or otherwise dispose of, purchase or otherwise acquire any of assets or
properties having a value in excess of $100,000 in the aggregate or otherwise
material to the business or any other material right, except in each case in the
ordinary course of business;
(e) enter into any material contract, or any material amendment, supplement
or waiver in respect of any material contract, except in each case in the
ordinary course of business;
(f) cancel or compromise any debt or claim, or waive or release any
material right, other than adjustments in the ordinary course of business for
goods and services sold and received which, in the aggregate, are not material
and the settlement of any pending or threatened litigation listed on Schedule
4.15, on terms approved by Xircom;
(g) make any capital expenditures or capital additions or improvements in
excess of an aggregate of $100,000;
35
(h) create any lien on any asset other than in the ordinary course of
business, consistent with past practices;
(i) enter into any transaction that would have a material adverse effect on
Xircom's ability after the Effective Date to conduct the business of the Company
as currently conducted;
(j) agree or otherwise commit, whether in writing or otherwise, to do, or
take any action or omit to take any action that would result in, any of the
foregoing.
Section 6.3. Xircom Commitments
------------------
Upon the reasonable request of VoiceStream or any party to a Significant
Contract (a "Significant Party") in connection with obtaining a consent to the
Transaction from a Significant Party, Xircom agrees, on the Effective Date, to
guarantee the performance of the Company thereunder or provide other reasonable
assurances to such Significant Party in connection therewith, but only to the
extent that such performance was guaranteed or otherwise assured by the
VoiceStream Parties prior to the Effective Date, and only if the provisions of
such guarantee or assurance is permitted under the agreements to which Xircom is
subject on the date of this Agreement.
Section 6.4. Insurance
---------
VoiceStream shall cause the Company to keep in effect until the Effective
Date all policies of insurance in effect as of the date hereof maintained by
VoiceStream or the Company insuring the assets, properties, business or
operations of the Company. On the Effective Date, coverage for the Company and
its Subsidiary under all the VoiceStream Parties' insurance policies, as well as
all of the Company's coverage under the VoiceStream Parties' insurance policies
and insurance-related surety bonds, will cease as of the Effective Date.
Section 6.5. Announcements
-------------
Between the date of this Agreement and the Effective Date, except to the
extent required by applicable Law or the rules and regulations of NASDAQ or
other national securities exchange (a) neither Xircom nor the VoiceStream
Parties shall, and none of them shall permit any Affiliate to, issue any press
release or public announcement of any kind concerning, or otherwise publicly
disclose, the Transactions without the consent of the other; and in the event
any such public announcement, release or disclosure is required by law, the
parties will consult prior to the making thereof and use their reasonable best
efforts to agree upon a mutually satisfactory text, and (b) subject to Section
6.1 hereof, Xircom shall not, and shall not permit its affiliates, directors,
employees, representatives, consultants and agents to, communicate with
customers, suppliers or employees of the Company with respect to the
Transactions or the business of the Company without the prior written consent of
VoiceStream, which will not be unreasonably withheld.
36
Section 6.6. Further Actions
---------------
(a) The Seller Parties and the Xircom Parties agree to use all reasonable
efforts to take all actions and to do all things necessary, proper or advisable
to consummate the Transactions, including, without limitation, to obtain or
cause to be obtained all consents of third parties (including without limitation
consents of the third parties and other Governmental Bodies) necessary to be
obtained by any of them in order to consummate the Transactions, and to cause
the deliveries and otherwise satisfy the respective conditions precedent set
forth in Article 8.
(b) The Seller Parties and the Xircom Parties have filed with the Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice pursuant to the HSR Act all requisite documents and notifications (if
any) in connection with this Agreement and the Transactions. The Xircom Parties
and the Seller Parties shall coordinate and cooperate with each other in
exchanging such information and providing such reasonable assistance as the
other may require to comply with any additional requirements of the HSR Act.
(c) At all times prior to the Effective Date, the Seller Parties shall
promptly notify Xircom in writing of any fact, condition, event or occurrence
that comes to the attention of Seller Parties which would reasonably be expected
to result in a breach of any of their representations or warranties or covenants
in this Agreement or to make any such representation or warranty untrue or
incorrect in any material respect or that is otherwise reasonably likely to
result in the failure of any of the conditions contained in Section 8 to be
satisfied, promptly upon either of them becoming aware of the same.
(d) At all times prior to the Effective Date, the Xircom Parties shall
promptly notify VoiceStream in writing of any fact, condition, event or
occurrence that comes to the attention of the Xircom Parties which would
reasonably be expected to result in a breach of any of its representations or
warranties or covenants in this Agreement or to make any such representation or
warranty untrue or incorrect in any material respect or that is otherwise
reasonably likely to result in the failure of any of the conditions contained in
Section 9 to be satisfied, promptly upon becoming aware of the same.
Section 6.7. No Solicitation or Negotiation
------------------------------
The Seller Parties agree that between the date of this Agreement and the
earlier of the Effective Date and the termination of this Agreement, neither the
Seller Parties nor any of their Affiliates, officers, directors, representatives
or agents will (a) solicit, initiate, consider, encourage or accept any other
proposals or offers from any Person (i) relating to any acquisition or purchase
of all or any portion of the capital stock of the Company or its Subsidiary or
assets of the Company or its Subsidiary (other than any sale of assets to be
sold in the ordinary course of business consistent with past practice), (ii) to
enter into any business combination with the Company or its Subsidiary or (iii)
to enter into any other extraordinary business transaction involving or
otherwise relating to the Company or its Subsidiary or (b) participate in any
discussions, conversations, negotiations or other
37
communications regarding, or furnish to any other Person any information with
respect to, or otherwise cooperate in any way, assist or participate in,
facilitate or encourage any effort or attempt by any other Person to seek to do
any of the foregoing. The Seller Parties shall immediately cause and cause to be
terminated all existing discussions, conversations, negotiations and other
communications with any Person conducted heretofore with respect to any of the
foregoing. The Seller Parties agree not to, without the prior written consent of
Xircom, release any Person from, or waive any provision of, any confidentiality
or standstill agreement to which the Company or its Subsidiary is a party.
Section 6.8. Expenses
--------
All costs and expenses incurred in connection with this Agreement and the
Transactions (including fees and disbursements of financial advisors,
accountants and attorneys and any brokers or finders), shall be paid (a) by
VoiceStream, if such costs or expenses are incurred by or on behalf of the
VoiceStream Parties and (b) by Xircom, if such costs or expenses are incurred by
or on behalf of the Xircom Parties.
Section 6.9. Certain Liabilities and Affiliate Agreements
--------------------------------------------
VoiceStream will cause all intercompany accounts of the Company and its
Subsidiary owed to VoiceStream or any of its Affiliates (other than the Company
and its Subsidiary), or owed by VoiceStream or any of its Affiliates (other than
the Company and its Subsidiary) to the Company or its Subsidiary, to be settled
in full at or prior to the Effective Date. Any amount owing by the Company or
its Subsidiary not so settled shall be canceled on the Effective Date.
VoiceStream shall cause all agreements between the Company or its Subsidiary and
VoiceStream or any of its Affiliates (other than the Company or its Subsidiary)
to be terminated prior to the Effective Date without any liability to the
Company or its Subsidiary.
Section 6.10. Limitation on Liabilities
-------------------------
As of the Effective Date, VoiceStream and the Company shall cause the
liabilities of the Company and its Subsidiary to be not more than an aggregate
of Six Million Dollars ($6,000,000). VoiceStream shall cause to be prepared and
shall deliver to Xircom within 60 days after the Effective Date a consolidated
balance sheet of the Company and its Subsidiary as of the Effective Date,
together with a schedule setting forth the contingent and other liabilities of
the Company and its Subsidiary outstanding as of such date that are not required
to be set forth on a balance sheet prepared in accordance with GAAP (the
"Supplemented Effective Date Balance Sheet"). Xircom shall have 30 days
following delivery of the Supplemented Effective Date Balance Sheet in which to
review it and if, in Xircom's opinion, the Supplemented Effective Date Balance
Sheet does not fairly present the liabilities of the Company and its Subsidiary
as of the Effective Date, then Xircom shall, within such 30-day period, deliver
to VoiceStream a written proposed adjustment ("Xircom's Adjustment Notice") to
the Supplemented Effective Date Balance Sheet setting forth (A) the amount of
the proposed adjustment, (B) the item or items to which
38
such proposed adjustment relates and (C) the facts and circumstances supporting
such adjustment. Xircom and VoiceStream shall each use commercially reasonable
efforts for 15 days after delivery of Xircom's Adjustment Notice to agree upon a
determination of the amount of liabilities of the Company and its Subsidiary as
of the Effective Date. Upon the expiration of such 15-day period, Xircom or
VoiceStream may demand in writing that any and all disputes reflected in
Xircom's Adjustment Request be submitted for resolution to an independent
certified public accounting firm of recognized national standing designated by
the requesting party, which firm shall be subject to approval by the other
party, such approval not to be unreasonably withheld (such firm, the
"Independent Accountants"). As promptly as practicable, but in no event later
than 30 days after such demand, Xircom and VoiceStream shall deliver to the
Independent Accountants written submissions supporting their respective
positions with respect to such dispute. The decision of the Independent
Accountants with respect to Supplemented Effective Date Balance Sheet and
Xircom's Adjustment Notice, and any dispute related thereto, shall be final and
binding on the parties hereto and may be enforced as an arbitration award in any
court of competent jurisdiction. If the amount of the aggregate liabilities of
the Company and its Subsidiary as of the Effective Date are determined pursuant
to the foregoing provisions, by the Independent Accountants or otherwise (i) to
exceed Six Million Dollars ($6,000,000), then Xircom shall be entitled to
receive for cancellation a number of Xircom Shares having an aggregate value,
rounded to the nearest share, (as determined based upon a per share value equal
to the Closing Price) equal to the amount of such excess or (ii) to be less than
Six Million Dollars ($6,000,000), then, subject to the terms of the following
sentence, the amount of any claim which may be brought by any of the Xircom
Parties, the Company or its Subsidiary, pursuant to this Agreement, against any
of the VoiceStream Parties or their Affiliates, shall be reduced by the amount
of such deficiency. The provisions of clause (ii) of the preceding sentence
shall not apply to any damages, liabilities or claims arising from (i) a breach
of Sections 4.28 of this Agreement which breach is Known to the Seller Parties
on the date hereof or (ii) claims listed on Schedule 10.5. The costs and
expenses of the Independent Accountants shall be shared equally between Xircom
and VoiceStream. The parties agree to cooperate with each other, and Xircom will
cause the Company and its Subsidiary to make books, records, information and
personnel available as reasonably necessary, to enable the Supplemented
Effective Date Balance Sheet to be prepared and the determination of Effective
Date liabilities to be determined as contemplated by this Section 6.10.
ARTICLE 7
OTHER COVENANTS AND AGREEMENTS OF THE PARTIES
---------------------------------------------
Section 7.1. Employee Matters
----------------
(a) VoiceStream has delivered to Xircom Schedule 7.1(a) which lists
separately each employee of the Company and its Subsidiary and each such
employee's name, job title, current salary and any other compensation items
(e.g., bonus, allowances, etc.), years of service and the current status of each
such employee (e.g., whether the employee is active, on short-term disability,
on leave of absence, etc.) as of the date indicated on such document (the "OTI
Employees").
39
(b) Schedule 7.1(b) contains a list of OTI Employees which Xircom (in its
sole discretion) intends to retain as employees of the Company or its Subsidiary
(the "Final List"). For purposes of this Agreement, "Company Employee" shall
refer to each employee of the Company as of the Effective Date as set forth on
the Final List.
(c) Effective as of the Effective Date, Xircom shall cause the Company or
its Subsidiary to employ each Company Employee; provided, however, each
employee's at-will status shall remain in effect and nothing contained herein
shall modify such status.
(d) Effective as of the Effective Date, VoiceStream shall or shall cause
one of its Subsidiaries, to employ each OTI Employee who is not a Company
Employee; provided, however, each employee's at-will status shall remain in
effect and nothing contained herein shall modify such status.
(e) For a period of 12 months after the delivery of the Final List, none of
the VoiceStream Parties or their respective Affiliates shall directly or
indirectly solicit any of the Company Employees on behalf of themselves or any
of their Affiliates, without the prior written consent of Xircom.
(f) For a period of 12 months after the delivery of the Final List, none of
the Xircom Parties, the Company, it Subsidiary or any of their respective
Affiliates shall directly or indirectly solicit any of the OTI Employees who are
not Company Employees, without the prior written consent of VoiceStream.
(g) As of the Effective Date, all Company Employees shall be eligible to
participate in the pension, savings, profit sharing, health and welfare benefit
plans, programs and practices of Xircom generally applicable to other comparable
situated employees of Xircom. Xircom agrees that all Company Employees and
dependents who participated in the VoiceStream group health and welfare plans
prior to the Effective Date will be covered by Xircom's health and welfare plans
immediately after the Effective Date.
(h) Xircom shall recognize each Company Employee's service, as set forth on
Schedule 7.1(a) of this Agreement, for purposes of determining eligibility to
participate in and vesting, and, if applicable, eligibility to commence
retirement benefits (including any early retirement subsidies), but not benefit
accruals, under any qualified pension, savings, or profit-sharing plans in which
Company Employees may participate, or such other qualified pension or profit-
sharing plans maintained by Xircom or established on or after the Effective Date
in which Company Employees participate, and for purposes of determining
eligibility to participate in and the schedule of benefits provided by any group
health plans, vacation and other paid time off plans and policies, severance,
sick pay, disability and other welfare benefit plans established or maintained
by Xircom or its Affiliate on or after the Effective Date.
(i) VoiceStream Parties shall be responsible for providing any continuation
coverage required pursuant to Section 4980B of the Code as the result of any
"qualifying
40
event" (within the meaning of Section 4980B(f)(3)) occurring with respect to any
OTI employee or any of the respective spouses or dependents thereof on or prior
to the Effective Date. For purposes of determining whether any Company Employee
or his or her covered dependents have satisfied any required co-payments, annual
deductibles and out-of-pocket maximums from and after the Effective Date under
the terms of the Company's or Xircom's or its Affiliate's group health plan for
the calendar year in which the Effective Date occurs, Company Employees and
their covered dependents shall be credited with the amount of deductibles and
co-payments made by, or on behalf of, such Company Employees and their covered
dependents under the VoiceStream Parties' group health plan for such year.
Section 7.2. Access to Books and Records
---------------------------
(a) Access. On and after the Effective Date, each of Xircom and the
------
VoiceStream Parties shall cause their respective employees to give to the
requesting party and its representatives such access as the requesting party may
reasonably request to the properties, books, records and employees of the
Company, its Subsidiary or the VoiceStream Parties, as applicable relating to
any period ending on or before the Effective Date, for purposes including but
not limited to (i) preparing Tax Returns and financial statements and responding
to Tax audits relating to the Company, or (ii) investigating, preparing the
defense or prosecution of, prosecuting or defending any litigation proceeding,
or investigation pending, threatened or anticipated by or against Xircom, the
Company or any of the VoiceStream Parties, except in an action between the
parties hereto; provided that (x) the normal conduct of the business of Xircom,
--------
the Company or the VoiceStream Parties shall not be disrupted thereby and (y) in
the event of any litigation or threatened litigation between the parties, the
foregoing shall in no event be, or be deemed to be, a waiver by a party of any
right to assert the attorney-client privilege or other applicable privilege.
Subject to the foregoing, such access shall include, without limitation,
assuring the presence of a party's former employees as witnesses at depositions,
hearings or trials.
(b) Maintenance of Records. For a period of three years after the
----------------------
Effective Date, the VoiceStream Parties shall maintain and Xircom shall cause
the Company to maintain the books and records of the Company and the books and
records of the VoiceStream Parties relating to the Company in existence as of
the Effective Date. If requested by written notice during the last year of such
three-year period, the VoiceStream Parties or Xircom, as the case may be, shall
(at the requesting party's expense) provide any such books and records to the
requesting party instead of disposing thereof.
(c) Access to Records. In the event that, under the Exchange Act and the
-----------------
rules and regulations thereunder, Xircom is required to include in its reports
thereunder audited financial statements of the Company and its Subsidiary for
periods (or portions of periods) prior to the Effective Date, the VoiceStream
Parties shall provide reasonable to Xircom and its independent accountants such
access as Xircom may reasonably request to the properties, books, records and
employees necessary for the preparation and audit of
41
such financial statements; provided, however, the VoiceStream Parties shall not
have any liability with respect to such preparation and audit.
Section 7.3. Tax Matters
-----------
(a) Liability for Taxes
-------------------
(i) The VoiceStream Parties shall be liable for and indemnify
Xircom or the Company as the case may be, for all Taxes: (A) imposed
on the Company or any entity that is a Subsidiary of the Company on
the Effective Date, or for which the Company or such Subsidiaries may
otherwise be liable, for any taxable year or period that ends on or
before the Effective Date and, with respect to any portion of a
taxable year or period beginning before and ending after the Effective
Date ("Split Period"), the portion of such Split Period ending on and
including the Effective Date or (B) for which the Company or such
Subsidiaries is held liable as a member of a consolidated group that
includes the VoiceStream Parties or any of their Affiliates (other
than the Company and its Subsidiary) pursuant to Section 1.1502-6(a)
of the Treasury Regulations.
(ii) The Company shall be liable for and Xircom shall
indemnify VoiceStream and its Affiliates for all Taxes imposed on
VoiceStream Parties or any of their Affiliates with respect to the
Company or its Subsidiary for any taxable year or period that begins
after the Effective Date and, with respect to a Split Period, the
portion of such Split Period beginning after the Effective Date.
(b) Taxes for Short Taxable Year. For purposes of paragraph (a),
----------------------------
whenever it is necessary to determine the liability for Taxes of the Company for
a portion of a Split Period, the determination of the Taxes for the portion of
the Split Period ending on, and the portion of the Split Period beginning after,
the Effective Date, shall be determined by assuming that the Company and its
Subsidiary had a taxable year or period that ended at the close of the Effective
Date, except that any such Tax imposed annually based on ownership of assets on
a particular date shall be prorated to the period to and including the Effective
Date and the period thereafter.
(c) Tax Refunds. The VoiceStream Parties shall be entitled to any
-----------
refund of any Taxes of the Company and its Subsidiary, including interest paid
thereon, with respect to periods ending on or before the Effective Date.
VoiceStream shall have the right to determine whether any claim for refund for
such Taxes shall be made on behalf of VoiceStream Parties by the Company. If
VoiceStream elects to make a claim for refund, Xircom, the Company and its
Subsidiary shall cooperate fully in connection therewith. Notwithstanding the
foregoing, VoiceStream Parties shall not be entitled make any claim for refund
of Taxes which would adversely affect the liability for Taxes of Xircom, the
Company or its Subsidiary for any period after the Effective Date to any extent
(including, but not limited to, the imposition of income tax deficiencies, the
reduction of asset basis or cost adjustments, the lengthening of any
amortization or depreciation periods, the denial of amortization or depreciation
deductions, or the reduction of loss or credit carry
42
forwards) without the prior written consent of Xircom. Such consent shall not be
unreasonably withheld, and shall not be necessary to the extent that VoiceStream
Parties have indemnified Xircom against the effects of any such settlement.
VoiceStream Parties shall reimburse Xircom and the Company for reasonable
out-of-pocket expenses incurred in providing such cooperation.
(d) Adjustment to Purchase Price. Xircom and VoiceStream Parties agree
----------------------------
to report any indemnification payment made by VoiceStream Parties under this
Section 7.3 as an adjustment to purchase price, contribution to capital, or
other non-taxable amount to the extent that there is substantial authority for
such reporting position under applicable law.
(e) Amended Returns. Without the prior written consent of the
---------------
VoiceStream Parties, neither Xircom, the Company or its Subsidiary, nor any
Affiliate of Xircom shall (i) make any election or (ii) file any amended Tax
Return or propose or agree to any adjustment of any item with the Internal
Revenue Service or any other taxing authority with respect to any tax period
ending on, before or including the Effective Date that would have the effect of
increasing the liability for any Taxes or reducing any Tax benefit of
VoiceStream Parties the Company or its Subsidiary.
(f) Tax Returns. VoiceStream Parties shall file or cause to be filed
-----------
when due, including extensions thereof, all Returns that are required to be
filed with respect to the Company for taxable years or periods ending on or
before the Effective Date and shall pay any Taxes due in respect of such
Returns, and Xircom shall file or cause to be filed when due all Returns that
are required to be filed with respect to the Company and its Subsidiary for
taxable years or periods beginning and ending after the Effective Date and shall
pay any Taxes due in respect of such Returns. The VoiceStream Parties and Xircom
shall jointly prepare and Xircom shall file or cause to be filed all Returns
that are required to be filed with respect to the Company for any Split Period
taxable year, and VoiceStream and Xircom agree to negotiate and resolve in good
faith any issue arising as a result of the preparation of such Tax Return. In
the event the parties are unable to resolve any dispute prior to thirty (30)
Business Days before the due date of such Tax Return, including extensions
thereof, if a request for extension has been timely filed, VoiceStream and
Xircom shall jointly select a public accounting firm with nationally recognized
tax expertise ("Tax Arbitrator") to resolve the dispute. If the Tax Arbitrator
has not resolved the dispute within five (5) Business Days prior to the due date
(including extensions) for the filing of the Tax Return in question, then Xircom
may file such Tax Return in accordance with its position on such disputed issue
without VoiceStream's consent. Notwithstanding the filing of such Tax Return,
the Tax Arbitrator shall make a determination with respect to any disputed
issue, and the amount of Taxes for which VoiceStream Parties are responsible
pursuant to Section 7.3(b) shall be as determined by the Tax Arbitrator. The
fees and expenses of the Tax Arbitrator shall be shared equally by Xircom and
VoiceStream. Not later than five (5) Business Days before the due date for the
payment of Taxes with respect to such Tax Return or (ii) in the event of a
dispute five (5) Business Days after notice to VoiceStream Parties of resolution
thereof, VoiceStream Parties shall pay to Xircom an amount equal to the Taxes
allocable to VoiceStream Parties
43
pursuant to Section 7.3(b). Notwithstanding the foregoing, in the case of a
dispute, the VoiceStream Parties shall pay to Xircom. not later than five (5)
Business Days before the due date for the payment of Taxes with respect to such
Tax Return, the amount of Taxes that the VoiceStream Parties reasonably believe
at such time is properly allocable to VoiceStream Parties pursuant to Section
7.3(b). No payment pursuant to this Section shall exempt VoiceStream Parties
from their indemnification obligations pursuant to this Agreement if the amount
of Taxes as ultimately determined (on audit or otherwise) for the periods
covered by such Tax Returns that are the responsibility of the VoiceStream
Parties exceeds the amount of VoiceStream's payment under this Section.
(g) Tax Contest Provisions. Whenever Xircom receives a notice of any
----------------------
pending or threatened Tax audit or assessment for any taxable period for which
VoiceStream Parties are or may be liable under this Agreement, Xircom shall
promptly inform VoiceStream Parties in writing, provided that failure to comply
with this provision shall not affect Xircom's right to indemnification
hereunder. VoiceStream shall have the right to control, at its own cost, any
resulting proceedings and to determine whether and when to settle any such
claim, assessment or dispute to the extent such proceedings or determinations
affect the amount of Taxes for which VoiceStream Parties are liable under this
Agreement. Notwithstanding the foregoing, the VoiceStream Parties shall not be
entitled to settle, either administratively or after the commencement of
litigation, any claim for Taxes which would adversely affect the liability for
Taxes of Xircom, the Company or its Subsidiary for any period after the
Effective Date to any extent (including, but not limited to, the imposition of
income tax deficiencies, the reduction of asset basis or cost adjustments, the
lengthening of any amortization or depreciation periods, the denial of
amortization or depreciation deductions, or the reduction of loss or credit
carry forwards) without the prior written consent of Xircom. Such consent shall
not be unreasonably withheld, and shall not be necessary to the extent that
VoiceStream Parties have indemnified Xircom against the effects of any such
settlement. Whenever any taxing authority sends a notice of an audit, initiates
an examination of the Company or otherwise asserts a claim, makes an assessment
or disputes the amount of Taxes (i) for any taxable period for which Xircom is
liable under this Agreement or (ii) for any taxable period that involves an
issue that could potentially affect a taxable period for which Xircom is or may
be liable under this Agreement, VoiceStream Parties shall promptly inform Xircom
in writing, and Xircom shall have the right to control, at its cost, any
resulting proceedings and to determine whether and when to settle any such
claim, assessment or dispute, except to the extent such proceedings affect the
amount of Taxes for which VoiceStream Parties are liable under this Agreement.
(h) Termination of Tax Allocation Agreements. Any tax allocation or
----------------------------------------
sharing agreement or arrangement, whether or not written, that may have been
entered into by VoiceStream and the Company or its Subsidiary shall be
terminated as to the Company and its Subsidiary as of the Effective Date, and no
payments which are owed by or to the Company or its Subsidiary pursuant thereto
shall be made thereunder.
(i) Assistance and Cooperation. Each of Xircom and VoiceStream Parties
--------------------------
will provide the other with such assistance as may reasonably be requested by
each of them in
44
connection with the preparation of any Tax Return, any audit or other
examination by any taxing authority, or any judicial or administrative
proceedings relating to liability for Taxes, and each provide the other with any
records or information which may be relevant to such Return, audit or
examination, proceedings or determination. Such assistance shall include making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder and shall include
providing copies of any relevant tax Return and supporting work schedules. The
party requesting assistance hereunder shall reimburse the other for reasonable
expense incurred in providing such assistance. Without limiting in any way the
foregoing provisions of Section 7.3 or this Section 7.3(i), Xircom hereby agrees
that it will retain, until the appropriate statutes of limitation (including any
extensions) expire, copies of all Tax Returns, supporting work schedules and
other records or information which it possesses and which may be relevant to
such returns of the Company for all taxable periods ending on or prior to the
Effective Date, and that such records shall be maintained until the expiration
of the applicable statute of limitations, including any extensions thereto.
Further, Xircom will not destroy or otherwise dispose of such records without
first providing VoiceStream with a reasonable opportunity to review and copy
such records.
(j) Survival of Obligations. Notwithstanding any other provision of
-----------------------
this Agreement, the rights and obligations of the parties with respect to any
claim under this Section 7.3 shall remain in effect until such claim is finally
resolved and the obligations satisfied.
Section 7.4. Employee Stock Options
----------------------
On the Effective Date, Xircom shall grant to each Company Employee options
to purchase a number of shares of Xircom Common Stock in an amount equal, in
each such case, to (a) the number of shares of VoiceStream Common Stock which
such Company Employee is entitled to purchase immediately prior to the Effective
Date under options that were outstanding on the date of this Agreement and
unvested immediately prior to the Effective Date, multiplied by (b) the ratio of
(i) the average closing price for a share of VoiceStream Common Stock on the
Business Day prior to the date of this Agreement over (ii) the average closing
price for a share of Xircom Common Stock on the Business Day prior to the date
of this Agreement. Such options shall be granted at per share exercise prices
equal to the respective exercise prices set forth in the options described in
clause (a) above divided by the ratio set forth in clause (b) above and shall
vest on a schedule corresponding to the vesting schedules applicable to the
respective options described in clause (a) above, unless otherwise agreed by
Xircom and the respective Company Employee. Such options shall otherwise be on
the terms and conditions generally applicable to options granted by Xircom under
its currently existing stock option plans. Unless otherwise agreed by
VoiceStream and the Company Employee, each Company Employee shall continue to
hold under the terms thereof all options to acquire shares of VoiceStream Common
Stock that are vested on the Closing Date. VoiceStream shall remain solely
responsible for all options to acquire shares of VoiceStream Common Stock
granted to OTI Employees who are not Company Employees and to all Company
Employees who do not remain employed by the Company on the Closing Date, whether
45
such options are vested or unvested. No options will be granted to any OTI
Employee between the date of this Agreement and the delivery of the Final List
or to any Company Employee between the delivery of the Final List and the
earlier of the Effective Date and the termination of this Agreement, without the
prior written consent of Xircom.
Section 7.5. Omnipoint Marks
---------------
(a) At or prior to the Effective Date, the VoiceStream Parties will
terminate the rights of the Company and its Subsidiary to use the service marks,
trademarks, tradenames, corporate names and company names, listed on Schedule
7.5, including but not limited to any of the foregoing containing the term
"Omnipoint" or any similar term (the "Omnipoint Marks"). The Xircom Parties
hereby acknowledge and agree that none of the Omnipoint Marks is included in the
Intellectual Property owned by or licensed to the Company or its Subsidiary
after the Effective Date.
(b) The Company, its Subsidiary and Xircom shall modify any equipment
and manufacturing materials using the Omnipoint Marks and shall not distribute,
publish or otherwise disseminate any brochures, stationery or other printed
materials using the Omnipoint Marks so as to eliminate such Omnipoint Marks as
soon as practicable after the Effective Date but in no event later than three
(3) months after the Effective Date. Neither the Company, its Subsidiary, Xircom
nor their Affiliates, shall permit the Company or its Subsidiary to use the
Omnipoint Marks from and after three (3) months after the Effective Date. Such
three (3) month periods shall not apply to any Omnipoint Marks which are not
reasonably apparent or outwardly visible.
Section 7.6. Leasehold Matters
-----------------
Prior to the Effective Date, the VoiceStream Parties shall cause the
Company to enter into a lease for its principal place of business on terms and
conditions reasonably acceptable to Xircom, including commitments for completion
and payment of tenant improvements, either from the lessor or the VoiceStream
Parties, adequate for the conduct of the business of the Company and its
Subsidiary without material interruption and on a basis at least comparable to
the facilities available to the Company and its Subsidiary prior to the date of
this Agreement.
Section 7.7. Transfer of Intellectual Property Rights
----------------------------------------
On or prior to the Effective Date, VoiceStream shall sell, assign and
transfer to the Company or its Subsidiary its entire right, title and interest
in and to the Marks listed on Schedule 4.12(a), the Patents listed on Schedule
4.12(b) and the Copyrights on software that is principally used in the business
of the Company and its Subsidiary.
Section 7.8. Further Assurances
------------------
After the Effective Date, the VoiceStream Parties and the Xircom Parties
shall, and shall cause each of their Affiliates to, from time to time, execute
and deliver such additional instruments, documents, conveyances or assurances
and take such other actions
46
as shall be necessary, or otherwise reasonably requested by the other party, to
confirm and assure the rights and obligations provided for in this Agreement and
render effective the consummation of the Transactions.
Section 7.9. Notification of Certain Matters
-------------------------------
Each of the parties to this Agreement shall promptly notify the other
parties to this Agreement of (a) the occurrence or non-occurrence of any fact or
event which would be reasonably likely (i) to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Effective Date or (ii) to cause
any material covenant, condition or agreement hereunder not to be complied with
or satisfied in all material respects and (b) any failure of any party to this
Agreement to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder in any material respect.
Section 7.10. Tax Covenant
------------
Xircom agrees that it will not take, or fail to take, any action of any
nature whatsoever on or after the Effective Date which would cause any of the
representations set forth in the Tax Matters Representation Letter set forth in
Exhibit D-2 not to be true and correct if the effect of such action, or
inaction, would cause the opinion of tax counsel referred to in Section 8.6(b)
not to be true and correct in any respect.
ARTICLE 8
CONDITIONS PRECEDENT OF THE VOICESTREAM PARTIES
-----------------------------------------------
The obligation of the VoiceStream Parties to consummate the Transactions is
subject to the fulfillment of each of the following conditions prior to or on
the Effective Date:
Section 8.1. Representations and Warranties
------------------------------
The representations and warranties of the Xircom Parties contained in
Article 5 shall be true and correct in all material respects (except for such
representations and warranties that are qualified by their terms by a reference
to materiality or Xircom Material Adverse Effect which representations and
warranties as so qualified shall be true in all respects) at and as of the
Effective Date, with the same force and effect as though made at and as of the
Effective Date, except for changes expressly contemplated by this Agreement, and
except to the extent that any representation or warranty is made as of a
specified date, in which case such representation or warranty shall be true in
all material respects (except for such representations and warranties that are
qualified by their terms by a reference to materiality or Xircom Material
Adverse Effect which representations and warranties as so qualified shall be
true in all respects) as of such date.
47
Section 8.2. Agreements
----------
Each of the Xircom Parties shall have performed and complied in all
material respects with all its undertakings, covenants and agreements required
by this Agreement to be performed or complied with by Xircom prior to or on the
Effective Date.
Section 8.3. Xircom Certificate
------------------
The VoiceStream Parties shall have been furnished with a certificate of an
authorized officer of Xircom, dated the Effective Date, certifying to the effect
that the conditions contained in Sections 8.1 and 8.2 have been fulfilled.
Section 8.4. Compliance with Law
-------------------
No Law, and no order or injunction of any Governmental Body, shall be in
effect which prohibits the consummation of the Transactions.
Section 8.5. Consents
--------
All material governmental authorizations, consents, approvals, exemptions,
or other actions required to consummate the Transactions (including, without
limitation, as required under the HSR Act) shall have been obtained and shall be
in full force and effect, without the imposition of any conditions not
reasonably acceptable to the VoiceStream Parties.
Section 8.6. Opinions of Counsel to Xircom
-----------------------------
(a) The VoiceStream Parties shall have received an opinion of counsel to
Xircom reasonably satisfactory to VoiceStream, dated the Effective Date.
(b) VoiceStream shall have received an opinion of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ &
▇▇▇▇▇, in form and substance reasonably satisfactory to VoiceStream on the basis
of certain facts, representations and assumptions set forth in the opinion,
dated as of the Effective Date, to the effect that (i) the Merger will be
treated for federal income tax purposes as a reorganization described in Section
368(a) of the Code, and (ii) each of the Company, Xircom and, in the case of a
reorganization described in Section 368(a)(2)(E) of the Code, Merger Sub, will
be a party to the reorganization within the meaning of Section 368(b) of the
Code. In rendering such opinion, such counsel shall be entitled to rely upon
certain documentation including representations of officers of Omnipoint Finance
and Xircom in substantially the same form as Exhibits D-1 and D-2 respectively.
Section 8.7. Release of OTI Employees
------------------------
The VoiceStream Parties shall have received either (i) a release from each
Company Employee reasonably satisfactory to VoiceStream, dated as of the
Effective Date, releasing the VoiceStream Parties and their Affiliate from any
obligation owing to the Company Employees (including any rights and claims, any
Company Employees may
48
have) in connection with any stock options rights under any compensation or
stock option plans that they were not vested in, prior to the Effective Date
("Employee Claims") or (ii) an indemnification from by Xircom, reasonably
satisfactory to VoiceStream indemnifying the VoiceStream Parties and their
Affiliates from any claims, demands, losses, damages, costs, and reasonable
expenses, including reasonable legal fees and expenses, relating to any Employee
Claims.
Section 8.8. Related Agreements
------------------
Each of the Xircom Parties shall have executed, as of the Effective Date,
and delivered to the VoiceStream Parties the Related Agreements to which each
Xircom Party is a party.
Section 8.9. No Material Adverse Effect
--------------------------
Since the date hereof, no event or events shall have occurred, which,
individually or in the aggregate, have, or could reasonably be expected to have,
a Xircom Material Adverse Effect.
Section 8.10. Other Deliveries
----------------
The Xircom Parties shall have delivered to the VoiceStream Parties the
following: (i) certificates as to the good standing of each of the Xircom
Parties in their respective states of organization and principal place of
business, (ii) certificates representing the Xircom Shares registered in the
name of Omnipoint Finance, (iii) certificates of the Secretary or an Assistant
Secretary of each of the Xircom Parties as to (a) the resolutions of such Xircom
Party with respect to the Agreement and the Transactions, and (b) the incumbency
of the officers of such Xircom Party executing the Agreement and the Related
Agreements and (iv) any other instruments and documents required to be delivered
by the Xircom Parties on the Effective Date.
ARTICLE 9
CONDITIONS PRECEDENT OF XIRCOM
------------------------------
The obligation of the Xircom Parties to consummate the Transactions is
subject to the fulfillment of each of the following conditions prior to or on
the Effective Date:
Section 9.1. Representations and Warranties
------------------------------
The representations and warranties of the VoiceStream Parties contained in
Article 4 shall be true and correct in all material respects (except for such
representations and warranties that are qualified by their terms by a reference
to materiality or Material Adverse Effect which representations and warranties
as so qualified shall be true in all respects) at and as of the Effective Date,
with the same force and effect as though made at and as of the Effective Date,
except for changes expressly contemplated by this Agreement, and except to the
extent that any representation or warranty is made as of a specified date, in
which case such representation or warranty shall be true in all material
49
respects (except for such representations and warranties that are qualified by
their terms by a reference to materiality or Material Adverse Effect which
representations and warranties as so qualified shall be true in all respects) as
of such date.
Section 9.2. Agreements
----------
Each of the VoiceStream Parties shall have performed and complied in all
material respects with all of its undertakings, covenants and agreements
required by this Agreement to be performed or complied with by the VoiceStream
Parties prior to or on the Effective Date.
Section 9.3. Sellers' Certificates
---------------------
Xircom shall have been furnished with a certificate of an authorized
officer of each of the VoiceStream Parties dated the Effective Date, certifying
to the effect that the conditions contained in Sections 9.1 and 9.2 have been
fulfilled.
Section 9.4. Compliance with Law
-------------------
No Law, and no order or injunction of any Governmental Body, shall be in
effect which prohibits the consummation of the Transactions.
Section 9.5. Consents
--------
Any necessary consents under any Significant Contracts as well as all
material governmental authorizations, consents, approvals, exemptions, or other
actions required to consummate the Transactions (including, without limitation,
as required under the HSR Act) shall have been obtained and shall be in full
force and effect, without the imposition of any conditions not reasonably
acceptable to Xircom.
Section 9.6. Related Agreements
------------------
Each of the VoiceStream Parties shall have executed, as of the Effective
Date, and delivered to the Xircom Parties the Related Agreements to which each
VoiceStream Party is a party.
Section 9.7. Other Deliveries
----------------
The VoiceStream Parties shall have delivered to the Xircom Parties the
following: (i) certificates as to the good standing of each of the Seller
Parties in their respective states of organization and principle place of
business, (ii)certificates representing the OTHI Shares, with duly executed
stock powers in blank and all requisite transfer tax stamps attached, (iii) the
resignations of all directors, from the Board of Directors of the Company and
its Subsidiary (iv) certificates of the Secretary or an Assistant Secretary of
each of the Seller Parties as to (a) the resolutions of such VoiceStream Party
with respect to the Agreement and the Transactions, and (b) the incumbency of
the officers of such Seller Party executing the Agreement and the Related
Agreements and (v) any other
50
instruments and documents required to be delivered by the VoiceStream Parties on
the Effective Date.
Section 9.8. No Material Adverse Effect
--------------------------
Since the date hereof, no event or events shall have occurred, which,
individually or in the aggregate, have, or could reasonably be expected to have,
a Material Adverse Effect.
Section 9.9. Opinion of Counsel to the VoiceStream Parties
---------------------------------------------
Xircom shall have received an opinion of counsel to VoiceStream reasonably
satisfactory to Xircom.
ARTICLE 10
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION
-------------------------------
Section 10.1. Survival of Representations and Warranties
------------------------------------------
All representations and warranties of the VoiceStream Parties and the
Xircom Parties included in this Agreement shall survive for twelve months after
the Effective Date and shall thereafter expire except with respect to breaches
and violations theretofore specified in reasonable detail to the VoiceStream
Parties by Xircom or to Xircom by the VoiceStream Parties, as the case may be,
and except for the representations and warranties contained in Sections 4.14
relating to Taxes (other than with respect to matters relating to Taxes to which
the provisions of Section 7.3 shall apply) 4.17 relating to ERISA matters, 4.20
relating to environmental matters, 4.24 relating to acquisition of shares, 4.26
relating to certain payments and 5.9 relating to acquisition of shares, which
shall survive for the applicable statute of limitations, and the representations
in Sections 4.1, 4.2 (first paragraph), 4.3, 4.4, 4.5 and 4.6(a) and Sections
5.1, 5.2 (first paragraph), 5.3, 5.6 and 5.7 which shall survive indefinitely.
Section 10.2. Indemnification of Xircom
-------------------------
Subject to the terms and conditions of this Article 10, and other than with
respect to matters relating to Taxes to which the provisions of Section 7.3
shall apply, each of the VoiceStream Parties agrees to indemnify and hold
harmless Xircom, against and in respect of any and all claims, demands, losses,
damages, costs and reasonable expenses, including, without limitation,
reasonable legal fees and expenses ("Damages"), resulting or arising from (a)
any failure by such VoiceStream Party to perform or otherwise fulfill or comply
with any provision of this Agreement, (b) any breach or violation of any
representation or warranty of any VoiceStream Party hereunder (subject to
Section 10.1), and (c) any claims arising from the items listed on Schedule
10.5.
51
Section 10.3. Indemnification of the VoiceStream Parties
------------------------------------------
Subject to the terms and conditions of this Article 10, Xircom agrees to
indemnify and hold harmless the VoiceStream Parties, against and in respect of
any and all Damages, resulting or arising from (a) any failure by Xircom to
perform or otherwise fulfill or comply with any provision of this Agreement, and
(b) any breach or violation of any representation or warranty of Xircom
hereunder (subject to Section 10.1).
Section 10.4. Claims
------
Any claim for indemnity under Section 10.2 or 10.3 shall be made by written
notice from the party seeking to be indemnified (the "Indemnitee") to the party
from which indemnification is sought (the "Indemnifying Party") specifying in
reasonable detail the basis of the claim. When an Indemnitee seeking
indemnification under Section 10.2 or 10.3 receives notice of any claims made by
third parties ("Third Party Claims") which is to be the basis for a claim for
indemnification hereunder, the Indemnitee shall give written notice within a
reasonable period thereof to the Indemnifying Party reasonably indicating the
nature of such claims and the basis thereof. Upon notice from the Indemnitee,
the Indemnifying Party may, but shall not be required to, assume the defense of
any such Third Party Claim, including its compromise or settlement, and the
Indemnifying Party shall pay all reasonable costs and expenses thereof and shall
be fully responsible for the outcome thereof, provided, however, that the
-------- -------
Indemnifying Party shall not settle any such claim without the Indemnitee's
prior written consent (which consent shall not be unreasonably withheld) unless
the only remedy for such claim is monetary damages which are paid in full by the
Indemnifying Party or unless such settlement includes as an unconditional term
thereof the giving by the claimant or the plaintiff to Indemnitee, a release
from all liability in respect to such claim. In connection with any claim
involving any remedy other than monetary damages, the Indemnitee shall have the
right to be kept informed and be consulted in connection with the resolution of
such claim. The Indemnifying Party shall give notice to the Indemnitee as to
its intention to assume the defense of any such Third Party Claim within twenty
(20) days after the date of receipt of the Indemnitee's notice in respect of
such Third Party Claim. The Indemnitee shall cooperate fully in the defense of
the Third Party Claim as and to the extent reasonably requested by the
Indemnifying Party (such cooperation shall include the retention and, upon the
request of the Indemnifiable Party, the provision to such party of records and
information which are reasonably relevant to such claim or demand and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder). If an
Indemnifying Party does not, within twenty (20) days after the Indemnitee's
notice is given, give notice to the Indemnitee of its assumption of the defense
of the Third Party Claim, the Indemnifying Party shall not have the right to
control the defense thereof unless it thereafter elects to assume the defense
thereof by notice to the Indemnitee. If the Indemnitee assumes the defense of
any Third Party Claim because of the failure of the Indemnifying Party to do so
in accordance with this Section 10.4, the Indemnifying Party shall pay all
reasonable costs and expenses of such defense and shall be fully responsible for
the outcome thereof. The Indemnifying
52
Party shall have no liability with respect to any compromise or settlement
thereof effected without its prior written consent, which consent shall not be
unreasonably withheld.
Section 10.5. Limitation of Liability
-----------------------
Except as provided in Section 11.1 and 11.2, each party to this Agreement
shall have as its sole and exclusive remedy resulting from the breach of any
representation or warranty made by the other party to this Agreement, other than
with respect to matters relating to Taxes to which the provisions of Section 7.3
shall apply, a claim for indemnity under Sections 10.2 or 10.3 of this
Agreement. Any claims by Xircom or any VoiceStream Party for breach of any
representation or warranty made hereunder shall be subject to the following:
(a) with respect to Sections 10.2(b) and 10.3(b), the provisions for
indemnity shall be effective only when the aggregate amount of all such claims
for which a party is liable hereunder exceeds 0.50% of the Merger Consideration,
in which case Xircom or the VoiceStream Parties, as the case may be, shall be
liable for all such amounts in excess thereof; provided, that in no event shall
--------
Xircom or the VoiceStream Parties, as the case may be, be liable for more than
an amount in the aggregate equal to 20.00% of the Merger Consideration,
provided, further, that the foregoing limitations shall not apply to the breach
-------- -------
of any representation or warranty contained in Sections 4.1, 4.2, 4.3, 4.4.,4.5,
4.6(a), 4.14 (but only to the extent Section 7.3 does not apply), 4.17, 4.20,
4.24, 4.26, 5.1, 5.2, 5.3, 5.6, 5.7 or 5.9 or with respect to any claims listed
on Schedule10.5; and provided, further, that in the event any payments are to be
-------- -------
made pursuant to this Article 10, the VoiceStream Parties shall have the option
to make such payments in the form of cash or shares of Xircom Common Stock,
which Xircom Common Stock shall, for the purposes of this Section 10.5, have a
per share value equal to the Closing Price.
(b) the amount of any claim for indemnity hereunder shall be reduced to
reflect any insurance proceeds recoverable by and paid to the Indemnitee
relating to such claim, provided that the foregoing reduction shall not be
--------
applied if to do so would excuse any insurer from any obligation to cover any
loss or would increase the cost of future coverage.
(c) nothing contained in this Section 10.5 shall preclude the Xircom
Parties from asserting any common law rights of fraud against any of the
VoiceStream Parties.
53
ARTICLE 11
TERMINATION
-----------
Section 11.1. Grounds for Termination
-----------------------
This Agreement may be terminated at any time prior to the Effective Date:
(a) by written agreement of Xircom and VoiceStream;
(b) by either Xircom or VoiceStream in writing without liability to the
terminating party or parties on account of such termination (provided the
terminating party is not otherwise in material default or breach of this
Agreement) if the Merger shall not have occurred on or prior to June 30, 2000;
and
(c) by either Xircom or VoiceStream in writing without liability to the
terminating party or parties on account of such termination (provided the
terminating party is not otherwise in material default or breach of this
Agreement) upon the breach by the other party of any provision of this Agreement
not cured within 10 days of delivery of notice by the non-breaching party.
Section 11.2. Effect of Termination
---------------------
Termination of this Agreement pursuant to this Article 11 shall terminate
all obligations of the parties hereto except as provided below in this Section
11.2; provided, however, that (a) termination pursuant to Section 11.1(b) or (c)
-------- -------
shall not relieve the defaulting or breaching party hereunder from any liability
to the other party hereto resulting from the default or breach hereunder of such
defaulting or breaching party occurring prior to the date of termination, and
(b) the provisions of this Article 11, the provisions set forth in Sections
6.1(b), 6.5, 6.8, 11.2 and the provisions of Article 12, shall survive any such
termination.
ARTICLE 12
MISCELLANEOUS
-------------
Section 12.1. GOVERNING LAW
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THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
Section 12.2. Notices
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All notices, requests, permissions, waivers, and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
received if delivered by hand, facsimile transmission or by United States mail
(registered mail, return receipt
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requested), properly addressed and postage prepaid, return receipt requested, or
by overnight courier as follows:
If to VoiceStream Parties:
3650 ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ llp
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Xircom, to:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax:
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Such names and addresses may be changed by such notice.
Section 12.3. Entire Agreement
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This Agreement, (including the schedules hereto) the Related Agreements,
and the Nondisclosure Agreement contain the entire understanding of the parties
hereto with respect to the subject matter contained herein and therein, and
supersedes and cancel all prior agreements, negotiations, correspondences,
undertakings and communications of the parties, oral or written, regarding such
subject matter.
Section 12.4. Amendments
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This Agreement may be amended only by a written instrument executed by the
parties or their respective successors or permitted assigns.
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Section 12.5. Headings; References
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The article, section and paragraph headings and table of contents contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. All references herein to
"Articles", "Sections", or "Schedules" shall be deemed to be references to
Articles or Sections hereof and Schedules hereto unless otherwise indicated.
Section 12.6. Counterparts
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This Agreement may be executed in one or more counterparts and each
counterpart shall be deemed to be an original.
Section 12.7. Parties in Interest; Assignment
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This Agreement shall inure to the benefit of and be binding upon the
parties and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any Person not a party
to this Agreement any rights or remedies under or by reason of this Agreement,
except as otherwise provided in Article 10 with respect to Indemnities. No
party to this Agreement may assign or delegate all or any portion of its rights,
obligations or liabilities under this Agreement without the prior written
consent of the other parties to this Agreement.
Section 12.8. Severability: Enforcement
-------------------------
Whenever possible, each provision of this Agreement will be interpreted in
such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable
under any applicable law or rule in any jurisdiction, such provision will be
ineffective only to the extent of such invalidity, illegality or
unenforceability in such jurisdiction, without invalidating the remainder of
this Agreement in such jurisdiction or any provision hereof in any other
jurisdiction.
Section 12.9. Jurisdiction; Venue; Waiver of Jury Trial
-----------------------------------------
Each party hereby irrevocably and unconditionally submit to the exclusive
jurisdiction of the state and federal courts located in the Borough of
Manhattan, The City of New York, for any actions, suits, or proceedings arising
out of or relating to this Agreement and the transactions contemplated hereby
(and Xircom and the VoiceStream parties agree not to commence any action, suit
or proceeding relating thereto except in such courts), and further agree that
service of any process, summons, notice or document by U.S. registered mail to
its address set forth above shall be effective service of process of any action,
suit or proceeding brought against it in any such court. Xircom and the
VoiceStream Parties hereby irrevocably and unconditionally waive any objection
to the laying of venue of any action, suit or proceeding arising out of this
Agreement or the Transactions in such state or federal courts as aforesaid and
hereby further irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient
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forum. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL.
Section 12.10. Waiver
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Any of the conditions to Merger set forth in this Agreement may be waived
in writing at any time prior to or on the Effective Date hereunder by the party
entitled to the benefit thereof. The failure of any party hereto to enforce at
any time any of the provisions of this Agreement shall in no way be construed to
be a waiver of any such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of such party thereafter to enforce
each and every such provisions. No waiver of any breach of or noncompliance
with this Agreement shall be held to be a waiver of any other or subsequent
breach or noncompliance.
Section 12.11. Disclosure Schedules
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The information contained in the Schedules hereto shall not be deemed to
constitute an admission by the VoiceStream Parties or Xircom or otherwise imply
that any such information is material for purposes of this Agreement or
otherwise. The VoiceStream Parties and Xircom shall have the right at any time
prior to the Effective Date to supplement or amend in writing the Schedules
hereto with respect to any matter required to be set forth or described in such
Schedules; provided, however, that such supplement or amendment shall not be
deemed to cure a breach of a representation or warranty or satisfy a condition
unless waived by the party for whose benefit the representation or warranty is
made. For purposes of the rights and obligations of the parties hereunder, upon
the occurrence of the Merger, any such supplemental or amended disclosure shall
be deemed to have been disclosed as of the date of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
VOICESTREAM WIRELESS CORPORATION
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
OMNIPOINT FINANCE, L.L.C.
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
OMNIPOINT TECHNOLOGY HOLDINGS, INC.
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
XIRCOM, INC.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Secretary and General Counsel
OTHI ACQUISITION CO.
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary