EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
TELLABS, INC.,
CHARDONNAY MERGER CORP.
AND
ADVANCED FIBRE COMMUNICATIONS, INC.
DATED AS OF MAY 19, 2004
(AS AMENDED AND RESTATED AS OF SEPTEMBER 7, 2004)
AGREEMENT OF PLAN AND MERGER
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER AND SUBSEQUENT MERGER........................................................... 1
Section 1.1 The Merger............................................................................. 1
Section 1.2 Effective Time......................................................................... 2
Section 1.3 Effects of the Merger.................................................................. 2
Section 1.4 Charter and Bylaws; Directors and Officers............................................. 2
Section 1.5 Conversion of Securities............................................................... 2
Section 1.6 Parent to Make Certificates Available.................................................. 4
Section 1.7 Dividends; Transfer Taxes; Withholding................................................. 4
Section 1.8 No Fractional Securities............................................................... 5
Section 1.9 Return of Exchange Fund................................................................ 5
Section 1.10 Adjustment of Per Share Merger Consideration........................................... 6
Section 1.11 No Further Ownership Rights in Company Common Stock.................................... 6
Section 1.12 Closing of Company Transfer Books...................................................... 6
Section 1.13 Lost Certificates...................................................................... 6
Section 1.14 Further Assurances..................................................................... 6
Section 1.15 Closing; Closing Deliveries............................................................ 7
Section 1.16 Subsequent Merger...................................................................... 8
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB........................................... 10
Section 2.1 Organization, Standing and Power....................................................... 10
Section 2.2 Capital Structure...................................................................... 11
Section 2.3 Authority.............................................................................. 12
Section 2.4 Consents and Approvals; No Violation................................................... 13
Section 2.5 SEC Documents and Other Reports........................................................ 14
Section 2.6 Registration Statement and Proxy Statement............................................. 14
Section 2.7 Absence of Certain Changes or Events................................................... 15
Section 2.8 Permits and Compliance................................................................. 15
Section 2.9 Tax Matters............................................................................ 16
Section 2.10 Actions, Proceedings and Violations.................................................... 17
Section 2.11 Certain Agreements..................................................................... 17
Section 2.12 ERISA.................................................................................. 18
Section 2.13 Compliance with Worker Safety and Environmental Laws................................... 19
Section 2.14 Labor Matters.......................................................................... 19
Section 2.15 Intellectual Property.................................................................. 19
Section 2.16 Required Vote of Parent Stockholders................................................... 20
-i-
Section 2.17 Reorganization......................................................................... 20
Section 2.18 Brokers................................................................................ 20
Section 2.19 Operations of Sub...................................................................... 21
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................................. 21
Section 3.1 Organization, Standing and Power....................................................... 21
Section 3.2 Capital Structure...................................................................... 21
Section 3.3 Authority.............................................................................. 23
Section 3.4 Consents and Approvals; No Violation................................................... 23
Section 3.5 SEC Documents and Other Reports........................................................ 24
Section 3.6 Registration Statement and Proxy Statement............................................. 24
Section 3.7 Absence of Certain Changes or Events................................................... 25
Section 3.8 Permits and Compliance................................................................. 26
Section 3.9 Tax Matters............................................................................ 26
Section 3.10 Actions, Proceedings and Violations.................................................... 27
Section 3.11 Certain Agreements..................................................................... 28
Section 3.12 ERISA.................................................................................. 30
Section 3.13 Compliance with Worker Safety and Environmental Laws................................... 31
Section 3.14 Labor Matters.......................................................................... 32
Section 3.15 Intellectual Property.................................................................. 32
Section 3.16 Opinion of Financial Advisor........................................................... 33
Section 3.17 State Takeover Statutes; Certain Charter Provisions.................................... 33
Section 3.18 Required Vote of Company Stockholders.................................................. 33
Section 3.19 Reorganization......................................................................... 33
Section 3.20 Brokers................................................................................ 34
Section 3.21 Rights Agreement....................................................................... 34
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS.................................................. 34
Section 4.1 Conduct of Business Pending the Merger................................................. 34
Section 4.2 No Solicitation........................................................................ 39
Section 4.3 Third Party Standstill Agreements...................................................... 41
ARTICLE V ADDITIONAL AGREEMENTS...................................................................... 42
Section 5.1 Company Stockholder Meeting............................................................ 42
Section 5.2 Preparation of the Registration Statement and the Proxy Statement...................... 42
Section 5.3 Access to Information.................................................................. 43
Section 5.4 Compliance with the Securities Act..................................................... 43
Section 5.5 Current Nasdaq Quotation............................................................... 44
Section 5.6 Fees and Expenses...................................................................... 44
Section 5.7 Company Stock Plans and Company Stock Purchase Plan.................................... 46
Section 5.8 Reasonable Best Efforts................................................................ 47
Section 5.9 Public Announcements................................................................... 48
Section 5.10 State Takeover Laws.................................................................... 49
Section 5.11 Indemnification; Directors and Officers Insurance...................................... 49
ii
Section 5.12 Notification of Certain Matters........................................................ 50
Section 5.13 Employee Benefit Plans and Agreements.................................................. 51
Section 5.14 Nasdaq................................................................................. 53
Section 5.15 Rights Agreement....................................................................... 53
Section 5.16 Board of Directors Representative...................................................... 53
Section 5.17 Section 16 Matters..................................................................... 53
ARTICLE VI CONDITIONS PRECEDENT TO THE MERGER......................................................... 54
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger............................. 54
Section 6.2 Conditions to Obligation of the Company to Effect the Merger........................... 54
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the Merger....................... 55
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.......................................................... 56
Section 7.1 Termination............................................................................ 56
Section 7.2 Effect of Termination.................................................................. 58
Section 7.3 Amendment.............................................................................. 59
Section 7.4 Waiver................................................................................. 59
ARTICLE VIII GENERAL PROVISIONS......................................................................... 59
Section 8.1 Non-Survival of Representations and Warranties......................................... 59
Section 8.2 Notices................................................................................ 59
Section 8.3 Interpretation......................................................................... 60
Section 8.4 Counterparts........................................................................... 60
Section 8.5 Entire Agreement; No Third-Party Beneficiaries......................................... 61
Section 8.6 Governing Law and Venue; Waiver of Jury Trial.......................................... 61
Section 8.7 Assignment............................................................................. 62
Section 8.8 Severability........................................................................... 62
Section 8.9 Enforcement of this Agreement.......................................................... 62
iii
TABLE OF DEFINED TERMS
Defined Term Section
------------ -------
Acquisition Transaction......................................................................... 4.2
Affiliate....................................................................................... 1.16(e)
Agreement....................................................................................... Introduction
Amendment Date.................................................................................. Recitals
Blue Sky Laws................................................................................... 2.4
Certificate of Merger........................................................................... 1.2
Certificates.................................................................................... 1.6(b)
Closing......................................................................................... 1.15(a)
Closing Date.................................................................................... 1.15(a)
Code............................................................................................ 1.16(a)
Company......................................................................................... Introduction
Company Acquisition Transaction................................................................. 5.6(g)
Company Affiliate Letter........................................................................ 5.4
Company Business Personnel...................................................................... 3.14
Company Bylaws.................................................................................. 1.15(d)(iii)
Company Charter................................................................................. 1.4(a)
Company Common Stock............................................................................ .Recitals
Company Contracts............................................................................... 3.11(a)
Company Key Customers........................................................................... 3.7(b)
Company Foreign Benefit Plan.................................................................... 3.12(f)
Company Letter.................................................................................. 3.2(b)
Company Multiemployer Plan...................................................................... 3.12(c)
Company Permits................................................................................. 3.8(a)
Company Plan.................................................................................... 3.12(c)
Company Preferred Stock......................................................................... 3.2(a)
Company Series A Preferred Stock................................................................ 3.2(a)
Company SEC Documents........................................................................... 3.5
Company Stock Option Plans...................................................................... 3.2(a)
Company Stock Options........................................................................... 3.2(a)
Company Stock Purchase Plan..................................................................... 3.2(a)
Company Stockholder Approval.................................................................... 5.1(a)
Company Stockholder Meeting..................................................................... 5.1(a)
Company's Current Premium....................................................................... 5.11(b)
Company Tax Certificate......................................................................... 1.16(a)
Confidentiality Agreement....................................................................... 5.3
Constituent Corporations........................................................................ Introduction
Contract........................................................................................ 2.2(a)
Costs........................................................................................... 5.11(a)
Dissenting Shares............................................................................... 1.5(d)
DGCL............................................................................................ 1.1
D&O Insurance................................................................................... 5.11(b)
Effective Time.................................................................................. 1.2
-iv-
Employee Agreement.............................................................................. 3.11(c)
End Date........................................................................................ 7.1(d)
Environmental Laws.............................................................................. 2.13
ERISA........................................................................................... 2.12(a)
ERISA Affiliate................................................................................. 2.12(c)
Exchange Act.................................................................................... 2.4
Exchange Agent.................................................................................. 1.6(a)
Exchange Fund................................................................................... 1.6(a)
Exchange Ratio.................................................................................. 1.5(c)
GAAP............................................................................................ 2.5
Governmental Entity............................................................................. 2.4
HSR Act......................................................................................... 2.4
Indemnified Party............................................................................... 5.11(a)
Intellectual Property Rights.................................................................... 2.15(a)
IRS............................................................................................. 2.9
Proxy Statement................................................................................. 2.6
Joint Venture................................................................................... 2.2(c)
Knowledge of Parent............................................................................. 2.8(a)
Knowledge of the Company........................................................................ 3.8(a)
Marconi......................................................................................... 5.13(e)
Material Adverse Change......................................................................... 2.1
Material Adverse Effect......................................................................... 2.1
Merger.......................................................................................... Recitals
MIP............................................................................................. 5.13(g)
Nasdaq.......................................................................................... 1.8
Non-ERISA Benefits.............................................................................. 5.13(a)
Option Exchange Ratio........................................................................... 5.7(a)
Order........................................................................................... 6.1(e)
Original Agreement Date......................................................................... Recitals
Parent.......................................................................................... Introduction
Parent Acquisition Transaction.................................................................. 7.1
Parent Business Personnel....................................................................... 2.14
Parent Bylaws................................................................................... 1.15(a)(iii)
Parent Charter.................................................................................. 1.15(b)(i)
Parent Common Stock............................................................................. Recitals
Parent Contract................................................................................. 2.11
Parent Key Customers............................................................................ 2.7(b)
Parent Letter................................................................................... 2.2(b)
Parent Multiemployer Plan....................................................................... 2.12(c)
Parent Permits.................................................................................. 2.8(a)
Parent Plan..................................................................................... 2.12(c)
Parent SEC Documents............................................................................ 2.5
Parent Stock Plans.............................................................................. 2.2(a)
Parent Tax Certificate.......................................................................... 1.16(a)
Per Share Cash Consideration.................................................................... 1.5(c)
Per Share Merger Consideration.................................................................. 1.5(c)
-v-
Per Share Stock Consideration................................................................... 1.5(c)
Person.......................................................................................... 1.6(a)
Registration Statement.......................................................................... 2.3
Rights.......................................................................................... 3.2(a)
Rights Agreement................................................................................ 3.2(a)
Rule 145 Affiliates............................................................................. 5.4
Sabbatical Program.............................................................................. 5.13(e)
SAR............................................................................................. 5.7(a)
Xxxxxxxx-Xxxxx Act.............................................................................. 2.8(b)
SEC............................................................................................. 2.2(b)
Securities Act.................................................................................. 2.3
Share Issuance.................................................................................. 2.3
Sister Subsidiary............................................................................... 1.16(a)
State Takeover Approvals........................................................................ 2.4
Sub............................................................................................. Introduction
Subsequent Certificate of Merger................................................................ 1.16(a)
Subsequent Merger............................................................................... 1.16(a)
Subsidiary...................................................................................... 2.1
Substitute Option............................................................................... 5.7(a)
Superior Proposal............................................................................... 4.2(a)
Surviving Corporation........................................................................... 1.1
Takeover Proposal............................................................................... 4.2(a)
Tax Return...................................................................................... 2.9
Taxes........................................................................................... 2.9
Termination Fee................................................................................. 5.6(c)
Third Party..................................................................................... 4.2
Transmittal Letter.............................................................................. 1.6(b)
Unvested Company Share.......................................................................... 5.7(b)
Unvested Share Restrictions..................................................................... 5.7(b)
Worker Safety Laws.............................................................................. 2.13
-vi-
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 19, 2004, as amended
and restated as of September 7, 2004 (this "Agreement"), among Tellabs, Inc., a
Delaware corporation ("Parent"), Chardonnay Merger Corp., a Delaware corporation
and a direct wholly owned subsidiary of Parent ("Sub"), and Advanced Fibre
Communications, Inc., a Delaware corporation (the "Company") (Sub and the
Company being hereinafter collectively referred to as the "Constituent
Corporations").
WITNESSETH:
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved and declared advisable the merger of Sub with and into the
Company (the "Merger"), upon the terms and subject to the conditions set forth
herein, whereby each issued and outstanding share of common stock, $0.01 par
value, of the Company ("Company Common Stock"), together with the associated
Rights (as hereinafter defined) under the Rights Agreement (as hereinafter
defined), not owned directly or indirectly by Parent or the Company, will be
converted into the right to receive (i) shares of common stock, $0.01 par value,
of Parent ("Parent Common Stock") and (ii) the Per Share Cash Consideration (as
hereinafter defined);
WHEREAS, the respective Boards of Directors of Parent and the
Company have determined that the Merger is in furtherance of and consistent with
their respective long-term business strategies and is fair to, and in the best
interest of, their respective stockholders;
WHEREAS, the Company, Parent and Sub are parties to a certain
Agreement and Plan of Merger, dated as of May 19, 2004 (the "Original Agreement
Date"), and the parties thereto desire to amend and restate such agreement as of
September 7, 2004 (the "Amendment Date") so that it reads in its entirety as set
forth in this Agreement; and
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained, the parties agree as follows:
ARTICLE I
THE MERGER AND SUBSEQUENT MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the General Corporation Law
of the State of Delaware (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time (as hereinafter defined). Following the Merger,
the separate corporate existence of Sub shall cease and the Company shall
continue as the surviving corporation (the "Surviving Corporation") and shall
succeed to and assume all the rights and obligations of Sub in accordance with
the DGCL. Notwithstanding anything to the contrary herein, at the election of
Parent, any direct wholly owned Subsidiary (as hereinafter defined) of Parent
may be substituted for Sub as a constituent corporation in the Merger; provided
that such substituted corporation is a Delaware corporation which is formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement and has engaged in no other business activities. In such event, the
parties agree to
-1-
execute an appropriate amendment to this Agreement, in form and substance
reasonably satisfactory to Parent and the Company, in order to reflect such
substitution.
Section 1.2 Effective Time. The Merger shall become effective when a
certificate of merger (the "Certificate of Merger"), executed in accordance with
the relevant provisions of the DGCL, is filed with the Secretary of State of the
State of Delaware; provided, however, that, upon mutual consent of the
Constituent Corporations, the Certificate of Merger may provide for a later date
of effectiveness of the Merger not more than 30 days after the date the
Certificate of Merger is filed. When used in this Agreement, the term "Effective
Time" shall mean the date and time at which the Certificate of Merger is
accepted for recording or such later time set forth in the Certificate of
Merger. The filing of the Certificate of Merger shall be made on the date of the
Closing (as hereinafter defined).
Section 1.3 Effects of the Merger. The Merger shall have the effects
set forth in this Agreement and in Section 259 of the DGCL.
Section 1.4 Charter and Bylaws; Directors and Officers. (a) At the
Effective Time, the Fifth Amended and Restated Certificate of Incorporation, as
amended, of the Company (the "Company Charter"), as in effect immediately prior
to the Effective Time, shall be amended so that Article FOURTH of the Company
Charter reads in its entirety as follows: "The total number of shares of all
classes of capital stock which the Corporation shall have authority to issue is
1,000 shares of Common Stock, $0.01 par value" and Article SIXTH Subsection (a)
reads in its entirety as follows: "Any action required to be taken by the
stockholders of the Corporation may be taken by written consent of holders of
common stock of the Corporation having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted." As so amended, the
Company Charter shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law. At the Effective Time, the Bylaws of Sub, as in effect
immediately prior to the Effective Time, shall become the Bylaws of the
Surviving Corporation until thereafter changed or amended as provided therein or
in the Certificate of Incorporation of the Surviving Corporation.
(b) The directors of Sub at the Effective Time shall be the
directors of the Surviving Corporation, until the earlier of their resignation
or removal or until their respective successors are duly elected and qualified,
as the case may be. The officers of the Company at the Effective Time shall be
the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
Section 1.5 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Sub, the
Company or the holders of any securities of the Constituent Corporations:
(a) Each issued and outstanding share of common stock, $0.01 par
value, of Sub shall be converted into one validly issued, fully paid and
nonassessable share of common stock, $0.01 par value, of the Surviving
Corporation.
-2-
(b) All shares of Company Common Stock, together with the associated
Rights, that are held in the treasury of the Company or by any wholly owned
Subsidiary of the Company and any shares of Company Common Stock, together with
the associated Rights, owned by Parent or any wholly owned Subsidiary of Parent
shall be canceled and no capital stock of Parent or other consideration shall be
delivered in exchange therefor.
(c) Subject to the provisions of Sections 1.8 and 1.10 hereof, each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time (together with the associated Rights), other than Dissenting
Shares (as hereinafter defined) and shares to be canceled in accordance with
Section 1.5(b), shall be converted into the right to receive (i) 0.504 (such
number being the "Exchange Ratio") validly issued, fully paid and nonassessable
shares of Parent Common Stock (the "Per Share Stock Consideration") and (ii)
$12.00 in cash, without interest (the "Per Share Cash Consideration" and,
together with the Per Share Stock Consideration, the "Per Share Merger
Consideration"). All such shares of Company Common Stock and the associated
Rights, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive any dividends and other distributions in
accordance with Section 1.7, certificates representing the shares of Parent
Common Stock into which such shares are converted, the Per Share Cash
Consideration and any cash, without interest, in lieu of fractional shares to be
issued or paid in consideration therefor upon the surrender of such certificate
in accordance with Section 1.6.
(d) Notwithstanding anything in this Agreement to the contrary,
shares of Company Common Stock issued and outstanding immediately prior to the
Effective Time, together with the associated Rights, which are held of record by
stockholders who shall not have approved the Merger and who shall have demanded
properly in writing appraisal of such shares in accordance with Section 262 of
the DGCL ("Dissenting Shares") shall not be converted into the right to receive
the Per Share Merger Consideration as set forth in Section 1.5(c), but the
holders thereof instead shall be entitled to, and the Dissenting Shares shall
only represent the right to receive, payment of the fair value of such shares in
accordance with the provisions of Section 262 of the DGCL; provided, however,
that (i) if such a holder fails to demand properly in writing from the Surviving
Corporation the appraisal of his or its shares in accordance with Section 262(d)
of the DGCL or, after making such demand, subsequently delivers an effective
written withdrawal of such demand, or fails to establish his or its entitlement
to appraisal rights as provided in Section 262 of the DGCL, if so required, or
(ii) if a court shall determine that such holder is not entitled to receive
payment for his or its shares or such holder shall otherwise lose his or its
appraisal rights, then, in any such case, each share of Company Common Stock,
together with the associated Rights, held of record by such holder or holders
shall automatically be converted into and represent only the right to receive
the Per Share Merger Consideration as set forth in Section 1.5(c), upon
surrender of the certificate or certificates representing such Dissenting
Shares. The Company shall give Parent and Sub prompt notice of any demands
received by the Company for appraisal of such shares, and Parent and Sub shall
have the right to participate in all negotiations and proceedings with respect
to such demands except as required by applicable law. The Company shall not,
except with the prior written consent of Parent, voluntarily make any payment
with respect to any demands for fair value for Dissenting Shares or offer to
settle, settle or negotiate in respect of any such demands.
-3-
Section 1.6 Parent to Make Certificates Available. (a) Parent shall
authorize a commercial bank (or such other Person as shall be reasonably
acceptable to Parent and the Company) to act as Exchange Agent hereunder (the
"Exchange Agent"). As soon as practicable after the Effective Time, Parent shall
deposit, or cause to be deposited, with the Exchange Agent for exchange with
certificates which represented outstanding shares of Company Common Stock
immediately prior to the Effective Time, together with the associated Rights,
all cash and certificates representing the shares of Parent Common Stock payable
or issuable pursuant to Section 1.5(c) and cash, as required to make payments in
lieu of any fractional shares pursuant to Section 1.8 (such cash and shares of
Parent Common Stock, together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange Fund"). The Exchange
Agent shall deliver the Per Share Merger Consideration contemplated to be issued
and paid pursuant to Section 1.5(c) out of the Exchange Fund. For purposes of
this Agreement, "Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, estate,
Governmental Entity (as hereinafter defined), trust or unincorporated
organization.
(a) Parent shall instruct the Exchange Agent, as soon as practicable
after the Effective Time, to mail to each record holder of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock, together with the associated Rights,
converted in the Merger (the "Certificates"), a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon actual delivery of the Certificates to the
Exchange Agent, and shall contain instructions for use in effecting the
surrender of such Certificates in exchange for the Per Share Cash Consideration
and certificates representing shares of Parent Common Stock and cash in lieu of
fractional shares and which shall be reasonably satisfactory to the Company (the
"Transmittal Letter")). Upon surrender for cancellation to the Exchange Agent of
all Certificates held by any record holder of a Certificate, together with the
Transmittal Letter, duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor the Per Share Cash Consideration and a
certificate representing that number of whole shares of Parent Common Stock into
which the shares represented by the Certificate so surrendered shall have been
converted at the Effective Time pursuant to this Article I, cash in lieu of any
fractional share in accordance with Section 1.8 and certain dividends and other
distributions in accordance with Section 1.7, and any Certificate so surrendered
shall forthwith be canceled.
Section 1.7 Dividends; Transfer Taxes; Withholding. No dividends or
other distributions that are declared on or after the Effective Time on Parent
Common Stock, or are payable to the holders of record thereof on or after the
Effective Time, will be paid to any Person entitled by reason of the Merger to
receive a certificate representing Parent Common Stock until such Person
surrenders the related Certificate or Certificates, as provided in Section 1.6.
Subject to the effect of applicable law, there shall be paid to each record
holder of a new certificate representing such Parent Common Stock: (i) at the
time of such surrender or as promptly as practicable thereafter, the amount of
any dividends or other distributions theretofore paid with respect to the shares
of Parent Common Stock represented by such new certificate and having a record
date on or after the Effective Time and a payment date prior to such surrender;
and (ii) at the appropriate payment date or as promptly as practicable
thereafter, the amount of any dividends or other distributions payable with
respect to such shares of Parent Common Stock and having a record date on or
after the Effective Time but prior to such surrender and a payment
-4-
date on or subsequent to such surrender. In no event shall the Person entitled
to receive such dividends or other distributions be entitled to receive interest
on such dividends or other distributions. If any cash or certificate
representing shares of Parent Common Stock is to be paid to or issued in a name
other than that in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed and otherwise in proper form for transfer
and that the Person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of certificates for
such shares of Parent Common Stock in a name other than that of the registered
holder of the Certificate surrendered, or shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable. Parent or
the Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any Person such
amounts as Parent or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the Code or under any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Parent or the Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the Person who otherwise would
have received the payment in respect of which such deduction and withholding was
made by Parent or the Exchange Agent.
Section 1.8 No Fractional Securities. No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates pursuant to this Article I; no Parent
dividend or other distribution or stock split shall relate to any fractional
share; and no fractional share shall entitle the owner thereof to vote or to any
other rights of a securityholder of Parent. In lieu of any such fractional
share, each holder of Company Common Stock who would otherwise have been
entitled to a fraction of a share of Parent Common Stock upon surrender of
Certificates for exchange pursuant to this Article I will be paid an amount in
cash (without interest), rounded down to the nearest cent, determined by
multiplying (i) the last reported sale price per share of Parent Common Stock on
The Nasdaq National Market ("Nasdaq") on the date of the Effective Time (or, if
the shares of Parent Common Stock do not trade on Nasdaq on such date, the first
date of trading of shares of Parent Common Stock on Nasdaq after the Effective
Time) by (ii) the fractional interest of a share of Parent Common Stock to which
such holder would otherwise be entitled. As promptly as practicable after the
determination of the amount of cash, if any, to be paid to holders of fractional
share interests, the Exchange Agent shall so notify Parent, and Parent shall
deposit such amount with the Exchange Agent and shall cause the Exchange Agent
to forward payments to such holders of fractional share interests subject to and
in accordance with the terms of this Section 1.8. No cash payment in lieu of
fractional shares will be paid to any Person until such Person surrenders the
related Certificate or Certificates.
Section 1.9 Return of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the former stockholders of the Company for
twelve (12) months after the Effective Time shall be delivered to Parent, upon
demand of Parent, and any such former stockholders who have not theretofore
complied with this Article I shall thereafter look only to Parent for payment of
their claim for Parent Common Stock, Per Share Cash Consideration, any cash in
lieu of fractional shares of Parent Common Stock and any dividends or
distributions with respect to Parent Common Stock. None of Parent, the Surviving
Corporation or the Exchange Agent shall be liable to any former holder of
Company Common Stock for any such shares of Parent Common Stock, Per Share Cash
Consideration, cash in lieu
-5-
of fractional shares of Parent Common Stock and dividends and distributions
which are delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
Section 1.10 Adjustment of Per Share Merger Consideration. In the
event of any reclassification, stock split or stock dividend (including any
dividend or distribution of securities convertible into or exercisable for
Parent Common Stock or Company Common Stock) with respect to Parent Common Stock
or Company Common Stock or any change or conversion of Parent Common Stock or
Company Common Stock into other securities (or if a record date with respect to
any of the foregoing should occur) on or after the Original Agreement Date and
prior to the Effective Time, appropriate and proportionate adjustments, if any,
shall be made to the Per Share Merger Consideration, Exchange Ratio, Per Share
Stock Consideration and Per Share Cash Consideration and all references to the
Per Share Merger Consideration, Exchange Ratio, Per Share Stock Consideration
and Per Share Cash Consideration in this Agreement shall be deemed to be to the
Per Share Merger Consideration, Exchange Ratio, Per Share Stock Consideration
and Per Share Cash Consideration as so adjusted.
Section 1.11 No Further Ownership Rights in Company Common Stock.
All shares of Parent Common Stock issued and the Per Share Cash Consideration
paid upon the surrender for exchange of Certificates in accordance with the
terms hereof (including any cash paid pursuant to Section 1.8) shall be deemed
to have been issued and paid in full satisfaction of all rights pertaining to
the shares of Company Common Stock, together with the associated Rights,
represented by such Certificates.
Section 1.12 Closing of Company Transfer Books. At the Effective
Time, the stock transfer books of the Company shall be closed, and no transfer
of shares of Company Common Stock shall thereafter be made on the records of the
Company. If, after the Effective Time, Certificates are presented to the
Surviving Corporation, the Exchange Agent or Parent, such Certificates shall be
canceled and exchanged as provided in this Article I.
Section 1.13 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent or the Exchange Agent, the posting by such Person of a bond,
in such reasonable amount as Parent or the Exchange Agent may direct as
indemnity against any claim that may be made against Parent, the Surviving
Corporation or the Exchange Agent with respect to such Certificate, the Exchange
Agent or Parent will issue and pay or cause to be issued and paid in exchange
for such lost, stolen or destroyed Certificate the shares of Parent Common
Stock, Per Share Cash Consideration, any cash in lieu of fractional shares of
Parent Common Stock to which the holder thereof is entitled pursuant to Section
1.8, and any dividends or other distributions to which the holder thereof is
entitled pursuant to Section 1.7.
Section 1.14 Further Assurances. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the
-6-
Surviving Corporation and its proper officers and directors or their designees
shall be authorized to execute and deliver, in the name and on behalf of either
of the Constituent Corporations, all such deeds, bills of sale, assignments and
assurances and to do, in the name and on behalf of either Constituent
Corporation, all such other acts and things as may be necessary, desirable or
proper to vest, perfect or confirm the Surviving Corporation's right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to carry out
the purposes of this Agreement.
Section 1.15 Closing; Closing Deliveries.
(a) The closing of the transactions contemplated by this Agreement
(the "Closing") and all actions specified in this Agreement to occur at the
Closing shall take place at the offices of Sidley Xxxxxx Xxxxx & Xxxx LLP, Bank
One Plaza, 00 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, at 10:00 a.m., local
time, no later than the second business day following the day on which the last
of the conditions set forth in Article VI (other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the fulfillment
or waiver of those conditions) shall have been fulfilled or waived (if
permissible) in accordance with this Agreement or at such other time and place
as Parent and the Company shall agree (the "Closing Date").
(b) Subject to fulfillment or waiver of the conditions set forth in
Article VI, at the Closing Parent shall deliver to the Company all of the
following:
(i) a copy of the Restated Certificate of Incorporation, as amended,
of Parent (the "Parent Charter"), certified as of a recent date by the
Secretary of State of the State of Delaware;
(ii) a certificate of good standing of Parent, issued as of a recent
date by the Secretary of State of the State of Delaware; and
(iii) a certificate of the Secretary or an Assistant Secretary of
Parent, dated the Closing Date, in form and substance reasonably
satisfactory to the Company, as to (A) no amendments to the Parent Charter
since a specified date, (B) the Amended and Restated Bylaws of Parent (the
"Parent Bylaws"), (C) the resolutions of the Board of Directors of Parent
authorizing the execution and performance of this Agreement and the
transactions contemplated herein and (D) the incumbency and signatures of
the officers of Parent executing this Agreement.
(c) Subject to fulfillment or waiver of the conditions set forth in
Article VI, at the Closing Sub shall deliver to the Company all of the
following:
(i) a copy of the Certificate of Incorporation of Sub, certified as
of a recent date by the Secretary of State of the State of Delaware;
(ii) a certificate of good standing of Sub, issued as of a recent
date by the Secretary of State of the State of Delaware; and
-7-
(iii) a certificate of the Secretary or an Assistant Secretary of
Sub, dated the Closing Date, in form and substance reasonably satisfactory
to the Company, as to (A) no amendments to the Certificate of
Incorporation of Sub since a specified date, (B) the Bylaws of Sub, (C)
the resolutions of the Board of Directors of Sub authorizing the execution
and performance of this Agreement and the transactions contemplated
herein, (D) the written consent of Parent in its capacity as sole
stockholder of Sub approving and adopting this Agreement in accordance
with Section 251 of the DGCL and (E) the incumbency and signatures of the
officers of Sub executing this Agreement and any other agreement or
certificate executed by Sub in connection with the Closing.
(d) Subject to fulfillment or waiver of the conditions set forth in
Article VI, at the Closing the Company shall deliver to Parent all of the
following:
(i) a copy of the Company Charter, certified as of a recent date by
the Secretary of State of the State of Delaware;
(ii) a certificate of good standing of the Company, issued as of a
recent date by the Secretary of State of the State of Delaware; and
(iii) certificate of the Secretary or an Assistant Secretary of the
Company, dated the Closing Date, in form and substance reasonably
satisfactory to Parent, as to (A) no amendments to the Company Charter
since a specified date, (B) the Bylaws of the Company (the "Company
Bylaws"), (C) the resolutions of the Board of Directors of the Company
authorizing the execution and performance of this Agreement and the
transactions contemplated herein, (D) the resolutions of the stockholders
of the Company approving and adopting this Agreement in accordance with
Section 251 of the DGCL and (E) the incumbency and signatures of the
officers of the Company executing this Agreement.
Section 1.16 Subsequent Merger.
(a) Immediately after the Effective Time, Parent will cause the
Surviving Corporation to merge with and into a newly created limited liability
company which is a direct, wholly owned Subsidiary of Parent (the "Sister
Subsidiary") and the separate corporate existence of the Surviving Corporation
shall thereupon cease (the "Subsequent Merger") if, prior to the Effective Time:
(i) the Company shall have received the opinion of Pillsbury Winthrop LLP,
special counsel to the Company, dated as of the Closing Date, to the effect that
the Merger and the Subsequent Merger, taken together, will be treated for U.S.
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder (the "Code"), and that each of Parent and the
Company will be a party to that reorganization within the meaning of Section
368(b) of the Code and (ii) Parent shall have received the opinion of Sidley
Xxxxxx Xxxxx & Xxxx LLP, special counsel to Parent, dated as of the Closing
Date, to the effect that the Merger and the Subsequent Merger, taken together,
will be treated for U.S. federal income tax purposes as a reorganization within
the meaning of Section 368(a) of the Code, and that each of Parent and the
Company will be a party to that reorganization within the meaning of Section
368(b) of the Code. The parties agree to make such reasonable representations as
may be requested by
-0-
Xxxxxxxxx Xxxxxxxx LLP and/or Sidley Xxxxxx Xxxxx & Xxxx LLP for the purpose of
rendering such opinions, and in rendering such opinions such counsel may rely on
such representations. In the absence of a change in circumstances, if the
Subsequent Merger will occur, Parent and Sub currently expect to be able to make
representations substantially to the effect of the representations in Exhibit A
(the "Parent Tax Certificate") (other than the representation set forth in
paragraph 2 thereof) and the Company currently expects to be able to make
representations substantially to the effect of the representations in Exhibit B
(the "Company Tax Certificate") (other than the representation set forth in
paragraph 3 thereof). Each of the Company and Parent shall request its
respective counsel to render opinions prior to the Effective Time to the effect
described above. In the event either party's counsel is unable to render
opinions prior to the Effective Time to the effect described above, such counsel
shall (at the request of the other party) provide prior to the Effective Time a
written explanation of the substantive reason or reasons causing such counsel to
be unable to do so. To the extent either the Company does not receive prior to
the Effective Time the opinion described in clause (i) of the first sentence of
this Section 1.16(a) or Parent does not receive prior to the Effective Time the
opinion described in clause (ii) of the first sentence of this Section 1.16(a),
then Parent shall have no obligation to cause the Subsequent Merger to be
consummated. If consummated, the Subsequent Merger shall become effective upon
the filing of a certificate of merger (the "Subsequent Certificate of Merger"),
executed in accordance with the relevant provisions of the Delaware Limited
Liability Company Act, with the Secretary of State of the State of Delaware or
such later time as may be specified in the Subsequent Certificate of Merger;
provided, however, that, if consummated, the Subsequent Merger shall be
effective immediately after the Effective Time (it being understood that in all
events the Subsequent Merger, if consummated, shall be effective not later than
the end of the same day as the Merger).
(b) At the effective time of the Subsequent Merger, each issued and
outstanding share of common stock, $0.01 par value, of the Surviving Corporation
shall be converted into one validly issued membership interest in the surviving
entity in the Subsequent Merger.
(c) At the effective time of the Subsequent Merger, each issued and
outstanding membership interest of the Sister Subsidiary shall be canceled and
no consideration shall be delivered in exchange therefor.
(d) If the Subsequent Merger is consummated, the Merger and the
Subsequent Merger, taken together, are intended to be treated for federal income
tax purposes as a "reorganization" under Section 368(a) of the Code (to which
each of Parent and the Company are to be parties under Section 368(b) of the
Code) in which the Company is to be treated as merging directly with and into
Parent, with the Company Common Stock, together with the associated Rights,
converted in such merger into the right to receive the consideration provided
for hereunder.
(e) If the Subsequent Merger is consummated, each of the parties
hereto shall, and shall cause its Affiliates to, treat the Merger and Subsequent
Merger for all Tax (as hereinafter defined) purposes consistent with Section
1.16(d). For purposes of this Agreement, "Affiliate" means, with respect to any
Person, any other Person which directly or indirectly controls, is controlled by
or is under common control with such Person.
-9-
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
As of the Amendment Date, Parent and Sub represent and warrant to
the Company as follows:
Section 2.1 Organization, Standing and Power. Each of Parent and Sub
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority to carry on its business as now being conducted. Each Subsidiary (as
hereinafter defined) of Parent is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and has the
requisite corporate (in the case of a Subsidiary that is a corporation) or other
power and authority to carry on its business as now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power or authority would not, individually or in the aggregate, have a
Material Adverse Effect (as hereinafter defined) on Parent. Parent and each of
its Subsidiaries are duly qualified to do business, and are in good standing, in
each jurisdiction where the character of their properties owned or held under
lease or the nature of their activities makes such qualification or good
standing necessary, except where the failure to be so qualified and in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on Parent. For purposes of this Agreement (a) "Material Adverse Change"
or "Material Adverse Effect" means, when used with respect to Parent or the
Company, as the case may be, any event, effect, change or development that,
individually or when taken together with all other events, effects, changes or
developments, is, or would reasonably be expected to be, materially adverse to
the business, assets, liabilities, financial condition or results of operations
of Parent and its Subsidiaries, taken as a whole, or the Company and its
Subsidiaries, taken as a whole, as the case may be; provided, however, that to
the extent any event, effect, change or development constitutes, is caused by or
results from any of the following, it shall not be taken into account in
determining whether there has been (or would reasonably be expected to be) a
"Material Adverse Change" and "Material Adverse Effect": (i) the fact that
Parent (as opposed to any other Person) is a party to this Agreement with
respect to a Material Adverse Effect on the Company or the fact that the Company
(as opposed to any other Person) is a party to this Agreement with respect to a
Material Adverse Effect on Parent; (ii) compliance by Parent or the Company, as
the case may be, with their respective covenants contained in this Agreement;
(iii) factors affecting the industry in which the Company or Parent, as the case
may be, operates generally or affecting the economy or financial markets as a
whole (which factors in each case do not disproportionately affect Parent or the
Company, as the case may be, as compared to other comparable companies in their
industry in any material respect); (iv) changes in any applicable law,
ordinance, administrative or governmental rule or regulation after the Original
Agreement Date; (v) with respect to a Material Adverse Effect or Material
Adverse Change on the Company, any of the matters listed in Section 2.1 of the
Company Letter; and (vi) any failure by Parent or the Company, as the case may
be, to meet analysts revenue or earnings projections, in and of itself, or the
trading price of the Company Common Stock or Parent Common Stock, as the case
may be, in and of itself (it being understood that any event, effect, change or
development which affects or otherwise relates to the failure to meet analysts
revenue or earnings projections or the trading price, other than an event,
effect, change or development set forth in clauses (i) through (v) above, may be
deemed to constitute, or be taken
-10-
into account in determining whether there has been, or would reasonably be
expected to be, a Material Adverse Change or Material Adverse Effect), and (b)
"Subsidiary" means any corporation, partnership, limited liability company,
joint venture, trust, association or other entity of which Parent or the
Company, as the case may be (either alone or through or together with any other
Subsidiary), owns, directly or indirectly, (i) 50% or more of the stock or other
equity interests the holders of which are generally entitled to elect at least a
majority of the Board of Directors or other governing body of such corporation,
partnership, limited liability company, joint venture, trust, association or
other entity or (ii) if there are no such voting interests, 50% or more of the
equity interests in such corporation, partnership, limited liability company,
joint venture, trust, association or other entity.
Section 2.2 Capital Structure. (a) As of the Amendment Date, the
authorized capital stock of Parent consists of 1,000,000,000 shares of Parent
Common Stock and 5,000,000 shares of preferred stock $0.01 par value per share.
At the close of business on August 31, 2004, (i) 416,901,200 shares of Parent
Common Stock were issued and outstanding; (ii) 3,250,000 shares of Parent Common
Stock were held in the treasury of Parent and no shares of Parent Common Stock
were held by Subsidiaries of Parent; (iii) 35,920,148 shares of Parent Common
Stock were reserved for issuance pursuant to outstanding options, warrants,
restricted stock units or other rights to purchase or otherwise acquire shares
of Parent Common Stock under Parent's plans or other arrangements or pursuant to
any plans or arrangements assumed by Parent in connection with any acquisition,
business combination or similar transaction (collectively, the "Parent Stock
Plans"); and (iv) 162,223 stock appreciation rights are outstanding pursuant to
the Parent Stock Plans. Between August 31, 2004 and the Amendment Date, except
as set forth above and except for the issuance of shares of Parent Common Stock
pursuant to the Parent Stock Plans, no shares of capital stock or other voting
securities of Parent were issued, reserved for issuance or outstanding. All of
the shares of Parent Common Stock issuable upon conversion of Company Common
Stock at the Effective Time in accordance with this Agreement will be, when so
issued, duly authorized, validly issued, fully paid and nonassessable and free
of preemptive rights. As of the Amendment Date, except for (i) this Agreement
and (ii) as set forth above, there are no options, warrants, calls, rights, puts
or Contracts (as hereinafter defined) to which Parent or any of its Subsidiaries
is a party or by which any of them is bound obligating Parent or any of its
Subsidiaries to issue, deliver, sell, redeem or otherwise acquire, or cause to
be issued, delivered, sold, redeemed or otherwise acquired, any additional
shares of capital stock (or other voting securities or equity equivalents) of
Parent or any of its Subsidiaries or obligating Parent or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
right, put or Contract. As of the Amendment Date, Parent does not have any
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or convertible into or exercisable for securities having
the right to vote) with the stockholders of Parent on any matter. There are no
Contracts to which Parent or its Subsidiaries or, to the Knowledge of Parent,
any of their respective officers or directors is a party concerning the voting
of any capital stock of Parent or any of its Subsidiaries. For purposes of this
Agreement, "Contract" means any contract, agreement, instrument, guarantee,
indenture, note, bond, mortgage, permit, franchise, concession, commitment,
lease, license, arrangement, obligation or understanding, whether written or
oral.
(b) Except as set forth in Section 2.2(b) of the letter dated the
Amendment Date and delivered on the Amendment Date by Parent to the Company,
which letter relates to this
-11-
Agreement and is designated the Parent Letter (the "Parent Letter"), each
outstanding share of capital stock (or other voting security or equity
equivalent, as the case may be) of each material Subsidiary of Parent is duly
authorized, validly issued, fully paid and nonassessable and, except for
director or qualifying shares, each such share (or other voting security or
equity equivalent) is owned by Parent or another Subsidiary of Parent, free and
clear of all security interests, liens, claims, pledges, options, rights of
first refusal, limitations on voting rights, charges and other encumbrances of
any nature whatsoever. Exhibit 21 to Parent's Annual Report on Form 10-K for the
year ended January 2, 2004, as filed with the Securities and Exchange Commission
(the "SEC"), constituted a true, accurate and correct statement in all material
respects of all of the information required to be set forth therein by the
regulations of the SEC as of the date thereof.
(c) Section 2.2(c) of the Parent Letter sets forth a list as of the
Amendment Date of all material Subsidiaries and Joint Ventures (as hereinafter
defined) of Parent and the jurisdiction in which such Subsidiary or Joint
Venture is organized. Section 2.2(c) of the Parent Letter also sets forth as of
the Amendment Date the extent of the ownership and voting interests held by
Parent in each such Joint Venture. As of the Amendment Date, Parent has no
obligation to make any capital contributions, or otherwise provide assets or
cash, to any Joint Venture. As used in this Agreement, "Joint Venture" means,
with respect to a party, any corporation, limited liability company,
partnership, joint venture, trust or other entity which is not a Subsidiary of
such party and in which (i) such party, directly or indirectly, owns or controls
any shares of any class of the outstanding voting securities or other equity
interests (other than the ownership of securities primarily for investment
purposes as part of routine cash management or investments of 1% or less in
publicly traded companies) or (ii) such party or a Subsidiary of such party is a
general partner.
(d) As of the Amendment Date, neither Parent nor any of its
Affiliates or associates (as that term is defined in Rule 12b-2 under the
Exchange Act (as defined below) beneficially owns, or, within the last two
years, has owned, directly or indirectly, 15% or more of the then issued and
outstanding shares of capital stock of the Company.
Section 2.3 Authority. On or prior to the Amendment Date, the Boards
of Directors of Parent and Sub have declared this Agreement and the Merger
advisable and fair to and in the best interest of Parent and Sub, respectively,
and their respective stockholders, and Parent, as sole stockholder of Sub, has
approved and adopted this Agreement in accordance with the DGCL, and the Board
of Directors of Parent has approved the issuance of Parent Common Stock in
connection with the Merger (the "Share Issuance"). Each of Parent and Sub has
all requisite corporate power and authority to enter into this Agreement and to
consummate the Merger, the Subsequent Merger and the other transactions
contemplated hereby. The execution and delivery of this Agreement by Parent and
Sub and the consummation by Parent and Sub of the Merger, the Subsequent Merger
and the other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and Sub, subject to the filing
of the Certificate of Merger and the Subsequent Certificate of Merger. This
Agreement has been duly executed and delivered by Parent and Sub and (assuming
the valid authorization, execution and delivery of this Agreement by the Company
and the validity and binding effect hereof on the Company) except to the extent
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by the effect of general principles of equity
(regardless of whether
-12-
enforcement is considered in a proceeding in equity or at law), this Agreement
constitutes the valid and binding obligation of Parent and Sub enforceable
against each of them in accordance with its terms. The filing of a registration
statement on Form S-4 with the SEC by Parent under the Securities Act of 1933,
as amended (together with the rules and regulations promulgated thereunder, the
"Securities Act"), for the purpose of registering the shares of Parent Common
Stock to be issued in the Merger (together with any amendments or supplements
thereto, whether prior to or after the effective date thereof, the "Registration
Statement") has been duly authorized by Parent's Board of Directors. Parent has
made available to the Company complete and correct copies of the Parent Charter
and the Parent Bylaws and the Certificate of Incorporation and Bylaws of Sub.
Section 2.4 Consents and Approvals; No Violation. Assuming that all
consents, approvals, authorizations and other actions described in this Section
2.4 have been obtained and all filings and obligations described in this Section
2.4 have been made, except as set forth in Section 2.4 of the Parent Letter, the
execution and delivery of this Agreement does not, and the consummation of the
Merger, the Subsequent Merger and the other transactions contemplated hereby and
compliance with the provisions hereof will not, result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give to
others a right of termination or cancellation or accelerate any obligation of
Parent or result in the loss of a material benefit to Parent or any of its
Subsidiaries under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Parent or any of
its Subsidiaries under, any provision of (i) the Parent Charter or the Parent
Bylaws; (ii) the comparable charter or organizational documents of any of
Parent's Subsidiaries; (iii) any material Contract applicable to Parent or any
of its Subsidiaries or any of their respective properties or assets; or (iv) any
judgment, order, decree, injunction, statute, law, ordinance, rule or regulation
applicable to Parent or any of its Subsidiaries or any of their respective
properties or assets, other than, in the case of clause (iv), any such
violations, defaults, rights, liens, security interests, charges or encumbrances
that would not, individually or in the aggregate, have a Material Adverse Effect
on Parent or prevent or delay beyond the End Date the consummation of the
Merger, the Subsequent Merger or any of the other transactions contemplated
hereby by Parent or Sub. No filing or registration with, or authorization,
consent or approval of, any domestic (federal and state), foreign or
supranational court, commission, governmental body, regulatory agency, authority
or tribunal (a "Governmental Entity") is required by or with respect to Parent
or any of its Subsidiaries in connection with the execution and delivery of this
Agreement by Parent or Sub or is necessary for the consummation by Parent or Sub
of the Merger, the Subsequent Merger and the other transactions contemplated by
this Agreement, except for (i) in connection, or in compliance, with the
provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (together with the rules and regulations promulgated thereunder, the
"HSR Act"), the Securities Act and the Securities Exchange Act of 1934, as
amended (together with the rules and regulations promulgated thereunder, the
"Exchange Act"); (ii) the filing of the Certificate of Merger and the Subsequent
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which the
Company or any of its Subsidiaries is qualified to do business; (iii) such
filings, authorizations, orders and approvals as may be required by state
takeover laws (the "State Takeover Approvals"); (iv) applicable requirements, if
any, of state securities or "blue sky" laws ("Blue Sky Laws") and Nasdaq; (v)
applicable requirements, if any, under foreign or supranational laws relating to
antitrust and to competition clearances; and (vi)
-13-
such other consents, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made would not, individually or
in the aggregate, have a Material Adverse Effect on Parent or prevent or delay
beyond the End Date the consummation of the Merger, the Subsequent Merger or any
of the other transactions contemplated hereby by Parent or Sub.
Section 2.5 SEC Documents and Other Reports. Parent has timely filed
with the SEC all documents required to be filed by it since December 28, 2001
under the Securities Act or the Exchange Act (the "Parent SEC Documents"). As of
their respective filing dates, or, if amended, as of the date of the last
amendment prior to the Amendment Date, the Parent SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and, at the respective times they were filed, none of
the Parent SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements (including, in each
case, any notes thereto) of Parent included in the Parent SEC Documents complied
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with generally accepted accounting principles ("GAAP")
(except, in the case of the unaudited statements, as permitted by Form 10-Q of
the SEC) applied on a consistent basis during the periods involved (except as
may be indicated therein or in the notes thereto) and fairly presented in all
material respects the consolidated financial position of Parent and its
consolidated subsidiaries as at the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
Except as disclosed in the Parent SEC Documents filed with the SEC prior to the
Amendment Date or as required by GAAP, Parent has not, between January 2, 2004
and the Amendment Date, made or adopted any material change in its accounting
methods, practices or policies in effect on January 2, 2004.
Section 2.6 Registration Statement and Proxy Statement. None of the
information to be supplied by Parent or Sub for inclusion or incorporation by
reference in the Registration Statement or the proxy statement/prospectus
included therein relating to the Company Stockholder Meeting (as defined in
Section 5.1) (together with any amendments or supplements thereto, the "Proxy
Statement") will (i) in the case of the Registration Statement, at the time it
becomes effective, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading or (ii) in the case of the Proxy
Statement, at the time of the mailing of the Proxy Statement and at the time of
the Company Stockholder Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. If, at any time prior to the Company Stockholder
Meeting, any event with respect to Parent, its officers and directors or any of
its Subsidiaries shall occur which is required at that time to be described in
the Proxy Statement or the Registration Statement, such event shall be so
described, and (subject to Section 5.2) an appropriate amendment or supplement
shall be promptly filed with the SEC and, as required by law, disseminated to
the stockholders of the Company. The Registration Statement will comply (with
respect to Parent) as to form in all
-14-
material respects with the provisions of the Securities Act, and the Proxy
Statement will comply (with respect to Parent) as to form in all material
respects with the provisions of the Exchange Act.
Section 2.7 Absence of Certain Changes or Events. (a) Except as
disclosed in the Parent SEC Documents filed with the SEC prior to the Amendment
Date, since December 31, 2003, (i) Parent and its Subsidiaries have not incurred
any liability or obligation (indirect, direct or contingent) that would, after
taking into consideration any related benefits or value (indirect, direct or
contingent), individually or in the aggregate, have a Material Adverse Effect on
Parent; (ii) Parent and its Subsidiaries have not sustained any loss or
interference with their business or properties from fire, flood, windstorm,
accident or other calamity (whether or not covered by insurance) that has,
individually or in the aggregate, had a Material Adverse Effect on Parent; (iii)
through the Amendment Date, there has not been any split, combination or
reclassification of any of Parent's capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of Parent's capital stock or dividend or
distribution of any kind declared, set aside, paid or made by Parent on any
class of its stock; and (iv) through the Amendment Date, there has been no
Material Adverse Change with respect to Parent.
(b) Section 2.7(b) of the Parent Letter sets forth a list (without
specifying the identity of any customer listed thereon) for the twelve months
ended December 31, 2003 of the top ten revenue producing customers of Parent and
its Subsidiaries (collectively, the "Parent Key Customers"), including the
amount of revenue received from such Parent Key Customers for the twelve months
ended December 31, 2003. Since January 1, 2004 there has been no actual or, to
the Knowledge of Parent, threatened termination, cancellation or limitation of,
or adverse modification or change in, the business relationship of Parent or any
of its Subsidiaries with any one or more of the Parent Key Customers, other than
as would not, individually or in the aggregate, have a Material Adverse Effect
on Parent.
Section 2.8 Permits and Compliance. (a) Each of Parent and its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, charters, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for
Parent or any of its Subsidiaries to own, lease and operate its properties or to
carry on its business as it is now being conducted (the "Parent Permits"),
except where the failure to have any such Parent Permit would not, individually
or in the aggregate, have a Material Adverse Effect on Parent, and no suspension
or cancellation of any such Parent Permits is pending or, to the Knowledge of
Parent (as hereinafter defined), threatened, except where the suspension or
cancellation of any such Parent Permit would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. Neither Parent nor any of
its Subsidiaries is in violation of (i) its charter, bylaws or other
organizational documents; (ii) any applicable law, ordinance, administrative or
governmental rule or regulation; or (iii) any order, decree or judgment of any
Governmental Entity having jurisdiction over Parent or any of its Subsidiaries,
except, in the case of clauses (ii) and (iii), for any violations that would
not, individually or in the aggregate, have a Material Adverse Effect on Parent.
No notice of any such violation or non-compliance has been received by the
Parent or any of its Subsidiaries since December 31, 2002. For purposes of this
Agreement, "Knowledge of Parent" means the actual knowledge of the individuals
identified in Section 2.8(a) of the Parent Letter.
-15-
(b) Parent is in compliance in all material respects with (i) the
applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the related rules
and regulations promulgated thereunder or under the Exchange Act (the
"Xxxxxxxx-Xxxxx Act") and (ii) the applicable listing and corporate governance
rules and regulations of Nasdaq. Except as permitted by the Exchange Act,
including Sections 13(k)(2) and (3), since the enactment of the Xxxxxxxx-Xxxxx
Act, neither Parent nor any of its Affiliates has made, arranged or modified (in
any material way) personal loans to any executive officer or director of Parent.
(c) Parent has (i) designed disclosure controls and procedures to
ensure that material information relating to Parent, including its consolidated
Subsidiaries, is made known to the management of Parent by others within those
entities and (ii) to the extent required by applicable laws, disclosed, based on
its most recent evaluation, to Parent's auditors and the audit committee of
Parent's Board of Directors (A) any significant deficiencies and material
weaknesses in the design or operation of internal controls over financial
reporting which are reasonably likely to adversely affect Parent's ability to
record, process, summarize and report financial information and (B) any fraud,
whether or not material, that involves management or other employees who have a
significant role in Parent's internal control over financial reporting. Parent
has made available to the Company a summary of any such disclosure made by
management to Parent's auditors and audit committee since January 1, 2002.
Section 2.9 Tax Matters. Except as otherwise set forth in Section
2.9 of the Parent Letter, (i) Parent and each of its Subsidiaries have filed all
federal, and all material state, local and foreign, Tax Returns (as hereinafter
defined) required to have been filed or appropriate extensions therefor have
been properly obtained, and such Tax Returns are correct and complete, except to
the extent that any failure to so file or any failure to be correct and complete
would not, individually or in the aggregate, have a Material Adverse Effect on
Parent; (ii) all Taxes (as hereinafter defined) shown to be due on such Tax
Returns have been timely paid or extensions for payment have been properly
obtained, except to the extent that any failure to so pay or so obtain such an
extension would not, individually or in the aggregate, have a Material Adverse
Effect on Parent; (iii) Parent and each of its Subsidiaries have complied in all
material respects with all rules and regulations relating to the withholding of
Taxes except to the extent that any failure to comply with such rules and
regulations would not, individually or in the aggregate, have a Material Adverse
Effect on Parent; (iv) any Tax Returns referred to in clause (i) relating to
federal income Taxes have been examined by the Internal Revenue Service (the
"IRS") or the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired; (v) no material issues that have
been raised in writing by the relevant taxing authority in connection with the
examination of the Tax Returns referred to in clause (i) are currently pending;
(vi) all material deficiencies asserted or assessments made in writing as a
result of any examination of such Tax Returns by any taxing authority have been
paid in full; (vii) during the past three years, neither Parent nor any of its
Subsidiaries has been a distributing or controlled corporation in a transaction
intended to qualify for tax-free treatment under Section 355 of the Code; (viii)
during the last five years, neither Parent nor any of its Subsidiaries has been
a party to any "listed transaction" within the meaning of Treasury Regulation
section 1.6011-4(b)(2) identified by the IRS; (ix) during the most recently
ended five taxable years (and during the period since the end of the most
recently ended taxable year), neither Parent nor any of its Subsidiaries (nor
any predecessor thereof) has for United States federal income tax purposes,
filed Tax Returns on a consolidated basis with any group of corporations
-16-
other than a group consisting solely of Parent, one or more Subsidiaries
thereof, or any combination thereof; and (x) during the most recently ended five
taxable years (and during the period since the end of the most recently ended
taxable year) no Subsidiary of Parent organized under the laws of a jurisdiction
outside the United States (and, with respect to Parent or any of its
Subsidiaries, no predecessor thereof organized under the laws of a jurisdiction
outside the United States) has been acquired from any third party (directly or
indirectly) by Parent or any Subsidiary thereof. For purposes of this Agreement:
(i) "Taxes" means any federal, state, local or foreign income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or added minimum, ad valorem, value-added, transfer or
excise tax, or other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty imposed by any Governmental Entity and (ii) "Tax Return" means any
return, report or similar statement (including the attached schedules) required
to be filed with respect to any Tax, including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax.
Section 2.10 Actions, Proceedings and Violations. Except as set
forth in the Parent SEC Documents filed prior to the Amendment Date and except
as set forth in Section 2.10 of the Parent Letter, there are no outstanding
orders, judgments, injunctions, awards or decrees of any Governmental Entity
against or involving Parent or any of its Subsidiaries or, to the Knowledge of
Parent, against or involving any of the present or former directors, officers,
employees or agents of Parent or any of its Subsidiaries, in each case, in
connection with their employment by or service to Parent or any of its
Subsidiaries, or any of its or their properties, assets or business that would,
individually or in the aggregate, have a Material Adverse Effect on Parent or
prevent or delay beyond the End Date the consummation of the Merger, the
Subsequent Merger or any of the other transactions contemplated hereby. Except
as set forth in the Parent SEC Documents filed prior to the Amendment Date and
except as set forth in Section 2.10 of the Parent Letter, there are no actions,
suits or claims or legal, administrative or arbitration proceedings or
investigations pending or, to the Knowledge of Parent, threatened against or
involving Parent or any of its Subsidiaries or, to the Knowledge of Parent, any
of its or their present or former directors, officers, employees or agents, in
each case, in connection with their employment by or service to Parent or any of
its Subsidiaries, or any of its or their properties, assets or business that
would, individually or in the aggregate, have a Material Adverse Effect on
Parent or prevent or delay beyond the End Date the consummation of the Merger,
the Subsequent Merger or any other of the other transactions contemplated
hereby. Except as set forth in Section 2.10 of the Parent Letter, as of the
Amendment Date, there are no actions, suits, labor disputes or other litigation,
legal or administrative proceedings or governmental investigations relating to
the Merger, the Subsequent Merger or any of the other transactions contemplated
hereby pending or, to the Knowledge of Parent, threatened against or affecting
Parent or any of its Subsidiaries or, to the Knowledge of Parent, any of its or
their present or former officers, directors, employees or agents in connection
with their employment by or service to Parent or any of its Subsidiaries, or any
of its or their properties, assets or business.
Section 2.11 Certain Agreements. All of the Parent Contracts are
valid and in full force and effect (except those which are cancelled, rescinded
or terminated after the Amendment Date in accordance with their terms), except
where the failure to be in full force and effect would not, individually or in
the aggregate, have a Material Adverse Effect on Parent. To the Knowledge of
Parent, no Person is challenging the validity or enforceability of any Parent
-17-
Contract, except such challenges which would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. Neither Parent nor any of
its Subsidiaries and, to the Knowledge of Parent, none of the other parties
thereto, is in breach of any provision of, or committed or failed to perform any
act which (with or without notice or lapse of time or both) would constitute a
default under the provisions of, any Parent Contract, except for those
violations and defaults which would not, individually or in the aggregate, have
a Material Adverse Effect on Parent. For purposes of this Agreement, "Parent
Contract" means any Contract, regardless of whether it was entered into before
or after the Amendment Date, to which Parent or any of its Subsidiaries is a
party or by which Parent or any of its Subsidiaries is bound that is material to
Parent and its Subsidiaries, taken as a whole.
Section 2.12 ERISA. (a) Except as would not, individually or in the
aggregate, have a Material Adverse Effect on Parent, (i) each Parent Plan (as
hereinafter defined) complies in all respects with Title IV of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the Code and all
other applicable statutes and governmental rules and regulations and (ii) no
"reportable event" (within the meaning of Section 4043 of ERISA) has occurred
with respect to any Parent Plan. Neither Parent nor any of its ERISA Affiliates
(as hereinafter defined) has withdrawn from any Parent Plan or Parent
Multiemployer Plan (as hereinafter defined) or instituted, or is currently
considering taking, any action to do so. Except as would not, individually or in
the aggregate, have a Material Adverse Effect on Parent, no Parent Plan, nor any
trust created thereunder, has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived.
(b) With respect to the Parent Plans, no event or set of
circumstances has occurred and, to the Knowledge of Parent, there exists no
condition or set of circumstances in connection with which Parent or any of its
ERISA Affiliates or Parent Plan fiduciary are or could reasonably be expected to
be subject to any liability under the terms of such Parent Plans, ERISA, the
Code or any other applicable law, other than liabilities for benefits payable in
the normal course, which would, individually or in the aggregate, have a
Material Adverse Effect on Parent.
(c) As used herein, (i) "Parent Plan" means a "pension plan" (as
defined in Section 3(2) of ERISA (other than a Parent Multiemployer Plan)), a
"welfare plan" (as defined in Section 3(1) of ERISA) or any bonus, profit
sharing, deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, holiday pay, vacation, severance, death
benefit, sick leave, fringe benefit, insurance or other plan, arrangement or
understanding, in each case established or maintained by Parent or any of its
ERISA Affiliates or as to which Parent or any of its ERISA Affiliates has
contributed or otherwise may have any liability; (ii) "Parent Multiemployer
Plan" means a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA)
to which Parent or any of its ERISA Affiliates is or has been obligated to
contribute or otherwise may have any liability; and (iii) with respect to any
Person, "ERISA Affiliate" means any trade or business (whether or not
incorporated) which is under common control or would be considered a single
employer with such Person pursuant to Section 414(b), (c), (m) or (o) of the
Code and the rules and regulations promulgated under those sections or pursuant
to Section 4001(b) of ERISA and the rules and regulations promulgated
thereunder.
-18-
Section 2.13 Compliance with Worker Safety and Environmental Laws.
The properties, assets and operations of Parent and its Subsidiaries are in
compliance with all applicable federal, state, local and foreign laws, rules and
regulations, orders, decrees, judgments, permits and licenses relating to public
and worker health and safety (collectively, "Worker Safety Laws") and the
protection and clean-up of the environment and activities or conditions related
thereto, including those relating to the generation, handling, disposal,
transportation or release of hazardous materials (collectively, "Environmental
Laws"), except for any violations that would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. With respect to such
properties, assets and operations, including any previously owned, leased or
operated properties, assets or operations, there are no events, conditions,
circumstances, activities, practices, incidents, actions or plans of Parent or
any of its Subsidiaries that may interfere with or prevent compliance or
continued compliance with applicable Worker Safety Laws and Environmental Laws,
other than any such interference or prevention as would not, individually or in
the aggregate, have a Material Adverse Effect on Parent.
Section 2.14 Labor Matters. As of the Amendment Date, neither Parent
nor any of its Subsidiaries is a party to any collective bargaining Contract.
Neither Parent nor any of its Subsidiaries has engaged in any unfair labor
practice with respect to any Persons employed by or otherwise performing
services primarily for Parent or any of its Subsidiaries (the "Parent Business
Personnel"), and there is no unfair labor practice complaint or grievance
against Parent or any of its Subsidiaries by the National Labor Relations Board
or any comparable state agency pending or threatened in writing with respect to
the Parent Business Personnel, except where such unfair labor practice,
complaint or grievance would not, individually or in the aggregate, have a
Material Adverse Effect on Parent. There is no labor strike, dispute, slowdown
or stoppage pending or, to the Knowledge of Parent, threatened against or
affecting Parent or any of its Subsidiaries, except such dispute, strike or work
stoppage which would not, individually or in the aggregate, have a Material
Adverse Effect on Parent.
Section 2.15 Intellectual Property.
(a) Except as set forth in Section 2.15(a) of the Parent Letter,
Parent and its Subsidiaries own or have a valid right to use all patents,
trademarks, trade names, service marks, domain names, copyrights and any
applications and registrations for any of the foregoing, trade secrets,
know-how, technology, computer software and other tangible and intangible
proprietary information and intellectual property rights (collectively,
"Intellectual Property Rights") as are necessary to conduct the business of
Parent and its Subsidiaries as currently conducted or planned to be conducted by
Parent and its Subsidiaries, taken as a whole, except where the failure to have
such Intellectual Property Rights would not, individually or in the aggregate,
have a Material Adverse Effect on Parent. Neither Parent nor any of its
Subsidiaries has infringed, misappropriated or violated in any material respect
any Intellectual Property Rights of any third party, except where such
infringement, misappropriation or violation would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. No third party infringes,
misappropriates or violates any Intellectual Property Rights owned or
exclusively licensed by or to Parent or any of its Subsidiaries, except where
such infringement, misappropriation or violation would not, individually or in
the aggregate, have a Material Adverse Effect on Parent.
-19-
(b) Except as set forth in the Parent SEC Documents filed prior to
the Amendment Date or in Section 2.15(b) of the Parent Letter, (i) as of the
Amendment Date, to the Knowledge of Parent, there are no actions, suits or
claims, or administrative proceedings or investigations pending or threatened
that challenge or question the Intellectual Property Rights of Parent or any of
its Subsidiaries and (ii) there are no actions, suits or claims, or
administrative proceedings or investigations pending or, to the Knowledge of
Parent, threatened that challenge or question the Intellectual Property Rights
of Parent or any of its Subsidiaries and that, if adversely decided, would,
individually or in the aggregate, have a Material Adverse Effect on Parent.
Section 2.16 Required Vote of Parent Stockholders. No vote of the
holders of Parent Common Stock or any other securityholders of Parent is
required to approve the Share Issuance or required by law, the Parent Charter or
the Parent Bylaws or otherwise in order for Parent to consummate the Merger, the
Subsequent Merger and the transactions contemplated hereby.
Section 2.17 Reorganization. Neither Parent nor any of its
Subsidiaries has taken any action which action would, to the Knowledge of
Parent, jeopardize the qualification of the Merger and the Subsequent Merger,
taken together, as a "reorganization" within the meaning of Section 368(a) of
the Code, and Parent does not have any knowledge of any fact or circumstance
that, to the Knowledge of Parent, would prevent the Merger and the Subsequent
Merger, taken together, from qualifying as a "reorganization" within the meaning
of Section 368(a) of the Code; provided, however, that the parties acknowledge
that special counsel to each of Parent and the Company will not be able to
conclude that the "continuity of interest" requirement necessary for the Merger
and Subsequent Merger (if consummated), taken together, to so qualify will be
met unless prior to the Effective Time, the per share fair market value of
Parent Common Stock increases so that the aggregate fair market value of the Per
Share Stock Consideration, stated as a percentage of the aggregate fair market
value of the Per Share Merger Consideration and other cash deliverable pursuant
to the Merger (and any amounts to be paid with respect to Dissenting Shares) is
sufficient to permit special counsel to each of Parent and the Company to
conclude that the "continuity of interest" requirement will be satisfied. If the
fair market value of the Parent Common Stock does not increase sufficiently to
permit special counsel to each of Parent and the Company to conclude that the
"continuity of interest" requirement will be satisfied, or the "continuity of
interest" requirement is otherwise not satisfied due to the fair market value of
the Parent Common Stock, neither Parent nor any of its Subsidiaries shall be
deemed to have breached any representation, covenant or agreement in this
Agreement by reason of any failure to satisfy such requirement or by reason of
any inability of either party's special counsel to conclude that the Merger and
Subsequent Merger (if consummated) would satisfy such requirement, or, in either
of the foregoing cases, by reason of the failure of the Subsequent Merger to be
consummated.
Section 2.18 Brokers. No broker, investment banker or other Person,
other than Credit Suisse First Boston LLC, the fees and expenses of which will
be paid by Parent, is entitled to any broker's, finder's or other similar fee or
commission in connection with the Merger, the Subsequent Merger or any of the
other transactions contemplated by this Agreement based upon arrangements made
by or on behalf of Parent or any of its Subsidiaries.
-20-
Section 2.19 Operations of Sub. Sub is a direct, wholly owned
subsidiary of Parent, was formed solely for the purpose of engaging in the
transactions contemplated hereby, has engaged in no other business activities
and has conducted its operations only as contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As of the Amendment Date, the Company represents and warrants to
Parent and Sub as follows:
Section 3.1 Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
carry on its business as now being conducted. Each Subsidiary of the Company is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate (in the
case of a Subsidiary that is a corporation) or other power and authority to
carry on its business as now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power or authority would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. The Company and each of its Subsidiaries are duly qualified to do
business, and are in good standing, in each jurisdiction where the character of
their properties owned or held under lease or the nature of their activities
makes such qualification or good standing necessary, except where the failure to
be so qualified and in good standing would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
Section 3.2 Capital Structure. (a) The authorized capital stock of
the Company consists of (i) 200,000,000 shares of Company Common Stock and (ii)
5,000,000 shares of preferred stock, $0.01 par value per share ("Company
Preferred Stock"), of which 200,000 shares have been designated as Series A
Junior Participating Preferred Stock (the "Company Series A Preferred Stock").
At the close of business on September 3, 2004, (i) 88,677,887 shares of Company
Common Stock were issued and outstanding, all of which were validly issued,
fully paid and nonassessable and free of preemptive rights; (ii) 62,676 shares
of Company Common Stock were held in the treasury of the Company or by
Subsidiaries of the Company; (iii) 15,557,184 shares of Company Common Stock
were reserved for issuance pursuant to outstanding options (the "Company Stock
Options") to purchase shares of Company Common Stock pursuant to (A) the
Company's 1996 Stock Incentive Plan, (B) the Company's 1993 Stock Option/Stock
Issuance Plan, as amended, and (C) the AccessLan Communications, Inc. 1997 Stock
Plan (collectively, the "Company Stock Option Plans"); (iv) 1,047,882 shares of
Company Common Stock were reserved for issuance pursuant to the Company's 1996
Employee Stock Purchase Plan (the "Company Stock Purchase Plan") and (v) no
shares of Company Preferred Stock were reserved for issuance, other than 200,000
shares of Company Series A Preferred Stock reserved for issuance pursuant to the
Rights Agreement, dated as of May 13, 1998, between the Company and Equiserve
Trust Company, N.A. (as the successor in interest to BankBoston, N.A.),as
amended by First Amendment to the Rights Agreement, dated as of October 19, 1998
(the "Rights Agreement") providing for rights to acquire shares of Company
-21-
Series A Preferred Stock (the "Rights"). The Company Stock Option Plans and the
Company Stock Purchase Plan are the only benefit plans of the Company or its
Subsidiaries under which any securities of the Company or any of its
Subsidiaries are issuable. Each share of Company Common Stock which may be
issued pursuant to any Company Stock Option Plan or the Company Stock Purchase
Plan has been duly authorized and, if and when issued pursuant to the terms
thereof, will be validly issued, fully paid and nonassessable and free of
preemptive rights. No shares of Company Preferred Stock are issued or
outstanding. Except as set forth above and except for the issuance of shares of
Company Common Stock upon the exercise of Company Stock Options outstanding on
September 3, 2004 in accordance with the terms thereof, no shares of capital
stock or other voting securities of the Company are issued, reserved for
issuance or outstanding. Except as set forth above, there are no options,
warrants, calls, rights, puts or Contracts to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the Company
or any of its Subsidiaries to issue, deliver, sell, redeem or otherwise acquire,
or cause to be issued, delivered, sold, redeemed or otherwise acquired, any
additional shares of capital stock (or other voting securities or equity
equivalents) of the Company or any of its Subsidiaries or obligating the Company
or any of its Subsidiaries to grant, extend or enter into any such option,
warrant, call, right, put or Contract. The Company does not have any outstanding
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company on any matter. There are no
Contracts to which the Company or its Subsidiaries or, to the Knowledge of the
Company, any of their respective officers or directors is a party concerning the
voting of any capital stock of the Company or any of its Subsidiaries.
(b) Except as set forth in Section 3.2(b) of the letter dated the
Amendment Date and delivered on the Amendment Date by the Company to Parent,
which letter relates to this Agreement and is designated the Company Letter (the
"Company Letter"), each outstanding share of capital stock (or other voting
security or equity equivalent, as the case may be) of each Subsidiary of the
Company is duly authorized, validly issued, fully paid and nonassessable, and,
each such share (or other voting security or equity equivalent, as the case may
be) is owned by the Company or a Subsidiary of the Company, free and clear of
all security interests, liens, claims, pledges, options, rights of first
refusal, limitations on voting rights, charges and other encumbrances of any
nature whatsoever. Exhibit 21.1 to the Company's Annual Report on Form 10-K for
the year ended December 31, 2003, as filed with the SEC, constituted a true,
accurate and correct statement in all material respects of all of the
information required to be set forth therein by the regulations of the SEC as of
the date thereof.
(c) Section 3.2(c) of the Company Letter sets forth a list of all
Subsidiaries and Joint Ventures of the Company and the jurisdiction in which
such Subsidiary or Joint Venture is organized. Section 3.2(c) of the Company
Letter also sets forth the nature and extent of the ownership and voting
interests held by the Company in each such Joint Venture. The Company has no
obligation to make any capital contributions, or otherwise provide assets or
cash, to any Joint Venture.
(d) The Company has caused the Company Stock Purchase Plan and all
rights thereunder to be suspended on August 1, 2004, with the effect of such
suspension being that no offering period and no Purchase Interval (as such term
is defined in the Company Stock Purchase
-22-
Plan) shall commence or continue under such plan during the period of such
suspension. Such suspension is in full force and effect.
Section 3.3 Authority. On or prior to the Amendment Date, the Board
of Directors of the Company has declared this Agreement and the Merger advisable
and fair to and in the best interest of the Company and its stockholders,
approved and adopted this Agreement in accordance with the DGCL, resolved to
recommend the approval and adoption of this Agreement by the Company's
stockholders and directed that this Agreement be submitted to the Company's
stockholders for approval and adoption. The Company has all requisite corporate
power and authority to enter into this Agreement and, subject to approval and
adoption of this Agreement by the stockholders of the Company, to consummate the
Merger, the Subsequent Merger and the other transactions contemplated hereby.
The execution and delivery of this Agreement by the Company and the consummation
by the Company of the Merger, the Subsequent Merger and the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, subject to (x) approval and adoption of this
Agreement by the stockholders of the Company and (y) the filing of the
Certificate of Merger and Subsequent Certificate of Merger. This Agreement has
been duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent and Sub and
the validity and binding effect of this Agreement on Parent and Sub) except to
the extent enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law), this Agreement constitutes the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms. The filing of the
Proxy Statement with the SEC has been duly authorized by the Company's Board of
Directors. The Company has made available to Parent complete and correct copies
of the Company Charter and Company Bylaws and the Certificate of Incorporation
and Bylaws (or comparable organizational documents) of each of its Subsidiaries.
Section 3.4 Consents and Approvals; No Violation. Assuming that all
consents, approvals, authorizations and other actions described in this Section
3.4 have been obtained and all filings and obligations described in this Section
3.4 have been made, except as set forth in Section 3.4 of the Company Letter,
the execution and delivery of this Agreement does not, and the consummation of
the Merger, the Subsequent Merger and the other transactions contemplated hereby
and compliance with the provisions hereof will not, result in any violation of,
or default (with or without notice or lapse of time, or both) under, or give to
others a right of termination or cancellation or accelerate any obligation of
the Company or result in the loss of a material benefit to the Company or any of
its Subsidiaries under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company or any of its Subsidiaries under, any provision of (i) the Company
Charter or the Company Bylaws; (ii) the comparable charter or organizational
documents of any of the Company's Subsidiaries; (iii) any material Contract
applicable to the Company or any of its Subsidiaries or any of their respective
properties or assets; or (iv) any judgment, order, decree, injunction, statute,
law, ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, other than, in the
case of clause (iv), any such violations, defaults, rights, liens, security
interests, charges or encumbrances that would not, individually or in the
aggregate, have a Material Adverse Effect on the Company or prevent
-23-
or delay beyond the End Date the consummation of the Merger, the Subsequent
Merger or any of the other transactions contemplated hereby. No filing or
registration with, or authorization, consent or approval of, any Governmental
Entity is required by or with respect to the Company or any of its Subsidiaries
in connection with the execution and delivery of this Agreement by the Company
or is necessary for the consummation of the Merger, the Subsequent Merger and
the other transactions contemplated by this Agreement, except for (i) in
connection, or in compliance, with the provisions of the HSR Act, the Securities
Act and the Exchange Act; (ii) the filing of the Certificate of Merger and the
Subsequent Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities of other states
in which the Company or any of its Subsidiaries is qualified to do business;
(iii) such filings, authorizations, orders and approvals as may be required to
obtain the State Takeover Approvals; (iv) applicable requirements, if any, of
Blue Sky Laws and Nasdaq; (v) applicable requirements, if any, under foreign or
supranational laws relating to antitrust and to competition clearances; and (vi)
such other consents, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made would not, individually or
in the aggregate, have a Material Adverse Effect on the Company or prevent or
delay beyond the End Date the consummation of the Merger, the Subsequent Merger
or any of the other transactions contemplated hereby.
Section 3.5 SEC Documents and Other Reports. The Company has timely
filed with the SEC all documents required to be filed by it since December 31,
2001 under the Securities Act or Exchange Act (the "Company SEC Documents"). As
of their respective filing dates, or, if amended, as of the date of the last
amendment prior to the Amendment Date, the Company SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and, at the respective times they were filed, none of
the Company SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements (including, in each
case, any notes thereto) of the Company included in the Company SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with GAAP (except, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto) and fairly presented in all material respects the
consolidated financial position of the Company and its consolidated subsidiaries
as at the respective dates thereof and the consolidated results of their
operations and their consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein). Except as disclosed
in the Company SEC Documents filed with the SEC prior to the Amendment Date or
as required by GAAP, the Company has not, between December 31, 2003 and the
Amendment Date, made or adopted any change in its accounting methods, practices
or policies in effect on December 31, 2003.
Section 3.6 Registration Statement and Proxy Statement. None of the
information to be supplied by the Company for inclusion or incorporation by
reference in the Registration Statement or the Proxy Statement will (i) in the
case of the Registration Statement, at the time it becomes effective, contain
any untrue statement of a material fact or omit to state
-24-
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading or (ii) in the case of the Proxy
Statement, at the time of the mailing of the Proxy Statement and at the time of
the Company Stockholder Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. If at any time prior to the Company Stockholder
Meeting any event with respect to the Company, its officers and directors or any
of its Subsidiaries shall occur which is required at that time to be described
in the Proxy Statement or the Registration Statement, such event shall be so
described, and (subject to Section 5.2) an appropriate amendment or supplement
shall be promptly filed with the SEC and, as required by law, disseminated to
the stockholders of the Company. The Registration Statement will comply (with
respect to the Company) as to form in all material respects with the provisions
of the Securities Act, and the Proxy Statement will comply (with respect to the
Company) as to form in all material respects with the provisions of the Exchange
Act.
Section 3.7 Absence of Certain Changes or Events.
(a) Except as disclosed in the Company SEC Documents filed with the
SEC prior to the Amendment Date or as disclosed in Section 3.7(a) of the Company
Letter, since December 31, 2003 (i) the Company and its Subsidiaries have not
incurred any liability or obligation (indirect, direct or contingent), that
would, after taking into consideration any related benefits or value (indirect,
direct or contingent), individually or in the aggregate, have a Material Adverse
Effect on the Company; (ii) the Company and its Subsidiaries have not sustained
any loss or interference with their business or properties from fire, flood,
windstorm, accident or other calamity (whether or not covered by insurance) that
has, individually or in the aggregate, had a Material Adverse Effect on the
Company; (iii) there has not been any split, combination or reclassification of
any of the Company's capital stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of the Company's capital stock or dividend or distribution of any
kind declared, set aside, paid or made by the Company on any class of its stock;
(iv) there has not been (x) any granting by the Company or any of its
Subsidiaries to any officer of the Company or any of its Subsidiaries of any
increase in compensation, except in the ordinary course of business consistent
with the Company's prior practice or as was required under employment Contracts
in effect as of the date of the most recent audited financial statements
included in the Company SEC Documents, (y) any granting by the Company or any of
its Subsidiaries to any employee of any increase in rights of severance or (z)
any entry by the Company or any of its Subsidiaries into any employment,
severance or termination Contract with any employee; and (v) through the
Amendment Date, there has been no Material Adverse Change with respect to the
Company.
(b) Section 3.7(b) of the Company Letter sets forth a list (without
specifying the identity of any customer listed thereon) for the twelve months
ended December 31, 2003 of the top ten revenue producing customers of the
Company and its Subsidiaries (collectively, the "Company Key Customers"),
including the amount of revenue received from such Company Key Customers for the
twelve months ended December 31, 2003. Except as disclosed in Section 3.7(b) of
the Company Letter, since January 1, 2004 there has been no actual or, to the
Knowledge of the Company, threatened termination, cancellation or limitation of,
or adverse modification or change in, the business relationship of the Company
or any of its Subsidiaries
-25-
with any one or more of the Company Key Customers, other than as would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Section 3.8 Permits and Compliance. (a) Each of the Company and its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, charters, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for the
Company or any of its Subsidiaries to own, lease and operate its properties or
to carry on its business as it is now being conducted (the "Company Permits"),
except where the failure to have any such Company Permit would not, individually
or in the aggregate, have a Material Adverse Effect on the Company, and no
suspension or cancellation of any of the Company Permits is pending or, to the
Knowledge of the Company (as hereinafter defined), threatened, except where the
suspension or cancellation of such Company Permit would not, individually or in
the aggregate, have a Material Adverse Effect on the Company. Neither the
Company nor any of its Subsidiaries is in violation of (i) its charter, bylaws
or other organizational documents; (ii) any applicable law, ordinance,
administrative or governmental rule or regulation; or (iii) any order, decree or
judgment of any Governmental Entity having jurisdiction over the Company or any
of its Subsidiaries, except, in the case of clauses (ii) and (iii), for any
violations that would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. No notice of any such violation or non-compliance
has been received by the Company or any of its Subsidiaries since December 31,
2002. For purposes of this Agreement, "Knowledge of the Company" means the
actual knowledge of the individuals identified in Section 3.8(a) of the Company
Letter.
(b) The Company is in compliance in all material respects with (i)
the applicable provisions of the Xxxxxxxx-Xxxxx Act and (ii) the applicable
listing and corporate governance rules and regulations of Nasdaq. Except as
permitted by the Exchange Act, including Sections 13(k)(2) and (3), since the
enactment of the Xxxxxxxx-Xxxxx Act, neither the Company nor any of its
Affiliates has made, arranged or modified (in any material way) personal loans
to any executive officer or director of the Company.
(c) The Company has (i) designed disclosure controls and procedures
to ensure that material information relating to the Company, including its
consolidated Subsidiaries, is made known to the management of the Company by
others within those entities and (ii) to the extent required by applicable laws,
disclosed, based on its most recent evaluation, to the Company's auditors and
the audit committee of the Company's Board of Directors (A) any significant
deficiencies and material weaknesses in the design or operation of internal
controls over financial reporting which are reasonably likely to adversely
affect the Company's ability to record, process, summarize and report financial
information and (B) any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company's internal control
over financial reporting. The Company has made available to Parent a summary of
any such disclosure made by management to the Company's auditors and audit
committee since January 1, 2002.
Section 3.9 Tax Matters. Except as otherwise set forth in Section
3.9 of the Company Letter, (i) the Company and each of its Subsidiaries have
filed all federal, and all material state, local and foreign Tax Returns
required to have been filed or appropriate extensions therefor have been
properly obtained, and such Tax Returns are correct and complete,
-26-
except to the extent that any failure to so file or any failure to be correct
and complete would not, individually or in the aggregate, have a Material
Adverse Effect on the Company; (ii) all Taxes shown to be due on such Tax
Returns have been timely paid or extensions for payment have been properly
obtained, except to the extent that any failure to so pay or so obtain such an
extension would not, individually or in the aggregate, have a Material Adverse
Effect on the Company; (iii) the Company and each of its Subsidiaries have
complied in all material respects with all rules and regulations relating to the
withholding of Taxes except to the extent that any failure to comply with such
rules and regulations would not, individually or in the aggregate, have a
Material Adverse Effect on the Company; (iv) any Tax Returns referred to in
clause (i) relating to federal income Taxes have been examined by the IRS or the
period for assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired; (v) no material issues that have been raised
in writing by the relevant taxing authority in connection with the examination
of the Tax Returns referred to in clause (i) are currently pending; (vi) all
material deficiencies asserted or assessments made in writing as a result of any
examination of such Tax Returns by any taxing authority have been paid in full;
(vii) during the past three years, neither the Company nor any of its
Subsidiaries has been a distributing or controlled corporation in a transaction
intended to qualify for tax-free treatment under Section 355 of the Code; (viii)
neither the Company nor any of its Subsidiaries has been a United States real
property holding corporation (as defined in Section 897(c)(2) of the Code)
during the five-year period specified in Section 897(c)(1)(ii) of the Code
ending on the Closing Date; (ix) during the last five years, neither the Company
nor any of its Subsidiaries has been a party to any "listed transaction" within
the meaning of Treasury Regulation 1.6011-4(b)(2) identified by the IRS; (x)
during the most recently ended five taxable years (and during the period since
the end of the most recently ended taxable year), neither the Company nor any of
its Subsidiaries (nor any predecessor thereof) has for United States federal
income tax purposes filed Tax Returns on a consolidated basis with any group of
corporations other than a group consisting solely of the Company, one or more
Subsidiaries thereof, or any combination thereof; and (xi) during the most
recently ended five taxable years (and during the period since the end of the
most recently ended taxable year) no Subsidiary of the Company organized under
the laws of a jurisdiction outside the United States (and, with respect to the
Company or any of its Subsidiaries, no predecessor thereof organized under the
laws of a jurisdiction outside the United States) has been acquired from any
third party (directly or indirectly) by the Company or any Subsidiary thereof.
Section 3.10 Actions, Proceedings and Violations. Except as set
forth in the Company SEC Documents filed prior to the Amendment Date and except
as set forth in Section 3.10 of the Company Letter, there are no outstanding
orders, judgments, injunctions, awards or decrees of any Governmental Entity
against or involving the Company or any of its Subsidiaries or, to the Knowledge
of the Company, against or involving any of the present or former directors,
officers, employees or agents of the Company or any of its Subsidiaries, in each
case, in connection with their employment by or service to the Company or any of
its Subsidiaries, or any of its or their properties, assets or business or any
Company Plan (as hereinafter defined) that would, individually or in the
aggregate, have a Material Adverse Effect on the Company or prevent or delay
beyond the End Date the consummation of the Merger, the Subsequent Merger or any
of the other transactions contemplated hereby. Except as set forth in the
Company SEC Documents filed prior to the Amendment Date and except as set forth
in Section 3.10 of the Company Letter, there are no actions, suits or claims or
legal, administrative or arbitration proceedings or investigations pending or,
to the Knowledge of the Company, threatened against
-27-
or involving the Company or any of its Subsidiaries or, to the Knowledge of the
Company, any of its or their present or former directors, officers, employees or
agents, in each case, in connection with their employment by or service to the
Company or any of its Subsidiaries, or any of its or their properties, assets or
business or any Company Plan that would, individually or in the aggregate, have
a Material Adverse Effect on the Company or prevent or delay beyond the End Date
the consummation of the Merger, the Subsequent Merger or any of the other
transactions contemplated hereby. Except as set forth in Section 3.10 of the
Company Letter, as of the Amendment Date, there are no actions, suits, labor
disputes or other litigation, legal or administrative proceedings or
governmental investigations relating to the Merger, the Subsequent Merger or any
of the other transactions contemplated hereby pending or, to the Knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries or, to the Knowledge of the Company, any of its or their present or
former officers, directors, employees or agents, in each case, in connection
with their employment by or service to the Company or any of its Subsidiaries,
or any of its or their properties, assets or business.
Section 3.11 Certain Agreements. (a) Except as filed as exhibits to
the Company SEC Documents filed prior to the Amendment Date and except as set
forth in Section 3.11(a) of the Company Letter, as of the Amendment Date,
neither the Company nor any of its Subsidiaries is a party to or bound by (i)
any Contract which is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K under the Exchange Act); (ii) any Contract which
purports to materially limit or restrict any line of business or localities in
which the Company or any of its Affiliates (including Parent or any of its
Subsidiaries following the Merger) may conduct business, excluding any
limitations on scope or territory of use of third party Intellectual Property
Rights that may be set forth in licenses under which the Company or any of its
Subsidiaries is the licensee, or any material Contract which obligates the
Company or any of its Affiliates (including Parent or any of its Subsidiaries
following the Merger) to extend most favored nation pricing to any Person or any
Contract imposing exclusivity obligations on the Company or any of its
Affiliates (including Parent or any of its Subsidiaries following the Merger)
with respect to customers or suppliers or imposing obligations on the Company or
any of its Affiliates (including Parent or any of its Subsidiaries following the
Merger) with respect to non-solicitation of customers or suppliers; (iii) any
Contract which requires any payment by the Company or its Subsidiaries in excess
of $3,000,000 in any year and which is not terminable within one year without
penalty, or which requires any payment to the Company or its Subsidiaries in
excess of $1,000,000 in any year and which is not terminable within one year
without penalty; (iv) any Contract under which the Company or any of its
Subsidiaries is indebted for borrowed money (or may become so indebted) or any
guaranty by the Company or any of its Subsidiaries of indebtedness for borrowed
money; (v) any Contract relating to the acquisition or disposition of any
business (whether by merger, sale of stock, sale of assets, or otherwise)
entered into since January 1, 2001 or any Contract relating to the acquisition
or disposition of assets entered into since January 1, 2001, which involves an
asset value in excess of $5,000,000; (vi) any Employee Agreement (as hereinafter
defined); (vii) any material Contract of indemnification or any guaranty of a
material obligation (other than an obligation of the Company or any of its
Subsidiaries) by the Company or any of its Subsidiaries other than any Contract
entered into in connection with the sale or license by or to the Company or any
of its Subsidiaries of products or services in the ordinary course of business;
(viii) any Contract to provide source code to any third party for any product or
technology that is material to the Company and its Subsidiaries, taken as a
whole, except for Contracts providing for source code
-28-
to be released from escrow upon insolvency or bankruptcy; (ix) any material
Contract, to license any third party to use, manufacture or reproduce any
Company product, service or Intellectual Property Right or any material Contract
to sell, distribute or market any Company product, service or Intellectual
Property Right, other than, in each case, end-user license and sale Contracts
and related maintenance and support Contracts entered into in the ordinary
course of business; (x) any settlement Contract which materially affects the
conduct of the Company's or any of its Subsidiaries' businesses; and (xi) any
other Contract that is material to the Company and its Subsidiaries, taken as a
whole. Except for Contracts for which disclosure is prohibited by
confidentiality provisions, the Company has previously made available to Parent
complete and correct copies of each Contract of the type described in this
Section 3.11 which was entered into prior to the Amendment Date. All Contracts
of the type described in this Section 3.11 shall be referred to as "Company
Contracts" regardless of whether they were entered into before or after the
Amendment Date. All of the Company Contracts are valid and in full force and
effect (except those which are cancelled, rescinded or terminated after the
Amendment Date in accordance with their terms), except where the failure to be
in full force and effect would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. Except as set forth in Section 3.11(a)
of the Company Letter, to the Knowledge of the Company, no Person is challenging
the validity or enforceability of any Company Contract, except such challenges
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. Except as set forth in Section 3.11(a) of the Company
Letter, neither the Company nor any of its Subsidiaries and, to the Knowledge of
the Company, none of the other parties thereto, is in breach of any provision
of, or committed or failed to perform any act which (with or without notice or
lapse of time or both) would constitute a default under the provisions of, any
Company Contract, except for those violations and defaults which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
(b) Except as set forth in Section 3.11(b) of the Company Letter,
neither the Company nor any of its Subsidiaries is a party to any Contract or
written or oral plan, including any stock option plan, stock appreciation rights
plan, restricted stock plan or stock purchase plan, with or relating to any
current or former employee, director, officer or consultant, any of the benefits
of which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of the Merger, the Subsequent Merger or any of
the other transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. No holder of any (i) option to purchase shares
of Company Common Stock; (ii) rights under the Company Stock Purchase Plan; or
(iii) shares of Company Common Stock granted in connection with the performance
of services for the Company or its Subsidiaries, is or will be entitled to
receive cash from the Company or any Subsidiary in lieu of or in exchange for
such option or shares in connection with the Merger, the Subsequent Merger or
any of the other transactions contemplated hereby. Section 3.11(b) of the
Company Letter sets forth the total amount of indebtedness owed to the Company
or its Subsidiaries from each officer or director of the Company and its
Subsidiaries.
(c) For purposes of this Agreement, "Employee Agreement" means each
management, employment, severance, retention, consulting or other Contract
between the Company, or any ERISA Affiliate, and any current or former employee,
director or officer of the Company or any ERISA Affiliate other than offer
letters used in the Company's ordinary course
-29-
of business that do not provide for severance or other payments after
termination of employment or acceleration of any equity award or termination
letters or Contracts with respect to former employees entered into in the
ordinary course of business prior to the Amendment Date if the Company and its
Subsidiaries have no further payment or other material obligations thereunder.
Section 3.12 ERISA. (a) Each Company Plan is listed in Section
3.12(a) of the Company Letter. With respect to each Company Plan, the Company
has made available to Parent a true and correct copy of (i) the three (3) most
recent annual reports (Form 5500) filed with the IRS; (ii) each such Company
Plan that has been reduced to writing and all amendments thereto; (iii) each
trust, insurance or administrative Contract relating to each such Company Plan;
(iv) a written summary of each unwritten Company Plan; (v) the most recent
summary plan description or other written explanation of each Company Plan
provided to participants; (vi) the most recent determination letter and request
therefor, if any, issued by the IRS with respect to any Company Plan intended to
be qualified under Section 401(a) of the Code; (vii) any request for a
determination currently pending before the IRS; and (viii) all correspondence
with the IRS, the Department of Labor, the SEC or Pension Benefit Guaranty
Corporation relating to any outstanding controversy or audit. Each Company Plan
complies in all material respects with ERISA, the Code and all other applicable
statutes and governmental rules and regulations. Neither the Company nor any of
its ERISA Affiliates currently maintains, contributes to or has any liability
under or, at any time during the past six (6) years has maintained or
contributed to, any pension plan which is subject to Section 412 of the Code or
Section 302 of ERISA or Title IV of ERISA. Neither the Company nor any of its
ERISA Affiliates currently maintains, contributes to or has any liability under
or, at any time during the past six (6) years has maintained or contributed to,
any Company Multiemployer Plan (as hereinafter defined).
(b) Except as listed in Section 3.12(b) of the Company Letter, with
respect to the Company Plans, no event or set of circumstances has occurred and,
to the Knowledge of the Company, there exists no condition or set of
circumstances in connection with which the Company or any of its ERISA
Affiliates or any Company Plan fiduciary are, or would reasonably be expected to
be, subject to any liability under the terms of such Company Plans, ERISA, the
Code or any other applicable law, other than liabilities which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
All Company Plans that are intended by their terms to be, or are otherwise
treated by the Company as, qualified under Section 401(a) of the Code have been
determined by the IRS to be so qualified, or a timely application for such
determination is now pending and the Company is not aware of any reason any such
Company Plan is not so qualified in operation. Except as set forth in Section
3.12(b) of the Company Letter, neither the Company nor any of its ERISA
Affiliates has any liability or obligation under any welfare plan or Contract to
provide benefits after termination of employment to any employee or dependent
other than as required by Section 4980B of the Code.
(c) For purposes of this Agreement, (i) "Company Plan" means a
"pension plan" (as defined in Section 3(2) of ERISA (other than a Company
Multiemployer Plan)), a "welfare plan" (as defined in Section 3(1) of ERISA) or
any bonus, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, holiday pay, vacation,
severance, death benefit, sick leave, fringe benefit, insurance or other plan,
arrangement or understanding, in each case established or maintained by the
Company or any of its ERISA Affiliates or as to which the Company or any of its
ERISA Affiliates has contributed
-30-
or otherwise may have any liability and (ii) "Company Multiemployer Plan" means
a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) to which the
Company or any of its ERISA Affiliates is or has been obligated to contribute or
otherwise may have any liability.
(d) Section 3.12(d) of the Company Letter contains a list, as of the
Amendment Date, and the Company has heretofore made available to Parent a
complete and correct copy, of all (i) severance (other than termination letters
or Contracts with respect to former employees entered into in the ordinary
course of business prior to the Amendment Date if the Company and its
Subsidiaries have no further payment or other material obligations thereunder),
employment and material consulting Contracts with employees and consultants of
the Company and each of its ERISA Affiliates to which the Company is a party,
(ii) severance programs and policies of the Company and each of its ERISA
Affiliates with or relating to its employees and (iii) plans, programs,
Contracts and other arrangements of the Company and each of its ERISA Affiliates
with or relating to its current and former employees containing change of
control or similar provisions.
(e) Except as set forth in Section 3.12(e) of the Company Letter,
the Company is not a party to any Contract that would reasonably be expected to
result, separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code as a result of the
Merger or the Subsequent Merger.
(f) With respect to each Company Plan not subject to United States
law (a "Company Foreign Benefit Plan"), (i) the fair market value of the assets
of each funded Company Foreign Benefit Plan, the liability of each insurer for
any Company Foreign Benefit Plan funded through insurance or the reserve shown
on the consolidated financial statements of the Company included in the Company
SEC Documents for any unfunded Company Foreign Benefit Plan, together with any
accrued contributions, is sufficient to procure or provide for the projected
benefit obligations, as of the Effective Time, with respect to all current and
former participants in such plan based on reasonable, country specific actuarial
assumptions and valuations and no transaction contemplated by this Agreement
shall cause such assets or insurance obligations or book reserve to be less than
such projected benefit obligations and (ii) each Company Foreign Benefit Plan
required to be registered has been registered and has been maintained in good
standing with the appropriate regulatory authorities.
(g) The Company, with respect to employees outside of the United
States, (i) is not under any legal liability to pay pensions, gratuities,
superannuation allowances or the like to any past or present directors,
officers, employees or dependents of employees; (ii) has not made ex-gratia or
voluntary payments by way of superannuation allowance or pension; and/or (iii)
does not maintain any pension schemes or arrangements for payment of the
pensions or death benefits or similar arrangements.
Section 3.13 Compliance with Worker Safety and Environmental Laws.
The properties, assets and operations of the Company and its Subsidiaries are in
compliance with all applicable Worker Safety Laws and Environmental Laws, except
for any violations that would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. With respect to such properties, assets
and operations, including any previously owned, leased or operated properties,
assets or operations, there are no events, conditions, circumstances,
-31-
activities, practices, incidents, actions or plans of the Company or any of its
Subsidiaries that may interfere with or prevent compliance or continued
compliance with applicable Worker Safety Laws and Environmental Laws, other than
any such interference or prevention as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
Section 3.14 Labor Matters. Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining Contract or, except as set
forth in Section 3.14 of the Company Letter, any labor Contract. Neither the
Company nor any of its Subsidiaries has engaged in any unfair labor practice
with respect to any Persons employed by or otherwise performing services
primarily for the Company or any of its Subsidiaries (the "Company Business
Personnel"), and there is no unfair labor practice complaint or grievance
against the Company or any of its Subsidiaries by the National Labor Relations
Board or any comparable state agency pending or threatened in writing with
respect to the Company Business Personnel, except where such unfair labor
practice, complaint or grievance would not, individually or in the aggregate,
have a Material Adverse Effect on the Company. There is no labor strike,
dispute, slowdown or stoppage pending or, to the Knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries, except
any such dispute, strike or work stoppage which would not, individually or in
the aggregate, have a Material Adverse Effect on the Company.
Section 3.15 Intellectual Property. (a) Except as set forth in
Section 3.15(a) of the Company Letter, the Company and its Subsidiaries own or
have a valid right to use all Intellectual Property Rights as are necessary to
conduct the business of the Company and its Subsidiaries as currently conducted
or planned to be conducted by the Company and its Subsidiaries, taken as a
whole, except where the failure to have such Intellectual Property Rights would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. Neither the Company nor any of its Subsidiaries has infringed,
misappropriated or violated in any material respect any Intellectual Property
Rights of any third party, except where such infringement, misappropriation or
violation would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. No third party infringes, misappropriates or violates any
Intellectual Property Rights owned or exclusively licensed by or to the Company
or any of its Subsidiaries, except where such infringement, misappropriation or
violation would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
(b) Section 3.15(b) of the Company Letter contains a list as of the
Amendment Date of (i) all material registered United States, state and foreign
trademarks, service marks, logos, trade dress and trade names and pending
applications to register the foregoing; (ii) all United States and material
foreign patents and patent applications; and (iii) all material registered
United States and foreign copyrights and pending applications to register the
same, in each case owned by the Company and its Subsidiaries.
(c) Except as set forth in the Company SEC Documents filed prior to
the Amendment Date or in Section 3.15(c) of the Company Letter, (i) as of the
Amendment Date, to the Knowledge of the Company, there are no actions, suits or
claims or administrative proceedings or investigations pending or threatened
that challenge or question the Intellectual Property Rights of the Company or
any of its Subsidiaries and (ii) there are no actions, suits or claims, or
administrative proceedings or investigations pending or, to the Knowledge of
-32-
Company, threatened that challenge or question the Intellectual Property Rights
of the Company or any of its Subsidiaries and that, if adversely decided, would,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Section 3.16 Opinion of Financial Advisor. The Company has received
the opinion of Bear, Xxxxxxx & Co. Inc., as of the Amendment Date, to the effect
that, as of the Amendment Date, the Per Share Merger Consideration is fair to
the Company's stockholders from a financial point of view.
Section 3.17 State Takeover Statutes; Certain Charter Provisions.
The Board of Directors of the Company has, to the extent such statutes are
applicable, taken all action (including appropriate approvals of the Board of
Directors of the Company) necessary to exempt Parent, its Subsidiaries and
Affiliates, the Merger, the Subsequent Merger, this Agreement and the
transactions contemplated hereby from Section 203 of the DGCL and Article EIGHTH
of the Company Charter. To the Knowledge of the Company, no other state takeover
statutes or charter or bylaw provisions are applicable to the Merger and/or the
Subsequent Merger, this Agreement or the transactions contemplated hereby.
Section 3.18 Required Vote of Company Stockholders. The affirmative
vote of the holders of a majority of the outstanding shares of Company Common
Stock is required to approve and adopt this Agreement. No other vote of the
securityholders of the Company is required by law, the Company Charter, the
Company Bylaws or otherwise in order for the Company to consummate the Merger,
the Subsequent Merger and the other transactions contemplated hereby.
Section 3.19 Reorganization. Neither the Company nor any of its
Subsidiaries has taken any action which action would, to the Knowledge of the
Company, jeopardize the qualification of the Merger and the Subsequent Merger,
taken together, as a "reorganization" within the meaning of Section 368(a) of
the Code, and the Company does not have any knowledge of any fact or
circumstance that, to the Knowledge of the Company, would prevent the Merger and
the Subsequent Merger, taken together, from qualifying as a "reorganization"
within the meaning of Section 368(a) of the Code; provided, however, that the
parties acknowledge that special counsel to each of Parent and the Company will
not be able to conclude that the "continuity of interest" requirement necessary
for the Merger and Subsequent Merger (if consummated), taken together, to so
qualify will be met unless prior to the Effective Time, the per share fair
market value of Parent Common Stock increases so that the aggregate fair market
value of the Per Share Stock Consideration, stated as a percentage of the
aggregate fair market value of the Per Share Merger Consideration and other cash
deliverable pursuant to the Merger (and any amounts to be paid with respect to
Dissenting Shares) is sufficient to permit special counsel to each of Parent and
the Company to conclude that the "continuity of interest" requirement will be
satisfied. If the fair market value of the Parent Common Stock does not increase
sufficiently to permit special counsel to each of Parent and the Company to
conclude that the "continuity of interest" requirement will be satisfied, or the
"continuity of interest" requirement is otherwise not satisfied due to the fair
market value of the Parent Common Stock, neither the Company nor any of its
Subsidiaries shall be deemed to have breached any representation, covenant or
agreement in this Agreement by reason of any failure to satisfy such requirement
or by reason of any inability of either party's special counsel to conclude that
the
-33-
Merger and Subsequent Merger (if consummated) would satisfy such requirement,
or, in either of the foregoing cases, by reason of the failure of the Subsequent
Merger to be consummated.
Section 3.20 Brokers. No broker, investment banker or other Person,
other than Bear, Xxxxxxx & Co. Inc., the fees and expenses of which will be paid
by the Company (as reflected in an agreement between Bear, Xxxxxxx & Co. Inc.
and the Company, dated March 23, 2004, a copy of which has been furnished to
Parent), is entitled to any broker's, finder's or other similar fee or
commission in connection with the Merger, the Subsequent Merger or any of the
other transactions contemplated by this Agreement based upon arrangements made
by or on behalf of the Company.
Section 3.21 Rights Agreement. The Company has amended the Rights
Agreement to (i) render the Rights Agreement inapplicable to the Merger, the
Subsequent Merger and the other transactions contemplated hereby and (ii)
provide that none of Sub, Parent or any Affiliate of Parent shall be deemed an
Acquiring Person (as defined in the Rights Agreement), the Distribution Date (as
defined in the Rights Agreement) shall not be deemed to occur and the Rights
will not separate from the shares of Company Common Stock as a result of
entering into this Agreement or consummating the Merger, the Subsequent Merger
or any of the other transactions contemplated hereby.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger. (a) Except as
expressly permitted by clauses (i) through (xix) of this Section 4.1(a), during
the period from the Original Agreement Date through the Effective Time, the
Company shall, and shall cause each of its Subsidiaries to, in all material
respects carry on its business in the ordinary course of its business as
currently conducted and, to the extent consistent therewith, use reasonable best
efforts to preserve intact its current business organizations, keep available
the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business shall be unimpaired at the
Effective Time. Without limiting the generality of the foregoing, and except as
otherwise expressly contemplated by this Agreement or as set forth in Section
4.1 of the Company Letter (with specific reference to the applicable subsection
below), the Company shall not, and shall not permit any of its Subsidiaries to,
without the prior written consent of Parent (which consent shall not be
unreasonably withheld, conditioned or delayed):
(i) (A) declare, set aside or pay any dividends on, or make any
other actual, constructive or deemed distributions in respect of, any of
its capital stock, or otherwise make any payments to its stockholders in
their capacity as such other than dividends or distributions from wholly
owned Subsidiaries of the Company, (B) split, combine or reclassify any of
its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (C) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any Subsidiary or any other securities
thereof or any rights, warrants or options to acquire, any such shares or
other securities;
-34-
(ii) issue, deliver, sell, pledge, dispose of or otherwise encumber
any shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities, equity equivalent
or convertible securities, other than (A) the issuance of shares of
Company Common Stock upon the exercise of Company Stock Options
outstanding on the Original Agreement Date or issuances pursuant to
options that are granted after the Original Agreement Date in accordance
with Section 4.1(a)(ii)(C), in each case, in accordance with their
respective terms; (B) the issuance of shares of Company Common Stock
pursuant to the Company Stock Purchase Plan in accordance with its current
terms; (C) additional options to acquire shares of Company Common Stock
granted under the terms of any Company Stock Option Plan as in effect on
the Original Agreement Date in the ordinary course of business consistent
with past practice and which stock options have an exercise or purchase
price at least equal to the fair market value of the Company Common Stock
of the date of grant, provided that the aggregate number of shares of
Company Common Stock issuable upon exercise of options granted pursuant to
this Section 4.1(a)(ii)(C) following the Original Agreement Date shall in
no event exceed the number of shares of Company Common Stock set forth in
Section 4.1(a)(ii)(C) of the Company Letter; (D) transfers or issuances of
shares of any Subsidiary of the Company to the Company or any of its
wholly-owned Subsidiaries; (E) the issuance of up to 210,000 restricted
shares of Company Common Stock under the Company's 1996 Stock Incentive
Plan pursuant to the retention plan referenced in Section 4.1(a)(ix) for
the benefit of employees of the Company; and (F) where required by
applicable law, issuances of director qualifying shares in jurisdictions
other than the United States; provided, however, that the Company shall
take all actions necessary so that no option issued in accordance with
clause (ii)(C) to any employee of the Company or any of its Subsidiaries
who is hired after the Original Agreement Date shall accelerate in
connection with the Merger, the Subsequent Merger or any of the other
transactions contemplated by this Agreement, including by reason of any
subsequent termination of employment or service;
(iii) amend its certificate of incorporation or bylaws or other
comparable organizational documents;
(iv) acquire or agree to acquire by merging or consolidating with,
by purchasing a substantial portion of the assets of or equity in or by
any other manner, any business or any corporation, limited liability
company, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets,
other than assets acquired in the ordinary course of business and not
material to the Company and its Subsidiaries, taken as a whole;
(v) sell, transfer, lease, license (as licensor of Intellectual
Property Rights of the Company), mortgage, pledge, encumber or otherwise
dispose of any of its properties or assets, other than sales, leases or
licenses of inventory, products or services or licenses of Intellectual
Property Rights associated with the sale of such products or services, in
each case, in the ordinary course of business and not material to the
Company and its Subsidiaries, taken as a whole;
-35-
(vi) incur any indebtedness for borrowed money, guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
other investments in, any other Person, other than (A) indebtedness,
loans, advances, capital contributions and investments between the Company
and any of its wholly owned Subsidiaries or between any of such wholly
owned Subsidiaries; (B) additional letters of credit under the Company's
existing facility not exceeding $5,000,000; (C) refinancings, refundings
or replacements of indebtedness, guarantees and investments in existence
on the Original Agreement Date, provided that the outstanding principal
amount is not thereby increased; (D) relocation loans and advances of
travel, relocation and other business expenses to employees, in each case,
in the ordinary course of business and consistent with past practice; and
(E) indemnification advances to directors and officers pursuant to
applicable law, the Company Bylaws, and/or indemnification agreements
existing as of the Original Agreement Date;
(vii) merge, liquidate, reorganize or restructure or otherwise alter
in any fashion the corporate structure of the Company or any of its
Subsidiaries;
(viii) enter into, adopt or amend any severance plan, Company Plan,
Employee Agreement or material consulting Contract, except as required by
applicable law, including the Company Stock Option Plans, other than any
severance Contract with non-officer employees involving payments to any
such employee not in excess of $100,000 individually (or $200,000
individually with respect to officers) or $1,000,000 in the aggregate with
respect to all employees (including officers) so long as, in each case,
such severance Contract is in the ordinary course of business consistent
with past practice and contains a customary release from such employee to
the benefit of the Company and its Subsidiaries;
(ix) increase the compensation payable or to become payable to its
directors, officers or employees (except for increases in the ordinary
course of business consistent with past practice in salaries or wages of
employees of the Company or any of its Subsidiaries who are not officers
of the Company), other than as required by law, or a Contract or Company
Plan existing on the Original Agreement Date, or establish, adopt, enter
into or, except as may be required to comply with applicable law, amend or
take action to enhance or accelerate any rights or benefits under, any
labor, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, Contract, trust, fund, policy or
arrangement for the benefit of any current or former director, officer or
employee; provided, however, that prior to the Effective Time, the Company
may implement a retention plan for the benefit of those employees of the
Company and its Subsidiaries mutually selected by the Company and Parent,
which shall provide for the payment of retention benefits to such
employees in an aggregate amount not to exceed $5 million and payable 12
months after the Effective Time, or at such earlier time and subject to
such other terms upon which the Company and Parent shall mutually agree,
and the issuance of up to 210,000 restricted shares of Company Common
Stock to employees of the Company and its Subsidiaries under the Company's
1996 Stock Incentive Plan on the terms upon which the Company and Parent
shall mutually agree; provided, further, that no employee of the Company
or any of its Subsidiaries that is
-36-
identified as being party to a Contract set forth in Items 18 through 32
of Section 3.12(d)(i) of the Company Letter shall be entitled to receive
any of the foregoing retention benefits (including any restricted shares
of Company Common Stock);
(x) knowingly violate or knowingly fail to perform any obligation or
duty imposed upon it or any Subsidiary by any applicable material federal,
state or local law, rule, regulation, guideline or ordinance;
(xi) make or adopt any change to its accounting methods, practices
or policies (other than actions which are required to be taken by GAAP or
under SEC rules, regulations or requirements and requirements communicated
to the Company by its independent auditors);
(xii) prepare or file any Tax Return in a manner that is materially
inconsistent with past practice or, on any such Tax Return, take any
material position, make any material election or adopt any material method
that is inconsistent with positions taken, elections made or methods used
in preparing or filing similar Tax Returns in prior periods; provided,
however, that no covenant described in this Section 4.1(a) shall be deemed
to be breached by reason of preparing or filing a Tax Return (or, on any
Tax Return, taking any position, making any election, or adopting any
method) consistent with a private letter ruling received by the Company
from the IRS after the Original Agreement Date;
(xiii) settle or compromise any material federal, state, local or
foreign income tax liability; provided, however, that no covenant
described in this Section 4.1(a) shall be deemed to be breached by reason
of a settlement or compromise of any Tax liability consistent with a
private letter ruling received by the Company from the IRS after the
Original Agreement Date;
(xiv) enter into any material Contract outside of the ordinary
course of business or that if entered into on or prior to the Original
Agreement Date would be required to be disclosed in the Company Letter
pursuant to clause (i) (excluding Contracts described in Item
601(b)(10)(iii) of Regulation S-K) or any of clauses (vii) through (ix) of
Section 3.11(a) (other than, with respect to Contracts described in clause
(ix) of Section 3.11(a), any distribution Contract entered into in the
ordinary course of business consistent with past practice with existing
U.S. distributors of the Company or any of its Subsidiaries) or amend or
terminate any Company Contract unless such amendment or termination is in
the ordinary course of business and would not be materially adverse to the
Company or any of its Subsidiaries;
(xv) enter into any Contract (A) that would, after the Effective
Time, restrict Parent or any of its Subsidiaries (including the Company
and its Subsidiaries) with respect to engaging in any line of business or
conducting business in any geographical area (other than field of use or
territorial restrictions of third party Intellectual Property Rights in
licenses under which the Company or any of its Subsidiaries is the
licensee and which are entered into in the ordinary course of business),
(B) that obligates the Company or any of its Affiliates (including Parent
or any of its Subsidiaries following the
-37-
Merger) to extend most favored nation pricing to any Person other than
Contracts with such provisions that are entered into in the ordinary
course of business consistent with the Company's past practices, or (C)
that imposes obligations on the Company or any of its Affiliates
(including Parent or any of its Subsidiaries following the Merger) with
respect to non-solicitation of customers or suppliers or imposes
exclusivity obligations on the Company or any of its Affiliates (including
Parent or any of its Subsidiaries following the Merger) with respect to
any customer or supplier;
(xvi) make or agree to make any new capital expenditure or
expenditures which, individually, is in excess of $1,000,000 or, in the
aggregate, are in excess of $10,000,000;
(xvii) waive or release any material right or claim or pay,
discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction, in the ordinary course
of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in the most recent
Company SEC Documents filed prior to the Amendment Date, or incurred in
the ordinary course of business consistent with past practice;
(xviii) initiate any material litigation or arbitration proceeding,
settle or compromise any material litigation or arbitration proceeding or
initiate, settle or compromise any claim involving intellectual property;
or
(xix) authorize or announce an intention to do any of the foregoing
or enter into any Contract to do any of the foregoing.
(b) During the period from the Original Agreement Date to the
Effective Time, Parent shall not, and shall not permit any of its Subsidiaries
to, without the prior written consent of the Company (which consent shall not be
unreasonably withheld, conditioned or delayed):
(i) (A) declare, set aside or pay any dividends on, or make any
other actual, constructive or deemed distributions in respect of, any
capital stock of Parent, (B) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for shares of its capital
stock, (C) purchase, redeem or otherwise acquire any shares of capital
stock of Parent or any Subsidiary or any other securities thereof or any
rights, warrants or options to acquire, any such shares or other
securities (other than pursuant to Contracts in existence on the Original
Agreement Date or pursuant to any Parent Stock Plan);
(ii) amend the Parent Charter or the Parent Bylaws except as
contemplated by clause (vi) below;
(iii) acquire or agree to acquire by merging or consolidating with,
by purchasing a substantial portion of the assets of or equity in or by
any other manner, any business or any corporation, limited liability
company, partnership, association or other business organization or
division thereof, other than acquisitions in which the fair market value
of the total consideration (including the value of indebtedness acquired
or assumed), determined as of the date of any definitive agreement
relating thereto, does not
-38-
exceed $100,000,000 in the aggregate and that would not prevent or delay
beyond the End Date the consummation of the Merger, the Subsequent Merger
or any of the other transactions contemplated hereby;
(iv) adopt a plan or agreement of complete or partial liquidation or
dissolution of Parent;
(v) sell or transfer all or substantially all of the assets of
Parent and its Subsidiaries, taken as a whole;
(vi) increase, or take any action to increase, the size of the Board
of Directors of Parent, except for adding up to two directors (one of whom
will be added to comply with Section 5.16); or
(vii) authorize or announce an intention to do any of the foregoing
or enter into any Contract to do any of the foregoing.
Notwithstanding the foregoing, nothing contained in this Agreement
shall prohibit Parent from adopting a stockholder rights plan (so long as any
such plan shall not prevent or delay beyond the End Date the consummation of the
Merger, the Subsequent Merger or any of the other transactions contemplated
hereby) and issuing securities pursuant thereto or amending the Parent Charter
to increase the number of shares authorized thereby.
Section 4.2 No Solicitation. (a) From the Original Agreement Date
until the earlier of the Effective Time or the date on which this Agreement is
terminated in accordance with the terms hereof, the Company shall not, nor shall
it permit any of its Subsidiaries to, nor shall the Company authorize or permit
any officer, director or employee of or any financial advisor, attorney or other
advisor or representative of, the Company or any of its Subsidiaries to,
directly or indirectly, (i) solicit, initiate or knowingly encourage the
submission of, any Takeover Proposal (as hereinafter defined); (ii) enter into
any letter of intent or agreement with respect to any Takeover Proposal; or
(iii) participate in any discussions or negotiations regarding, or furnish to
any Third Party (as hereinafter defined) any information with respect to, or
take any other action to knowingly facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal; provided, however, that nothing contained in this Agreement
shall prevent the Company or its Board of Directors from (A) complying with
Rules 14d-9 and 14e-2 under the Exchange Act or (B) furnishing non-public
information regarding the Company to, or entering into discussions or
negotiations with, any Third Party in connection with an unsolicited bona fide
written Takeover Proposal by such Third Party, if and only to the extent that,
with respect to clause (B) above, (1) such Takeover Proposal is or is reasonably
likely to result in a Superior Proposal in the good faith judgment of the Board
of Directors of the Company, after consultation with its outside financial
advisors, (2) prior to furnishing such non-public information to, or entering
into discussions or negotiations with, such Third Party, such Board of Directors
receives from such Third Party an executed confidentiality agreement with
provisions not less favorable to the Company than those contained in the
Confidentiality Agreement (as hereinafter defined) and the Company provides 24
hours advance written notice to Parent of the identity of the Third Party or
entity making, and the proposed terms and conditions of, such Takeover Proposal,
(3) the Company shall have provided (or shall
-39-
contemporaneously provide) to Parent a copy of all written materials delivered
to the Third Party making the Takeover Proposal in connection with such Takeover
Proposal and made available to Parent all materials and information made
available to the Third Party making the Takeover Proposal in connection with
such Takeover Proposal, in each case, only to the extent not previously provided
or made available to the other parties hereto, and (4) the Company shall have
fully complied with this Section 4.2. For purposes of this Agreement, (i)
"Takeover Proposal" means any inquiry, offer or proposal by a Third Party
relating to any Acquisition Transaction; (ii) "Acquisition Transaction" means
any transaction or series of related transactions other than the Merger
involving: (A) any acquisition or purchase from the Company by any Third Party
of more than a 15% interest in the total outstanding voting securities of the
Company or any of its Subsidiaries or any tender offer or exchange offer that if
consummated would result in any Third Party beneficially owning 15% or more of
the total outstanding voting securities of the Company or any of its
Subsidiaries or any merger, consolidation, business combination or similar
transaction involving the Company pursuant to which the stockholders of the
Company immediately preceding such transaction hold less than 85% of the equity
interests in the surviving or resulting entity of such transaction, (B) any
sale, lease, exchange, transfer, license, acquisition or disposition of more
than 15% of the assets of the Company and its Subsidiaries, taken as a whole, or
(C) any liquidation, dissolution, recapitalization or other significant
corporate reorganization of the Company; (iii) "Superior Proposal" means a bona
fide binding written proposal reasonably capable of being consummated in the
good faith judgment of the Board of Directors of the Company made by a Third
Party to acquire, directly or indirectly, pursuant to a tender offer, exchange
offer, merger, consolidation or other business combination, all or substantially
all of the assets of the Company and its Subsidiaries, taken as a whole, or in
excess of 50% of the outstanding voting securities of the Company and as a
result of which the stockholders of the Company immediately preceding such
transaction would cease to hold at least 50% of the equity interests in the
surviving or resulting entity of such transaction, on terms that in the
reasonable good faith judgment of the Board of Directors of Company, after
consultation with its outside financial advisors, would cause the proposal, if
consummated, to be more favorable to Company's stockholders from a financial
point of view than the Merger and the Subsequent Merger, taken together, taking
into account all the terms and conditions of such proposal and this Agreement
(including any proposal by either party to amend the terms of this Agreement);
and (iv) "Third Party" means any Person or group (as defined under Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder) other
than Parent and its Affiliates.
(b) The Company agrees that it and its Subsidiaries shall, and the
Company shall direct its and its Subsidiaries' respective officers, directors,
employees, representatives and agents to, immediately cease and cause to be
terminated any activities, discussions or negotiations with any Third Party with
respect to any Takeover Proposal. The Company shall advise Parent orally (within
48 hours) and in writing (as promptly as practicable) of (i) the receipt of any
Takeover Proposal or any inquiry with respect to or which could lead to any
Takeover Proposal; (ii) the proposed terms and conditions of such Takeover
Proposal; and (iii) the identity of the Third Party making any such Takeover
Proposal or inquiry. The Company will keep Parent fully informed on a current
basis of the status and details of any such Takeover Proposal or inquiry. The
Company also agrees that it will promptly request each Person that has
heretofore executed a confidentiality agreement in connection with any Takeover
Proposal to
-40-
return or destroy all confidential information heretofore furnished to such
Third Party by or on behalf of it or any of its Subsidiaries.
Section 4.3 Third Party Standstill Agreements. During the period
from the Original Agreement Date through the Effective Time, the Company (a)
shall not terminate, amend, modify or waive any provision of any confidentiality
agreement relating to a Takeover Proposal or standstill agreement to which the
Company or any of its Subsidiaries is a party (other than any involving Parent)
and (b) agrees to enforce, to the fullest extent permitted under applicable law,
the provisions of any such agreements, including obtaining injunctions to
prevent any breaches of such agreements and to enforce specifically the terms
and provisions thereof in any court of the United States or any state thereof
having jurisdiction; provided, that the Company shall not be required to take,
or be prohibited from taking, any action otherwise prohibited by this Section
4.3, if, in the good faith judgment of the Company's Board of Directors, after
consultation with outside counsel of the Company, such action or inaction, as
the case may be, would violate the fiduciary duties of the Company's Board of
Directors to the Company's stockholders.
Section 4.4 Reorganization. During the period from the Amendment
Date through the Effective Time, unless the other parties hereto shall otherwise
agree in writing, none of the Parent, the Company or any of their respective
Subsidiaries (including, without limitation, Sub and Sister Subsidiary) shall
take any action, which action would, to the Knowledge of Parent or the Knowledge
of the Company, respectively, jeopardize the qualification of the Merger and the
Subsequent Merger (if consummated), taken together, as a "reorganization" within
the meaning of Section 368(a) of the Code or otherwise cause special counsel to
be unable to render the tax opinions set forth in Section 1.16; provided,
however, that nothing herein shall require any party to agree to amend the terms
of this Agreement or waive any rights under this Agreement; provided, further,
that the parties acknowledge that special counsel to each of Parent and the
Company will not be able to conclude that the "continuity of interest"
requirement necessary for the Merger and Subsequent Merger (if consummated),
taken together, to so qualify will be met, and special counsel will not be able
to render the tax opinions set forth in Section 1.16, unless, prior to the
Effective Time, the per share fair market value of the Parent Common Stock
increases so that, as of the Effective Time, the aggregate fair market value of
the Per Share Stock Consideration, stated as a percentage of the aggregate fair
market value of the Per Share Merger Consideration and other cash deliverable
pursuant to the Merger (and any amounts to be paid with respect to Dissenting
Shares), is sufficient to permit special counsel to each of Parent and the
Company to conclude that the "continuity of interest" requirement will be
satisfied, and nothing herein shall be construed to require Parent, the Company,
any of their respective Subsidiaries, Sub or Sister Subsidiary to refrain from
taking any action or to take any action so as to cause the fair market value of
the Parent Common Stock to be sufficient to satisfy such requirement. Without
limiting the foregoing, if the fair market value of the Parent Common Stock does
not increase sufficiently to permit special counsel to each of Parent and the
Company to conclude that the "continuity of interest" requirement will be
satisfied, or the "continuity of interest" requirement is otherwise not
satisfied due to the fair market value of the Parent Common Stock, no party
shall be deemed to have breached any representation, covenant or agreement in
this Agreement by reason of any inability of either party's special counsel to
conclude that the Merger and Subsequent Merger (if consummated) would satisfy
such requirement or, in such event, by reason of the failure of the Subsequent
Merger to be
-41-
consummated; provided, further, that nothing in this Section 4.4 shall be
construed to require Parent to cause the Subsequent Merger to be consummated
except strictly upon satisfaction of the conditions, and in accordance with the
terms of, Section 1.16.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Company Stockholder Meeting. (a) The Company will, as
soon as practicable following the Amendment Date, duly call, give notice of,
convene and hold a meeting of stockholders (the "Company Stockholder Meeting")
to be held as promptly as practicable after the declaration of effectiveness of
the Registration Statement for the purpose of the Company's stockholders duly
approving and adopting this Agreement (the "Company Stockholder Approval"). The
Company shall ensure that the Company Stockholder Meeting is called, noticed,
convened, held and conducted and that all proxies solicited by it in connection
with the Company Stockholder Meeting are solicited in compliance with the DGCL,
its certificate of incorporation and bylaws, the rules of Nasdaq and all other
applicable laws, as applicable.
(b) The Company shall, through its Board of Directors, recommend to
its stockholders approval and adoption of this Agreement, shall use all
reasonable efforts to solicit such approval and adoption by its stockholders and
such Board of Directors or committee thereof shall not withhold, withdraw,
qualify, amend or modify in a manner adverse to Parent such recommendation or
its declaration that this Agreement and the Merger are advisable and fair to and
in the best interest of the Company and its stockholders or resolve or propose
to do any of the foregoing, except if (i) the Company has complied with Section
4.2 and (ii) in the good faith judgment of the Company's Board of Directors,
after consultation with the outside counsel of the Company, the making of, or
the failure to withhold, withdraw, qualify, amend or modify, such recommendation
would violate the fiduciary duties of such Board of Directors to the Company's
stockholders under applicable law. The Company agrees to submit this Agreement
to its stockholders for approval and adoption whether or not the Board of
Directors of the Company determines at any time subsequent to the Original
Agreement Date that this Agreement is no longer advisable and recommends that
the stockholders of the Company reject it.
Section 5.2 Preparation of the Registration Statement and the Proxy
Statement. As promptly as practicable after the Amendment Date (and within
twenty (20) days if reasonably possible), Parent and the Company shall promptly
prepare and the Company shall promptly file with the SEC the Proxy Statement and
Parent shall prepare and file with the SEC the Registration Statement, in which
the Proxy Statement will be included as a prospectus, in each case, by means of
an amendment to that certain registration statement on Form S-4 (Reg. No.
333-116794). Each of Parent and the Company shall promptly respond to any
comments from the SEC and shall use its reasonable best efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing. Each of Parent and the Company will notify the
other promptly upon the receipt of any comments from the SEC or its staff in
connection with the filing of, or amendments or supplements to, the Registration
Statement and/or the Proxy Statement. Whenever any event occurs which, in the
good faith judgment of Parent or the Company, as the case may be, is required to
be set forth in an
-42-
amendment or supplement to the Proxy Statement or the Registration Statement,
Parent or the Company, as the case may be, will promptly inform the other of
such occurrence and cooperate in filing with the SEC and/or mailing to
stockholders of Parent and/or the Company, such amendment or supplement. Parent
shall provide the Company (and its counsel) with a reasonable opportunity to
review and comment on the Registration Statement and the Company shall provide
Parent (and its counsel) with a reasonable opportunity to review and comment on
the Proxy Statement, and, in either case, any amendment or supplement thereto,
prior to filing such with the SEC, and each of Parent and the Company will
provide the other with a copy of such filings made with the SEC. The Company
will reasonably cooperate with Parent with respect to such filings. As promptly
as practicable after the Registration Statement shall have become effective, the
Company shall distribute the Proxy Statement to its stockholders. Parent shall
also take any actions reasonably required to be taken under applicable state
securities laws in connection with the Share Issuance.
Section 5.3 Access to Information. Subject to currently existing
contractual and legal restrictions applicable to Parent or to the Company or any
of their respective Subsidiaries, as the case may be, each of Parent and the
Company shall, and shall cause each of its Subsidiaries to, upon reasonable
notice, afford to the accountants, counsel, financial advisors and other
representatives of the other reasonable access to, and permit them to make such
inspections as they may reasonably require of, during normal business hours
during the period from the Original Agreement Date through the Effective Time,
all of its employees, properties, books, contracts, commitments and records
(including the work papers of independent accountants, if available and subject
to the consent of such independent accountants), and, during such period, each
of Parent and the Company shall, and shall cause each of its Subsidiaries to,
furnish promptly to the other (i) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (ii) all other information
concerning its business, properties and personnel as the other may reasonably
request; provided, however, that either the Company or Parent, as the case may
be, may restrict the foregoing access to the extent that disclosure of any such
information or document would result in the loss of the attorney-client
privilege. All requests for information and access made pursuant to this Section
5.3 shall be directed to an executive officer of either Parent or the Company,
as applicable, or such person as may be designated by its executive officers. No
investigation pursuant to this Section 5.3 shall affect any representation or
warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto. All information obtained pursuant to this
Section 5.3 shall be kept confidential and used only in accordance with the
Confidentiality Agreement, dated April 28, 2003, between Parent and the Company
(the "Confidentiality Agreement").
Section 5.4 Compliance with the Securities Act. Section 5.4 of the
Company Letter contains a list identifying all Persons who, as of the Original
Agreement Date, may be deemed to be "affiliates" of the Company as that term is
used in paragraphs (c) and (d) of Rule 145 under the Securities Act (the "Rule
145 Affiliates"). The Company has provided Parent with written agreements in
substantially the form of Exhibit C hereto (the "Company Affiliate Letter"),
executed by each of such Persons identified in the foregoing list. Prior to the
Effective Time, the Company shall amend and supplement Section 5.4 of the
Company Letter so as to identify all of the Company's Rule 145 Affiliates as of
immediately prior to the Effective Time and use its reasonable best efforts to
cause each additional Person who is identified as a Rule 145
-43-
Affiliate of the Company to execute the Company Affiliate Letter. Parent shall
be entitled to place appropriate legends on the certificates evidencing any
Parent Common Stock to be received by affiliates of the Company pursuant to this
Agreement and to issue appropriate stop transfer instructions to the transfer
agent for the Parent Common Stock, consistent with the terms of the Company
Affiliate Letter.
Section 5.5 Current Nasdaq Quotation. Each of Parent and the Company
shall use its reasonable best efforts to continue the quotation of the Parent
Common Stock and the Company Common Stock on Nasdaq, respectively, during the
term of this Agreement.
Section 5.6 Fees and Expenses. (a) Except as provided in this
Section 5.6, whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement, the Merger, the Subsequent Merger
and the other transactions contemplated hereby, including the fees and
disbursements of counsel, financial advisors and accountants, shall be paid by
the party incurring such costs and expenses, provided that all printing expenses
and all filing fees (including filing fees under the Securities Act, the
Exchange Act and the HSR Act) shall be divided equally between Parent and the
Company.
(b) Notwithstanding any provision in this Agreement to the contrary,
if this Agreement is terminated (i) by the Company or Parent pursuant to Section
7.1(e) and a Takeover Proposal existed between the Original Agreement Date and
the date of the termination of this Agreement, (ii) by Parent pursuant to
Section 7.1(f) or (iii) by the Company pursuant to Section 7.1(g), then, in each
case, the Company shall (without prejudice to any other rights Parent may have
against the Company for breach of this Agreement) reimburse Parent upon demand
by wire transfer of immediately available funds to an account specified in
writing by Parent for all reasonable out-of-pocket fees and expenses incurred or
paid by or on behalf of Parent or any Affiliate of Parent in connection with
this Agreement, the Merger, the Subsequent Merger and the other transactions
contemplated herein (other than wages, salaries or employee benefits paid or due
to employees of Parent or any of its Affiliates), including all fees and
expenses of counsel, investment banking firms, accountants and consultants;
provided, however, that the Company shall not be obligated to make payments
pursuant to this Section 5.6(b) in excess of $10,000,000 in the aggregate.
(c) Notwithstanding any provision in this Agreement to the contrary,
if (i) this Agreement is terminated by the Company or Parent pursuant to Section
7.1(e) and a Takeover Proposal existed between the Original Agreement Date and
the date of the termination of this Agreement and, concurrently with or within
twelve months after any such termination a Company Acquisition Transaction
occurs or the Company or any of its Subsidiaries shall enter into any letter of
intent, agreement in principle, acquisition agreement or other similar agreement
with respect to a Company Acquisition Transaction, (ii) this Agreement is
terminated by Parent pursuant to Section 7.1(f) or (iii) this Agreement is
terminated by the Company pursuant to Section 7.1(g), then, in each case, the
Company shall (in addition to any obligation under Section 5.6(b) and without
prejudice to any other rights that Parent may have against the Company for a
breach of this Agreement) pay to Parent a fee (the "Termination Fee") of
$44,445,000 by wire transfer of immediately available funds to an account
specified in writing by Parent, such payment to be made promptly, but in no
event later than, in the case of clause (i), the earlier to occur of such
Company Acquisition Transaction and the entry into such letter of intent,
-44-
agreement in principle, acquisition agreement or similar agreement with respect
to a Company Acquisition Transaction, in the case of clause (ii), one business
day after such termination, or, in the case of clause (iii), on the date of such
termination.
(d) Notwithstanding any provision in this Agreement to the contrary,
if this Agreement is terminated by the Company pursuant to Section 7.1(h), then
Parent shall (without prejudice to any other rights the Company may have against
Parent for breach of this Agreement) reimburse the Company upon demand by wire
transfer of immediately available funds to an account specified in writing by
the Company for all reasonable out-of-pocket fees and expenses incurred or paid
by or on behalf of the Company or any Affiliate of the Company in connection
with this Agreement, the Merger, the Subsequent Merger and the other
transactions contemplated herein (other than wages, salaries or employee
benefits paid or due to employees of the Company or any of its Affiliates),
including all fees and expenses of counsel, investment banking firms,
accountants and consultants; provided, however, that Parent shall not be
obligated to make payments pursuant to this Section 5.6(d) in excess of
$10,000,000 in the aggregate.
(e) Notwithstanding any provision in this Agreement to the contrary,
if this Agreement is terminated by the Company pursuant to Section 7.1(h), then
Parent shall (in addition to any obligation under Section 5.6(d) and without
prejudice to any other rights that the Company may have against Parent for a
breach of this Agreement) pay to the Company a fee of $44,445,000 upon demand by
wire transfer of immediately available funds to an account specified in writing
by the Company.
(f) Each of the parties hereto acknowledges that the agreements
contained in Sections 5.6(b), 5.6(c), 5.6(d) and 5.6(e) are an integral part of
the Merger, the Subsequent Merger and the other transactions contemplated by
this Agreement, and that, without these agreements the Company or Parent, as the
case may be, would not enter into this Agreement; accordingly, if the Company or
Parent, as the case may be, fails to promptly pay the amounts due pursuant to
Sections 5.6(b) and 5.6(c) or Sections 5.6(d) and 5.6(e), as the case may be,
and, in order to obtain such payment Parent or the Company, as the case may be,
commences a suit which results in a judgment against the other party for any of
the amounts set forth in Sections 5.6(b) and 5.6(c) or Sections 5.6(d) and
5.6(e), as the case may be, such other party shall pay to Parent or the Company,
as the case may be, its costs and expenses (including attorneys' fees) in
connection with such suit, together with interest on the amounts due pursuant to
Sections 5.6(b) and 5.6(c) or Sections 5.6(d) and 5.6(e), as the case may be, at
the prime rate of Citibank, N.A. in effect on the date such payment was required
to be made.
(g) For purposes of this Section 5.6, "Company Acquisition
Transaction" means any transaction or series of transactions involving: (i) a
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company pursuant to which the
stockholders of the Company immediately preceding such transaction hold less
than seventy percent (70%) of the aggregate equity interests in the surviving or
resulting entity of such transaction or any direct or indirect parent thereof,
(ii) a sale or other disposition by the Company or any of its Subsidiaries of
assets representing in excess of twenty percent (20%) of the aggregate fair
market value of the assets of the Company and its Subsidiaries, taken as a
whole, immediately prior to such sale or other disposition, or (iii) the
-45-
acquisition by any Third Party (including by way of a tender offer or an
exchange offer or issuance by the party or Third Party), directly or indirectly,
of beneficial ownership or a right to acquire beneficial ownership of shares
representing in excess of twenty percent (20%) of the voting power of the
then-outstanding shares of capital stock of the Company.
For purposes of this Section 5.6, each of the parties hereto
acknowledges that this Agreement may only be deemed to be terminated by a party
hereto pursuant to a single subsection of Section 7.1.
Section 5.7 Company Stock Plans and Company Stock Purchase Plan.
(a) Except as provided in Section 5.7(c), not later than the
Effective Time, each Company Stock Option (and related stock appreciation right
("SAR")) which is outstanding immediately prior to the Effective Time pursuant
to the Company Stock Option Plans shall be assumed by Parent and become and
represent an option and related SAR to purchase the number of shares of Parent
Common Stock (a "Substitute Option") (decreased to the nearest full share)
determined by multiplying (i) the number of shares of Company Common Stock
subject to such Company Stock Option immediately prior to the Effective Time by
(ii) the Option Exchange Ratio (as hereinafter defined), at an exercise price
per share of Parent Common Stock (rounded up to the nearest cent) equal to the
exercise price per share of Company Common Stock under such Company Stock Option
immediately prior to the Effective Time divided by the Option Exchange Ratio.
After the Effective Time, except as provided above in this Section 5.7(a), each
Substitute Option shall be exercisable upon the same terms and conditions as
were applicable under the related Company Stock Option immediately prior to the
Effective Time, after giving effect to any acceleration, lapse or other vesting
occurring by operation of the Merger and the Subsequent Merger. The Company
shall take all necessary action to implement and make effective the provisions
of this Section 5.7(a). For purposes of this Agreement, the "Option Exchange
Ratio" means the sum of (A) the Exchange Ratio plus (B) a ratio, the numerator
of which is the Per Share Cash Consideration and the denominator of which is the
average of the last reported sale price per share of Parent Common Stock on
Nasdaq on each of the 10 trading days immediately preceding the Effective Time.
For purposes of this Section 5.7 and Section 5.17, "Company Stock Options" shall
include any options to acquire Company Common Stock granted in accordance with
Section 4.1(a)(ii)(C).
(b) As of the Effective Time, all Unvested Share Restrictions (as
hereinafter defined), including all repurchase and forfeiture rights held by the
Company, with respect to each Unvested Company Share (as hereinafter defined)
shall be and hereby are assigned to Parent, and the shares of Parent Common
Stock issued and the cash paid upon the conversion of the Unvested Company
Shares in the Merger shall continue to be unvested and subject to the same
Unvested Share Restrictions which applied to such Unvested Company Shares
immediately prior to the Effective Time, after giving effect to any
acceleration, lapse or other vesting occurring by operation of the Merger and
the Subsequent Merger. The certificates representing such shares of Parent
Common Stock shall accordingly be marked with appropriate legends noting such
Unvested Share Restrictions. The Company shall take all actions necessary to
ensure that, from and after the Effective Time, Parent (or its assignee) shall
be entitled to exercise the rights held by the Company immediately prior to the
Effective Time with respect to all Unvested Share Restrictions. For purposes of
this Agreement, (i) "Unvested Company Share" means each
-46-
outstanding share of Company Common Stock issued under a Company Stock Option
Plan or otherwise which is subject to any Unvested Share Restrictions and (ii)
"Unvested Share Restrictions" means all repurchase, cancellation, forfeiture,
vesting and other conditions or restrictions applicable to an Unvested Company
Share.
(c) If compliance with the provisions of Section 5.7(a) would result
in the Share Issuance requiring approval of the holders of Parent Common Stock,
then Section 5.7(a) shall not apply, and in lieu thereof each Company Stock
Option (and related SAR) which is outstanding immediately prior to the Effective
Time pursuant to the Company Stock Option Plans shall be assumed by Parent and
become and represent (i) a Substitute Option (subject to vesting in accordance
with the remaining vesting schedule applicable to the Company Stock Option) to
acquire the number of shares of Parent Common Stock (decreased to the nearest
full share) determined by multiplying the number of shares of Company Common
Stock subject to such Company Stock Option immediately prior to the Effective
Time by the Exchange Ratio, at an exercise price per share of Parent Common
Stock (rounded up to the nearest cent) equal to the exercise price per share of
Company Common Stock under such Company Stock Option immediately prior to the
Effective Time multiplied by the Stock Ratio (as hereinafter defined), and
divided by the Exchange Ratio and (ii) a right to receive one or more cash
payments in an aggregate amount equal to the product of (x) the number of shares
of Company Common Stock subject to such Company Stock Option immediately prior
to the Effective Time and (y) the difference of the Per Share Cash Consideration
minus the product of (A) the exercise price per share of Company Common Stock
under such Company Stock Option immediately prior to the Effective Time, and (B)
the Cash Ratio (as hereinafter defined); provided, that the cash payments
described in clause (ii) shall be subject to, and payable upon the satisfaction
of, vesting conditions established by Parent which shall be no less favorable to
the recipient than the vesting conditions of the Company Stock Option to which
such cash payments relate, and, with respect to Company Stock Options which are
vested at the Effective Time, shall be payable as soon as practicable after the
Effective Time. The Stock Ratio equals the Exchange Ratio divided by the Option
Exchange Ratio, and the Cash Ratio equals one minus the Stock Ratio. After the
Effective Time, except as provided above in this Section 5.7(c), each Substitute
Option shall be exercisable upon the same terms and conditions as were
applicable under the related Company Stock Option immediately prior to the
Effective Time, after giving effect to any acceleration, lapse or other vesting
occurring by operation of the Merger and the Subsequent Merger. The Company and
Parent shall take all necessary action to implement and make effective the
provisions of this Section 5.7(c).
(d) Within ten (10) business days after the Effective Time, Parent
shall file a registration statement on Form S-8 (or any successor or other
appropriate form) with respect to Parent Common Stock subject to Substitute
Options or shall cause Substitute Options to be deemed to be issued pursuant to
a Parent Stock Plan for which a sufficient number of shares of Parent Common
Stock have been previously registered pursuant to an appropriate registration
form.
Section 5.8 Reasonable Best Efforts. (a) Upon the terms and subject
to the conditions set forth in this Agreement, each of Parent and the Company
agrees to use its reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or
-47-
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger, the Subsequent Merger and the other transactions
contemplated by this Agreement, including using reasonable best efforts to
accomplish the following: (i) causing the conditions precedent set forth in
Article VI to be satisfied; (ii) obtaining all necessary actions or nonactions,
waivers, consents, approvals, orders and authorizations from Governmental
Entities and from Persons other than Governmental Entities and the making of all
necessary registrations, declarations and filings (including registrations,
declarations and filings with Governmental Entities, if any) and the taking of
all reasonable steps as may be necessary to avoid any suit, claim, action,
investigation or proceeding by any Governmental Entity; (iii) defending any
suits, claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement, the consummation of the Merger, the
Subsequent Merger or any of the other transactions contemplated hereby,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed; and (iv) the execution
or delivery of any additional instruments reasonably necessary to consummate the
Merger, the Subsequent Merger and the other transactions contemplated by, and to
fully carry out the purposes of, this Agreement.
(b) Each of Parent and the Company shall notify the other promptly
upon the receipt of: (i) any comments from any officials of any Governmental
Entity in connection with any filings made pursuant hereto and (ii) any request
by any officials of any Governmental Entity for amendments or supplements to any
filings made pursuant to, or information provided to comply in all material
respects with, any law. Whenever any event occurs that is required to be set
forth in an amendment or supplement to any filing made pursuant hereto, Parent
or the Company, as the case may be, will promptly inform the other of such
occurrence and cooperate in filing with the applicable Governmental Entity such
amendment or supplement.
(c) Each party shall use all reasonable best efforts to not take any
action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or result
in a breach of any covenant made by it in this Agreement.
(d) Notwithstanding anything to the contrary contained in this
Agreement, (i) neither Parent nor any of its Affiliates shall be required to
divest or hold separate or otherwise take or commit to take any action that
limits its freedom of action with respect to, or its ability to retain, the
Company or any of the businesses, product lines or assets of Parent, the Company
or any of their respective Subsidiaries or Affiliates, unless such action or
actions would not, individually or in the aggregate, reasonably be expected to
materially impair the benefits sought to be derived by Parent from the
transactions contemplated by this Agreement, including the Merger and the
Subsequent Merger, or have a Material Adverse Effect on Parent and (ii) the
Company shall not, without Parent's prior written consent, take or agree to take
any such action.
(e) At or prior to the Effective Time, the Company shall deliver to
Parent all consents, waivers or approvals obtained by the Company with respect
to the consummation of the Merger, the Subsequent Merger and the other
transactions contemplated by this Agreement.
Section 5.9 Public Announcements. The initial press release
concerning this Agreement shall be a joint press release of Parent and the
Company. Thereafter, Parent and the Company will not issue any press release
with respect to the Merger, the Subsequent Merger or
-48-
any of the other transactions contemplated by this Agreement or otherwise issue
any written public statements with respect to such transactions without prior
consultation with the other party, except as may be required by applicable law
or by obligations pursuant to any listing agreement with any national securities
exchange or the rules of Nasdaq.
Section 5.10 State Takeover Laws. If any "fair price," "business
combination" or "control share acquisition" statute or other similar statute or
regulation shall become applicable to the Merger, the Subsequent Merger or any
of the other transactions contemplated hereby, Parent and the Company and their
respective Boards of Directors shall use their reasonable best efforts to grant
such approvals and take such actions as are necessary so that the Merger, the
Subsequent Merger and the other transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to minimize the effects of any such statute or regulation on the
Merger, the Subsequent Merger and the other transactions contemplated hereby.
Section 5.11 Indemnification; Directors and Officers Insurance.
(a) Subject to applicable law, for six years from and after the
Effective Time, Parent and the Surviving Corporation shall, jointly and
severally, (i) fulfill and honor in all respects the obligations of the Company
for indemnification and advancement of expenses in favor of each past and
present officer and director of the Company (each, an "Indemnified Party") under
the Company Charter, the Company Bylaws or any indemnification agreement set
forth in Section 5.11 of the Company Letter to which such Indemnified Party is a
party and (ii) shall indemnify and hold harmless each Indemnified Party against
any costs or expenses (including but not limited to reasonable attorneys' fees
and expenses), judgments, fines, losses, claims, settlements, damages or
liabilities (collectively, "Costs") incurred in connection with any threatened
or pending claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative (each, a "Proceeding"), whether
asserted or claimed prior to, at or after the Effective Time, if and whenever
such Indemnified Party is or was a party to or a subject of, or is threatened to
be made a party to or a subject of, such Proceeding arising out of or pertaining
to acts or omissions or alleged acts or omissions of the Indemnified Party
occurring at or prior to the Effective Time (including, without limitation, for
acts or omissions occurring in connection with the approval of this Agreement
and the consummation of the transactions contemplated hereby) in his or her
capacity as an officer or director of the Company or its wholly-owned
Subsidiaries, to the fullest extent permitted under the DGCL (and Parent shall
also advance expenses to each Indemnified Party as incurred to the fullest
extent permitted by the DGCL, provided that Indemnified Party to whom expenses
are advanced provides an undertaking to repay such advances if it is ultimately
determined that such expenses can not be reimbursed or indemnified under the
DGCL to the extent such undertaking is required by the DGCL). The provisions of
Section 5.11(a)(ii) shall not require Parent to indemnify an Indemnified Party
hereunder in connection with a Proceeding commenced by such Indemnified Party.
(b) Parent shall provide and maintain in effect, or shall cause the
Surviving Corporation to provide and maintain in effect, for an aggregate period
of not less than six (6) years from the Effective Time, for the benefit of those
Persons who are covered by the Company's directors' and officers' liability
insurance policy as of the Original Agreement Date
-49-
an insurance and indemnification policy that provides coverage for acts or
omissions occurring at or prior to the Effective Time (including, without
limitation, for acts or omissions occurring in connection with the approval of
this Agreement and the consummation of the transactions contemplated hereby)
(the "D&O Insurance") that is at least as favorable (with respect to coverage,
amounts, limits, deductibles and conditions) to the Company's existing policy;
provided, however, that Parent and the Surviving Corporation shall not be
required to pay an annual premium for the D&O Insurance in excess of 200% of the
annual premium currently paid by the Company for such coverage (the "Company's
Current Premium"). If such premiums for such insurance would at any time exceed
200% of the Company's Current Premium, then Parent shall maintain the maximum
amount of coverage under a policy having the same deductible as is available for
such 200% of the Company's Current Premium. The Company represents and warrants
to Parent that the Company's Current Premium is $1,240,000. Notwithstanding the
foregoing, Parent shall use its reasonable best efforts to cause coverage to be
extended under the Company's D&O Insurance by obtaining a six-year "tail"
policy, provided that the cost of such tail coverage does not exceed $3 million.
If Parent is unable to obtain such tail policy, Parent shall provide the Company
with notice thereof at least 5 business days prior to the Effective Time. If the
Company receives such notice from Parent, the Company may purchase such tail
policy, provided that the cost of such tail coverage does not exceed $3 million.
Such tail policy shall satisfy Parent's and the Surviving Corporation's
obligations under the provisions of this Section 5.11(b).
(c) The provisions of this Section 5.11 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties and
their heirs and estates and such provisions may not be terminated or amended in
any manner adverse to the interests of such Person without his or her prior
consent.
(d) Notwithstanding anything herein to the contrary, if any claim,
action, suit, proceeding or investigation is made against an Indemnified Party,
for which such Indemnified Party is entitled to indemnification hereunder, on or
prior to the sixth anniversary of the Effective Time, the provisions of this
Section 5.11 shall continue in effect, solely with respect to such matters,
until the final disposition of such claim, action, suit, proceeding or
investigation.
(e) In the event the Parent or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other Person and shall not be the continuing or surviving corporation of such
consolidation or merger, or (ii) transfers all or substantially all of its
properties to any Person, then, and in each case, to the extent necessary to
effect such assumption, proper provision shall be made so that the successors
and assigns of the Parent and the Surviving Corporation, as the case may be,
shall assume the obligations set forth in this Section 5.11.
Section 5.12 Notification of Certain Matters. Parent shall use its
reasonable best efforts to give prompt notice to the Company, and the Company
shall use its reasonable best efforts to give prompt notice to Parent, of: (i)
the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which it has Knowledge and which would be reasonably likely
to cause (x) any representation or warranty of the notifying party contained in
this Agreement to be untrue or inaccurate in any material respect or (y) any
covenant, condition or agreement of the notifying party contained in this
Agreement not to be complied with or satisfied
-50-
in all material respects, (ii) any material failure of the notifying party to
comply in a timely manner with or satisfy any material covenant, condition or
agreement to be complied with or satisfied by it hereunder or (iii) any change,
event or effect which would, individually or in the aggregate, have a Material
Adverse Effect on the notifying party; provided, however, that the delivery of
any notice pursuant to this Section 5.12 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice; and provided,
further, that a failure to comply with this Section 5.12 shall not cause the
failure of any condition set forth in Article VI to be satisfied unless the
underlying untruth, inaccuracy, noncompliance, failure or Material Adverse
Effect would independently result in the failure of a condition set forth in
Article VI to be satisfied.
Section 5.13 Employee Benefit Plans and Agreements. (a) Parent
agrees that it will cause the Surviving Corporation from and after the Effective
Time to honor all Company Plans and all employment, severance and change in
control agreements entered into by the Company prior to the Original Agreement
Date and described in Section 3.12 of the Company Letter; provided, however,
that, except as provided in this Section 5.13, nothing in this Agreement shall
be interpreted as limiting the power of Parent or the Surviving Corporation to
amend or terminate any Company Plan or any other individual employee benefit
plan, program, Contract or policy (provided that such amendment or termination
is permitted by its terms) or as requiring Parent or the Surviving Corporation
to offer to continue (other than as required by its terms) any written
employment contract. Except as otherwise provided herein, following the
Effective Time and continuing at least until December 31, 2004, employees of the
Company and its Subsidiaries (i) shall continue to participate in all "welfare
plans" and "pension plans," as such terms are defined in Sections 3(1) and 3(2),
respectively, of ERISA, which are maintained by the Company and in effect
immediately prior to the Effective Time and (ii) shall be eligible for benefits
other than those described in clause (i) ("Non-ERISA Benefits") which in the
aggregate are substantially comparable to the Non-ERISA Benefits provided by the
Company immediately prior to the Effective Time; provided, however, that the
employee stock purchase plans maintained by Parent and the Company shall be
deemed comparable to each other for this purpose. After December 31, 2004,
employees of the Company and its Subsidiaries shall be eligible for the Parent
Plans on the same terms as such plans and arrangements are generally offered
from time to time to employees of Parent and its Subsidiaries in comparable
positions.
(b) Parent shall cause each Parent Plan covering employees of the
Company or its Subsidiaries to recognize prior service of such employees with
the Company and its Subsidiaries or their predecessors (to the extent recognized
under the analogous Company Plans) as service with Parent and its Subsidiaries
for purposes of eligibility (including eligibility for early retirement
benefits) and vesting (but not benefit accrual) under any Parent Plan that is a
"pension plan" (as defined in Section 3(2) of ERISA).
(c) To the extent any employee of the Company or its Subsidiaries
first becomes eligible to participate in a Parent Plan that is a "welfare plan,"
as defined in Section 3(1) of ERISA, after January 1, 2005, Parent shall take
such action as is appropriate to effect the integration of such employee into
such Parent Plan, which shall include (i) waiving all pre-existing conditions
and waiting periods with respect to participation and coverage requirements
applicable to such employee and his or her eligible dependents under such Parent
Plan, except to the extent such pre-existing conditions or waiting periods
applied immediately prior thereto
-51-
under the analogous Company Plan and (ii) providing such employee and his or her
eligible dependents with credit for any co-payments and deductibles paid prior
to becoming eligible to participate in such Parent Plan under an analogous
Company Plan (to the same extent that such credit was given under such Company
Plan) in satisfying any applicable deductible or annual maximum out-of-pocket
requirements under such Parent Plan.
(d) Following the Effective Time, employees of the Company and its
Subsidiaries shall accrue vacation under a policy maintained by Parent for
employees in comparable positions; provided, however, that no such employee
shall accrue vacation at a rate less than the rate at which such employee was
accruing vacation for the calendar year in which the Effective Time occurs under
the policy maintained by the Company.
(e) The Company shall amend the employee sabbatical program
maintained by the Company immediately prior to the Effective Time (the
"Sabbatical Program") to terminate the provision of any benefits thereunder on
or after the Effective Time, except in accordance with this Section 5.13(e).
Each person who is employed by the Company immediately prior to the Effective
Time and who under the terms of the Sabbatical Program is or is expected to be
eligible to begin a sabbatical prior to January 1, 2006 shall be permitted to
take such sabbatical, subject to the terms of the Sabbatical Program and such
other terms and conditions mutually acceptable to the Company and Parent, and
provided such sabbatical is completed within 12 months after the date on which
the employee's eligibility commences. If any such employee is unable to take a
sabbatical, due to business or personal reasons approved by the Surviving
Corporation, then such employee shall receive a cash payment from the Surviving
Corporation in an amount equal to six times such employee's weekly rate of base
pay, subject to applicable tax withholding requirements. Each person who is
employed by the Company immediately prior to the Effective Time and who under
the terms of the Sabbatical Program is not and is not expected to be eligible to
take a sabbatical prior to January 1, 2006 shall, in lieu of the benefits
otherwise provided under the Sabbatical Program, receive a cash payment from the
Surviving Corporation, payable as soon as administratively practicable after the
Effective Time, in an amount equal to the product of (i) six times the
employee's weekly rate of base pay and (ii) a fraction, the numerator of which
is the number of months of eligibility service credited to such employee under
the Sabbatical Program immediately prior to the Effective Time, rounded up to
the nearest whole month, and the denominator of which is 60, subject to
applicable tax withholding requirements. No employee shall receive a cash
payment pursuant to this Section 5.13(e) in excess of six times such employee's
weekly rate of base pay.
(f) Parent shall cause the Surviving Corporation (or any successor
thereto) (i) to maintain the Company's Change-in-Control Severance Plan, as in
effect on the Original Agreement Date, for a period not less than six months
after the Effective Time, and (ii) to maintain the severance plan and agreements
applicable to former employees of Marconi, as set forth in Section 5.13(f) of
the Company Letter, through December 31, 2004.
(g) Parent shall cause the Surviving Corporation (or any successor
thereto) to pay the cash bonuses under the terms of the Company's Management
Incentive Plan (the "MIP") for the year ending December 31, 2004, and each of
the quarters ending therein, to those persons employed by the Company or its
Subsidiaries immediately before the Effective Time and who are eligible
thereunder, equal to a percentage of base salary based upon actual performance
-52-
(provided, that Parent shall be entitled to make such adjustments in the
performance goals of the MIP as it shall deem appropriate in light of any
changes in circumstance following the Effective Time that do not materially
reduce either the amount as a percentage of base compensation or the likelihood
of achievement of the goals). Notwithstanding anything to the contrary contained
herein, any employee whose employment terminates prior to December 31, 2004 due
to an involuntary termination by Parent or any of its Affiliates (other than as
a result of death, disability or for cause) or a voluntary termination by such
employee for "good reason" or pursuant to a "qualifying resignation" (as defined
in the severance plan or agreement pursuant to which such employee is eligible
for severance benefits) shall be entitled to (i) a prorated bonus for the
quarter during which the employee's employment terminates, based on the
employee's period of employment during such quarter, (ii) the bonus earned for
any prior quarter during 2004 but not yet paid and (iii) a prorated bonus for
the "fifth quarter," within the meaning of the MIP, based on the employee's
period of employment during 2004, and in each case based on the employee's
annualized base salary and the achievement of actual performance goals. Bonus
payments pursuant to this Section 5.13 shall be in addition to any benefits to
which the employee is entitled under any applicable severance plan or agreement.
Section 5.14 Nasdaq. Parent shall use its reasonable best efforts to
cause the shares of Parent Common Stock to be issued in the Merger to be
approved for listing on Nasdaq, subject to official notice of issuance, prior to
the Effective Time. The Surviving Corporation shall use its reasonable best
efforts to cause its shares of Common Stock and associated Rights to no longer
be quoted on Nasdaq and to be de-registered under the Exchange Act as soon as
practicable following the Effective Time.
Section 5.15 Rights Agreement. Without the prior written consent of
Parent, the Company shall not redeem the Rights issued under the Rights
Agreement or amend or terminate the Rights Agreement prior to the Effective Time
unless required to do so by a court of competent jurisdiction.
Section 5.16 Board of Directors Representative. Immediately after
the Effective Time, Parent shall appoint Xxxx X. Xxxxxxxxx or such other person
to be agreed upon by Parent and the Company prior to the Effective Time to the
Board of Directors of Parent as a Class I director. Prior to such appointment,
the Board of Directors of Parent shall take all necessary action to increase the
size of the Board of Directors of Parent as necessary to comply with the
foregoing sentence.
Section 5.17 Section 16 Matters. The Board of Directors of the
Company and Parent shall, prior to the Effective Time, to the extent permitted
by law, take all such actions as may be necessary or appropriate pursuant to
Rule 16b-3(d) and Rule 16b-3(e) to exempt (i) the conversion of Company Common
Stock into cash or Parent Common Stock and the conversion of Company Stock
Options into Substitute Options and (ii) the acquisition of Parent Common Stock
and the right to receive Parent Common Stock (including pursuant to Substitute
Options) pursuant to the terms of this Agreement by officers and directors of
the Company subject to the reporting requirements of Section 16(a) of the
Exchange Act or by employees or directors of the Company who may become an
officer or director of Parent subject to the reporting requirements of Section
16(a) of the Exchange Act. Parent and the Company shall provide to counsel to
the
-53-
other party copies of the resolutions to be adopted by the respective Boards of
Directors to implement the foregoing.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment or waiver by Parent and the Company at or prior to
the Closing Date of the following conditions:
(a) Stockholder Approval. The Company Stockholder Approval shall
have been obtained in accordance with applicable law and the Company Charter and
the Company Bylaws.
(b) Quotation of Stock. The Parent Common Stock issuable in the
Merger shall have been authorized for quotation on Nasdaq, subject to official
notice of issuance.
(c) Certain Approvals. (i) The waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated.
(ii) All other authorizations, consents, orders, declarations or
approvals of or filings with, or terminations or expirations of waiting
periods imposed by, any Governmental Entity, which the failure to obtain,
make or occur would have the effect of making the Merger, the Subsequent
Merger or any of the other transactions contemplated hereby illegal or
would, individually or in the aggregate, have a Material Adverse Effect on
Parent (assuming the Merger and the Subsequent Merger had taken place),
shall have been obtained, shall have been made or shall have occurred.
(d) Registration Statement. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act. No
stop order suspending the effectiveness of the Registration Statement shall have
been issued by the SEC, and no proceedings for that purpose shall have been
initiated or, to the Knowledge of Parent or the Company, threatened by the SEC.
All necessary state securities or Blue Sky authorizations (including State
Takeover Approvals) shall have been received.
(e) No Order. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect
prohibiting or having the effect of making illegal the consummation of the
Merger or the Subsequent Merger (collectively, an "Order") and no Governmental
Entity shall have instituted any proceeding that is pending seeking such an
Order.
Section 6.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment or waiver by the Company at or prior to the Closing Date of the
following additional conditions:
-54-
(a) Performance of Obligations; Representations and Warranties. (i)
Each of Parent and Sub shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed on or prior to
the Closing Date; (ii) each of the representations and warranties of Parent and
Sub contained in Section 2.2 (Capital Structure), Section 2.3 (Authority),
Section 2.6 (Registration Statement and Proxy Statement), Section 2.16 (Required
Vote of Parent Stockholders) and Section 2.19 (Operations of Sub) shall be true
and correct in all material respects as of the Amendment Date and on and as of
the Closing Date as if made on and as of such date (other than, in each case,
representations and warranties which address matters only as of a certain date,
without regard for purposes of this parenthetical to the introductory paragraph
to Article II, which shall be true and correct in all material respects as of
such certain date); and (iii) each of the representations and warranties of
Parent and Sub contained in this Agreement (other than those listed in clause
(ii) immediately above), when read without any exception or qualification as to
materiality or Material Adverse Effect, shall be true and correct as of the
Amendment Date and on and as of the Closing Date as if made on and as of such
date (other than, in each case, representations and warranties which address
matters only as of a certain date, without regard for purposes of this
parenthetical to the introductory paragraph to Article II, which shall be true
and correct as of such certain date), except where the failure to be so true and
correct would not, individually or in the aggregate with respect to all such
failures, have a Material Adverse Effect on Parent or reasonably be likely to
materially adversely affect the ability of Parent to effect the Merger in
accordance with this Agreement, in the case of each of clauses (ii) and (iii) of
this Section 6.2(a) except as contemplated or permitted by this Agreement, and
the Company shall have received a certificate signed on behalf of Parent by its
Chief Executive Officer and its Chief Financial Officer to such effect.
(b) Material Adverse Effect. Since the Amendment Date, there shall
not have been any Material Adverse Effect on Parent. The Company shall have
received a certificate signed on behalf of Parent by its Chief Executive Officer
and its Chief Financial Officer to such effect.
Section 6.3 Conditions to Obligations of Parent and Sub to Effect
the Merger. The obligations of Parent and Sub to effect the Merger shall be
subject to the fulfillment or waiver by Parent at or prior to the Closing Date
of the following additional conditions:
(a) Performance of Obligations; Representations and Warranties. (i)
The Company shall have performed in all material respects each of its agreements
contained in this Agreement required to be performed on or prior to the Closing
Date; (ii) each of the representations and warranties of the Company contained
in Section 3.2 (Capital Structure), Section 3.3 (Authority), Section 3.6
(Registration Statement and Proxy Statement), Section 3.11(a)(ii) (Certain
Agreements) (only insofar as such representation and warranty relates to
contractual provisions that would be binding on Parent and its Subsidiaries
(other than the Company and its Subsidiaries) after the Merger and the
Subsequent Merger), Section 3.17 (State Takeover Statutes; Certain Charter
Provisions), Section 3.18 (Required Vote of Company Stockholders) and Section
3.21 (Rights Agreement) shall be true and correct in all material respects as of
the Amendment Date and on and as of the Closing Date as if made on and as of
such date (other than, in each case, representations and warranties which
address matters only as of a certain date, without regard for purposes of this
parenthetical to the introductory paragraph to Article III, which shall be true
and correct in all material respects as of such certain date); and
-55-
(iii) each of the representations and warranties of the Company contained in
this Agreement (other than those listed in clause (ii) immediately above), when
read without any exception or qualification as to materiality or Material
Adverse Effect, shall be true and correct as of the Amendment Date and on and as
of the Closing Date as if made on and as of such date (other than, in each case,
representations and warranties which address matters only as of a certain date,
without regard for purposes of this parenthetical to the introductory paragraph
to Article III, which shall be true and correct as of such certain date), except
where the failure to be so true and correct would not, individually or in the
aggregate with respect to all such failures, have a Material Adverse Effect on
the Company or reasonably be likely to materially adversely affect the ability
of the Company to effect the Merger in accordance with this Agreement, in the
case of each of clauses (ii) and (iii) of this Section 6.3(a) except as
contemplated or permitted by this Agreement, and Parent shall have received a
certificate signed on behalf of the Company by its Chief Executive Officer and
its Chief Financial Officer to such effect.
(b) Material Adverse Effect. Since the Amendment Date, there shall
not have been any Material Adverse Effect on the Company. Parent shall have
received a certificate signed on behalf of the Company by its Chief Executive
Officer and its Chief Financial Officer to such effect.
(c) Rights Agreement. The Rights shall not have become
nonredeemable, exercisable, distributed or triggered pursuant to the terms of
the Rights Agreement.
(d) Dissenting Stockholders. The Dissenting Shares shall include no
more than ten percent (10%) of the shares of Company Common Stock outstanding
immediately prior to the Effective Time. Parent shall have received a
certificate signed on behalf of the Company by its Chief Executive Officer and
its Chief Financial Officer to such effect.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after any approval of the
matters presented in connection with the Merger by the stockholders of the
Company or Parent:
(a) by mutual written consent of Parent and the Company;
(b) by Parent if there has been a breach of any representation,
warranty, covenant or other agreement made by the Company in this Agreement, or
any such representation and warranty shall have become untrue after the
Amendment Date, in each case such that Section 6.3(a) would not be satisfied and
such breach or condition is not curable or, if curable, is not cured within 30
days after written notice thereof is given by Parent to the Company;
(c) by the Company if there has been a breach of any representation,
warranty, covenant or other agreement made by Parent or Sub in this Agreement,
or any such representation and warranty shall have become untrue after the
Amendment Date, in each case such that Section 6.2(a) would not be satisfied and
such breach or condition is not curable or, if
-56-
curable, is not cured within 30 days after written notice thereof is given by
the Company to Parent;
(d) by either Parent or the Company if: (i) the Merger has not been
effected on or prior to the close of business on December 31, 2004 (the "End
Date"); provided, however, that the right to terminate this Agreement pursuant
to this Section 7.1(d)(i) shall not be available to any party whose failure to
fulfill any of its obligations contained in this Agreement has been the cause
of, or resulted in, the failure of the Merger to have occurred on or prior to
the aforesaid date; or (ii) any court or other Governmental Entity having
jurisdiction over a party hereto shall have issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or otherwise
prohibiting or having the effect of making illegal the consummation of the
Merger or the Subsequent Merger and such order, decree, ruling or other action
shall have become final and nonappealable;
(e) by either Parent or the Company if the Company Stockholder
Approval is not obtained at the Company Stockholder Meeting or at any
adjournment or postponement thereof; provided, however, that the Company may not
terminate this Agreement pursuant to this Section 7.1(e) if the Company has not
complied with its obligations under Sections 4.2, 5.1 and 5.2 or has otherwise
breached in any material respect any of its obligations under this Agreement in
any manner that could reasonably have caused the failure to obtain the Company
Stockholder Approval at the Company Stockholder Meeting;
(f) by Parent if at any time prior to the time when the Company
Stockholder Approval has been obtained, (i) the Board of Directors of the
Company shall not have recommended, or such Board of Directors or a committee
thereof shall have resolved not to recommend, or shall have qualified, modified,
amended or withdrawn such Board of Directors' recommendation of the approval and
adoption of this Agreement or the declaration that this Agreement and the Merger
are advisable and fair to and in the best interest of the Company and its
stockholders in a manner adverse to Parent or shall have taken any other action
or made any other statement in connection with the Company Stockholder Meeting
inconsistent with such recommendation or declaration or shall have resolved or
proposed to do any of the foregoing; (ii) the Board of Directors of the Company
or any committee thereof shall have recommended to the stockholders of the
Company any Takeover Proposal or shall have resolved to do so; or (iii) a tender
offer or exchange offer for 15% or more of the outstanding shares of capital
stock of the Company is commenced, and the Board of Directors of the Company
fails to recommend against acceptance of such tender offer or exchange offer by
its stockholders within 10 business days of such commencement (including by
taking no position with respect to the acceptance of such tender offer or
exchange offer by its stockholders);
(g) by the Company if (A) the Board of Directors of the Company
authorizes the Company, subject to complying with the terms of this Agreement,
to enter into a definitive agreement concerning a transaction that constitutes a
Superior Proposal and the Company notifies Parent in writing that it intends to
enter into such an agreement, (B) Parent does not make, within five days of
receipt of the Company's written notification of its intention to enter into a
definitive agreement for a Superior Proposal, an offer that the Board of
Directors of the Company determines, in its reasonable good faith judgment after
consultation with its financial advisors, is at least as favorable, from a
financial point of view, to stockholders of the Company
-57-
and (C) the Company prior to or concurrently with such termination pays to
Parent in immediately available funds the Termination Fee provided for in
Section 5.6(c). The Company agrees (x) that it will not enter into a definitive
agreement referred to in clause (A) above earlier than the sixth day after it
has provided the notice to Parent required thereby and (y) to notify Parent
promptly in writing if its intention to enter into a definitive agreement
referred to in its notification shall change at any time after giving such
notification; or
(h) by the Company if a Parent Acquisition Transaction occurs or
Parent or any of its Subsidiaries shall enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement with
respect to a Parent Acquisition Transaction; provided, however, that the Company
shall only be entitled to terminate this Agreement pursuant to this Section
7.1(h) for a period of ten (10) days from the earlier to occur of such a Parent
Acquisition Transaction and the public announcement of the entry into such
letter of intent, agreement in principle, acquisition agreement or other similar
agreement with respect to such Parent Acquisition Transaction; for purposes of
this Section 7.1(h), "Parent Acquisition Transaction" means any transaction or
series of transactions involving: (i) a merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving Parent, pursuant to which the stockholders of Parent, immediately
preceding such transaction or series of transactions hold less than fifty
percent (50%) of the aggregate equity interests in the surviving or resulting
entity of such transaction or any direct or indirect parent thereof, (ii) a sale
or other disposition by Parent or any of its Subsidiaries of assets representing
in excess of fifty percent (50%) of the aggregate fair market value of the
assets of Parent and its Subsidiaries, taken as a whole, immediately prior to
such sale or other disposition, or (iii) the acquisition by any Third Party
(including by way of a tender offer or an exchange offer or issuance by the
party or such Third Party), directly or indirectly, of beneficial ownership or a
right to acquire beneficial ownership of shares representing in excess of fifty
percent (50%) of the voting power of the then-outstanding shares of capital
stock of Parent;
The right of any party hereto to terminate this Agreement pursuant
to this Section 7.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
Person controlling any such party or any of their respective officers or
directors, whether prior to or after the Original Agreement Date.
Section 7.2 Effect of Termination. Any termination of this Agreement
under Section 7.1 will be effective immediately upon the delivery of written
notice of termination by the terminating party to the other parties hereto
(except in the case of a termination pursuant to Section 7.1(a) which will be
effective upon the written consent of both Parent and the Company). In the event
of termination of this Agreement by either Parent or the Company, as provided in
Section 7.1, this Agreement shall forthwith become void, and there shall be no
liability hereunder on the part of the Company, Parent, Sub or their respective
officers, directors, employees, agents, advisors or other representatives
(except for the last sentence of Section 5.3, the entirety of Section 5.6 and
the entirety of Article VIII which shall survive the termination); provided,
however, that nothing contained in this Section 7.2 shall relieve any party
hereto from any liability for any willful breach of a representation or warranty
contained in this Agreement or the breach of any covenant contained in this
Agreement.
-58-
Section 7.3 Amendment. This Agreement may be amended by the parties
hereto, by or pursuant to action taken by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of the Company, but, after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 7.4 Waiver. At any time prior to the Closing Date, the
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and/or (iii) waive compliance with any of the
covenants, agreements or conditions contained herein which may legally be
waived. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties. The
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall terminate at the Effective Time.
Section 8.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given when delivered personally, one day
after being delivered to a nationally recognized overnight courier or on the
business day received (or the next business day if received after 5 p.m. local
time or on a weekend or day on which banks are closed) when sent via facsimile
(with a confirmatory copy sent by overnight courier) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
-59-
(a) if to Parent or Sub, to
Tellabs, Inc.
One Tellabs Center
0000 Xxxx Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
with a copy to:
Sidley Xxxxxx Xxxxx & Xxxx LLP
Bank One Plaza
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Facsimile No.: (000) 000-0000
(b) if to the Company, to
Advanced Fibre Communications, Inc.
0000 X. XxXxxxxx Xxxx.
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: 000-000-0000
with a copy to:
Pillsbury Winthrop LLP
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile No.:(000) 000-0000
Section 8.3 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents, table of defined terms and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." Except as
otherwise expressly provided in this Agreement, the covenants and agreements
contained herein are continuing in full force and effect from and after the
Original Agreement Date.
Section 8.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
-60-
Section 8.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, except as provided in the last sentence of Section 5.3, constitutes
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof. This Agreement, except for the provisions of Section 5.11, is not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
Section 8.6 Governing Law and Venue; Waiver of Jury Trial.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS
SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW
OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF. The parties hereby irrevocably submit to the jurisdiction of the courts
of the State of Delaware and the federal courts of the United States of America
located in the State of Delaware solely in respect of the interpretation and
enforcement of the provisions of this Agreement and of the documents referred to
in this Agreement, and in respect of the Merger, the Subsequent Merger and the
other transactions contemplated hereby, and hereby waive, and agree not to
assert, as a defense in any action, suit or proceeding for the interpretation or
enforcement hereof or of any such document, that it is not subject thereto or
that such action, suit or proceeding may not be brought or is not maintainable
in said courts or that the venue thereof may not be appropriate or that this
Agreement or any such document may not be enforced in or by such courts, and the
parties hereto irrevocably agree that all claims with respect to such action or
proceeding shall be heard and determined in such a Delaware state or federal
court. The parties hereby consent to and grant any such court jurisdiction over
the person of such parties and over the subject matter of such dispute and agree
that mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 8.2 or in such other manner as may
be permitted by law shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE MERGER, THE SUBSEQUENT MERGER OR ANY OF THE OTHER TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED
THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY,
AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.6.
-61-
Section 8.7 Assignment. Subject to Section 1.1, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties.
Section 8.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms, conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic and
legal substance of the Merger, the Subsequent Merger and the other transactions
contemplated hereby are not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
Merger, the Subsequent Merger and the other transactions contemplated by this
Agreement may be consummated as originally contemplated to the fullest extent
possible.
Section 8.9 Enforcement of this Agreement. In addition to any remedy
to which any party hereto is specifically entitled by the terms hereof, each
party shall be entitled to pursue any other remedy available to it at law or in
equity (including damages, specific performance or other injunctive relief) in
the event that any of the provisions of this Agreement were not performed in
accordance with their terms or were otherwise breached.
* * * * *
-62-
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed as of May 19, 2004 and amended and restated as of the
Amendment Date by their respective officers.
TELLABS, INC.
/s/ XXXXX X. XXXXXX
By: __________________________________
Name: Xxxxx X. Xxxxxx
Title: Chief Executive Officer and
President
CHARDONNAY MERGER CORP.
/s/ XXXXX X. XXXXXX
By: __________________________________
Name: Xxxxx X. Xxxxxx
Title: President
ADVANCED FIBRE COMMUNICATIONS, INC.
/s/ XXXX X. XXXXXXXXX
By: __________________________________
Name: Xxxx X. Xxxxxxxxx
Title: Chief Executive Officer and
President
1
