EXHIBIT 4.2
AMENDMENT NUMBER ONE
DATED AS OF DECEMBER 20, 2000,
TO
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
DATED AS OF NOVEMBER 4, 2000,
BY AND AMONG
EXFO ELECTRO-OPTICAL ENGINEERING INC.,
EXFO SUB, INC.,
BURLEIGH INSTRUMENTS, INC.,
XXXXXX X. XXXXXXXXXXX,
XXXXXXX X. MAY, JR,
XXXXX X. XXXXXXX
AND
XXXXXXX X. XXXXXXX
AMENDMENT NUMBER ONE TO
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
This AMENDMENT NUMBER ONE (this "AMENDMENT") dated as of December 20,
2000 amends that certain AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (the
"AGREEMENT") dated as of November 4, 2000 among EXFO Electro-Optical Engineering
Inc., incorporated pursuant to the CANADA BUSINESS CORPORATIONS ACT (the
"BUYER"), EXFO Sub, Inc., a corporation organized under the laws of the State of
New York ("BUYER SUB"), Burleigh Instruments, Inc., a corporation organized
under the laws of the State of New York (the "Company"), Xxxxxx X. Xxxxxxxxxxx,
("XXXXXXXXXXX"), Xxxxxxx X. May, Jr., ("MAY"), Xxxxx X. Xxxxxxx ("XXXXXXX") and
Xxxxxxx X. Xxxxxxx ("XXXXXXX" and, together with Klimasewski, May and Xxxxxxx,
the "SHAREHOLDERS"). Defined terms not otherwise defined herein shall have the
meaning ascribed to them in the Agreement.
RECITALS
WHEREAS, the Shareholders, the Company, the Buyer and the Buyer Sub
wish to amend the Agreement to reallocate the Merger Consideration to be
received by each of the Shareholders.
WHEREAS, the Shareholders, the Company, the Buyer and the Buyer Sub
wish to further amend the Agreement to reduce the Stock Consideration to enable
the Buyer to institute a restricted stock retention program for the Company's
employees, utilizing the value of certain Stock Consideration voluntarily
relinquished by certain of the Shareholders.
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth in the Agreement and in this Amendment, the
parties hereto hereby agree as follows:
1. Section 1.3 of the Agreement is hereby amended in its entirety to read
as follows:
EFFECTIVE TIME. The consummation of the Merger shall be
effected as promptly as practicable, but in no event more than
three business days after the satisfaction or waiver of the
conditions set forth in ARTICLE 5 of this Agreement (other
than those conditions which by their nature are to be
satisfied at the Closing, but subject to satisfaction of those
conditions), and the parties hereto will cause a copy of the
Articles of Merger attached hereto as Exhibit A (the "ARTICLES
OF MERGER") and including a Plan of Merger (the "PLAN OF
MERGER") to be executed, delivered and filed with the
Secretary of State of the State of New York in accordance with
the BCL. The Merger shall become effective upon the delivery
of the properly executed Articles of Merger to the Secretary
of State of the State of New York for filing. The date and
time on which the Merger shall become effective is referred to
herein as the "EFFECTIVE TIME".
2. Section 1.7(b)(i) of the Agreement is hereby amended in its entirety to
read as follows:
"(i) Buyer shall deliver to each Shareholder, as
applicable: (i) the aggregate amount of the Cash Consideration
payable to such Shareholder in United States dollars in
immediately available funds by wire transfer to one or more
accounts designated prior to the Effective Time in writing by
each such Shareholder for said purpose, subject to Section
1.13; (ii) stock certificates representing the Buyer Shares
(other than Escrow Shares) registered in each Shareholder's
name and in such denominations as set forth on Exhibit C,
which shall be agreed upon by the parties at the Closing and
which shall be determined by reference to the Closing Price;
and (iii) all documents, instruments and writings required to
have been delivered at or prior to the Effective Time by the
Buyer or by Buyer Sub pursuant to this Agreement;"
3. Section 1.8 of the Agreement is hereby amended in its entirety to read
as follows:
(a) "The total consideration to be paid by Buyer in the
Merger shall be $256,240,641 (the "MERGER CONSIDERATION") consisting of
(a) $33,593,141 payable in cash, subject to Section 1.13 (the "CASH
CONSIDERATION") and (b) $222,647,500 (the "STOCK CONSIDERATION")
payable in the form of Buyer Subordinate Voting Shares (the "BUYER
SHARES"). In addition, Buyer shall assume and pay certain obligations
of the Company pursuant to Section 1.13. The aggregate number of Buyer
Shares payable shall be determined by dividing the Stock Consideration
by the Closing Price. The "CLOSING PRICE" shall be the average closing
price of Buyer Subordinate Voting Shares for the five trading days
ending with December 18, 2000, as reported by the Nasdaq National
Market; provided, however, that for purposes of this Agreement, if the
Closing Price is less than 90% of the Signing Price, the Closing Price
shall be 90% of the Signing Price, and if the Closing Price is greater
than 110% of the Signing Price, the Closing Price shall be 110% of the
Signing Price. The "SIGNING PRICE" is $38.125, representing the closing
price of the Buyer Subordinate Voting Shares, as reported by the Nasdaq
National Market, at closing of trading on October 31, 2000. If, prior
to the Closing, there is any stock dividend, stock split or other
change in the character or amount of the outstanding Buyer Subordinate
Voting Shares, then in such event any and all new, substituted or
additional securities to which the Shareholders would have been
entitled by reason of their ownership of the Buyer Shares had the
Closing occurred prior to such event shall be considered Buyer Shares
for purposes of this Agreement and the consideration to be received by
each Shareholder shall be adjusted accordingly. At the Effective Time,
by virtue of the Merger and without further action on the part of
Buyer, Buyer Sub or the Company, the shares of Company Common Stock
issued and outstanding immediately prior to Closing shall be conceded
and extinguished and shall be converted into the right to receive the
Merger Consideration, such that each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive the Merger Consideration, which
Merger Consideration shall be paid to each Shareholder in such amount
of Stock Consideration and Cash Consideration, as the case may be, as
set forth on Schedule 1.8 attached hereto. The number of shares of
Buyer Stock
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constituting the Stock Consideration and the amount of Cash
Consideration to be received by each Shareholder is set forth on
Schedule 1.8 attached hereto. Each share of common stock, par value of
$0.01 per share of Buyer Sub issued and outstanding immediately prior
to the Effective Time shall be converted into and shall become one
validly issued fully paid and non-assessable share of Surviving
Corporation Common Stock as of the Effective Time, and the Surviving
Corporation shall become a wholly-owned subsidiary of Buyer. In
exchange for and in consideration of the issuance of the Merger
Consideration, Buyer will be entitled to subscribe and undertakes and
agrees to subscribe, at the Effective Time, for the Surviving
Corporation Common Stock. The Surviving Corporation Common Stock will
at the Effective Time have been duly authorized and, when issued to
Buyer, will be validly issued and outstanding as fully paid and
non-assessable. The number of shares of Company Common Stock held by
each Shareholder and to be converted into the right to receive the
Merger Consideration is set forth opposite each Shareholder's name on
Exhibit C. No fraction of a share of Buyer Subordinate Voting Shares
shall be issued, and each fractional share thereof shall be rounded up
to the nearest whole number. Until surrendered and exchanged, each
outstanding certificate which, prior to the Effective Time, represented
shares of Company Common Stock shall be deemed to represent and
evidence only the right to receive the Merger Consideration to be paid
therefore as set forth in this Section 1.8. No interest shall accrue or
be payable with respect to any Cash Consideration which any Shareholder
shall be entitled to receive. Buyer shall be authorized to pay Merger
Consideration attributable to any certificate theretofore issued which
has been lost or destroyed, upon receipt of satisfactory evidence of
ownership of the shares of Company Common Stock represented thereby and
of appropriate indemnification. It being agreed that the Merger
Consideration received by Messrs. Xxxxxxx and Xxxxxxx shall be reduced
on a dollar for dollar basis equal to six (6) months of their
respective annual remuneration in the event that Messrs. Xxxxxxx or
Xxxxxxx terminate unilaterally their respective employment agreement
with the Surviving Corporation prior to the second anniversary of the
Effective Time."
(b) It is acknowledged by the parties that the Merger
Consideration payable hereunder has been reduced by agreement of the
parties by the sum of $12,352,500 to reflect the voluntary contribution
of 360,000 Buyer Shares (valued at the Closing Price) by Klimasewski,
May and Xxxxxxx to a Restricted Stock Award Plan (the "Plan") to be
created by Buyer for the benefit of the Company's Employees. A copy of
the Plan is attached hereto as Exhibit A. The parties agree that
Klimasewski and May have each contributed the value of 151,285 Buyer
Shares to the Plan, and that Xxxxxxx has contributed the value of
57,430 shares to the Plan. The Buyer agrees that to the extent any
award of Buyer Shares is forfeited in whole or in part by an employee
of the Company, the Buyer Shares so forfeited as well as any
unallocated Buyer Shares as of January 31, 2001 shall increase the
Merger Consideration and shall be paid to Klimasewski, May and Xxxxxxx
in proportion to their contribution of Buyer Shares to the Plan (the
"Additional Shares"). The Additional Shares shall be paid to
Klimasewski, May and Xxxxxxx as soon as practicable, but in no event
later than ten (10) business days, following each Vesting Date (as
defined in the Plan) with respect to all
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Additional Shares forfeited by employees on or before such Vesting Date
or January 31, 2001, as applicable.
4. Section 1.9 of the Agreement is hereby amended in its entirety to read
as follows:
"Simultaneously with the Merger and at the Effective Time, an aggregate
15% of the Stock Consideration will be delivered to the Escrow Agent
(as such term is defined in the Escrow Agreement attached hereto as
Exhibit D (the "ESCROW AGREEMENT")). Such shares of Buyer Shares shall
constitute an escrow fund (the "ESCROW FUND") to be governed by the
terms set forth in the Escrow Agreement. Each Shareholder shall
contribute such number of Buyer Shares received by him to the Escrow
Fund as is set forth on Schedule 1.8 attached hereto. The portion of
the Escrow Fund contributed on behalf of each of the Shareholders shall
be in proportion to the Merger Consideration which such holder would
otherwise be entitled under Section 1.8. The Escrow Fund shall
terminate in accordance with the terms of the Escrow Agreement. The
provisions of the Escrow Agreement shall govern in the event of any
conflict between the Escrow Agreement and this Section 1.9. The
Shareholders may withdraw shares of Buyer Shares (the "WITHDRAWN
SHARES") and substitute cash in lieu thereof at any time, provided that
the amount deposited in substitution for the Withdrawn Shares is equal
to the product of (i) the Closing Price, and (ii) the number of
Withdrawn Shares."
5. Section 1.13 of the Agreement is hereby amended in its entirety to read
as follows:
"At the Closing, the Buyer hereby assumes and agrees to pay directly
the legal fees incurred by the Company in connection with the
transactions contemplated hereby and further assumes and agrees to pay
directly the investment banking fees incurred by the Company and
payable as of the Closing (collectively, the "EXPENSES"). The
Shareholders hereby jointly and severally assume and agree to pay
directly the investment banking fees of the Company arising out of the
transactions contemplated hereby and payable following the Closing with
respect to the portion of the Stock Consideration placed in escrow
pursuant to the Escrow Agreement. At the Closing, the Buyer shall pay
the Expenses in cash, in the currency requested by the service
provider, by wire transfer of immediately available funds. The Company
shall, at least two business days prior to the Closing Date, advise the
Buyer in writing of the amount of the Expenses, together with wire
transfer instructions for such payments. Xxxxxxx and Xxxxxxx
acknowledge that, as a result of the assumption and payment of the
Expenses by the Buyer, that the number of shares of Buyer Stock to be
received by them as part of the Merger Consideration shall be adjusted
as set forth on Schedule 1.8 "
6. Section 2.8 of the Agreement is hereby amended in its entirety to read
as follows:
"The Shareholders (a) have delivered to the Buyer on or prior to the
execution of this Agreement complete and correct copies of the
Company's audited combined consolidated balance sheet as of December
31, 1999 and 1998, and the related statements of operations,
shareholders' equity and cash flows (together with the auditors' report
thereon) for the year ended December 31, 1999 and 1998, together with
notes to such financial statements (the "AUDITED FINANCIAL
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STATEMENTS"), and (b) have delivered to the Buyer on or about December
19, 2000 complete and correct copies of the Company's unaudited
combined consolidated balance sheet as at September 30, 2000, and the
related statements of operations, stockholders' equity and cash flows
for the nine month periods ended September 30, 2000 (the "INTERIM
FINANCIAL STATEMENTS") (the Audited Financial Statements and Interim
Financial Statements are herein collectively referred to as the
"FINANCIAL STATEMENTS"). The Financial Statements are in accordance
with the books and records of the Company and have been prepared in
accordance with generally accepted accounting principles ("GAAP")
consistently applied throughout the periods covered thereby and present
fairly in all material respects, as of their respective dates, the
financial condition and results of operations of the Company (subject,
in the case of Interim Financial Statements, to normal, recurring
year-end adjustments that may be required upon audit). No information
has become available to the Company that would render the Financial
Statements materially and adversely incomplete or inaccurate."
7. Section 5.2(m) is hereby amended to read in its entirety as follows:
(m) SEC FINANCIAL STATEMENTS. The Shareholders shall have
delivered (i) consolidated, combined audited balance sheets of the
Company and its Subsidiaries as of the end of the two most recent
fiscal years, (ii) a consolidated, combined unaudited balance sheet as
of the end of the most recent quarter preceding the Closing, (iii)
consolidated, combined audited statements of income and cash flows for
each of the three fiscal years preceding the Closing, and (iv)
consolidated, combined unaudited statements of income and cash flows
for the interim period between the latest audited balance sheet date
and the date of the balance sheet being provided pursuant to clause
(ii), in each case meeting the requirements of the SEC that would be
applicable to the Company as if its securities were registered under
Section 12 of the SECURITIES AND EXCHANGE ACT OF 1934, as amended
(collectively, the "SEC FINANCIAL STATEMENTS").
8. Section 5.2(n) is hereby amended to read in its entirety as follows:
(n) The Buyer shall have received confirmation that KPMG
LLP, the Company's auditors, are independent certified public
accountants qualified to deliver the accountant's report on the SEC
Financial Statements as required by the SEC.
9. The parties to this Amendment agree to take all actions, including the
execution of additional documents, as may be reasonably requested by the other
parties hereto to effect the intent and purposes of this Amendment.
10. This Amendment shall be governed in all respects by the provisions of
the Agreement, which shall remain in full force and effect, as modified by this
Amendment.
[Remainder of Page Intentionally Left Blank]
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[Amendment No. One Signature Page]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized signatories as of the date first
indicated above.
BURLEIGH INSTRUMENTS, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
EXFO ELECTRO-OPTICAL
ENGINEERING INC.
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: President and Chief Executive Officer
EXFO SUB, INC.
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: President
/s/ Xxxxxx X. Xxxxxxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxxxxxx
/s/ Xxxxxxx X. May, Jr.
---------------------------------------
Xxxxxxx X. May, Jr.
/s/ Xxxxx X. Xxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxxx
