EXHIBIT 2.1
ALCATEL
as "ALCATEL"
and
NEWBRIDGE NETWORKS CORPORATION
as "NEWBRIDGE"
________________________________________________________________________________
MERGER AGREEMENT
February 22, 2000
________________________________________________________________________________
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
Section 1.1 Definitions............................................................................ 1
Section 1.2 Interpretation Not Affected by Headings, etc........................................... 9
Section 1.3 Currency............................................................................... 9
Section 1.4 Number, etc............................................................................ 9
Section 1.5 Date For Any Action.................................................................... 9
Section 1.6 Entire Agreement....................................................................... 9
Section 1.7 Schedules.............................................................................. 9
Section 1.8 Accounting Matters..................................................................... 10
Section 1.9 Knowledge.............................................................................. 10
ARTICLE 2
THE ARRANGEMENT
Section 2.1 Implementation Steps by NEWBRIDGE...................................................... 10
Section 2.2 Implementation Steps by ALCATEL........................................................ 11
Section 2.3 Interim Order.......................................................................... 12
Section 2.4 Articles of Arrangement................................................................ 12
Section 2.5 NEWBRIDGE Circular..................................................................... 13
Section 2.6 ALCATEL Circular....................................................................... 13
Section 2.7 Securities Compliance.................................................................. 13
Section 2.8 Preparation of Filings, etc............................................................ 14
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of NEWBRIDGE............................................ 16
Section 3.2 Representations and Warranties of ALCATEL.............................................. 31
Section 3.3 Survival............................................................................... 36
ARTICLE 4
COVENANTS
Section 4.1 Retention of Goodwill.................................................................. 36
Section 4.2 Treatment of Options, Warrants, ESPP and KEEP.......................................... 36
Section 4.3 Covenants of NEWBRIDGE................................................................. 36
Section 4.4 Covenants of ALCATEL................................................................... 41
Section 4.5 Covenants Regarding Non-Solicitation................................................... 44
Section 4.6 Notice by NEWBRIDGE of Superior Proposal Determination................................. 45
Section 4.7 Access to Information.................................................................. 47
Section 4.8 Closing Matters........................................................................ 47
(i)
Section 4.9 Indemnification........................................................................ 48
Section 4.10 Pooling of Interests Accounting........................................................ 48
Section 4.11 Safe Income............................................................................ 48
ARTICLE 5
CONDITIONS
Section 5.1 Mutual Conditions Precedent............................................................ 49
Section 5.2 Additional Conditions Precedent to the Obligations of ALCATEL.......................... 51
Section 5.3 Additional Conditions Precedent to the Obligations of NEWBRIDGE........................ 52
Section 5.4 Notice and Cure Provisions............................................................. 53
Section 5.5 Satisfaction of Conditions............................................................. 54
ARTICLE 6
AMENDMENT AND TERMINATION
Section 6.1 Amendment.............................................................................. 54
Section 6.2 Mutual Understanding Regarding Amendments.............................................. 55
Section 6.3 Termination............................................................................ 55
Section 6.4 Break and Other Fees; Option........................................................... 57
Section 6.5 Remedies............................................................................... 58
ARTICLE 7
GENERAL
Section 7.1 Notices................................................................................ 58
Section 7.2 Assignment............................................................................. 59
Section 7.3 Binding Effect......................................................................... 60
Section 7.4 Waiver and Modification................................................................ 60
Section 7.5 Further Assurances..................................................................... 60
Section 7.6 Expenses............................................................................... 60
Section 7.7 Consultation........................................................................... 61
Section 7.8 Governing Laws......................................................................... 61
Section 7.9 Time of Essence........................................................................ 61
Section 7.10 Counterparts........................................................................... 61
(ii)
MERGER AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 22/nd/ day of February, 2000.
B E T W E E N :
ALCATEL a corporation existing under the laws of France (hereinafter
referred to as "ALCATEL")
- and -
NEWBRIDGE NETWORKS CORPORATION
a corporation existing under the laws of Canada
(hereinafter referred to as "NEWBRIDGE")
THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants
and agreements herein contained, the parties hereto covenant and agree as
follows:
ARTICLE 1
INTERPRETATION
Section 1.1 Definitions.
In this Agreement, unless there is something in the subject matter or
context inconsistent therewith, the following terms shall have the following
meanings respectively:
"1933 Act" means the United States Securities Act of 1933, as amended;
"Acquisition Proposal" means any proposal or offer with respect to any
merger, amalgamation, arrangement, business combination, liquidation,
dissolution, recapitalization, take-over bid, purchase of all or any
material assets of, or any purchase of more than 20% of the equity (or
rights thereto) of, or similar transactions involving, NEWBRIDGE or any
NEWBRIDGE Material Subsidiary, excluding the Arrangement;
"affiliate" shall have the meaning ascribed thereto under the Securities
Act;
-2-
"ALCATEL Circular" means the circular to be sent to the ALCATEL
Shareholders, including the notice of the ALCATEL Meeting and all
appendices thereto, containing information relating to the transactions
contemplated herein;
"ALCATEL Material Subsidiary" means each subsidiary of ALCATEL the total
assets of which constituted more than ten percent of the consolidated
assets of ALCATEL or the total revenues of which constituted more than ten
percent of the consolidated revenues of ALCATEL, in each case as set out in
the financial statements of ALCATEL for the year ended December 31, 1999,
and including each affiliate of ALCATEL that directly or indirectly holds
an equity interest in each such subsidiary;
"ALCATEL Meeting" means the ordinary general and extraordinary meeting of
ALCATEL Shareholders, including any adjournment or postponement thereof, to
be called and held in accordance with applicable laws to consider the
ALCATEL Resolution as well as other matters to be considered at ALCATEL's
2000 ordinary general meeting;
"ALCATEL ADRs" means the American Depositary Receipts of ALCATEL;
"ALCATEL ADSs" means the American Depositary Shares of ALCATEL;
"ALCATEL Shares" means the shares in the capital of ALCATEL, nominal value
Euro 10 each;
"ALCATEL Resolution" means the resolution of the ALCATEL Shareholders to
increase the ALCATEL share capital in order to implement the Arrangement;
"ALCATEL Shareholders" means the holders of ALCATEL Shares;
"Arrangement" means an arrangement under Section 192 of the CBCA on the
terms and subject to the conditions set out in the Plan of Arrangement,
subject to any amendments or variations thereto made in accordance with
Section 6.1 or Article 6 of the Plan of Arrangement or made at the
direction of the Court;
"Arrangement Resolution" means the special resolution of the NEWBRIDGE
shareholders, to be substantially in the form and content of Schedule A
annexed hereto;
"Articles of Arrangement" means the articles of arrangement of NEWBRIDGE in
respect of the Arrangement that are required by the CBCA to be sent to the
Director after the Final Order is made;
-3-
"Business Day" means any day on which commercial banks are generally open
for business in Toronto, Ontario, New York City, New York and Paris, France
other than a Saturday, a Sunday or a day observed as a holiday in Toronto,
Ontario, in New York City, New York or in Paris, France under applicable
laws;
"CBCA" means the Canada Business Corporations Act as now in effect and as
it may be amended from time to time prior to the Effective Date;
"Callco" or "ALCATEL Holdings" means an unlimited liability company to be
incorporated under the laws of Nova Scotia and wholly-owned, as a first or
second tier subsidiary, by ALCATEL;
"COB" means the Commission des Operations de Bourse;
"Confidentiality Agreement" means the confidentiality letter agreement
dated December 7, 1999 between ALCATEL and NEWBRIDGE;
"Court" means the Superior Court of Justice (Ontario);
"Director" means the Director appointed pursuant to Section 260 of the
CBCA;
"Dissent Rights" means the rights of dissent in respect of the Arrangement
described in Section 3.1 of the Plan of Arrangement;
"Dissenting Shareholder" has the meaning ascribed thereto in the Plan of
Arrangement;
"Effective Date" means the date shown on the certificate of arrangement to
be issued by the Director under the CBCA giving effect to the Arrangement;
"Effective Time" has the meaning ascribed thereto in the Plan of
Arrangement;
"Environmental Laws" means all applicable Laws, including applicable common
law, relating to the protection of the environment and public health and
safety;
"ERISA" has the meaning ascribed thereto in Section 3.1(l)(i);
"Exchange Trust Agreement" means an agreement to be made between ALCATEL,
NEWBRIDGE and the Trustee in connection with the Plan of Arrangement
substantially in the form and content of Schedule E annexed hereto, with
such changes thereto as the parties hereto, may agree.
-4-
"Exchangeable Shares" means the non-voting exchangeable shares to be
created in the capital of NEWBRIDGE, having substantially the rights,
privileges, restrictions and conditions set out in Appendix I to the Plan
of Arrangement;
"Final Order" means the final order of the Court approving the Arrangement
as such order may be amended by the Court at any time prior to the
Effective Date or, if appealed, then, unless such appeal is withdrawn or
denied, as affirmed or as amended on appeal;
"Form F-3" has the meaning ascribed thereto in Section 2.7(4);
"Form S-8" has the meaning ascribed thereto in Section 2.7(5);
"Governmental Entity" means any (a) multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitral body,
commission, board, bureau or agency, domestic or foreign, (b) any
subdivision, agent, commission, board, or authority of any of the
foregoing, or (c) any quasi- governmental or private body exercising any
regulatory, expropriation or taxing authority under or for the account of
any of the foregoing;
"holders" means, when used with reference to the NEWBRIDGE Common Shares,
NEWBRIDGE Options or NEWBRIDGE Warrants, the holders thereof shown from
time to time in the register maintained by or on behalf of NEWBRIDGE in
respect of such securities and, when used with reference to the
Exchangeable Shares, means the holders of Exchangeable Shares shown from
time to time in the register maintained by or on behalf of NEWBRIDGE in
respect of the Exchangeable Shares;
"including" means including without limitation;
"Information" has the meaning ascribed thereto in Section 4.7(2);
"Interim Order" means the interim order of the Court, as the same may be
amended, in respect of the Arrangement, as contemplated by Section 2.3;
"Laws" means all statutes, regulations, statutory rules, orders, and terms
and conditions of any grant of approval, permission, authority or license
of any court, Governmental Entity, statutory body (including the OSC, The
Toronto Stock Exchange, the PSE, the NYSE, the SEC and the COB) or self-
regulatory authority, and the term "applicable" with respect to such Laws
and in the context that refers to one or more Persons, means that such Laws
apply to such Person or Persons or its or their business, undertaking,
property or securities and emanate from a Governmental Entity having
jurisdiction over
-5-
the Person or Persons or its or their business, undertaking, property or
securities;
"Letter of Transmittal and Election Form" means the letter of transmittal
and election form for use by holders of NEWBRIDGE Common Shares, in the
form accompanying the NEWBRIDGE Circular;
"Material Adverse Change", when used in connection with ALCATEL or
NEWBRIDGE, means any change, effect, event or occurrence with respect to
the condition (financial or otherwise), properties, assets, liabilities,
obligations (whether absolute, accrued, conditional or otherwise),
businesses, operations or results of operations of such party or those of
its subsidiaries that is, or could reasonably be expected to be, material
and adverse to such party and its subsidiaries taken as a whole, other than
any change, effect, event or occurrence (i) relating to the Canadian,
United States, United Kingdom or French economies, political conditions or
securities markets in general, or (ii) affecting the worldwide
telecommunications equipment industry in general and which does not have a
materially disproportionate impact on such party, or (iii) relating to any
change in the trading price of the ALCATEL Shares or ALCATEL ADRs or the
NEWBRIDGE Common Shares, respectively, either (A) related to the
Arrangement or the announcement thereof, or (B) unrelated to any change,
circumstance, effect, event or occurrence that is, or could reasonably be
expected to be, material and adverse to such party and its subsidiaries
taken as a whole;
"Material Adverse Effect" when used in connection with ALCATEL or
NEWBRIDGE, means any effect that is, or could reasonably be expected to be,
material and adverse to the condition (financial or otherwise), properties,
assets, liabilities, obligations (whether absolute, accrued, conditional or
otherwise), businesses, operations or results of operations of such party
and its subsidiaries taken as a whole, other than any effect (i) relating
to the Canadian, United States, United Kingdom or French economies,
political conditions or securities markets in general, or (ii) affecting
the worldwide telecommunications equipment industry in general and which
does not have a materially disproportionate impact on such party, or (iii)
relating to any change in the trading price of the ALCATEL Shares or
ALCATEL ADRs or the NEWBRIDGE Common Shares, respectively, either (A)
related to the Arrangement or the announcement thereof, or (B) unrelated to
any change, circumstance, effect, event or occurrence that is, or could
reasonably be expected to be, material and adverse to such party and its
subsidiaries taken as a whole;
"material fact" shall have the meaning ascribed thereto under the
Securities Act;
-6-
"NEWBRIDGE Circular" means the notice of the NEWBRIDGE Meeting and
accompanying management information circular, including all appendices
thereto, to be sent to NEWBRIDGE Shareholders in connection with the
NEWBRIDGE Meeting;
"NEWBRIDGE Common Shares" means the common shares in the capital of
NEWBRIDGE;
"NEWBRIDGE Documents" has the meaning ascribed thereto in Section 3.1(m);
"NEWBRIDGE Employee Stock Purchase Plan" means the share purchase plan for
NEWBRIDGE employees, as amended to the date hereof;
"NEWBRIDGE Key Employee Executive Plan" means the deferred compensation
plan for NEWBRIDGE key executive employees, as amended to the date hereof;
"NEWBRIDGE Material Subsidiary" means NEWBRIDGE LIMITED of England,
NEWBRIDGE INC. of the U.S., and NEWBRIDGE (ASIA) LIMITED of Hong Kong;
"NEWBRIDGE Meeting" means the special meeting of NEWBRIDGE Shareholders,
including any adjournment or postponement thereof, to be called and held in
accordance with the Interim Order to consider the Arrangement;
"NEWBRIDGE Options" means the NEWBRIDGE Common Share purchase options
granted under the NEWBRIDGE Stock Option Plan;
"NEWBRIDGE Plans" has the meaning ascribed thereto in Section 3.1(l)(i);
"NEWBRIDGE Preferred Shares" means the preferred shares in the capital of
NEWBRIDGE;
"NEWBRIDGE Shareholders" means the holders of NEWBRIDGE Common Shares,
NEWBRIDGE Options and NEWBRIDGE Warrants;
"NEWBRIDGE Stock Option Plan" means NEWBRIDGE's 1999 Key Employee Stock
Option Plan, NEWBRIDGE's Consolidated Key Employee Stock Option Plan and
Stanford Telecommunications, Inc.'s 1991 Stock Option Plan, in each case as
amended to the date hereof;
"NEWBRIDGE Warrants" means the 285,000 share purchase warrants of NEWBRIDGE
exercisable between May 21, 2000 and May 21, 2004;
-7-
"NYSE" means the New York Stock Exchange;
"Option Agreement" means the option agreement attached as Schedule F
hereto;
"OSC" means the Ontario Securities Commission;
"Outside Date" means, subject to Section 6.3(4), September 30, 2000 or such
later date as may be mutually agreed by the parties;
"PSE" means the Paris Bourse;
"Person" includes any individual, firm, partnership, limited partnership,
joint venture, venture capital fund, limited liability company, unlimited
liability company, association, trust, trustee, executor, administrator,
legal personal representative, estate, group, body corporate, corporation,
unincorporated association or organization, Governmental Entity, syndicate
or other entity, whether or not having legal status;
"Plan of Arrangement" means the plan of arrangement substantially in the
form and content of Schedule B annexed hereto and any amendments or
variations thereto made in accordance with Section 6.1 or Article 6 of the
Plan of Arrangement or made at the direction of the Court;
"Pre-Effective Date Period" shall mean the period from and including the
date hereof to and including the Effective Time;
"Publicly Disclosed by NEWBRIDGE" means disclosed by NEWBRIDGE in a public
filing made by it with the OSC, The Toronto Stock Exchange, the NYSE or the
SEC from January 1, 1998 to the date hereof;
"Publicly Disclosed by ALCATEL" means disclosed by ALCATEL in a public
filing made by it with the PSE, the COB, the NYSE or the SEC from January
1, 1998 to the date hereof;
"Regulatory Approvals" means those sanctions, rulings, consents, orders,
exemptions, permits and other approvals (including the lapse, without
objection, of a prescribed time under a statute or regulation that states
that a transaction may be implemented if a prescribed time lapses following
the giving of notice without an objection being made) of Governmental
Entities, regulatory agencies or self-regulatory organizations, as set out
in Schedule C hereto;
"Revised Options" has the meaning ascribed thereto in the Plan of
Arrangement;
-8-
"Representatives" has the meaning ascribed thereto in Section 4.7(1);
"SEC" means the United States Securities and Exchange Commission;
"Securities Act" means the Securities Act (Ontario) and the rules,
regulations and policies made thereunder, as now in effect and as they may
be amended from time to time prior to the Effective Date;
"subsidiary" means, with respect to a specified body corporate, any body
corporate of which more than 50% of the outstanding shares ordinarily
entitled to elect a majority of the board of directors thereof (whether or
not shares of any other class or classes shall or might be entitled to vote
upon the happening of any event or contingency) are at the time owned
directly or indirectly by such specified body corporate, and shall include
any body corporate, partnership, joint venture or other entity over which
it exercises direction or control or which is in a like relation to a
subsidiary;
"Superior Proposal" means any bona fide written Acquisition Proposal that
in the good faith determination of the Board of Directors of NEWBRIDGE,
after consultation with its financial advisors and with outside counsel (a)
is reasonably capable of being completed, taking into account all legal,
financial, regulatory and other aspects of such proposal and the party
making such proposal, and (b) would, if consummated in accordance with its
terms, result in a transaction more favourable to the NEWBRIDGE
shareholders from a financial point of view than the transaction
contemplated by this Agreement;
"Support Agreement" means an agreement to be made between ALCATEL, Callco
and NEWBRIDGE substantially in the form and content of Schedule D annexed
hereto, with such changes thereto as the parties hereto may agree;
"Tax" and "Taxes" have the respective meanings ascribed thereto in Section
3.1(k) (iii);
"Tax Returns" means all returns, declarations, reports, information returns
and statements required to be filed with any taxing authority relating to
Taxes; and
"Trustee" means the trustee to be chosen by ALCATEL and NEWBRIDGE, acting
reasonably, to act as trustee under the Exchange Trust Agreement, being a
corporation organized and existing under the laws of Canada and authorized
to carry on the business of a trust company in all the provinces of Canada,
and any successor trustee appointed under the Exchange Trust Agreement.
-9-
Section 1.2 Interpretation Not Affected by Headings, etc.
The division of this Agreement into Articles, Sections and other portions
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation hereof. Unless otherwise
indicated, all references to an "Article" or "Section" followed by a number
and/or a letter refer to the specified Article or Section of this Agreement. The
terms "this Agreement", "hereof", "herein" and "hereunder" and similar
expressions refer to this Agreement (including the Schedules hereto) and not to
any particular Article, Section or other portion hereof and include any
agreement or instrument supplementary or ancillary hereto.
Section 1.3 Currency.
Unless otherwise specifically indicated, all sums of money referred to in
this Agreement are expressed in lawful money of Canada.
Section 1.4 Number, etc.
Unless the context otherwise requires, words importing the singular shall
include the plural and vice versa and words importing any gender shall include
all genders.
Section 1.5 Date For Any Action.
In the event that any date on which any action is required to be taken
hereunder by any of the parties hereto is not a Business Day, such action shall
be required to be taken on the next succeeding day which is a Business Day.
Section 1.6 Entire Agreement.
This Agreement, the agreements and other documents herein referred to and
the Confidentiality Agreement constitute the entire agreement between the
parties hereto pertaining to the terms of the Arrangement and supersede all
other prior agreements, understandings, negotiations and discussions, whether
oral or written, between the parties hereto with respect to the terms of the
Arrangement.
Section 1.7 Schedules.
The following Schedules are annexed to this Agreement and are hereby
incorporated by reference into this Agreement and form part hereof:
Schedule A - Arrangement Resolution
Schedule B - Plan of Arrangement
Schedule C - Regulatory Approvals
Schedule D - Support Agreement
Schedule E - Exchange Trust Agreement
Schedule F - Option Agreement
-10-
Section 1.8 Accounting Matters.
Unless otherwise stated, all accounting terms used in this Agreement in
respect of NEWBRIDGE shall have the meanings attributable thereto under Canadian
generally accepted accounting principles and all determinations of an accounting
nature in respect of NEWBRIDGE required to be made shall be made in a manner
consistent with Canadian generally accepted accounting principles and past
practice. Unless otherwise stated, all accounting terms used in this Agreement
in respect of ALCATEL shall have the meanings attributable thereto under French
generally accepted accounting principles and all determinations of an accounting
nature required to be made in respect of ALCATEL shall be made in a manner
consistent with French generally accepted accounting principles and past
practice.
Section 1.9 Knowledge.
Each reference herein to the knowledge of a party means, unless otherwise
specified, the knowledge of such party's senior officers following due inquiry.
ARTICLE 2
THE ARRANGEMENT
Section 2.1 Implementation Steps by NEWBRIDGE.
NEWBRIDGE covenants in favour of ALCATEL that NEWBRIDGE shall:
(a) subject to Section 2.5, as soon as reasonably practicable, apply in a
manner acceptable to ALCATEL, acting reasonably, under Section 192 of
the CBCA for an order approving the Arrangement and for the Interim
Order, and thereafter proceed with and diligently seek the Interim
Order;
(b) subject to Section 2.5, convene and hold the NEWBRIDGE Meeting for the
purpose of considering the Arrangement Resolution (provided however
that if there is another Acquisition Proposal to be considered at the
NEWBRIDGE Meeting, the order of presentation, signage, proxy forms and
other matters related thereto shall be acceptable to ALCATEL, acting
reasonably);
(c) subject to Section 5.4(2), except as required for quorum purposes, not
postpone or cancel (or propose for adjournment, postponement or
cancellation) the NEWBRIDGE Meeting without ALCATEL's prior written
consent except as required by Laws or required by the NEWBRIDGE
Shareholders;
-11-
(d) at the request of ALCATEL, use commercially reasonable efforts to
solicit from the NEWBRIDGE Shareholders proxies in favour of the
approval of the Arrangement Resolution and to take all other action
that is necessary or desirable to secure the approval of the
Arrangement Resolution by the NEWBRIDGE Shareholders, except to the
extent that the Board of Directors has changed its recommendation in
accordance with the terms of this Agreement (and subject in all cases
to Section 6.4 hereof);
(e) subject to obtaining the approvals as are required by the Interim
Order, proceed with and diligently pursue the application to the Court
for the Final Order;
(f) subject to obtaining the Final Order and the satisfaction or waiver of
the other conditions herein contained in favour of each party, send to
the Director, for endorsement and filing by the Director, the Articles
of Arrangement and such other documents as may be required in
connection therewith under the CBCA to give effect to the Arrangement;
and
(g) subject to obtaining the Final Order and the satisfaction or waiver of
the other conditions herein contained in its favour, execute the
Support Agreement and the Exchange Trust Agreement.
Section 2.2 Implementation Steps by ALCATEL.
ALCATEL covenants in favour of NEWBRIDGE that ALCATEL shall:
(a) subject to Section 2.6, convene and hold the ALCATEL Meeting at the
same time as its 2000 ordinary general meeting would otherwise have
been held for the purpose of considering the ALCATEL Resolution (and
for any other proper purpose as may be set out in the notice for such
meeting), and such meeting shall be held on or before May 31, 2000;
(b) subject to Section 5.4(2), except as required for quorum purposes, not
adjourn, postpone or cancel (or propose for adjournment, postponement
or cancellation) the ALCATEL Meeting without NEWBRIDGE's prior written
consent except as required by Laws or required by the ALCATEL
Shareholders;
(c) subject to their fiduciary duties, ALCATEL directors and officers
shall not make a negative recommendation in the ALCATEL Circular with
respect to the ALCATEL Resolution;
-12-
(d) incorporate and organize Callco;
(e) subject to obtaining the Final Order and the satisfaction or waiver of
the other conditions herein contained in its favour, ALCATEL shall
(and shall cause Callco to) execute and deliver the Support Agreement;
and
(f) subject to obtaining the Final Order and the satisfaction or waiver of
the other conditions herein contained in its favour, ALCATEL shall
(and shall cause Callco to) execute and deliver the Exchange Trust
Agreement.
Section 2.3 Interim Order.
The notice of motion for the application referred to in Section 2.1(a)
shall request that the Interim Order provide:
(a) for the class of Persons to whom notice is to be provided in respect
of the Arrangement and the NEWBRIDGE Meeting and for the manner in
which such notice is to be provided;
(b) that the requisite approval for the Arrangement Resolution shall be
66/2//\\3\\% of the votes cast on the Arrangement Resolution by
NEWBRIDGE Shareholders present in person or by proxy at the NEWBRIDGE
Meeting (such that each holder of NEWBRIDGE Common Shares is entitled
to one vote for each NEWBRIDGE Common Share held and each holder of
NEWBRIDGE Options and NEWBRIDGE Warrants is entitled to the number of
votes represented by the number of NEWBRIDGE Common Shares into which
such holder's NEWBRIDGE Option or NEWBRIDGE Warrants is convertible,
rounded down to the nearest whole number of NEWBRIDGE Common Shares
and without regard to vesting requirements, if any);
(c) that, in all other respects, the terms, restrictions and conditions of
the by-laws and articles of NEWBRIDGE, including quorum requirements
and all other matters, shall apply in respect of the NEWBRIDGE
Meeting; and
(d) for the grant of the Dissent Rights.
Section 2.4 Articles of Arrangement.
The Articles of Arrangement shall, with such other matters as are necessary
to effect the Arrangement, implement the Plan of Arrangement, as a result of
which, among other things, each holder of NEWBRIDGE Common Shares will be
entitled to
-13-
receive either 0.81 Exchangeable Shares or 0.81 ALCATEL ADSs (evidenced by
ALCATEL ADRs) at the option of the holder.
Section 2.5 NEWBRIDGE Circular.
As promptly as reasonably practicable after the execution and delivery of
this Agreement, NEWBRIDGE shall complete the NEWBRIDGE Circular together with
any other documents required by the Securities Act or other applicable Laws in
connection with the Arrangement, and as promptly as practicable after the
execution and delivery of this Agreement, NEWBRIDGE shall, unless otherwise
agreed by the parties and subject to the contemporaneous mailing of the ALCATEL
Circular, cause the NEWBRIDGE Circular and other documentation required in
connection with the NEWBRIDGE Meeting to be sent to each NEWBRIDGE Shareholder
and filed as required by the Interim Order and applicable Laws.
Section 2.6 ALCATEL Circular.
ALCATEL shall, subject to the obtaining of required Regulatory Approvals in
connection with sending the ALCATEL Circular, complete the ALCATEL Circular
together with any other documents required by the PSE or applicable Laws in
connection with the ALCATEL Meeting and shall, subject to the contemporaneous
mailing of the NEWBRIDGE Circular or as otherwise agreed by the parties, cause
the ALCATEL Circular and other documentation required in connection with the
ALCATEL Meeting to be sent to each ALCATEL Shareholder as required by applicable
Laws.
Section 2.7 Securities Compliance.
(1) ALCATEL shall use its reasonable best efforts to obtain all orders required
from the applicable Canadian securities regulatory authorities to permit
the issuance and first resale of (a) the Exchangeable Shares issued
pursuant to the Arrangement, and (b) the ALCATEL ADSs provided from time to
time upon exchange of the Exchangeable Shares, in each case without
qualification with or approval of or the filing of any prospectus, or the
taking of any proceeding with, or the obtaining of any further order,
ruling or consent from, any Governmental Entity or regulatory authority
under any Canadian federal, provincial or territorial securities or other
Laws or pursuant to the rules and regulations of any regulatory authority
administering such Laws, or the fulfilment of any other legal requirement
in any such jurisdiction (other than, with respect to such first resales,
any restrictions on transfer by reason of, among other things, a holder
being a "control person" of ALCATEL or NEWBRIDGE for purposes of Canadian
federal, provincial or territorial securities Laws) (for greater certainty,
in each case without affecting the need to comply with applicable United
States, French or other Laws).
-14-
(2) Each of ALCATEL and NEWBRIDGE shall use its reasonable best efforts to
obtain the approval of The Toronto Stock Exchange for the listing of the
Exchangeable Shares.
(3) ALCATEL shall use its reasonable best efforts to obtain the approval of the
COB and the PSE for the listing of the ALCATEL Shares to be issued in
connection with the Arrangement.
(4) ALCATEL shall use its reasonable best efforts to obtain the approval of the
NYSE for the listing of the ALCATEL ADRs and the ALCATEL ADSs to be
provided from time to time upon exchange of the Exchangeable Shares or the
exercise of the NEWBRIDGE Options or the NEWBRIDGE Warrants.
(5) As promptly as practicable after the date hereof but in no event later than
March 24, 2000, ALCATEL shall file a registration statement on Form F-3 (or
other applicable form) (the "Form F-3") in order to register under the 1933
Act the ALCATEL ADSs to be provided from time to time after the Effective
Time upon exchange of the Exchangeable Shares, and shall use its reasonable
efforts to cause the Form F-3 to become effective and to maintain the
effectiveness of such registration for the period that such Exchangeable
Shares remain outstanding.
(6) Within 10 days after or if necessary before the Effective Date, ALCATEL
shall file a registration statement on Form S-8 (or other applicable form)
(the "Form S-8") in order to register under the 1933 Act those ALCATEL ADSs
to be distributed from time to time after the Effective Time upon the
exercise of the Revised Options.
Section 2.8 Preparation of Filings, etc.
(1) ALCATEL and NEWBRIDGE shall use their reasonable best efforts to cooperate
in the preparation, seeking and obtaining of all circulars, filings,
consents, Regulatory Approvals and other approvals and other matters in
connection with this Agreement and the Arrangement, provided, however,
that, with respect to Canadian or U.S. federal, provincial, state or
territorial qualifications, ALCATEL shall not be required to register or
qualify as a foreign corporation or to take any action that would subject
it to service of process in any jurisdiction where it is not now so
subject, except as to matters and transactions arising solely from the
exchange of the Exchangeable Shares and the provision and listing of the
ALCATEL ADSs and the ALCATEL ADRs.
(2) Each of ALCATEL and NEWBRIDGE shall furnish to the other all such
information concerning it and its shareholders as may be required (and, in
the case of its shareholders, available to it) for the effectuation of the
actions
-15-
described in Sections 2.5, 2.6 and 2.7 and the foregoing provisions of this
Section 2.8, and each covenants that no information furnished by it (to its
knowledge in the case of information concerning its shareholders) in
connection with such actions or otherwise in connection with the
consummation of the Arrangement and the other transactions contemplated by
this Agreement will contain any untrue statement of a material fact or omit
to state a material fact required to be stated in any such document or
necessary in order to make any information so furnished for use in any such
document not misleading in the light of the circumstances in which it is
furnished.
(3) ALCATEL and NEWBRIDGE shall each promptly notify the other if at any time
before the Effective Time it becomes aware that the NEWBRIDGE Circular or
the ALCATEL Circular, an application for an order or any other document
described in Section 2.7 contains any untrue statement of a material fact
or omits to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading in light
of the circumstances in which they are made, or that otherwise requires an
amendment or supplement to the NEWBRIDGE Circular or the ALCATEL Circular
or such application or other document. In any such event, ALCATEL and
NEWBRIDGE shall cooperate in the preparation of a supplement or amendment
to the NEWBRIDGE Circular or the ALCATEL Circular or such application or
other document, as required and as the case may be, and, if required, shall
cause the same to be distributed to shareholders of ALCATEL or NEWBRIDGE
and/or filed with the relevant securities regulatory authorities and/or
stock exchanges.
(4) NEWBRIDGE shall ensure that the NEWBRIDGE Circular complies with all
applicable Laws and, without limiting the generality of the foregoing, that
the NEWBRIDGE Circular does not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading in light
of the circumstances in which they are made (other than with respect to any
information relating to and provided by ALCATEL or any third party that is
not an affiliate of NEWBRIDGE). Without limiting the generality of the
foregoing, NEWBRIDGE shall ensure that the NEWBRIDGE Circular provides
holders of NEWBRIDGE Common Shares with information in sufficient detail to
permit them to form a reasoned judgement concerning the matters to be
placed before them at the NEWBRIDGE Meeting, and ALCATEL shall provide all
information regarding it necessary to do so.
(5) ALCATEL shall ensure that the ALCATEL Circular and that the Form F-3 and
Form S-8 comply with all applicable Laws and, without limiting the
generality of the foregoing, that the ALCATEL Circular and such documents
-16-
do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements contained therein not misleading in light of the circumstances
in which they are made (other than with respect to any information relating
to and provided by NEWBRIDGE or any third party that is not an affiliate of
ALCATEL). Without limiting the generality of the foregoing, ALCATEL shall
ensure that the ALCATEL Circular provides ALCATEL Shareholders with
information in sufficient detail to permit them to form a reasoned
judgement concerning the matters to be placed before them at the ALCATEL
Meeting, and NEWBRIDGE shall provide all information regarding it necessary
to do so.
(6) NEWBRIDGE shall, at least 45 days prior to the date of the NEWBRIDGE
Meeting, deliver to ALCATEL a list reasonably satisfactory to ALCATEL
setting forth the names and addresses of all Persons who are at the time
"affiliates" of NEWBRIDGE for purposes of Rule 145 under the 1933 Act.
NEWBRIDGE shall furnish such information and documents as ALCATEL may
reasonably request for the purpose of reviewing such list, and NEWBRIDGE
shall, without expending any moneys or other consideration, use its
reasonable best efforts to cause each Person who is identified as an
affiliate on such list to execute a written agreement at least 30 days
prior to the date of the NEWBRIDGE Meeting in a form acceptable to ALCATEL
and NEWBRIDGE, acting reasonably, related to the applicable resale
restrictions of Rule 145.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of NEWBRIDGE.
NEWBRIDGE represents and warrants to and in favour of ALCATEL, as
follows and acknowledges that ALCATEL is relying upon such representations
and warranties in connection with the matters contemplated by this
Agreement:
(a) Organization.
Each of NEWBRIDGE and the NEWBRIDGE Material Subsidiaries has been duly
incorporated or formed under all applicable Laws, is validly
subsisting and has full corporate or legal power and authority to own
its properties and conduct its businesses as currently owned and
conducted. The only material subsidiaries of NEWBRIDGE are the
Material Subsidiaries. All of the outstanding shares and other
ownership interests of the NEWBRIDGE Material Subsidiaries which
-17-
are held directly or indirectly by NEWBRIDGE are validly issued, fully
paid and non-assessable and all such shares and other ownership
interests are owned directly or indirectly by NEWBRIDGE, free and
clear of all material liens, claims or encumbrances, except as has
been set forth in writing by NEWBRIDGE to ALCATEL in a form acceptable
to ALCATEL or pursuant to restrictions on transfers contained in
articles or similar documents, and except as aforesaid there are no
outstanding options, rights, entitlements, understandings or
commitments (contingent or otherwise) regarding the right to acquire
any such shares or other ownership interests in any of the NEWBRIDGE
Material Subsidiaries. NEWBRIDGE has disclosed in writing to ALCATEL
in a form acceptable to ALCATEL the names and jurisdictions of
incorporation of each of the NEWBRIDGE Material Subsidiaries.
(b) Capitalization. The authorized capital of NEWBRIDGE consists of an
unlimited number of NEWBRIDGE Common Shares and an unlimited number of
NEWBRIDGE Preferred Shares, issuable in Series, including the Series A
NEWBRIDGE Preferred Shares. As of the date hereof, there are
181,824,826 NEWBRIDGE Common Shares (and no more) and no NEWBRIDGE
Preferred Shares issued and outstanding. In addition, as at the date
hereof, options to acquire an aggregate of not more than 32,916,053
NEWBRIDGE Common Shares are granted and outstanding under the
NEWBRIDGE Stock Option Plan, rights to acquire not more than 7,500
NEWBRIDGE Common Shares are granted and outstanding under the
NEWBRIDGE Employee Stock Purchase Plan and rights to acquire 285,000
NEWBRIDGE Common Shares are granted and outstanding under the
NEWBRIDGE Warrants (and, in each case, no more). No awards have been
or will be made under the NEWBRIDGE Key Employee Executive Plan.
Except as described in the preceding sentences of this Section 3.1(b)
and in Section 3.1(a), there are no options, warrants, conversion
privileges or other rights, agreements, arrangements or commitments
(pre-emptive, contingent or otherwise) obligating NEWBRIDGE or any
NEWBRIDGE Material Subsidiary to issue or sell any shares of NEWBRIDGE
or any of the NEWBRIDGE Material Subsidiaries or securities or
obligations of any kind convertible into or exchangeable for any
shares of NEWBRIDGE or any NEWBRIDGE Material Subsidiary. All
outstanding NEWBRIDGE Common Shares have been duly authorized and are
validly issued and outstanding as fully paid and non-assessable
shares, free of pre-emptive rights. Except as described in the
preceding sentences of this Section 3.1(b), there are no outstanding
bonds, debentures or other evidences of indebtedness of
-18-
NEWBRIDGE or any subsidiary having the right to vote (or that are
convertible for or exercisable into securities having the right to
vote) with the holders of the NEWBRIDGE Common Shares on any matter.
Except as has been set forth in writing by NEWBRIDGE to ALCATEL in a
form acceptable to ALCATEL, there are no outstanding contractual
obligations of NEWBRIDGE or any of the NEWBRIDGE Material Subsidiaries
to repurchase, redeem or otherwise acquire any of its outstanding
securities or with respect to the voting or disposition of any
outstanding securities of any of the NEWBRIDGE Material Subsidiaries.
(c) Authority and No Violation.
(i) NEWBRIDGE has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by
NEWBRIDGE and the consummation by NEWBRIDGE of the transactions
contemplated by this Agreement have been duly authorized by its
Board of Directors and no other corporate proceedings on its
part are necessary to authorize this Agreement or the
transactions contemplated hereby, other than:
(A) with respect to the NEWBRIDGE Meeting, the NEWBRIDGE
Circular and other matters relating solely thereto, the
approval of the Board of Directors of NEWBRIDGE; and
(B) with respect to the completion of the Arrangement, the
requisite approval of the NEWBRIDGE Shareholders.
(ii) This Agreement has been duly executed and delivered by
NEWBRIDGE and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency and other applicable
Laws affecting creditors' rights generally, and to general
principles of equity.
(iii) The Board of Directors of NEWBRIDGE has (A) determined as of
the date hereof unanimously that the Arrangement is fair to the
holders of the NEWBRIDGE Common Shares and is in the best
interests of NEWBRIDGE, (B) received an opinion from Xxxxxx
Xxxxxxx & Co. Incorporated to the effect that, as of the date
of this Agreement, the consideration offered to NEWBRIDGE
Shareholders pursuant to the Arrangement is fair
-19-
from a financial point of view to the NEWBRIDGE Shareholders,
and (C) determined as of the date hereof to unanimously
recommend that the NEWBRIDGE Shareholders vote in favour of the
Arrangement. NEWBRIDGE's directors have advised NEWBRIDGE that,
as of the date hereof, they intend to vote NEWBRIDGE Common
Shares and NEWBRIDGE Options held by them in favour of the
Arrangement and (except with respect to Xx. Xxxxxxxx, unless
the Board of Directors of NEWBRIDGE shall have failed to
recommend or shall have withdrawn, modified or changed in a
manner adverse to ALCATEL its approval or recommendation of
this Agreement or the Arrangement or shall have approved or
recommended any unsolicited Superior Proposal in accordance
with Section 4.6) will so represent in the NEWBRIDGE Circular.
NEWBRIDGE is not subject to a shareholder rights plan or
"poison pill" or similar plan.
(iv) The approval of this Agreement, the execution and delivery by
NEWBRIDGE of this Agreement and the performance by it of its
obligations hereunder and the completion of the Arrangement and
the transactions contemplated thereby, will not, except as
disclosed in writing by NEWBRIDGE to ALCATEL in a form
acceptable to ALCATEL:
(A) result (with or without notice or the passage of time) in
a violation or breach of, require any consent to be
obtained under or give rise to any termination, purchase
or sale rights or payment obligation under any provision
of:
(I) its or any NEWBRIDGE Material Subsidiary's
certificate of incorporation, articles, by-laws or
other charter documents, including any unanimous
shareholder agreement;
(II) any Laws, judgement or decree (subject to obtaining
the Regulatory Approvals relating to NEWBRIDGE),
except to the extent that the violation or breach
of, or failure to obtain any consent under, any
Laws, judgement or decree would not, individually
or in the aggregate, have a Material Adverse Effect
on NEWBRIDGE; or
(III) except as would not, individually or in the
aggregate, have a Material Adverse Effect on
-20-
NEWBRIDGE, any contract, agreement, license,
franchise or permit to which NEWBRIDGE or any
subsidiary is party or by which it is bound or
subject or is the beneficiary;
(B) give rise to any right of termination or acceleration of
indebtedness of NEWBRIDGE or any subsidiary, or cause any
such indebtedness to come due before its stated maturity,
or cause any available credit of NEWBRIDGE or any
subsidiary to cease to be available, other than as would
not, individually or in the aggregate, have a Material
Adverse Effect on NEWBRIDGE;
(C) except as would not, individually or in the aggregate,
have a Material Adverse Effect on NEWBRIDGE, result in the
imposition of any encumbrance, charge or lien upon any of
its assets or the assets of any NEWBRIDGE Material
Subsidiary; or
(D) except as would not, individually or in the aggregate,
have a Material Adverse Effect on NEWBRIDGE, restrict,
hinder, impair or limit the ability of NEWBRIDGE or any
NEWBRIDGE Material Subsidiary to carry on the business of
NEWBRIDGE or any NEWBRIDGE Material Subsidiary as and
where it is now being carried on.
No consent, approval, order or authorization of, or declaration
or filing with, any Governmental Entity is required to be
obtained by NEWBRIDGE and its subsidiaries in connection with
the execution and delivery of this Agreement or the
consummation by NEWBRIDGE of the transactions contemplated
hereby other than (A) any approvals required by the Interim
Order, (B) the Final Order, (C) filings with the Director under
the CBCA, (D) the Regulatory Approvals relating to NEWBRIDGE
and (E) any other consents, approvals, orders, authorizations,
declarations or filings of or with a Governmental Entity which
have been set forth in writing by NEWBRIDGE to ALCATEL in a
form acceptable to ALCATEL or which, if not obtained, would,
individually or in the aggregate, have a Material Adverse
Effect on NEWBRIDGE.
(d) No Defaults. Subject to obtaining the Regulatory Approvals relating
to NEWBRIDGE and except as has been disclosed in writing by NEWBRIDGE
to ALCATEL in a form acceptable to ALCATEL, neither
-21-
NEWBRIDGE nor any of its subsidiaries is in default under, and there
exists no event, condition or occurrence which, after notice or lapse
of time or both, would constitute such a default under, any contract,
agreement, license or franchise to which it is a party which would
have a Material Adverse Effect on NEWBRIDGE.
(e) Absence of Certain Changes or Events. Except as has been disclosed in
writing by NEWBRIDGE to ALCATEL in a form acceptable to ALCATEL or
Publicly Disclosed by NEWBRIDGE, from April 30, 1999 through to the
date hereof, each of NEWBRIDGE and the NEWBRIDGE Material Subsidiaries
has conducted its business only in the ordinary and regular course of
business consistent with past practice and there has not occurred:
(i) a Material Adverse Change with respect to NEWBRIDGE;
(ii) any damage, destruction or loss not fully covered by insurance
that could reasonably be expected to have a Material Adverse
Effect on NEWBRIDGE;
(iii) any redemption, repurchase or other acquisition of NEWBRIDGE
Common Shares by NEWBRIDGE or any declaration, setting aside or
payment of any dividend or other distribution (whether in cash,
stock or property) with respect to NEWBRIDGE Common Shares;
(iv) any material increase in or modification of the compensation
payable or to become payable by it to any of its directors or
officers, or any grant to any such director or officer of any
increase in severance or termination pay;
(v) any material increase in or modification of any bonus, pension,
insurance or benefit arrangement (including the granting of
stock options, restricted stock awards or stock appreciation
rights) made to, for or with any of its directors or officers;
(vi) any acquisition or sale of its property or assets aggregating
10% or more of NEWBRIDGE's total consolidated property and
assets as at April 30, 1999 other than in the ordinary and
regular course of business consistent with past practice;
(vii) any entering into, amendment of, relinquishment, termination or
non-renewal by it of any material contract, agreement, license,
franchise, lease transaction, commitment or other right
-22-
or obligation that could reasonably be expected to have a
Material Adverse Effect on NEWBRIDGE;
(viii) any resolution to approve a split, consolidation or
reclassification of any of its outstanding shares;
(ix) any material change in its accounting methods, principles or
practices;
(x) any guarantee of the payment of material indebtedness or any
incurrence of material indebtedness for money borrowed or any
issue or sale of any debt securities except in the ordinary and
regular course of business consistent with past practice; or
(xi) except in the usual, ordinary and regular course of business
and consistent with past practice: (A) any satisfaction or
settlement of any claims or liabilities prior to the same being
due, which were, individually or in the aggregate, material; or
(B) any grant of any waiver, exercise of any option or
relinquishment of any contractual rights which were,
individually or in the aggregate, material.
(f) Employment Matters.
(i) Except as has been disclosed in writing by NEWBRIDGE to ALCATEL
in a form acceptable to ALCATEL, neither NEWBRIDGE nor any
NEWBRIDGE Material Subsidiary is a party to any agreement,
obligation or understanding providing for severance or
termination payments to, or any employment agreement with, any
director or officer, other than any common law obligations of
reasonable notice of termination or pay in lieu thereof and any
statutory obligations.
(ii) Except as has been set forth in writing by NEWBRIDGE to ALCATEL
in a form acceptable to ALCATEL, NEWBRIDGE or its subsidiaries
are not subject to any collective bargaining agreements, and
there are no current, pending or, to the knowledge of
NEWBRIDGE, threatened strikes or lockouts at NEWBRIDGE or any
NEWBRIDGE Material Subsidiary that would, individually or in
the aggregate, have a Material Adverse Effect on NEWBRIDGE.
(iii) Neither NEWBRIDGE nor any NEWBRIDGE Material Subsidiary is
subject to any litigation, actual or, to the knowledge of
NEWBRIDGE, threatened, relating to
-23-
employment or termination of employment of employees or
independent contractors, other than those claims or such
litigation as would, individually or in the aggregate, not have
a Material Adverse Effect on NEWBRIDGE.
(iv) NEWBRIDGE and all NEWBRIDGE Material Subsidiaries have operated
in accordance with all applicable Laws with respect to
employment and labour, including, but not limited to,
employment and labour standards, occupational health and
safety, employment equity, pay equity, workers' compensation,
human rights and labour relations and there are no current,
pending or, to the knowledge of NEWBRIDGE, threatened
proceedings before any board or tribunal with respect to any of
the above areas, other than as has been set forth in writing by
NEWBRIDGE to ALCATEL in a form acceptable to ALCATEL or where
the failure to so operate or such proceedings would,
individually or in the aggregate, not have a Material Adverse
Effect on NEWBRIDGE.
(v) Except as has been set forth in writing by NEWBRIDGE to ALCATEL
in a form acceptable to ALCATEL, there are no outstanding stock
appreciation rights, phantom equity or similar rights,
agreements, arrangements or commitments based upon the book
value, income or any other attribute of NEWBRIDGE or any
NEWBRIDGE Material Subsidiary.
(g) Financial Statements; Contingent Liabilities. The audited consolidated
financial statements for NEWBRIDGE as at and for each of the 12-month
periods ended on or about April 30, 1999, 1998 and 1997 and the
unaudited consolidated financial statements for the 3-month and 6-
month periods ended July 31 and October 31, 1999 have been prepared in
accordance with Canadian generally accepted accounting principles
(subject, in the case of such unaudited financial statements, to the
absence of notes and to usual and non-material year-end adjustments),
and such financial statements present fairly, in all material
respects, the consolidated financial position and results of
operations of NEWBRIDGE and its subsidiaries as of the respective
dates thereof and for the respective periods covered thereby, subject,
in the case of such unaudited financial statements, to usual and non-
material year-end adjustments. Such financial statements have also
been reconciled to U.S. generally accepted accounting principles in
accordance with the applicable requirements of the SEC. The financial
results for the 9-month period ended January 31, 2000 present fairly,
in all material respects, the consolidated financial position and
results of operations
-24-
of NEWBRIDGE at the date thereof and for the period covered thereby.
Except as set forth in the NEWBRIDGE Documents filed prior to the date
hereof, and except for liabilities and obligations incurred in the
ordinary course of business since the date of the most recent
consolidated balance sheet included in the NEWBRIDGE Documents,
neither NEWBRIDGE nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) except for those that would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect on NEWBRIDGE.
(h) Books and Records. The financial books, records and accounts of
NEWBRIDGE and its subsidiaries, in all material respects, (i) have
been maintained in accordance with Canadian generally accepted
accounting principles on a basis consistent with prior years, (ii) are
stated in reasonable detail and accurately and fairly reflect the
transactions and dispositions of the assets of NEWBRIDGE and its
subsidiaries and (iii) accurately and fairly reflect the basis for the
NEWBRIDGE consolidated financial statements. NEWBRIDGE's and the
NEWBRIDGE Material Subsidiaries' corporate minute books contain
minutes of all meetings and resolutions of the directors and
shareholders held, and full access thereto has been provided to
ALCATEL (except that only draft minutes have been made available in
respect of the November 18, 1999 and February 21/22, 2000 board
meetings).
(i) Litigation, Etc. Except as has been set forth in writing by NEWBRIDGE
to ALCATEL in a form acceptable to ALCATEL or Publicly Disclosed by
NEWBRIDGE, there is no claim, action, proceeding or investigation
pending or, to the knowledge of NEWBRIDGE, threatened against
NEWBRIDGE or any NEWBRIDGE Material Subsidiary before any court or
Governmental Entity that would reasonably be expected to have a
Material Adverse Effect on NEWBRIDGE or to prevent or materially delay
consummation of the transactions contemplated by this Agreement or the
Arrangement. Neither NEWBRIDGE nor any NEWBRIDGE Material Subsidiary,
nor any of their respective assets and properties, is subject to any
outstanding judgement, order, writ, injunction or decree that has had
or is reasonably likely to have a Material Adverse Effect on NEWBRIDGE
or that would prevent or materially delay consummation of the
transactions contemplated by this Agreement or the Arrangement. Except
as has been set forth in writing previously by NEWBRIDGE to ALCATEL in
a form acceptable to ALCATEL, to their knowledge, NEWBRIDGE and the
NEWBRIDGE
-25-
Material Subsidiaries are not subject to any warranty, negligence,
performance or other claims or disputes or potential claims or
disputes in respect of products or services currently being delivered
or previously delivered, and to their knowledge there are no events or
circumstances which could reasonably be expected to give rise to any
such claims or disputes or potential claims or disputes, in each case
which could reasonably be expected to have a Material Adverse Effect
on NEWBRIDGE.
(j) Environmental. Except for any matters that, individually or in the
aggregate, would not have a Material Adverse Effect on NEWBRIDGE or
except as has been set forth in writing by NEWBRIDGE to ALCATEL in a
form acceptable to ALCATEL:
(i) all operations of NEWBRIDGE and its subsidiaries have been
conducted, and are now, in compliance with all Environmental
Laws; and
(ii) to its knowledge, neither NEWBRIDGE nor any Material Subsidiary
is subject to:
(A) any Environmental Law which requires or may require any
material work, repairs, construction, change in business
practices or operations, or expenditures; or
(B) any written demand or written notice with respect to a
breach of or liability under any Environmental Laws
applicable to NEWBRIDGE or any NEWBRIDGE Material
Subsidiary.
(k) Tax Matters. Except as has been set forth in writing by NEWBRIDGE to
ALCATEL in a form acceptable to ALCATEL:
(i) NEWBRIDGE and each of the NEWBRIDGE Material Subsidiaries have
filed, or caused to be filed, all Tax Returns required to be
filed by them (all of which returns were correct and complete in
all material respects), except those in respect of which the
failure to file which would not have a Material Adverse Effect on
NEWBRIDGE, and have paid, or caused to be paid, all material
amounts of Taxes shown to be due and payable thereon, and
NEWBRIDGE's most recently published financial statements contain
an adequate provision in accordance with Canadian generally
accepted accounting principles for all material amounts of Taxes
payable in respect
-26-
of each period covered by such financial statements and all
prior periods to the extent such Taxes have not been paid,
whether or not due and whether or not shown as being due on any
Tax Returns. NEWBRIDGE and each of the NEWBRIDGE Material
Subsidiaries have made adequate provision in accordance with
Canadian generally accepted accounting principles in their
books and records for any material amounts of Taxes accruing in
respect of any accounting period which has ended subsequent to
the period covered by such financial statements.
(ii) Neither NEWBRIDGE nor any NEWBRIDGE Material Subsidiary has
received any written notification that any issues involving a
material amount of Taxes have been raised (and are currently
pending) by Canada Customs and Revenue Agency, the United
States Internal Revenue Service or any other taxing authority,
including, without limitation, any sales tax authority, in
connection with any of the Tax Returns filed or required to be
filed, and no waivers of statutes of limitations, or objections
to any assessments or reassessments, have been given or
requested or made with respect to NEWBRIDGE or any NEWBRIDGE
Material Subsidiary. All liability of NEWBRIDGE and the
NEWBRIDGE Material Subsidiaries for income taxes has been
assessed for all fiscal years up to and including the fiscal
year ended April 30, 1990. Neither NEWBRIDGE nor any NEWBRIDGE
Material Subsidiary has received any written notice from any
taxing authority to the effect that any Tax Return is being
examined. To the best of the knowledge of NEWBRIDGE, there are
no proposed in writing (but unassessed) additional Taxes
involving a material amount of Taxes and none has been asserted
in writing. No Tax liens have been filed for material amounts
of Taxes other than for Taxes not yet due and payable. Neither
NEWBRIDGE nor any of the NEWBRIDGE Material Subsidiaries is a
party to any Tax sharing or other similar agreement or
arrangement of any nature with any other person (other than
NEWBRIDGE or any of its subsidiaries) pursuant to which
NEWBRIDGE or any of the NEWBRIDGE Material Subsidiaries has or
could have any material liabilities in respect of Taxes, other
than any liability arising under an agreement providing for the
sale or other disposition of property by NEWBRIDGE or any of
the NEWBRIDGE Material Subsidiaries. Neither NEWBRIDGE nor
-27-
any NEWBRIDGE Material Subsidiary has received a refund of any
Taxes to which it was not entitled.
(iii) "Tax" and "Taxes" means, with respect to any entity, all income
taxes (including any tax on or based upon net income, gross
income, income as specially defined, earnings, profits or
selected items of income, earnings or profits) and all capital
taxes, gross receipts taxes, environmental taxes, sales taxes,
use taxes, ad valorem taxes, value added taxes, transfer taxes,
franchise taxes, license taxes, withholding taxes or other
withholding obligations, payroll taxes, employment taxes,
Canada or Quebec Pension Plan premiums, excise, severance,
social security premiums, workers' compensation premiums,
employment insurance or compensation premiums, stamp taxes,
occupation taxes, premium taxes, property taxes, windfall
profits taxes, alternative or add-on minimum taxes, goods and
services tax, customs duties or other taxes of any kind
whatsoever, together with any interest and any penalties or
additional amounts imposed by any taxing authority (domestic or
foreign) on such entity or for which such entity is
responsible, and any interest, penalties, additional taxes,
additions to tax or other amounts imposed with respect to the
foregoing.
(iv) For purposes of this Section 3.1(k), the term "material amount
of Taxes" shall mean an amount of Taxes that is material to
NEWBRIDGE and its subsidiaries taken as a whole.
(l) Pension and Employee Benefits.
(i) NEWBRIDGE has made available to ALCATEL a list of all employee
benefit, health, welfare, supplemental unemployment benefit,
bonus, pension, profit sharing, deferred compensation, stock
option, stock compensation, stock purchase, retirement,
hospitalization insurance, medical, dental, legal, disability
and similar plans or arrangements or practices, whether written
or oral, which are maintained by NEWBRIDGE and/or any NEWBRIDGE
Material Subsidiary (collectively referred to as the "NEWBRIDGE
Plans"). NEWBRIDGE has previously delivered to ALCATEL in a
form acceptable to ALCATEL a statement as to which of the
NEWBRIDGE Plans constitute "employee pension benefit plans" (as
defined in Section 3(2) of the United States Employee
Retirement Income Security Act of 1974,
-28-
as amended ("ERISA")) or "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA).
(ii) To NEWBRIDGE's knowledge, no step has been taken, no event has
occurred and no condition or circumstance exists that has
resulted in or could reasonably be expected to result in any
NEWBRIDGE Plan being ordered or required to be terminated or
wound up in whole or in part or having its registration under
applicable Laws refused or revoked, or being placed under the
administration of any trustee or receiver or regulatory
authority or being required to pay any material Taxes,
penalties or levies under applicable Laws. To NEWBRIDGE's
knowledge, there are no actions, suits, claims (other than
routine claims for payment of benefits in the ordinary course),
trials, demands, investigations, arbitrations or other
proceedings which are pending or threatened in respect of any
of the NEWBRIDGE Plans or their assets which individually or in
the aggregate would have a Material Adverse Effect on
NEWBRIDGE.
(iii) NEWBRIDGE has made available to ALCATEL true, correct and
complete copies of all of the material NEWBRIDGE Plans (or, in
the case of any material unwritten NEWBRIDGE Plan, a
description thereof) together with funding agreements,
actuarial reports, funding and financial information returns
and statements with respect to each NEWBRIDGE Plan, and current
plan summaries, booklets and personnel manuals. NEWBRIDGE has
made available to ALCATEL a true and complete copy of the most
recent report filed with applicable Governmental Entities with
respect to each NEWBRIDGE Plan in respect of which such a
report was required.
(iv) Other than as has been disclosed in writing by NEWBRIDGE to
ALCATEL in a form acceptable to ALCATEL, all of the NEWBRIDGE
Plans are in compliance in all material respects with all
applicable Laws and their terms, and all of the NEWBRIDGE Plans
are fully insured or fully funded.
(v) None of the NEWBRIDGE Plans is a "multi-employer plan" within
the meaning of ERISA, nor has NEWBRIDGE or any NEWBRIDGE
Material Subsidiary been obligated to contribute to any such
multi-employer plan at any time within the past five years.
-29-
(vi) Except as has been set forth in writing by NEWBRIDGE to ALCATEL
in a form acceptable to ALCATEL, the entry into or performance
by NEWBRIDGE of this Agreement and the completion of the
Arrangement and the transactions contemplated thereby will not
result in any payment (including severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming
due to any director, officer or employee of NEWBRIDGE or any
NEWBRIDGE Material Subsidiary, or increase any benefits
otherwise payable under any NEWBRIDGE Plan or result in the
acceleration of time of payment or vesting of any such
benefits.
(m) Reports. NEWBRIDGE has filed with the OSC and/or with the SEC and/or
with the NYSE true and complete copies of all forms, reports,
schedules, statements and other documents required to be filed by it
since January 1, 1998 (such forms, reports, schedules, statements and
other documents, including any financial statements or other
documents, including any schedules included therein, are referred to
as the "NEWBRIDGE Documents"). The NEWBRIDGE Documents at the time
filed (i) did not contain any misrepresentation of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and (ii)
complied in all material respects with the requirements of applicable
securities Laws. NEWBRIDGE has not filed any confidential material
change report with the OSC or any other securities authority or
regulator or any stock exchange or other self-regulatory authority
which at the date hereof remains confidential.
(n) Compliance with Laws. Except as has been disclosed in writing by
NEWBRIDGE to ALCATEL in a form acceptable to ALCATEL or Publicly
Disclosed by NEWBRIDGE, NEWBRIDGE and the NEWBRIDGE Material
Subsidiaries have complied with and are not in violation of any
applicable Laws, orders, judgements and decrees other than non-
compliance or violations which would not, individually or in the
aggregate, have a Material Adverse Effect on NEWBRIDGE. Without
limiting the generality of the foregoing, all securities of NEWBRIDGE
(including, all options, rights or other convertible or exchangeable
securities) have been issued in compliance with all applicable
securities Laws and all securities to be issued upon exercise of any
such options, rights and other convertible or exchangeable securities
will be issued in compliance with all applicable securities Laws.
-30-
(o) Restrictions on Business Activities. Except as has been set forth in
writing by NEWBRIDGE to ALCATEL in a form acceptable to ALCATEL or
Publicly Disclosed by NEWBRIDGE, there is no agreement, judgement,
injunction, order or decree binding upon NEWBRIDGE or any subsidiary
or affiliate that has or could reasonably be expected to have the
effect of prohibiting, restricting or impairing any business practice
of NEWBRIDGE or any subsidiary or affiliate, any acquisition of
property by NEWBRIDGE or any subsidiary or affiliate or the conduct of
business by NEWBRIDGE or any subsidiary or affiliate as currently
conducted (including following the Arrangement) other than such
agreements, judgements, injunctions, orders or decrees which would
not, individually or in the aggregate, have a Material Adverse Effect
on NEWBRIDGE.
(p) Property. Except as has been disclosed in writing by NEWBRIDGE to
ALCATEL in a form acceptable to ALCATEL, NEWBRIDGE and each NEWBRIDGE
Material Subsidiary have good and sufficient title to the real
property interests, including fee simple estate of and in real
property, leases, easements, rights of way, permits or licences from
land owners or authorities permitting the use of land by NEWBRIDGE or
such NEWBRIDGE Material Subsidiary, necessary to permit the operation
of its businesses as presently owned and conducted except for such
failure of title that would individually or in the aggregate not have
a Material Adverse Effect on NEWBRIDGE. NEWBRIDGE is not a party to,
or under any agreement to become a party to, any lease with respect to
real property which if terminated could reasonably be expected to have
a Material Adverse Effect on NEWBRIDGE.
(q) Licences, Etc. Except as has been disclosed in writing by NEWBRIDGE
to ALCATEL in a form acceptable to ALCATEL, NEWBRIDGE and each
NEWBRIDGE Material Subsidiary owns, possesses, or has obtained and is
in compliance with, all licences, permits, certificates, orders,
grants and other authorizations of or from any Governmental Entity
necessary to conduct its businesses as now conducted except for such
failure that would individually or in the aggregate not have a
Material Adverse Effect on NEWBRIDGE.
(r) Registration Rights. No holder of securities issued by NEWBRIDGE has
any right to compel NEWBRIDGE to register or otherwise qualify such
securities for public sale in Canada or the United States.
(s) Intellectual Property. NEWBRIDGE has set forth in writing in a form
acceptable to ALCATEL a complete and accurate list of all registered
trade-marks, service marks, copyrights, industrial designs, patents,
-31-
design patents and all applications therefor of NEWBRIDGE or its
subsidiaries ("NEWBRIDGE IP"). Except as disclosed in writing in a
form acceptable to ALCATEL, none of NEWBRIDGE nor its subsidiaries has
received written notice or is aware that its use of NEWBRIDGE IP
infringes upon or breaches the industrial or intellectual property
rights of any other Person in any material respect. Except as
disclosed in writing in a form acceptable to ALCATEL, NEWBRIDGE has
not commenced legal proceedings relating to an infringement by any
Person of the NEWBRIDGE IP. NEWBRIDGE, to its knowledge, has or has
rights to use all of the intellectual property necessary to conduct
the business of NEWBRIDGE as currently carried on except where the
failure to do so would not, individually or in the aggregate, have a
Material Adverse Effect on NEWBRIDGE.
(t) Non-Arm's Length Transactions. Except as has been set forth in
writing by NEWBRIDGE to ALCATEL in a form acceptable to ALCATEL, there
are no material contracts, commitments, agreements, arrangements or
other transactions between NEWBRIDGE or any of its subsidiaries, on
the one hand, and any (i) officer or director of NEWBRIDGE or any of
its subsidiaries, (ii) record or beneficial owner of five percent or
more of the voting securities of NEWBRIDGE or (iii) affiliate of any
such officer, director or beneficial owner, on the other hand.
(u) Insurance. NEWBRIDGE has provided or made available to ALCATEL true,
correct and complete copies of all material policies of insurance to
which each of NEWBRIDGE and its subsidiaries are a party or are a
beneficiary or named insured. NEWBRIDGE and its subsidiaries maintain
insurance coverage with reputable insurers in such amounts and
covering such risks as are in accordance with normal industry practice
for companies engaged in businesses similar to that of NEWBRIDGE and
its subsidiaries (taking into account the cost and availability of
such insurance).
Section 3.2 Representations and Warranties of ALCATEL.
ALCATEL represents and warrants to and in favour of NEWBRIDGE as
follows and acknowledges that NEWBRIDGE is relying upon such
representations and warranties in connection with the matters contemplated
by this Agreement:
(a) Organization. ALCATEL has been duly incorporated or formed under
applicable Laws, is validly subsisting and has full corporate or legal
power and authority to own its properties and conduct its businesses
as currently owned and conducted. All of the outstanding shares and
-32-
other ownership interests of the ALCATEL Material Subsidiaries which
are held directly or indirectly by ALCATEL are owned directly or
indirectly by ALCATEL, free and clear of all material liens, claims or
encumbrances, except as has been set forth in writing by ALCATEL to
NEWBRIDGE in a form acceptable to NEWBRIDGE or pursuant to
restrictions on transfers contained in articles or similar documents.
(b) Capitalization. The issued capital of ALCATEL consists of 206,648,635
ALCATEL Shares, Euro 10 nominal value each, as at the date hereof.
There are warrants, options or other rights to acquire from treasury
not more than 3,000,000 ALCATEL Shares outstanding as at December 31,
1999.
(c) Authority and No Violation.
(i) ALCATEL has the requisite corporate power and authority to enter
into this Agreement, the Support Agreement and the Exchange Trust
Agreement and to perform its obligations hereunder and
thereunder. The consummation by ALCATEL of the transactions
contemplated by this Agreement has been duly authorized by its
Board of Directors and no other corporate proceedings on its part
are necessary to authorize this Agreement, the Support Agreement
and the Exchange Trust Agreement or the transactions contemplated
hereby or thereby, other than:
(A) With respect to the ALCATEL Meeting, the ALCATEL Circular
and other matters relating solely thereto, the approval of
the Board of Directors of ALCATEL (and the COB); and
(B) The approval of the ALCATEL Shareholders.
(ii) This Agreement has been duly executed and delivered by ALCATEL
and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency and other applicable Laws affecting
creditors' rights generally, and to general principles of equity.
Each of the Support Agreement and the Exchange Trust Agreement
will be duly executed and delivered by each of ALCATEL and its
subsidiaries who will be party thereto and, when so executed and
delivered, will constitute their respective legal, valid and
binding obligations, enforceable against them in accordance with
their respective terms, subject to bankruptcy,
-33-
insolvency and other applicable Laws affecting creditors'
rights generally, and to general principles of equity.
(iii) The approval of this Agreement, the Support Agreement and the
Exchange Trust Agreement, the execution and delivery by ALCATEL
and each of its subsidiaries who will be party thereto of this
Agreement, the Support Agreement and the Exchange Trust
Agreement and the performance by each of them of their
respective obligations hereunder and thereunder and the
completion of the Arrangement and the transactions contemplated
thereby, will not:
(A) result (with or without notice or the passage of time) in
a violation or breach of, require any consent to be
obtained under or give rise to any termination, purchase
or sale rights or payment obligation under any provision
of:
(I) its certificate of incorporation, articles, by-laws
or other charter documents;
(II) any Laws, judgement or decree (subject to obtaining
the Regulatory Approvals relating to ALCATEL), except
to the extent that the violation or breach of, or
failure to obtain any consent under, any Laws,
judgement or decree would not, individually or in the
aggregate, have a Material Adverse Effect on ALCATEL;
(B) except as would not, individually or in the aggregate,
have a Material Adverse Effect on ALCATEL, result in the
imposition of any encumbrance, charge or lien upon any of
its assets or the assets of any ALCATEL Material
Subsidiary; or
(C) except as would not, individually or in the aggregate,
have a Material Adverse Effect on ALCATEL, restrict,
hinder, impair or limit the ability of ALCATEL or any
ALCATEL Material Subsidiary to carry on business of
ALCATEL or any ALCATEL Material Subsidiary as and where it
is now being carried on.
No consent, approval, order or authorization of, or declaration
or filing with, any Governmental Entity is required to be
obtained by ALCATEL in connection with the execution and
-34-
delivery of this Agreement, the Support Agreement and the
Exchange Trust Agreement or the consummation by ALCATEL of the
transactions contemplated hereby or thereby other than (A) the
Regulatory Approvals relating to ALCATEL, (B) any filings
required in connection with the creation and issue of the ALCATEL
ADSs, and (C) any other consents, approvals, orders,
authorizations, declarations or filings of or with a Governmental
Entity which have been set forth in writing by ALCATEL to
NEWBRIDGE in a form acceptable to NEWBRIDGE or which, if not
obtained, would not, individually or in the aggregate, have a
Material Adverse Effect on ALCATEL.
(d) Absence of Certain Changes or Events; No Defaults. Except as Publicly
Disclosed by ALCATEL, since December 31, 1999 through to the date
hereof ALCATEL and each ALCATEL Material Subsidiary has conducted its
business only in the ordinary and regular course of business
consistent with past practice and there has not occurred:
(i) a Material Adverse Change with respect to ALCATEL; or
(ii) any material change in its accounting methods, principles or
practices.
Subject to obtaining the Regulatory Approvals relating to ALCATEL and
except as has been disclosed in writing by ALCATEL to NEWBRIDGE in a
form acceptable to NEWBRIDGE, neither ALCATEL nor any of its
subsidiaries is in default under, and there exists no event, condition
or occurrence which, after notice or lapse of time or both, would
constitute such a default under, any contract, agreement, license or
franchise to which it is a party which would have a Material Adverse
Effect on ALCATEL.
(e) Financial Statements. The audited consolidated financial statements
for ALCATEL as at and for each of the 12-month periods ended December
31, 1999 and 1998 have been prepared in accordance with French
generally accepted accounting principles, the requirements of
applicable Governmental Entities and applicable securities Laws; such
financial statements present fairly, in all material respects, the
consolidated financial position and results of operations of ALCATEL
and its subsidiaries as of the respective dates thereof and for the
respective periods covered thereby.
-35-
(f) Reports. ALCATEL has filed with the PSE and/or the COB and/or the
NYSE and/or the SEC true and complete copies of all material forms,
reports, schedules, statements and other documents required to be
filed by it since January 1, 1998, and such documents, at the time
filed, complied in all material respects with the requirements of
applicable securities Laws and did not contain any misrepresentation
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(g) ALCATEL Shares. The ALCATEL Shares to be issued in connection with
the Arrangement and the ALCATEL ADSs to be provided upon the exchange
from time to time of the Exchangeable Shares and upon the exercise of
the NEWBRIDGE Options or the NEWBRIDGE Warrants will, in all cases, be
duly and validly issued by ALCATEL on their respective dates of issue
as fully paid and non-assessable securities.
(h) Litigation, Etc. Except as has been set forth in writing by ALCATEL
to NEWBRIDGE in a form acceptable to NEWBRIDGE or Publicly Disclosed
by ALCATEL, there is no claim, action, proceeding or investigation
pending or, to the knowledge of ALCATEL, threatened against ALCATEL or
any ALCATEL Material Subsidiary before any court or Governmental
Entity that would reasonably be expected to have a Material Adverse
Effect on ALCATEL or to prevent or materially delay consummation of
the transactions contemplated by this Agreement or the Arrangement.
Neither ALCATEL nor any ALCATEL Material Subsidiary, nor any of their
respective assets and properties, is subject to any outstanding
judgement, order, writ, injunction or decree that has had or is
reasonably likely to have a Material Adverse Effect on ALCATEL or that
would prevent or materially delay consummation of the transactions
contemplated by this Agreement or the Arrangement.
(i) Environmental. Except as has been Publicly Disclosed by ALCATEL and
except for any matters that, individually or in the aggregate, would
not have a Material Adverse Effect on ALCATEL or except as has been
set forth in writing by ALCATEL to NEWBRIDGE in a form acceptable to
NEWBRIDGE:
(i) all operations of ALCATEL and its subsidiaries have been
conducted, and are now, in compliance with all Environmental
Laws; and
-36-
(ii) to its knowledge, neither ALCATEL nor any ALCATEL Material
Subsidiary is subject to:
(A) any Environmental Law which requires or may require any
material work, repairs, construction, change in business
practices or operations, or expenditures; or
(B) any written demand or written notice with respect to a
breach of or liability under any Environmental Laws
applicable to ALCATEL or any ALCATEL Material Subsidiary.
(j) Compliance with Laws. Except as has been disclosed in writing by
ALCATEL to NEWBRIDGE in a form acceptable to NEWBRIDGE or Publicly
Disclosed by ALCATEL, ALCATEL and the ALCATEL Material Subsidiaries
have complied with and are not in violation of any applicable Laws,
orders, judgements and decrees other than non-compliance or violations
which would not, individually or in the aggregate, have a Material
Adverse Effect on ALCATEL.
Section 3.3 Survival.
For greater certainty, the representations and warranties of NEWBRIDGE and
ALCATEL contained herein shall survive the execution and delivery of this
Agreement and shall terminate on the earlier of the termination of this
Agreement in accordance with its terms and the Effective Time. Any investigation
by a party hereto and its advisors shall not mitigate, diminish or affect the
representations and warranties of another party to this Agreement.
ARTICLE 4
COVENANTS
Section 4.1 Retention of Goodwill.
During the Pre-Effective Date Period, NEWBRIDGE will, subject to the fact
that a transaction involving its businesses is contemplated hereby, continue to
carry on the business of NEWBRIDGE and its subsidiaries in a manner consistent
with prior practice, working to preserve the attendant goodwill of such entities
and to contribute to retention of that goodwill to and after the Effective Date,
but subject to the following provisions of this Article 4. The following
provisions of this Article 4 are intended to be in furtherance of this general
commitment.
Section 4.2 Treatment of Options, Warrants, ESPP and KEEP.
(a) The NEWBRIDGE Options and the NEWBRIDGE Warrants will be dealt with as
provided in the Plan of Arrangement.
-37-
(b) NEWBRIDGE shall, as soon as reasonably practicable after the date
hereof, and in any event prior to April 30, 2000, terminate the
NEWBRIDGE Employee Stock Purchase Plan and the NEWBRIDGE Key Employee
Executive Plan.
Section 4.3 Covenants of NEWBRIDGE.
(a) NEWBRIDGE covenants and agrees that, until the Effective Date or the
earlier termination of this Agreement in accordance with Article 6,
except (i) with the consent of ALCATEL to any deviation therefrom;
(ii) as has been disclosed in writing by NEWBRIDGE to ALCATEL in a
form acceptable to ALCATEL on the date hereof; or (iii) with respect
to any matter expressly contemplated by this Agreement or the Plan of
Arrangement, including the transactions involving the businesses of
NEWBRIDGE and ALCATEL contemplated hereby, NEWBRIDGE will, and will
cause the NEWBRIDGE Material Subsidiaries to:
(i) carry on its business in, and only in, the ordinary and regular
course in substantially the same manner as heretofore conducted
and, to the extent consistent with such business, use all
reasonable efforts to preserve intact its present business
organization and keep available the services of its present
officers and employees and others having business dealings with
it to the end that its goodwill and business shall be
maintained;
(ii) not split, consolidate or reclassify any of the outstanding
shares of NEWBRIDGE nor declare, set aside or pay any dividends
on or make any other distributions on or in respect of the
outstanding shares of NEWBRIDGE;
(iii) not amend the articles or by-laws of NEWBRIDGE or materially
amend the articles or by-laws of any subsidiary;
(iv) except for the grant of stock options in accordance with lists
of employees to be provided to ALCATEL in accordance with
applicable Laws and in the normal course of business consistent
with past practice, not to exceed 1,500,000 NEWBRIDGE Common
Shares per quarter and 3,000,000 NEWBRIDGE Common Shares in
aggregate, not sell, pledge, encumber, allot, reserve, set
aside or issue, authorize or propose the sale, pledge,
encumbrance, allotment, reservation, setting aside or issuance
of, or purchase or redeem or propose the purchase or redemption
of, any shares in its capital stock or of any NEWBRIDGE
Material Subsidiary thereof or any class of
-38-
securities convertible or exchangeable into, or rights,
warrants or options to acquire, any such shares or other
convertible or exchangeable securities, except for (a)
transactions between two or more wholly-owned NEWBRIDGE
subsidiaries or between a wholly-owned subsidiary of NEWBRIDGE
and NEWBRIDGE, and (b) the issuance of NEWBRIDGE Common Shares
pursuant to fully vested and duly exercised NEWBRIDGE Options
granted prior to the date hereof;
(v) not amend, vary or modify the NEWBRIDGE Employee Stock Purchase
Plan, the NEWBRIDGE Stock Option Plan or the NEWBRIDGE Key
Employee Executive Program or any NEWBRIDGE Options or other
benefits granted thereunder;
(vi) not reorganize, amalgamate or merge NEWBRIDGE or any of the
NEWBRIDGE Material Subsidiaries with any other Person, nor
acquire or agree to acquire by amalgamating, merging or
consolidating with, purchasing substantially all of the assets
or shares of or otherwise, any business of any corporation,
partnership, association or other business organization or
division thereof, which acquisition would be material to its
business or financial condition on a consolidated basis;
(vii) except with respect to the sale of inventory of NEWBRIDGE or
any subsidiary in the ordinary and regular course of business
consistent with past practice, not sell, lease, encumber or
otherwise dispose of any material assets (other than relating
to transactions between two or more wholly-owned NEWBRIDGE
subsidiaries or between a wholly-owned subsidiary of NEWBRIDGE
and NEWBRIDGE);
(viii) carry out the terms of the Interim Order and the Final Order
applicable to it and use its reasonable efforts to comply
promptly with all requirements which applicable Laws may impose
on NEWBRIDGE or its subsidiaries with respect to the
transactions contemplated hereby and by the Arrangement;
(ix) not, and cause each of the NEWBRIDGE Material Subsidiaries not:
(A) other than pursuant to existing employment, pension,
supplemental pension, termination, compensation
arrangements or policies, enter into or modify any
employment, severance, collective bargaining or similar
-39-
agreements, policies or arrangements with, or grant any
bonuses, salary increases, pension or supplemental pension
benefits, profit sharing, retirement allowances, deferred
compensation, incentive compensation, severance or
termination pay to or any other form of compensation or
with respect to any increase of benefits payable to, or
make any loan to, any officers or directors of NEWBRIDGE
or any NEWBRIDGE Material Subsidiary; or
(B) other than in the usual, ordinary and regular course of
business and consistent with past practice or pursuant to
existing employment, pension, supplemental pension,
termination, compensation arrangements or policies, in the
case of employees who are not officers or directors of
NEWBRIDGE or any NEWBRIDGE Material Subsidiary, take any
action with respect to the entering into or modification
of any material employment, severance, collective
bargaining or similar agreements, policies or arrangements
or grant any material bonuses, salary increases, pension
or supplemental pension benefits, profit sharing,
retirement allowances, deferred compensation, incentive
compensation, severance or termination pay or any other
form of compensation or with respect to any material
increase of benefits payable, or make any material loans
to employees;
(x) not, and will cause its subsidiaries not to, settle or
compromise any claim brought by any present, former or
purported holder of any of its securities in connection with
the transactions contemplated by this Agreement or the
Arrangement prior to the Effective Date;
(xi) not guarantee the payment of material indebtedness or incur
material indebtedness for money borrowed or issue or sell any
debt securities except in the ordinary and regular course of
business consistent with past practice, other than as has been
set forth in writing on the date hereof by NEWBRIDGE to ALCATEL
in a form acceptable to ALCATEL;
(xii) not, except in the usual, ordinary and regular course of
business and consistent with past practice: (A) satisfy or
settle any claims or liabilities prior to the same being due,
except such as have been reserved against in the financial
statements of
NEWBRIDGE and its subsidiaries or as has been disclosed in
writing to ALCATEL by NEWBRIDGE in a form acceptable to
ALCATEL, which are, individually or in the aggregate, material;
(B) grant any waiver, exercise any option or relinquish any
contractual rights which are, individually or in the aggregate,
material; or (C) enter into any interest rate, currency or
commodity swaps, xxxxxx or other similar financial instruments;
(xiii) use its reasonable commercial efforts (or cause each of its
subsidiaries to use reasonable commercial efforts) to cause its
current insurance (or re-insurance) policies not to be
cancelled or terminated or any of the coverage thereunder to
lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies underwritten by
insurance and re-insurance companies of nationally recognized
standing providing coverage equal to or greater than the
coverage under the cancelled, terminated or lapsed policies for
substantially similar premiums are in full force and effect;
(xiv) incur or commit to capital expenditures prior to the Effective
Date only in the ordinary course consistent with past practice
and not, in any event, exceeding $75 million, individually or
in the aggregate;
(xv) not make any changes to existing accounting practices relating
to NEWBRIDGE or any subsidiary, except as required by Canadian
or U.S. Law or required by Canadian or U.S. generally accepted
accounting principles, or make any material tax election
inconsistent with past practice; and
(xvi) promptly advise ALCATEL orally and in writing:
(A) of any event occurring subsequent to the date of this
Agreement that would render any representation or warranty
of NEWBRIDGE contained in this Agreement (except any such
representation or warranty which speaks solely as of a
date prior to the occurrence of such event), if made on or
as of the date of such event or the Effective Date, untrue
or inaccurate in any material respect;
(B) of any Material Adverse Change in respect of NEWBRIDGE;
and
(C) of any material breach by NEWBRIDGE of any covenant or
agreement contained in this Agreement;
-41-
(b) NEWBRIDGE shall and shall cause its subsidiaries to perform all
obligations required or desirable to be performed by NEWBRIDGE or any
of its subsidiaries under this Agreement, co-operate with ALCATEL in
connection therewith, and do all such other acts and things as may be
necessary or desirable in order to consummate and make effective, as
soon as reasonably practicable, the transactions contemplated in this
Agreement and, without limiting the generality of the foregoing,
NEWBRIDGE shall and where appropriate shall cause its subsidiaries to:
(i) use all reasonable efforts to obtain the requisite approvals of
the NEWBRIDGE Shareholders to the Arrangement;
(ii) apply for and use all reasonable efforts to obtain all
Regulatory Approvals relating to NEWBRIDGE or any of its
subsidiaries and, in doing so, to keep ALCATEL reasonably
informed as to the status of the proceedings related to
obtaining the Regulatory Approvals, including, but not limited
to, providing ALCATEL with copies of all related applications
and notifications, in draft form, in order for ALCATEL to
provide its reasonable comments;
(iii) apply for and use all reasonable efforts to obtain the Interim
Order and the Final Order;
(iv) defend all lawsuits or other legal, regulatory or other
proceedings to which it is a party challenging or affecting this
Agreement or the consummation of the transactions contemplated
hereby;
(v) use its reasonable efforts to have lifted or rescinded any
injunction or restraining order relating to NEWBRIDGE or other
order which may adversely affect the ability of the parties to
consummate the transactions contemplated hereby;
(vi) effect all necessary registrations, filings and submissions of
information required by Governmental Entities from NEWBRIDGE or
any of its subsidiaries relating to the Arrangement; and
(vii) use its reasonable efforts to obtain all necessary waivers,
consents and approvals required to be obtained by
-42-
NEWBRIDGE or a subsidiary in connection with the Arrangement
from other parties to any material loan agreements, leases or
other material contracts;
(c) NEWBRIDGE shall carry out the terms of the Interim Order and Final
Order applicable to it and use its reasonable efforts to comply
promptly with all requirements which applicable Laws may impose on
NEWBRIDGE or its subsidiaries with respect to the transactions
contemplated hereby and by the Arrangement; and
(d) NEWBRIDGE shall use all reasonable efforts to cause the Exchangeable
Shares to be listed and posted for trading on The Toronto Stock
Exchange by the Effective Date.
Section 4.4 Covenants of ALCATEL.
ALCATEL hereby covenants and agrees:
(a) to perform all obligations required or desirable to be performed by it
under this Agreement, to co-operate with NEWBRIDGE in connection
therewith, and to do all such other acts and things as may be
necessary or desirable in order to consummate and make effective, as
soon as reasonably practicable, the transactions contemplated by this
Agreement and, without limiting the generality of the foregoing, to:
(i) use all reasonable efforts to obtain the requisite approvals of
the ALCATEL Shareholders;
(ii) apply for and use all reasonable efforts to obtain all
Regulatory Approvals relating to ALCATEL, and, in doing so, to
keep NEWBRIDGE informed, subject to applicable Laws, as to the
status of the proceedings related to obtaining the Regulatory
Approvals, including, but not limited to, providing NEWBRIDGE
with copies of all related applications and notifications, in
draft form, in order for NEWBRIDGE to provide its reasonable
comments, and providing NEWBRIDGE with copies of all material
correspondence relating to the Regulatory Approvals;
(iii) defend all lawsuits or other legal, regulatory or other
proceedings to which it is a party challenging or affecting this
Agreement or the consummation of the transactions contemplated
hereby;
-43-
(iv) use all reasonable efforts to have lifted or rescinded any
injunction or restraining order or other order relating to
ALCATEL which may adversely affect the ability of the parties to
consummate the transactions contemplated hereby;
(v) effect all necessary registrations, filings and submissions of
information required by Governmental Entities from ALCATEL or
their subsidiaries relating to the Arrangement; and
(vi) reserve for issuance, as required, ALCATEL Shares in connection
with the transactions contemplated by this Agreement (including
upon the exercise of ALCATEL Options and ALCATEL Warrants)
consistent with the provisions of the Support Agreement; and
(b) to use all reasonable efforts to (i) cause the Exchangeable Shares to
be listed and posted for trading on The Toronto Stock Exchange by the
Effective Date and to maintain such listings for so long as there are
Exchangeable Shares outstanding (other than those Exchangeable Shares
held by ALCATEL or any of its affiliates), and (ii) to ensure that
NEWBRIDGE remains a "public corporation" within the meaning of the
Income Tax Act (Canada) for so long as there are Exchangeable Shares
outstanding (other than those Exchangeable Shares held by ALCATEL or
any of its affiliates);
(c) to carry out the terms of the Interim Order and Final Order applicable
to it and use its reasonable efforts to comply promptly with all
requirements which applicable Laws may impose on ALCATEL or its
subsidiaries with respect to the transactions contemplated hereby and
by the Arrangement;
(d) until the Effective Date or the earlier termination of this Agreement
in accordance with Article 6, except (i) with the consent of NEWBRIDGE
to any deviation therefrom, which shall not be unreasonably withheld;
(ii) with respect to any matters which were disclosed by ALCATEL to
NEWBRIDGE in writing; or (iii) with respect to any matter contemplated
by this Agreement or the Plan of Arrangement, including the
transactions involving the businesses of NEWBRIDGE and ALCATEL
contemplated hereby, ALCATEL will:
(i) not split, consolidate or reclassify any of the outstanding
ALCATEL Shares, ALCATEL ADRs or ALCATEL ADSs, nor declare, set
aside or pay any dividends on or make any other distributions on
or in respect of the outstanding ALCATEL
-44-
Shares, other than the normal and customary dividends on ALCATEL
Shares (except for a stock split contemplated to be put before
the holders of ALCATEL Shares at the next ordinary general
meeting for their approval);
(ii) not reorganize, amalgamate or merge ALCATEL with any other
Person, nor acquire by amalgamating, merging or consolidating
with, purchasing a majority of the voting securities or
substantially all of the assets of or otherwise, any business or
Person which acquisition or other transaction would reasonably
be expected to prevent or materially delay the transactions
contemplated hereby beyond the Outside Date; and
(iii) promptly advise NEWBRIDGE orally and in writing:
(A) of any event occurring subsequent to the date of this
Agreement that would render any representation or warranty
of ALCATEL contained in this Agreement (except any such
representation or warranty which speaks solely as of a date
prior to the occurrence of such event), if made on or as of
the date of such event or the Effective Date, untrue or
inaccurate in any material respect;
(B) of any Material Adverse Change in respect of ALCATEL; and
(C) of any material breach by ALCATEL of any covenant or
agreement contained in this Agreement.
Section 4.5 Covenants Regarding Non-Solicitation.
(1) Subject to Section 4.6, NEWBRIDGE shall not, directly or indirectly,
through any officer, director, employee, representative (including for
greater certainty any investment banker, lawyer or accountant) or agent of
NEWBRIDGE or any of its subsidiaries, (i) solicit, initiate, knowingly
encourage or otherwise facilitate (including by way of furnishing
information or entering into any form of agreement, arrangement or
understanding) the initiation of any inquiries or proposals regarding an
Acquisition Proposal, (ii) participate in any discussions or negotiations
regarding any Acquisition Proposal, (iii) approve or recommend any
Acquisition Proposal or (iv) accept or enter into any agreement,
arrangement or understanding related to any Acquisition Proposal.
Notwithstanding the preceding part of this Section 4.5(1) and any other
provision of this Agreement, nothing shall prevent the Board of Directors
of NEWBRIDGE from complying with NEWBRIDGE's disclosure
-45-
obligations under applicable Laws with regard to an Acquisition Proposal or
from considering, participating in any discussions or negotiations, or
entering into a confidentiality agreement and providing information
pursuant to Section 4.5(3) (but, subject to Section 4.6, not approve,
recommend, accept or enter into any agreement, arrangement or
understanding), regarding an unsolicited bona fide written Acquisition
Proposal (a) in respect of which any required financing has been
demonstrated to the satisfaction of the Board of Directors of NEWBRIDGE,
acting in good faith, to be reasonably likely to be obtained, (b) that did
not otherwise result from a breach of this Section 4.5, and (c) which the
Board of Directors of NEWBRIDGE has determined in good faith, after
consultation with financial advisors and with outside counsel, is a
Superior Proposal. NEWBRIDGE shall, and shall cause the officers,
directors, employees, representatives and agents of NEWBRIDGE and its
subsidiaries to, cease immediately all current discussions and negotiations
regarding any proposal that constitutes, or may reasonably be expected to
lead to, an Acquisition Proposal, and request the return or destruction of
all confidential information provided in connection therewith.
(2) NEWBRIDGE shall forthwith notify ALCATEL, at first orally and then in
writing, of any Acquisition Proposal and any inquiry that could lead to an
Acquisition Proposal, or any amendments to the foregoing, or any request
for non-public information relating to NEWBRIDGE or any NEWBRIDGE Material
Subsidiary in connection with an Acquisition Proposal or for access to the
properties, books or records of NEWBRIDGE or any NEWBRIDGE Material
Subsidiary by any Person that informs NEWBRIDGE or such NEWBRIDGE Material
Subsidiary that it is considering making, or has made, an Acquisition
Proposal. Such notice shall include a description of the material terms and
conditions of any proposal, the identity of the Person making such
proposal, inquiry or contact and provide such other details of the
proposal, inquiry, contact, discussions or negotiations as ALCATEL may
reasonably request. NEWBRIDGE shall keep ALCATEL informed of the status
including any change to the material terms of any such Acquisition Proposal
or inquiry.
(3) If NEWBRIDGE receives a request for material non-public information from a
Person who has made an unsolicited bona fide written Acquisition Proposal
and NEWBRIDGE is permitted, subject to and as contemplated under the second
sentence of Section 4.5(1), to negotiate the terms of such Acquisition
Proposal, then, and only in such case, the Board of Directors of NEWBRIDGE
may, subject to the execution by such Person of a confidentiality agreement
containing employee non-solicitation and standstill provisions
substantially similar to those contained in the confidentiality agreement
then in effect between NEWBRIDGE and ALCATEL, provide such Person with
access to
-46-
information regarding NEWBRIDGE; provided, however, that the Person making
the Acquisition Proposal shall not be precluded under such confidentiality
agreement from making the Acquisition Proposal (but not, except subject to
Section 4.6(4), any material amendment thereto) and provided further that
NEWBRIDGE sends a copy of any such confidentiality agreement to ALCATEL
promptly upon its execution and ALCATEL is provided with a list of or
copies of the information provided to such Person and immediately provided
with access to similar information to which such Person was provided.
(4) NEWBRIDGE shall ensure that its officers, directors and employees and its
subsidiaries and their officers, directors and employees and any financial
advisors or other advisors or representatives retained by it or its
subsidiaries are aware of the provisions of this Section 4.5, and it shall
be responsible for any breach of this Section 4.5 by its and its
subsidiaries' officers, directors, employees, representatives or agents.
Section 4.6 Notice by NEWBRIDGE of Superior Proposal Determination.
(1) Notwithstanding Sections 4.5(1), (2) and (3), but subject to ALCATEL's
rights under Sections 6.3(3)(c) and 6.4, NEWBRIDGE may accept, approve or
recommend or enter into any agreement, understanding or arrangement in
respect of an unsolicited Superior Proposal if, and only if: (i) it has
provided ALCATEL with a copy of the Superior Proposal document; and (ii)
three Business Days shall have elapsed from the later of the date ALCATEL
received written notice advising ALCATEL that NEWBRIDGE's Board of
Directors has resolved, subject only to compliance with this Section 4.6,
to accept, approve, recommend or enter into an agreement, understanding or
arrangement in respect of such Superior Proposal and the date ALCATEL
received a copy of such Superior Proposal. Any information provided by
NEWBRIDGE to ALCATEL pursuant to this Section 4.6 or pursuant to Section
4.5 shall constitute "Information" under Section 4.7(2).
(2) During such three Business Day period, NEWBRIDGE agrees that ALCATEL shall
have the right, but not the obligation, to offer to amend the terms of this
Agreement. The Board of Directors of NEWBRIDGE will review any offer by
ALCATEL to amend the terms of this Agreement in good faith in order to
determine, in its discretion in the exercise of its fiduciary duties (but
without regard to any requirement for approval or further approval by
ALCATEL's Shareholders), whether ALCATEL's offer upon acceptance by
NEWBRIDGE would result in such Superior Proposal ceasing to be a Superior
Proposal. If the Board of Directors of NEWBRIDGE so determines, it will
enter into an amended agreement with ALCATEL reflecting ALCATEL's amended
proposal. If the Board of Directors of NEWBRIDGE continues to believe, in
-47-
good faith, after consultation with its financial advisors and outside
counsel, that such Superior Proposal remains a Superior Proposal (without
regard to any requirement for approval or further approval by ALCATEL's
Shareholders) and therefore rejects ALCATEL's amended proposal, NEWBRIDGE
may approve, recommend, accept or enter into an agreement, understanding or
arrangement with respect to the Superior Proposal provided that such
acceptance or agreement does not obligate NEWBRIDGE or any other Person to
seek to interfere with the completion of the Arrangement or impose any
"break-up", "hello" or other fees or options or rights to acquire assets or
securities, or any other obligations that would survive the Effective Date,
on NEWBRIDGE or any subsidiary unless and until this Agreement is
terminated in accordance with its terms. In addition, in such
circumstances, NEWBRIDGE may proceed with such approvals, consents, filings
of or required by Governmental Entities and such other Persons as NEWBRIDGE
shall consider appropriate in order to consummate such Superior Proposal,
provided that such activity does not interfere with the completion of the
Arrangement.
(3) Nothing contained in this Section 4.6 shall limit in any way the obligation
of NEWBRIDGE to convene and hold the NEWBRIDGE Meeting in accordance with
Section 2.1 of this Agreement.
(4) NEWBRIDGE acknowledges and agrees that each successive material amendment
to any Acquisition Proposal shall constitute a new Acquisition Proposal for
purposes of the requirement under clause (ii) of Section 4.6(1) to initiate
an additional three Business Day notice period.
Section 4.7 Access to Information.
(1) Subject to Section 4.7(2) and applicable Laws, upon reasonable notice,
NEWBRIDGE shall (and shall cause each of its subsidiaries to) afford
ALCATEL's officers, employees, counsel, accountants and other authorized
representatives and advisors ("Representatives") access, during normal
business hours from the date hereof and until the earlier of the Effective
Date or the termination of this Agreement, to its and its subsidiaries'
properties, books, contracts and records as well as to its management
personnel, and, during such period, NEWBRIDGE shall (and shall cause each
of its subsidiaries to) furnish promptly to ALCATEL all information
concerning NEWBRIDGE's and its subsidiaries' businesses, properties and
personnel as ALCATEL may reasonably request. Subject to Section 4.7(2) and
applicable Laws, upon reasonable notice, ALCATEL shall afford NEWBRIDGE's
Representatives the opportunity, upon reasonable notice and during normal
business hours from the date hereof and until the earlier of the Effective
Date or termination of this Agreement, to speak to appropriate management
-48-
personnel as NEWBRIDGE may reasonably request, without materially
interfering with their other responsibilities, provided that all such
conversations shall impose upon NEWBRIDGE confidentiality obligations
equivalent to those applicable to ALCATEL under the Confidentiality
Agreement, mutatis mutandis.
----------------
(2) Each of ALCATEL and NEWBRIDGE acknowledges that certain information
provided to it under Section 4.7(1) above will be non-public and/or
proprietary in nature (the "Information") and will be subject to the terms
of the Confidentiality Agreement and Section 4.7(1). For greater certainty,
the provisions of the Confidentiality Agreement shall survive the
termination of this Agreement, provided that the Confidentiality Agreement
and Section 4.7(1) shall terminate at the Effective Time notwithstanding
anything to the contrary contained therein.
Section 4.8 Closing Matters.
Each of ALCATEL and NEWBRIDGE shall deliver, at the closing of the
transactions contemplated hereby, such customary certificates, resolutions and
other closing documents as may be required by the other party hereto, acting
reasonably.
Section 4.9 Indemnification.
(1) ALCATEL agrees that all rights to indemnification or exculpation now
existing in favour of the directors or officers of NEWBRIDGE or any
subsidiary as provided in the articles or by-laws thereof shall survive the
Arrangement and shall continue in full force and effect for a period of not
less than six years from the Effective Time.
(2) There shall be maintained in effect, for not less than six years from the
Effective Time, to the extent obtainable on reasonable commercial terms,
coverage substantially equivalent to that in effect under the current
policies of the directors' and officers' liability insurance maintained by
NEWBRIDGE or any of its subsidiaries, as the case may be, which is no less
advantageous, and with no gaps or lapses in coverages with respect to
matters occurring prior to the Effective Time. Alternatively, at ALCATEL's
option, it may cause NEWBRIDGE to purchase "run-off" directors' and
officers' liability insurance to cover prior events during such six year
period or the balance thereof.
Section 4.10 Pooling of Interests Accounting.
(1) ALCATEL shall each use its reasonable best efforts to cause the business
combination contemplated by the Arrangement to be effected in such a manner
as to ensure that such business combination will be accounted for as of the
Effective Date as a pooling of interests under French generally accepted
-49-
accounting principles, and will use its reasonable best efforts to refrain
from taking any actions which will prevent such accounting treatment.
(2) ALCATEL represents and warrants to NEWBRIDGE that the COB has approved in
principle such accounting treatment for the transactions contemplated
hereby, and ALCATEL has caused to be delivered a letter in favour of
NEWBRIDGE from its independent accountants confirming their view that the
transactions contemplated herein may be so accounted.
Section 4.11 Safe Income.
NEWBRIDGE shall arrange for a "safe income tuck-in" transaction (the
"Tuck-in") or, if a Tuck-in does not achieve the objective of crystallizing the
"safe income" or results in other material adverse tax consequences to the
shareholder, another form of safe income crystallisation transaction, with any
shareholder having a significant "safe income" with respect to its shares of
NEWBRIDGE and requesting such a transaction, provided that:
(a) only one form of transaction will be required and at least one
shareholder must request such a transaction within ten (10) days of the
date hereof;
(b) such transaction is to be completed in accordance with applicable Laws
prior to the Effective Date;
(c) such transaction (other than a Tuck-in) must be accomplished in a
manner that does not entail any material cost, expense, obligation or
liability (and for this purpose $2,500,000 in the aggregate shall be deemed
not to be material), or any delay in completing the Arrangement, to
NEWBRIDGE or their respective subsidiaries or shareholders (including to
NEWBRIDGE's non-participating shareholders); and
(d) such transaction and its terms and conditions must be satisfactory to
ALCATEL, acting reasonably (limited to, in the case of a Tuck-in, its
effect on NEWBRIDGE or its shareholders).
In the event that such transaction or its terms and conditions are not
satisfactory to ALCATEL, acting reasonably, or the Ontario Securities Commission
refuses to grant any relief required in connection with any such transaction,
ALCATEL will use its reasonable best efforts, for a period not to exceed 15
Business Days to assist NEWBRIDGE in structuring such a transaction in a manner
satisfactory to ALCATEL, acting reasonably. The parties acknowledge that ALCATEL
will require, without limitation, that the Arrangement and related matters
(after taking into account any transaction described herein) be poolable under
French GAAP and not objectionable to the COB or the PSE, and that a Tuck-in does
not adversely affect these pooling and COB/PSE issues. In the event that no such
transaction is
-50-
satisfactory to ALCATEL, acting reasonably, where it used its reasonable best
efforts as aforesaid, this shall not affect the completion of the Arrangement.
ARTICLE 5
CONDITIONS
Section 5.1 Mutual Conditions Precedent.
The respective obligations of the parties hereto to complete the
transactions contemplated by this Agreement shall be subject to the
satisfaction, on or before the Effective Date, of the following conditions
precedent, each of which may only be waived by the mutual consent of ALCATEL and
NEWBRIDGE:
(a) the Arrangement shall have been approved at the NEWBRIDGE Meeting by
not less than two-thirds of the votes cast by the NEWBRIDGE
Shareholders who are represented at the NEWBRIDGE Meeting;
(b) the Arrangement shall have been approved at the NEWBRIDGE Meeting in
accordance with any conditions in addition to those set out in
Section 5.1(a) which may be imposed by the Interim Order;
(c) the Interim Order and the Final Order shall each have been obtained in
form and on terms satisfactory to each of NEWBRIDGE and ALCATEL,
acting reasonably, and shall not have been set aside or modified in a
manner unacceptable to such parties, acting reasonably, on appeal or
otherwise;
(d) the ALCATEL Shareholders shall have approved the ALCATEL Resolution at
the ALCATEL Meeting by the requisite levels required by applicable
Laws;
(e) there shall not be in force any final and non-appealable injunction,
order or decree restraining or enjoining the consummation of the
transactions contemplated by this Agreement and there shall be no
proceeding (other than an appeal made in connection with the
Arrangement), of a judicial or administrative nature or otherwise,
brought by a Governmental Entity in progress or threatened that
relates to or results from the transactions contemplated by this
Agreement that would, if successful, result in an order or ruling that
would preclude completion of the transactions contemplated by this
Agreement in accordance with the terms hereof or would otherwise be
inconsistent with the Regulatory Approvals which have been obtained;
(f) this Agreement shall not have been terminated pursuant to Article 6;
-51-
(g) the Exchangeable Shares shall have been conditionally approved for
listing on The Toronto Stock Exchange, the ALCATEL ADRs and the
ALCATEL ADSs to be provided upon the exchange of Exchangeable Shares
shall have been approved for listing on the NYSE, and the ALCATEL
Shares to be issued in connection with the Arrangement shall have been
approved for listing on the PSE, subject to the filing of required
documentation, notice of issuance and/or other usual requirements;
(h) other than the Regulatory Approvals, all consents, waivers, permits,
orders and approvals of any Governmental Entity, and the expiry of any
waiting periods, in connection with, or required to permit, the
consummation of the Arrangement, the failure of which to obtain or the
non-expiry of which would constitute a criminal offense, or would have
a Material Adverse Effect on ALCATEL or NEWBRIDGE, as the case may be,
shall have been obtained or received on terms that will not have a
Material Adverse Effect on ALCATEL and/or NEWBRIDGE; there shall not
be pending or threatened any suit, action or proceeding by any
Governmental Entity: (i) seeking to prohibit or restrict the
acquisition by ALCATEL or any of its subsidiaries of any NEWBRIDGE
Common Shares, seeking to restrain or prohibit the consummation of the
Plan of Arrangement or seeking to obtain from NEWBRIDGE or ALCATEL any
damages directly or indirectly in connection with the Arrangement,
(ii) seeking to prohibit or materially limit the ownership or
operation by ALCATEL or any of its subsidiaries of any material
portion of the business or assets of NEWBRIDGE or any of its
subsidiaries or to compel ALCATEL or any of its subsidiaries to
dispose of or hold separate any material portion of the business or
assets of NEWBRIDGE or any of its subsidiaries, (iii) seeking to
impose limitations on the ability of ALCATEL or any of its
subsidiaries to acquire or hold, or exercise full rights of ownership
of, any NEWBRIDGE Common Shares, including the right to vote the
NEWBRIDGE Common Shares purchased by them on all matters properly
presented to the shareholders of NEWBRIDGE, (iv) seeking to prohibit
ALCATEL or any of its subsidiaries from effectively controlling in any
material respect the business or operations of NEWBRIDGE or any of its
subsidiaries or (v) which otherwise is reasonably likely to have a
Material Adverse Effect on NEWBRIDGE or ALCATEL; and
(i) the Regulatory Approvals shall have been obtained or satisfied on
terms and conditions satisfactory to ALCATEL and NEWBRIDGE (but only
insofar as it would directly affect NEWBRIDGE shareholders),
-52-
acting reasonably, and in connection therewith ALCATEL shall have
regard to the magnitude of the transaction.
Section 5.2 Additional Conditions Precedent to the Obligations of ALCATEL.
(1) The obligations of ALCATEL to complete the transactions contemplated by
this Agreement shall also be subject to the fulfilment of each of the
following conditions precedent (each of which is for ALCATEL's exclusive
benefit and may be waived by ALCATEL):
(a) all covenants of NEWBRIDGE under this Agreement to be performed on or
before the Effective Date shall have been duly performed by NEWBRIDGE
in all material respects;
(b) the representations and warranties of NEWBRIDGE shall have been true
and correct on the date hereof;
(c) the representations and warranties of NEWBRIDGE shall be true and
correct in all material respects (except where already qualified as to
materiality or the absence of a Material Adverse Effect) as of the
Effective Date as if made on and as of such date (except to the extent
such representations and warranties speak solely as of an earlier
date, in which event such representations and warranties shall be true
and correct to such extent as of such earlier date, or except as
affected by transactions contemplated or permitted by this Agreement),
and ALCATEL shall have received a certificate of NEWBRIDGE addressed
to ALCATEL and dated the Effective Date, signed on behalf of NEWBRIDGE
by two senior executive officers of NEWBRIDGE (on NEWBRIDGE's behalf
and without personal liability), confirming the same as at the
Effective Date;
(d) at the request of ALCATEL, NEWBRIDGE shall have executed a waiver(s)
or other agreement(s) by or with Kanata Research Park Corporation
relating to the extension for up to two (2) five year terms of any
leases to which it is a party with NEWBRIDGE on the same terms and at
agreed or arbitrated fair market value rents, subject only to
applicable Laws;
(e) the Board of Directors of NEWBRIDGE shall have adopted all necessary
resolutions, and all other necessary corporate action shall have been
taken by NEWBRIDGE and the subsidiaries to permit the consummation of
the Arrangement;
(f) between the date hereof and the Effective Date, there shall not have
occurred a Material Adverse Change to NEWBRIDGE;
-53-
(g) the transactions contemplated by the Arrangement shall be able to be
accounted for as a pooling of interests under French generally
accepted accounting principles; and
(h) the holders of NEWBRIDGE Common Shares representing in excess of 5% of
the outstanding NEWBRIDGE Common Shares shall not have exercised
dissent or similar rights in connection with the Arrangement.
(2) ALCATEL may not rely on the failure to satisfy any of the above conditions
precedent if the condition precedent would have been satisfied but for a
material default by ALCATEL in complying with their obligations hereunder.
Section 5.3 Additional Conditions Precedent to the Obligations of NEWBRIDGE.
(1) The obligations of NEWBRIDGE to complete the transactions contemplated by
this Agreement shall also be subject to the following conditions precedent
(each of which is for the exclusive benefit of NEWBRIDGE and may be waived
by NEWBRIDGE):
(a) all covenants of ALCATEL under this Agreement to be performed on or
before the Effective Date shall have been duly performed by ALCATEL in
all material respects;
(b) all representations and warranties of ALCATEL under this Agreement
shall have been true and correct on the date hereof;
(c) the representations and warranties of ALCATEL shall be true and
correct in all material respects (except where already qualified as to
materiality or the absence of a Material Adverse Effect) as of the
Effective Date as if made on and as of such date (except to the extent
such representations and warranties speak solely as of an earlier
date, in which event such representations and warranties shall be true
and correct to such extent as of such earlier date, or except as
affected by transactions contemplated or permitted by this Agreement),
and NEWBRIDGE shall have received a certificate of ALCATEL addressed
to NEWBRIDGE and dated the Effective Date, signed on behalf of ALCATEL
by two senior executive officers of ALCATEL (on ALCATEL's behalf and
without personal liability), confirming the same as at the Effective
Date;
(d) the Board of Directors of ALCATEL shall have adopted all necessary
resolutions, and all other necessary corporate action shall have been
taken by ALCATEL to permit the consummation of the Arrangement
-54-
and the provision of ALCATEL ADSs upon the exchange from time to time
of the Exchangeable Shares;
(e) between the date hereof and the Effective Date, there shall not have
occurred a Material Adverse Change to ALCATEL; and
(f) the orders referred to in Section 2.7(1) shall have been obtained.
(2) NEWBRIDGE may not rely on the failure to satisfy any of the above
conditions precedent if the condition precedent would have been satisfied
but for a material default by NEWBRIDGE in complying with its obligations
hereunder.
Section 5.4 Notice and Cure Provisions.
(1) ALCATEL and NEWBRIDGE will give prompt notice to the other of the
occurrence, or failure to occur, at any time from the date hereof until the
Effective Date, of any event or state of facts which occurrence or failure
would, or would be likely to:
(a) cause any of the representations or warranties of the other party
contained herein to be untrue or inaccurate on the date hereof or on
the Effective Date; or
(b) result in the failure in any material respect to comply with or
satisfy any covenant, condition or agreement to be complied with or
satisfied by the other hereunder prior to the Effective Date.
(2) Neither ALCATEL nor NEWBRIDGE may seek to rely upon any conditions
precedent contained in Sections 5.1, 5.2 or 5.3, or exercise any
termination right arising therefrom, unless forthwith and in any event
prior to the filing of the Articles of Arrangement for acceptance by the
Director, ALCATEL or NEWBRIDGE, as the case may be, has delivered a written
notice to the other specifying in reasonable detail all breaches of
covenants, representations and warranties or other matters which ALCATEL or
NEWBRIDGE, as the case may be, are asserting as the basis for the non-
fulfilment of the applicable condition precedent or the exercise of the
termination right, as the case may be. If any such notice is delivered,
provided that NEWBRIDGE or ALCATEL, as the case may be, is proceeding
diligently to cure such matter, if such matter is susceptible to being
cured (for greater certainty, except by way of disclosure in the case of
representations and warranties), the other may not terminate this Agreement
as a result thereof until the later of the 30 days prior to the Outside
Date and the expiration of a period of 30 days from such notice. If such
notice has been delivered prior to the date of the NEWBRIDGE Meeting, such
meeting shall, unless the parties agree otherwise, be postponed
-55-
or adjourned until the expiry of such period. If such notice has been
delivered prior to the making of the application for the Final Order or the
filing of the Articles of Arrangement with the Director, such application
and such filing shall be postponed until the expiry of such period. For
greater certainty, in the event that such matter is cured within the time
period referred to herein without a Material Adverse Effect on the curing
party, this Agreement may not be terminated as a result of the cured
breach.
Section 5.5 Satisfaction of Conditions.
The conditions precedent set out in Sections 5.1, 5.2 and 5.3 shall be
conclusively deemed to have been satisfied, waived or released when, with
the agreement of ALCATEL and NEWBRIDGE, a certificate of arrangement in
respect of the Arrangement is issued by the Director.
ARTICLE 6
AMENDMENT AND TERMINATION
Section 6.1 Amendment.
This Agreement and the Plan of Arrangement may, at any time and from
time to time before or after the holding of the NEWBRIDGE Meeting or the
ALCATEL Meeting but not later than the Effective Date, be amended by mutual
written agreement of the parties hereto, and any such amendment may,
subject to applicable Laws and the Interim Order, without limitation:
(a) change the time for performance of any of the obligations or acts of
the parties;
(b) waive any inaccuracies or modify any representation or warranty
contained herein or in any document delivered pursuant hereto;
(c) waive compliance with or modify any of the covenants herein contained
and waive or modify performance of any of the obligations of the
parties; and/or
(d) waive compliance with or modify any conditions precedent herein
contained.
Section 6.2 Mutual Understanding Regarding Amendments.
The parties agree that if ALCATEL or NEWBRIDGE, as the case may be, propose
any amendment or amendments to this Agreement or to the Plan of Arrangement, the
other will act reasonably in considering such amendment and if the other and its
security holders are not prejudiced by reason of any such amendment the other
will co-operate in a reasonable fashion with ALCATEL or
-56-
NEWBRIDGE, as the case may be, so that such amendment can be effected subject to
applicable Laws and the rights of the security holders. Without limiting the
generality of the foregoing, ALCATEL shall, acting reasonably, consider in good
faith any proposal from NEWBRIDGE made within 7 Business Days hereof regarding
the attributes of the Exchangeable Shares and ancillary rights (including the
outside date of their redemption and whether the holders thereof can indirectly
possess any voting rights at the ALCATEL level or other features of the
Arrangement), but the decision to modify any of such attributes shall be in the
sole discretion of ALCATEL.
Section 6.3 Termination.
(1) If any condition contained in Sections 5.1 or 5.2 is not satisfied at or
before the Effective Date to the satisfaction of ALCATEL, then ALCATEL may,
subject to Section 5.4 and to Section 5.2(2) in the case of Section 5.2, by
notice to NEWBRIDGE terminate this Agreement and the obligations of the
parties hereunder (except as otherwise herein provided, including under
Section 6.4), but without detracting from the rights of ALCATEL arising
from any breach by NEWBRIDGE but for which the condition would have been
satisfied.
(2) If any condition contained in Sections 5.1 or 5.3 is not satisfied at or
before the Effective Date to the satisfaction of NEWBRIDGE, then NEWBRIDGE
may, subject to Section 5.4 and to Section 5.3(2) in the case of Section
5.3, by notice to ALCATEL terminate this Agreement and the obligations of
the parties hereunder (except as otherwise herein provided, including under
Section 6.4), but without detracting from the rights of NEWBRIDGE arising
from any breach by ALCATEL but for which the condition would have been
satisfied.
(3) This Agreement may:
(a) be terminated by the mutual agreement of NEWBRIDGE and ALCATEL (for
greater certainty, without further action on the part of the NEWBRIDGE
Shareholders or the ALCATEL Shareholders if terminated after the
holding of the NEWBRIDGE Meeting or the ALCATEL Meeting, as
applicable);
(b) be terminated by either NEWBRIDGE or ALCATEL if there shall be passed
any Law that makes consummation of the transactions contemplated by
this Agreement illegal or otherwise prohibited; or
(c) be terminated by ALCATEL if (A) the Board of Directors of NEWBRIDGE
shall have failed to recommend or shall have withdrawn, modified or
changed in a manner adverse to ALCATEL its approval or recommendation
of this Agreement or the Arrangement (unless ALCATEL has suffered a
Material Adverse Change or
-57-
ALCATEL shall have made a misrepresentation at the date hereof or
breached a covenant under this Agreement in such a manner that, taking
into account Sections 5.3(2) and 5.4, NEWBRIDGE would be entitled to
rely on the failure of a condition set forth in Sections 5.3(1)(a),
(b) or (e) as a reason not to complete the Arrangement), or (B) the
Board of Directors of NEWBRIDGE shall have approved or recommended any
Acquisition Proposal;
in each case, prior to the Effective Date.
(4) If the Effective Date does not occur on or prior to the Outside Date, then,
unless otherwise agreed in writing by the parties, this Agreement shall
terminate, provided that in the event that the conditions set forth in
Sections 5.1(g), (h) or (i) above shall not have been satisfied by that
date, either party may unilaterally extend the Outside Date until December
31, 2000 upon written notice to the other party prior to September 30,
2000, in which case the Outside Date shall be deemed for all purposes to be
December 31, 2000.
(5) If this Agreement is terminated in accordance with the foregoing provisions
of this Section 6.3, no party shall have any further liability to perform
its obligations hereunder except as provided in Section 6.4 and as
otherwise contemplated hereby, and provided that neither the termination of
this Agreement nor anything contained in this Section 6.3(5) shall relieve
any party from any liability for any breach by it of this Agreement,
including from any inaccuracy in its representations and warranties and any
non-performance by it of its covenants made herein.
Section 6.4 Break and Other Fees; Option.
(1) If:
(a) ALCATEL shall terminate this Agreement pursuant to Section 6.3(3)(c);
or
(b) either NEWBRIDGE or ALCATEL shall terminate this Agreement pursuant to
Section 6.3(1) or (2) as a result of the failure to satisfy the
conditions specified in either Section 5.1(a) or Section 5.1(b) in
circumstances where the requisite NEWBRIDGE Shareholder approval has
not been obtained at the WENGRINDER Meeting, and an Acquisition
Proposal has been made by any person other than ALCATEL prior to the
NEWBRIDGE Meeting;
then in any such case NEWBRIDGE shall pay to ALCATEL $375 million in
immediately available funds to an account designated by ALCATEL. Such
-58-
payment shall be due (A) in the case of a termination specified in clause
(a), within one Business Day after written notice of termination by ALCATEL
or (B) in the case of a termination specified in clause (b), within one
Business Day after written notice of termination by either ALCATEL or prior
to written notice of termination by NEWBRIDGE, respectively. NEWBRIDGE
shall not be obligated to make more than one payment pursuant to this
Section 6.4(1).
(2) If the holders of the NEWBRIDGE Common Shares shall fail to approve the
Arrangement (unless ALCATEL shall have suffered a Material Adverse Change
or ALCATEL shall have made a misrepresentation at the date hereof or
breached a covenant under this Agreement in such a manner that, taking into
account Sections 5.3(2) and 5.4, NEWBRIDGE would be entitled to rely on the
failure of a condition set forth in Sections 5.3(1)(a), (b) or (e) as a
reason not to complete the Arrangement) at the NEWBRIDGE Meeting, then,
except in the circumstances contemplated in Section 6.4(1) above, on the
first Business Day following the termination of this Agreement as a result
thereof, NEWBRIDGE shall pay to ALCATEL $10,000,000 as payment in full of
ALCATEL's out-of-pocket costs and expenses in connection with the
transaction contemplated by this Agreement in immediately available funds
to an account designated by ALCATEL.
(3) If the ALCATEL Shareholders shall fail to approve the ALCATEL Resolution
put forward for approval (unless NEWBRIDGE shall have suffered a Material
Adverse Change or NEWBRIDGE shall have made a misrepresentation at the date
hereof or breached a covenant under this Agreement in such a manner that,
taking into account Section 5.4, ALCATEL would be entitled to rely on the
failure of a condition set forth in Sections 5.2(1)(a), (b) or (f) as a
reason not to complete the Arrangement) at the ALCATEL Meeting, then,
except in the circumstances contemplated in Section 6.4(1) above, on the
first Business Day following the termination of this Agreement as a result
thereof, ALCATEL shall pay to NEWBRIDGE $10,000,000 as payment in full of
NEWBRIDGE's out-of-pocket costs and expenses in connection with the
transaction contemplated by this Agreement in immediately available funds
to an account designated by NEWBRIDGE.
(4) On the date hereof, NEWBRIDGE granted to ALCATEL the option to purchase
NEWBRIDGE Common Shares upon the terms and subject to the conditions
contained in the Option Agreement, a copy of which is attached as Schedule
F.
Section 6.5 Remedies.
The parties hereto acknowledge and agree that an award of money damages
would be inadequate for any breach of this Agreement by any party or its
-59-
representatives and any such breach would cause the non-breaching party
irreparable harm. Accordingly, the parties hereto agree that, in the event of
any breach or threatened breach of this Agreement by one of the parties, the
non-breaching party will also be entitled, without the requirement of posting a
bond or other security, to equitable relief, including injunctive relief and
specific performance. Such remedies will not be the exclusive remedies for any
breach of this Agreement but will be in addition to all other remedies available
at law or equity to each of the parties.
ARTICLE 7
GENERAL
Section 7.1 Notices.
All notices and other communications which may or are required to be
given pursuant to any provision of this Agreement shall be given or made in
writing and shall be deemed to be validly given if served personally or by
telecopy, in each case addressed to the particular party at:
(a) If to ALCATEL, at:
x/x XXXXXXX
00 Xxx xx Xx Xxxxxx
00000 Xxxxx Xxxxxx
Attention: General Counsel
Telecopier No.: 011-331-4076-1435
with a copy to:
Stikeman, Xxxxxxx
Xxx 00, Xxxxxxxx Xxxxx Xxxx
000 Xxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attention: Xx. Xxxxx Xxxxxx
Telecopier No.: (000) 000-0000
(b) If to NEWBRIDGE at:
000 Xxxxx Xxxx
Xxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
-60-
Attention: General Counsel
Telecopier No.: 000-000-0000
with a copy to:
Xxxxx Xxxxxx & Harcourt
1500 - 00 X'Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxx, Xxxxxx
X0X 0X0
Attention: Xx. Xxxxxxxxx Xxxxxx
Telecopier No.: (000) 000-0000
or at such other address of which any party may, from time to time, advise the
other parties by notice in writing given in accordance with the foregoing. The
date of receipt of any such notice shall be deemed to be the date of delivery or
telecopying thereof.
Section 7.2 Assignment.
No party hereto may assign its rights or obligations under this Agreement
or the Arrangement, except that ALCATEL may assign all or part of its rights or
obligations, without reducing its own obligations hereunder, to a wholly-owned
subsidiary.
Section 7.3 Binding Effect.
This Agreement and the Arrangement shall be binding upon and shall enure to
the benefit of the parties hereto and their respective successors and permitted
assigns and no third party shall have any rights hereunder.
Section 7.4 Waiver and Modification.
NEWBRIDGE and ALCATEL may waive or consent to the modification of, in whole
or in part, any inaccuracy of any representation or warranty made to them
hereunder or in any document to be delivered pursuant hereto and may waive or
consent to the modification of any of the covenants herein contained for their
respective benefit or waive or consent to the modification of any of the
obligations of the other parties hereto. Any waiver or consent to the
modification of any of the provisions of this Agreement, to be effective, must
be in writing executed by the party granting such waiver or consent.
Section 7.5 Further Assurances.
Each party hereto shall, from time to time, and at all times hereafter, at
the request of the other parties hereto, but without further consideration, do
all such further acts and execute and deliver all such further documents and
instruments as
-61-
shall be reasonably required in order to fully perform and carry out the terms
and intent hereof.
Section 7.6 Expenses.
(1) Subject to Section 6.4, the parties agree that all out-of-pocket expenses
of the parties relating to the Arrangement and the transactions
contemplated hereby, including legal fees, accounting fees, financial
advisory fees, regulatory filing fees, stock exchange fees, all
disbursements of advisors and printing and mailing costs, shall be paid by
the party incurring such expenses.
(2) NEWBRIDGE represents and warrants to ALCATEL that, except for any amounts
owing to those financial advisers referred to in Section 3.1(c)(iii) by
NEWBRIDGE pursuant to and in accordance with the terms of written and
executed agreements existing as at the date hereof and disclosed to ALCATEL
on or prior to the date hereof, no broker, finder or investment banker is
or will be entitled to any brokerage, finder's or other fee or commission
from NEWBRIDGE or any subsidiary of NEWBRIDGE in connection with the
transactions contemplated hereby or by the Arrangement.
Section 7.7 Consultation.
ALCATEL and NEWBRIDGE agree to consult with each other as to the general
nature of any news releases or public statements with respect to this Agreement
or the Arrangement, and to use their respective reasonable efforts not to issue
any news releases or public statements inconsistent with the results of such
consultations. Subject to applicable Laws, each party shall use its reasonable
efforts to enable the other parties to review and comment on all such news
releases prior to the release thereof. The parties agree to issue jointly the
news release in the agreed form with respect to this Arrangement as soon as
practicable following the execution of this Agreement. ALCATEL and NEWBRIDGE
also agree to consult with each other in preparing and making any filings and
communications in connection with any Regulatory Approvals or other regulatory
approvals and in seeking any third party consents under leases, joint ventures
or other agreements.
Section 7.8 Governing Laws.
This Agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein and
shall be treated in all respects as a Ontario contract. Each party hereby
irrevocably attorns to the jurisdiction of the courts of the Province of Ontario
in respect of all matters arising under or in relation to this Agreement.
-62-
Section 7.9 Time of Essence.
Time shall be of the essence in this Agreement.
Section 7.10 Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together shall constitute one
and the same instrument.
-63-
IN WITNESS WHEREOF the parties hereto have executed this Merger Agreement
as of the date first written above.
ALCATEL
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Authorized Signing Officer
NEWBRIDGE NETWORKS CORPORATION
By: /s/ Pearse Xxxxx
---------------------------------
By: /s/ Xxxxxxx X. Xxxxxxxxxxxx
---------------------------------
Authorized Signing Officer
SCHEDULE A
ARRANGEMENT RESOLUTION
SPECIAL RESOLUTION OF THE NEWBRIDGE SHAREHOLDERS
. BE IT RESOLVED THAT:
1. The arrangement (the "Arrangement") under Section 192 of the Canada
Business Corporations Act (the "CBCA") involving NEWBRIDGE Corporation
("NEWBRIDGE"), as more particularly described and set forth in the
Management Information Circular (the "Circular") of NEWBRIDGE accompanying
the notice of this meeting (as the Arrangement may be or may have been
modified or amended) is hereby authorized, approved and adopted.
2. The plan of arrangement (the "Plan of Arrangement") involving NEWBRIDGE,
the full text of which is set out as Schedule B to the Merger Agreement
(the "Merger Agreement") made between ALCATEL and NEWBRIDGE (as the Plan of
Arrangement may be or may have been modified or amended) is hereby
authorized, approved and adopted.
3. Notwithstanding that this resolution has been passed (and the Arrangement
adopted) by the shareholders of NEWBRIDGE or that the Arrangement has been
approved by the Superior Court of Justice (Ontario), the directors of
NEWBRIDGE are hereby authorized and empowered (i) to amend the Merger
Agreement or the Plan of Arrangement to the extent permitted by the Merger
Agreement, and (ii) subject to the terms of the Merger Agreement, not to
proceed with the Arrangement without further approval of the shareholders
of NEWBRIDGE.
4. Any officer or director of NEWBRIDGE is hereby authorized and directed
for and on behalf of NEWBRIDGE to execute, under the seal of NEWBRIDGE or
otherwise, and to deliver articles of arrangement and such other documents
as are necessary or desirable to the Director under the CBCA in accordance
with the Merger Agreement for filing.
5. Any officer or director of NEWBRIDGE is hereby authorized and directed
for and on behalf of NEWBRIDGE to execute or cause to be executed, under
the seal of NEWBRIDGE or otherwise, and to deliver or cause to be
delivered, all such other documents and instruments and to perform or cause
to be performed all such other acts and things as may be necessary or
desirable to give full effect to the foregoing resolution and the matters
authorized hereby.
SCHEDULE C
REGULATORY APPROVALS
Canada
. expiration or earlier termination of the waiting period under Part IX of
the Competition Act (Canada) and receipt of an advance ruling certificate
("ARC") pursuant to the Competition Act (Canada) or, in the alternative to
an ARC, a no action letter from the Commissioner of Competition
. determination by the Minister responsible for Investment Canada under the
Investment Canada Act that the Arrangement is of "net benefit to Canada"
for purposes of such Act on terms and conditions satisfactory to ALCATEL,
acting reasonably
. exemption orders from the provincial securities regulators from the
registration and prospectus requirements with respect to the Exchangeable
Share structure
. conditional approval for the listing of the Exchangeable Shares on The
Toronto Stock Exchange
United States
. expiration or earlier termination of the waiting period under the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976
. approval of the NYSE to the listing of the ALCATEL ADRs and ALCATEL ADSs to
be issued under the Arrangement, subject to notice of issuance
. effectiveness of the registration statement on Form F-3 regarding the
ALCATEL ADRs and ALCATEL ADSs and on Form S-8 regarding the Revised Options
. compliance with the applicable requirements of U.S. state blue sky laws
. any other compliance with any applicable requirements of the U.S.
Securities Act of 1933 and the U.S. Securities Exchange Act of 1934, each
as amended
France/EU
. approval of the COB to the publication of the ALCATEL Circular and of the
COB and PSE to the listing of the additional ALCATEL Shares and related
matters
-2-
. the filing of a registration statement issued in connection with the
transactions related to the Arrangement with the COB and the approval
(visa) of such registration statement by the COB
. compliance with laws regulating competition, antitrust, investment or
exchange controls (as appropriate) on terms and conditions satisfactory to
ALCATEL, acting reasonably, or ALCATEL obtaining confirmation on terms
satisfactory to it that the transactions referred to in this Agreement or
any matter relating thereto will not be referred to such authorities
. ----------------
