EXECUTION COPY
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BACKSTOP AGREEMENT
BY AND AMONG
AVAYA INC.
AND
THE INVESTORS LISTED ON SCHEDULE 1
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Dated as of
DECEMBER 23, 2002
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Definitions...................................................3
SECTION 1.02. Other Definitions.............................................8
ARTICLE II
The Exchange Offer
SECTION 2.01. The Exchange Offer............................................9
SECTION 2.02. Required Filings.............................................12
ARTICLE III
Warrant Grants; Adjustments; Exercise and Conversion
SECTION 3.01. Grants and Exercise Price Adjustments........................13
SECTION 3.02. Agreement to Exercise........................................14
SECTION 3.03. Agreement to Convert.........................................14
SECTION 3.04. Expiration Time Deliveries...................................14
SECTION 3.05. Closing......................................................15
SECTION 3.06. Closing Deliveries...........................................15
SECTION 3.07. Exercise and Conversion Mechanics............................15
SECTION 3.08. Tax Treatment................................................17
ARTICLE IV
Representations and Warranties of the Company
SECTION 4.01. Organization and Standing....................................17
SECTION 4.02. Capital Stock................................................17
SECTION 4.03. Authorization; Enforceability................................18
SECTION 4.04. No Violation; Consents.......................................18
SECTION 4.05. Commission Filings; Financial Statements.....................19
SECTION 4.06. No Material Adverse Effect...................................19
SECTION 4.07. Contracts; Debt Instruments..................................19
SECTION 4.08. Compliance with Laws.........................................20
SECTION 4.09. Compliance with Constituent Documents........................20
SECTION 4.10. Opinion of Financial Advisor.................................20
SECTION 4.11. Section 355..................................................20
SECTION 4.12. DGCL Section 203.............................................20
SECTION 4.13. Rights Agreement.............................................20
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ARTICLE V
Representations and Warranties of the Investors
SECTION 5.01. Organization; Authorization; Enforceability..................21
SECTION 5.02. Private Placement............................................21
SECTION 5.03. No Violation; Consents.......................................22
SECTION 5.04. Financing....................................................23
SECTION 5.05. Ownership of Securities......................................23
SECTION 5.06. Future Acquisitions..........................................23
ARTICLE VI
Covenants of the Company
SECTION 6.01. Conduct of Business Pending the Expiration Date..............23
SECTION 6.02. Access to Books and Records..................................23
SECTION 6.03. Compliance with Conditions; Commercially Reasonable
Efforts......................................................24
SECTION 6.04. HSR Act Notification.........................................24
SECTION 6.05. Consents and Approvals.......................................24
SECTION 6.06. Certain Actions..............................................24
SECTION 6.07. Listing and Reservation of Shares............................25
SECTION 6.08. Use of Proceeds..............................................25
SECTION 6.09. Warburg Group Directors and Observer.........................25
SECTION 6.10. Registration Rights..........................................26
SECTION 6.11. Rights Agreement.............................................26
SECTION 6.12. No Intended Distributions....................................26
SECTION 6.13. Director's Insurance.........................................27
SECTION 6.14. Relationship with Lucent.....................................27
ARTICLE VII
Covenants of the Investors
SECTION 7.01. Compliance with Conditions; Commercially Reasonable
Efforts......................................................27
SECTION 7.02. HSR Act Notification.........................................27
SECTION 7.03. Consents and Approvals.......................................27
SECTION 7.04. Standstill...................................................28
SECTION 7.05. Voting Limitation............................................29
SECTION 7.06. Compliance with Section 355..................................29
ARTICLE VIII
Conditions Precedent to the Consummation of the Exchange Offer
SECTION 8.01. Conditions to the Company's Obligations in Respect of
the Exchange Offer...........................................29
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SECTION 8.02. Conditions to Each Investor's Obligations in Respect of
the Exchange Offer...........................................30
SECTION 8.03. Conditions to Each Party's Obligations in Respect of the
Exchange Offer...............................................31
ARTICLE IX
Miscellaneous
SECTION 9.01. Survival.....................................................32
SECTION 9.02. Legends......................................................32
SECTION 9.03. Notices......................................................32
SECTION 9.04. Termination..................................................33
SECTION 9.05. GOVERNING LAW................................................34
SECTION 9.06. WAIVER OF JURY TRIAL.........................................34
SECTION 9.07. Attorney Fees................................................34
SECTION 9.08. Entire Agreement.............................................35
SECTION 9.09. Modifications and Amendments.................................35
SECTION 9.10. Waivers and Extensions.......................................35
SECTION 9.11. Titles and Headings; Rules of Construction...................35
SECTION 9.12. Exhibits and Schedules.......................................35
SECTION 9.13. Expenses; Brokers............................................35
SECTION 9.14. Press Releases and Public Announcements......................36
SECTION 9.15. Assignment; No Third Party Beneficiaries.....................36
SECTION 9.16. Severability.................................................37
SECTION 9.17. Counterparts.................................................37
SECTION 9.18. Indemnification..............................................37
SECTION 9.19. Conversion Agreement and Stock Purchase Agreement............39
SCHEDULES
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SCHEDULE 1 Investors
SCHEDULE 4.04 No Violation; Consents
EXHIBITS
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EXHIBIT A Form of Series C and Series D Warrants
EXHIBIT B Form of Exchange Offer Documents
EXHIBIT C Form of Resolutions of Board of Directors
EXHIBIT D Form of Opinion of Weil, Gotshal & Xxxxxx LLP
EXHIBIT E Registration Rights Provisions
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BACKSTOP AGREEMENT, dated as of December 23, 2002 (this
"Agreement"), by and among Avaya Inc., a Delaware corporation (the "Company"),
and the investors listed on Schedule 1 (individually, an "Investor" and,
collectively, the "Investors").
WHEREAS, on October 2, 2000, the Company issued and sold to the
Investors (a) 4,000,000 shares (the "Preferred Shares") of its 6 1/2% Series B
Convertible Participating Preferred Stock, par value $1.00 per share ("Series B
Preferred Stock"), having an initial liquidation preference equal to $100 per
share, and (b) the Warrants (as defined below);
WHEREAS, on March 10, 2002, the Company and the Investors entered
into the Conversion and Exercise Agreement (the "Conversion Agreement") pursuant
to the terms of which, among other things, (a) the Company agreed to reduce the
conversion price of the Preferred Shares, and (b) the Investors agreed to (i)
convert all of the Preferred Shares into shares of Common Stock (as defined
below) and (ii) exercise for cash (A) a portion of the Series A Warrants (as
defined below) to purchase an aggregate of 159,268 Warrant Shares (as defined
below) at $34.73 per Warrant Share and (B) a portion of the Series B Warrants
(as defined below) to purchase an aggregate of 127,414 Warrant Shares at $34.73
per Warrant Share;
WHEREAS, also on March 10, 2002, the Company and the Investors
entered into the Stock Purchase Agreement (the "Stock Purchase Agreement")
pursuant to the terms of which, among other things, the Company agreed to sell
to the Investors, and the Investors agreed to purchase from the Company, an
aggregate of 14,383,953 shares of Common Stock;
WHEREAS, on March 21, 2002, the transactions contemplated by the
Conversion Agreement and the Stock Purchase Agreement were completed;
WHEREAS, the Company and the Investors desire to commence a
tender/exchange offer (the "Exchange Offer") to purchase and/or exchange up to
$660.542 million in aggregate principal amount at maturity of the XXXXx (as
defined below) on the terms and subject to the conditions set forth in this
Agreement and in the Offer Documents (as defined below);
WHEREAS, in the Exchange Offer, each holder of XXXXx will have the
option to receive, in exchange for each $1,000 of aggregate principal amount at
maturity of XXXXx validly tendered, not validly withdrawn and accepted for
purchase and/or exchange in the Exchange Offer, either (a)(i) a number of shares
of Common Stock equal to the Exchange Ratio (as defined below) plus (ii) $203.87
in cash (the "Mixed Consideration"), or (b) $389.61 in cash (the "Cash
Consideration", and, together with the Mixed Consideration, the "Offer
Consideration"), in each case, subject to proration as described below;
WHEREAS, in the Exchange Offer, XXXXx validly tendered, not validly
withdrawn and accepted for purchase and/or exchange shall be purchased by and as
between the Company and the Investors in the following order: (a) first, all
XXXXx up to the Maximum Amount of XXXXx, validly tendered, not validly withdrawn
and accepted for purchase and exchange in exchange for the Mixed Consideration
shall be purchased; and (b) second, the number of XXXXx purchasable, at a price
equal to the Cash Consideration, for an aggregate amount of cash equal to the
lesser of (1) $200 million minus the aggregate amount of cash paid for XXXXx
accepted for purchase pursuant to clause (a) above, and (2) the Maximum Amount
of XXXXx minus the number of XXXXx purchased pursuant to clause (a) above, (such
number of XXXXx, the "Cash Maximum Amount of XXXXx"), validly tendered, not
validly withdrawn and accepted for purchase and exchange in exchange for the
Cash Consideration shall be purchased, with (i) the consideration for all such
purchases being provided as follows: (A) the Company shall provide all of the
Common Stock for such consideration (the "Company Common Stock Consideration"),
(B) the Company shall provide cash in an amount up to $100 million for such
consideration (the amount so provided by the Company being referred to as the
"Company Cash Amount") and (C) the Investors shall provide cash in an amount up
to $100 million for such consideration (the amount so provided by the Investors
being referred to as "Investor Cash Amount"), (ii) the aggregate principal
amount at maturity of such XXXXx acquired by the Investors being equal to the
total principal amount at maturity of XXXXx acquired in the Exchange Offer
multiplied by a fraction, the numerator of which is the Investor Cash Amount and
the denominator of which is the sum of the Investor Cash Amount, the Company
Cash Amount and the Company Common Stock Value (as defined below) and (iii) the
Company being deemed to have purchased the remainder of such XXXXx;
WHEREAS, in consideration of the Investors' willingness to
participate in the Exchange Offer and enter into this Agreement, the Company is
issuing to the Investors new Series C Warrants to purchase an aggregate of
7,355,824 shares of Common Stock at a price per share equal to $3.50 with a four
year term, in the form set forth in Exhibit A (the "Series C Warrants");
WHEREAS, in consideration of the Investors' participation in the
Exchange Offer, the Company will issue to the Investors, following consummation
of the Exchange Offer, new Series D Warrants to purchase an aggregate number of
shares of Common Stock determined as set forth in Section 3.01(b), at a price
per share determined as set forth in Section 3.01(b), in the form set forth in
Exhibit A (the "Series D Warrants"); and
WHEREAS, in connection with the consummation of the Exchange Offer,
(a) the Company and the Investors desire that the Company (i) reduce, effective
as of the Closing (as defined below), the Exercise Price (as defined below) of
the Series A Warrants and the Series B Warrants in accordance with Section 3.01
(the "Exercise Price Adjustment") and (ii) increase the number of Warrant Shares
purchasable upon exercise of the Series A Warrants and of the Series B Warrants
in accordance with Section 3.01 (the "Warrant Shares Adjustment"), (b) following
effectiveness of the Exercise Price Adjustment and the Warrant Shares Adjustment
and subject to the terms and conditions set forth in this Agreement, the Company
and the Investors desire that the Investors exercise, for cash, a portion of
Series A Warrants and Series B Warrants (the "Exercise") and purchase Warrant
Shares in accordance with Section 3.02, and (c) following the Closing and
subject to the terms and conditions set forth in this Agreement, the Company and
the Investors desire that the Investors convert all XXXXx purchased by the
Investors in connection with the Exchange Offer into Conversion Shares (as
defined below) (the "Conversion").
NOW, THEREFORE, the parties to this Agreement, intending to be
legally bound, agree as follows.
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ARTICLE I
Definitions
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SECTION 1.01. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person,
directly or indirectly, controlling, controlled by, or under direct or indirect
common control with, such Person. For the purposes of this definition, "control"
means, when used with respect to any Person, the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Aggregate Agreed Upon Number of Shares" means the product of (a)
the Agreed Upon Exercise Amount, times (b) the quotient of (i) the total
principal amount at maturity of XXXXx deemed to be acquired by the Investors in
connection with the Exchange Offer, divided by (ii) $1,000.
"Agreed Upon Exercise Amount" means a number of shares of Common
Stock equal to the difference of (a) the quotient of (i) the Warburg Xxxxxx
XXXXx Purchase Price, divided by (ii) the product of (A) the Market Value of a
share of Common Stock, times (B) 0.90 (provided, however, that, in the event
that the product referred to in this clause (ii) shall be less than $1.78, such
product shall be deemed to be $1.78, and, if such product shall be more than
$2.68, such product shall be deemed to be $2.68), minus (b) 37.4437.
"Applicable Law" means (a) any United States federal, state or local
or foreign law, statute, rule, regulation, order, writ, injunction, judgment,
decree or permit of any Governmental Authority, and (b) any rule or listing
requirement of any national stock exchange or Commission recognized trading
market on which securities issued by the Company or any of the Subsidiaries are
listed or quoted, including, as of the date of this Agreement, the NYSE.
"Board of Directors" means the board of directors of the Company.
"BONY Indenture" means the Indenture, dated as of October 31, 2001,
as supplemented by the Second Supplemental Indenture thereto, dated as of March
28, 2002, by and between the Company and The Bank of New York, as trustee.
"Business Day" means any day other than a Saturday, a Sunday, or a
day when the Commission or banks in The City of New York are authorized by
Applicable Law to be closed.
"Capital Stock" means (a) with respect to any Person that is a
corporation, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock, and (b) with respect to any
other Person, any and all partnership or other equity interests of such Person.
"Commission" means the United States Securities and Exchange
Commission.
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"Common Stock" means the common stock of the Company, par value
$0.01 per share, and, unless the context otherwise requires, includes the
associated Series A Junior Participating Preferred Stock purchase rights
issuable in respect of such shares pursuant to the Rights Agreement.
"Company Common Stock Value" means the product of (a) the Market
Value per share of Common Stock (provided, however, that (i) if the Market Value
per share of Common Stock shall be less than $1.98, the amount in this clause
(a) shall be deemed to be equal to $1.98, and (ii) if the Market Value per share
of Common Stock shall be greater than $2.68, the amount in this clause (a) shall
be deemed to be equal to $2.68), times (b) the number of shares of Common Stock
issued by the Company as the Company Common Stock Consideration for XXXXx in the
Exchange Offer.
"Contract" means any contract, lease, loan agreement, mortgage,
security agreement, trust indenture, note, bond, or other agreement (whether
written or oral) or instrument.
"Conversion Shares" means those shares of Common Stock into which
XXXXx may be converted pursuant to Article V of the XXXXx Indenture.
"Dealer Manager Agreement" means the Dealer Manager Agreement, dated
as of the date of this Agreement, by and among the Company, the Investors and
Xxxxxx Xxxxxxx & Co. Incorporated.
"DGCL" means the General Corporation Law of the State of Delaware,
as from time to time amended.
"Distribution" means the distribution by Lucent to its stockholders
of Common Stock on September 30, 2000, and the related "Contribution" (as
defined in the Distribution Agreement).
"Distribution Agreement" means the Contribution and Distribution
Agreement, dated as of September 30, 2000, by and between the Company and
Lucent.
"Excess Shares" means any shares of Common Stock beneficially owned
by the Warburg Group in excess of 29.9% of the outstanding shares of Common
Stock (as calculated in accordance with Rule 13d-3 under the Exchange Act).
"Exchange Act" means the Securities Exchange Act of 1934, as from
time to time amended, and the rules and regulations of the Commission
promulgated thereunder.
"Exchange Agent" means the bank or trust company retained by the
Company and the Investors to act as exchange agent in connection with the
Exchange Offer.
"Exchange Ratio" means a number equal to $203.87 divided by the
Market Value of a share of Common Stock; provided, however, that the Exchange
Ratio shall not be more than 102 or less than 76.
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"Exercise Price" (a) with respect to the Series A Warrants, has the
meaning set forth in Section 2(A) of the Series A Warrants, and (b) with respect
to the Series B Warrants, has the meaning set forth in Section 2(A) of the
Series B Warrants.
"Exercise Price Shares" means the quotient of (a) the product of (i)
Aggregate Agreed Upon Number of Shares, times (ii) $0.01, divided by (b) the
product of (i) the Market Value of a share of Common Stock, times (ii) 0.90
(provided, however, that, if the product referred to in this clause (b) shall be
(A) less than $1.78, such product shall be deemed to be $1.78, or (B) more than
$2.68, such product shall be deemed to be $2.68).
"GAAP" means United States generally accepted accounting principles,
consistently applied.
"Governmental Authority" means (a) any United States federal, state
or local or foreign court or governmental or regulatory agency or authority, (b)
any arbitration board, tribunal or mediator and (c) any national stock exchange
or Commission recognized trading market on which securities issued by the
Company or any of the Subsidiaries are listed or quoted.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as from time to time amended, and applicable rules and regulations
promulgated thereunder and any similar state acts.
"Interim Excess Shares" means any shares of Common Stock
beneficially owned by the Warburg Group in excess of 25.0%, but less than 29.9%,
of the outstanding shares of Common Stock (as calculated in accordance with Rule
13d-3 under the Exchange Act).
"Letter Agreement" means the Letter Agreement, dated as of the date
of this Agreement, by and among the Company, the Investors and Xxxxxx Xxxxxxx &
Co. Incorporated.
"Lien" means any mortgage, pledge, lien, security interest, claim,
restriction, charge or encumbrance of any kind.
"Lucent" means Lucent Technologies Inc., a Delaware corporation.
"XXXXx" means the Company's Liquid Yield Option(TM) Notes due 2021,
with each $1,000 principal amount at maturity thereof being a "LYON".
"XXXXx Indenture" means the Indenture, dated as of October 31, 2001,
as supplemented by the First Supplemental Indenture, dated as of October 31,
2001, by and between the Company and The Bank of New York, as trustee.
"Market Value" of a share of Common Stock means the volume-weighted
average trading price of a share of Common Stock on the NYSE for the five NYSE
trading days ending at the close of business two NYSE trading days prior to the
NYSE trading day on which the Exchange Offer expires (i.e., if the Exchange
Offer expires at midnight on the 20th NYSE trading day following its
commencement, the period would include the 14th, 15th, 16th, 17th and 18th NYSE
trading days).
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"Material Adverse Effect" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance or
properties of the Company and the Subsidiaries, taken as a whole, or (b) the
ability of the Company to timely perform any of its obligations under this
Agreement.
"Maximum Amount of XXXXx" means a number of XXXXx having an
aggregate principal amount at maturity of $660.542 million.
"New Warrants" means the Series C Warrants and the Series D
Warrants.
"NYSE" means the New York Stock Exchange, Inc.
"Original Purchase Agreement" means the Preferred Stock and Warrant
Purchase Agreement, dated as of August 8, 2000, as amended by Amendment No. 1
thereto, dated as of September 29, 2000, by and among the Company and the
Investors.
"Permitted Transferee" means, with respect to any Investor or any
Permitted Transferee of any Investor, any member of the Warburg Group, Warburg
or any subsidiary of Warburg (but excluding any portfolio company of any member
of the Warburg Group); provided, however, that each Permitted Transferee must
agree in writing to be bound by the terms of this Agreement to the same extent,
and in the same manner, as the transferring Investor prior to the transfer of
any Warrants, New Warrants or Common Stock to such Permitted Transferee; and
provided further, however, that the transfer of Warrants, New Warrants or Common
Stock to such Permitted Transferee is in compliance with all applicable
securities laws.
"Person" means any individual, partnership, corporation, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
"Private Letter Ruling" means the private letter ruling, dated
August 3, 2000, from the Internal Revenue Service that the Distribution
qualifies as a tax-free distribution under Section 355.
A "Qualifying Ownership Interest" shall be deemed to exist at any
time the Investors and the Permitted Transferees beneficially own, in the
aggregate, at least 26 million shares of Common Stock (as such number is
adjusted to reflect any stock split, stock dividend, combination or similar
transaction).
"Representatives" means, collectively, with respect to any Person,
such Person's directors, partners, officers, employees, financial advisors,
lenders, accountants, attorneys, agents, equity investors, controlled Affiliates
and controlling Persons of such Person or its controlled Affiliates.
"Rights Agreement" means the Rights Agreement dated as of September
29, 2000, as amended by Amendment No. 1 thereto dated as of February 28, 2002 by
and between the Company and The Bank of New York, as Rights Agent.
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"Section 355" means Section 355 of the Internal Revenue Code of
1986, as from time to time amended.
"Securities Act" means the Securities Act of 1933, as from time to
time amended, and the rules and regulations of the Commission promulgated
thereunder.
"Series A Warrants" means the four-year warrants to purchase
6,883,933 shares of Common Stock issued pursuant to the Original Purchase
Agreement and exercised in part pursuant to the terms of the Conversion
Agreement (and thus currently exercisable for 6,724,665 shares of Common Stock).
"Series B Warrants" means the five-year warrants to purchase
5,507,146 shares of Common Stock issued pursuant to the Original Purchase
Agreement and exercised in part pursuant to the terms of the Conversion
Agreement (and thus currently exercisable for 5,379,732 shares of Common Stock).
"Series D Black-Scholes Value" means the value, as of the date of
the Subsequent Closing, of the right to purchase one share of Common Stock
pursuant to the Series D Warrants (the terms of which shall be determined
pursuant to Section 3.01(b)), calculated using the Black-Scholes value of such
right (determined using the Bloomberg L.P. Standard Option Valuation page
relating to the Common Stock), assuming (a) 50% volatility, (b) a risk free rate
of return equal to the Treasury rate corresponding to the term of the Series D
Warrants, (c) a 0% dividend yield and (d) the current value per share of Common
Stock to be equal to the Market Value of a share of Common Stock.
"subsidiary" means, with respect to any Person (a) a corporation a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by a subsidiary of such Person, or by such Person and one or more subsidiaries
of such Person, (b) a partnership in which such Person or a subsidiary of such
Person is, at the date of determination, a general partner of such partnership
and has the power to direct the policies and management of such partnership, or
(c) any other Person (other than a corporation) in which such Person, a
subsidiary of such Person or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination thereof, has (i) at
least a majority ownership interest or (ii) the power to elect or direct the
election of a majority of the directors or other governing body of such Person.
"Subsidiary" means a subsidiary of the Company.
"Transactions" means the transactions contemplated by this
Agreement, including without limitation the Exchange Offer, the issuance of the
Series C Warrants, the issuance of the Series D Warrants, the Exercise Price
Adjustment, the Warrant Shares Adjustment, the Exercise and the Conversion.
"Warburg" means the general partner of Warburg, Xxxxxx Equity
Partners, L.P.
"Warburg Group" means, collectively, any investment fund that is an
Affiliate of Warburg.
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"Warburg Xxxxxx XXXXx Purchase Price" means the quotient of (a) the
Investor Cash Amount divided by (b) the quotient of (i) the total principal
amount at maturity of XXXXx deemed to be acquired by the Investors in the
Exchange Offer, divided by (ii) $1,000.
"Warrants" means the Series A Warrants and the Series B Warrants.
"Warrant Shares" means the shares of Common Stock issuable upon the
exercise (in whole or in part) of the Warrants (including the Exercise Price
Shares), together with any shares of Common Stock issuable upon exercise (in
whole or in part) of the New Warrants.
SECTION 1.02. Other Definitions. As used in this Agreement, the following
terms shall have the meanings given thereto in the Sections set forth opposite
such terms:
Term Section
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Agreement Preamble
Cash Consideration Recitals
Claim 9.18
Closing 3.05
Closing Date 3.05
Company Preamble
Company Cash Amount Recitals
Company Commission Filings 4.05(a)
Company Common Stock Consideration Recitals
Conversion Recitals
Conversion Agreement Recitals
Exchange Offer Recitals
Exercise Recitals
Exercise Price Adjustment Recitals
Expiration Date 2.01(b)(i)
Expiration Time 2.01(b)(i)
Indemnified Party 9.18(c)
Indemnifying Party 9.18(c)
Investor Cash Amount Recitals
Investor; Investors Preamble
Material Contract 4.07
Maximum Number 7.06(b)
Mixed Consideration Recitals
Notices 9.03
Offer Consideration Recitals
Offer Documents 2.02
Offer Registration Statement 2.02
Preferred Shares Recitals
Prospectus 2.02
Qualifying Event 6.09(a)(ii)
Registrable Securities 6.10
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Term Section
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Registration Rights Provisions 6.10
Registration Statement 6.10
Schedule TO 2.02
Series B Preferred Stock Recitals
Series C Warrants Recitals
Series D Warrants Recitals
Stock Purchase Agreement Recitals
Subsequent Closing 3.07
Subsequent Closing Period 3.07
Termination Claims 2.01(a)
Unaffiliated Director 6.09(a)(ii)
Warburg Group Director 6.09(a)(i)
Warburg Group Observer 6.09(b)
Warrant Shares Adjustment Recitals
ARTICLE II
The Exchange Offer
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SECTION 2.01. The Exchange Offer. (a) On, or as promptly as reasonably
practicable following, the date of this Agreement, the Company and the Investors
shall commence (within the meaning of Rule 14d-2 under the Exchange Act) the
Exchange Offer. Each $1,000 aggregate principal amount at maturity of XXXXx
accepted for purchase and/or exchange in the Exchange Offer on the terms and
subject to the conditions and limitations set forth in this Agreement and in the
Offer Documents shall be exchanged for the right to receive the Offer
Consideration. The obligation of the Company and the Investors to accept for
purchase and/or exchange, and to purchase and/or exchange (which obligation
shall be several and not joint), any XXXXx validly tendered and not validly
withdrawn shall be subject only to the satisfaction or waiver (to the extent
permitted by this Agreement) of each of the conditions set forth in Article
VIII. Any condition may only be waived upon the mutual written agreement of the
Company and the Investor; provided, however, that (i) the Company shall be
deemed to have waived each condition set forth in Section 8.02 if such condition
is waived by the Investors, and (ii) the Investors shall be deemed to have
waived any or all condition or conditions set forth in Section 8.01 if such
condition or conditions are waived by the Company. No changes in any of the
terms and conditions of the Exchange Offer shall be made, except upon the mutual
written agreement of the Company and Investors. Notwithstanding the foregoing,
the Company shall have the right to terminate the Exchange Offer at any time
prior to the Expiration Time without the consent of the Investors; provided,
that (A) prior to any such termination, the Company shall consult with the
Investors concerning such termination, (B) the Company shall indemnify and hold
harmless each Investor and its partners, members, officers, directors, employees
and controlling Persons, if any, against any Claims (as defined below) arising
as a result of any such termination (such Claims, "Termination Claims"), and (C)
such termination shall not affect the Series C Warrants or the issuance thereof.
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(b) (i) Subject to the terms and conditions of the Exchange Offer and
this Agreement, the Exchange Offer shall expire at midnight, New York City
time, on the date that is twenty Business Days after the date the Exchange
Offer is commenced (as extended in accordance with this Section
2.01(b)(i), the "Expiration Date", with midnight, New York City Time, on
the Expiration Date, or if the Expiration Date is not the date that is
twenty Business Days after the date the Exchange Offer is commenced, such
other time on the Expiration Date as may be determined by the Company,
being the "Expiration Time"); provided, however, that, upon mutual
agreement of the Company and the Investors, the Exchange Offer may from
time to time be extended if at the Expiration Time any of the conditions
set forth in Article VIII shall not have been satisfied or waived, until
such time as such conditions are satisfied or waived; and provided,
further, that, if the Company makes any public announcement concerning its
financial condition or results of operations in the period beginning on
the first day of period during which the Market Value of a share of Common
Stock would have been determined (assuming the Expiration Date to be the
Expiration Date scheduled as of the date of such announcement) and ending
on the Expiration Date, the Company and the Investors shall, unless
mutually agreed between the Company and the Investors, extend the Exchange
Offer for an additional number of Business Days such that the Expiration
Date shall occur on the 7th NYSE trading day following such announcement
(which date shall in no event be any later than the 27th NYSE trading day
after the date on which the Exchange Offer is commenced). The Company may,
in its sole discretion, extend the Exchange Offer once for up to ten
Business Days, if at the then scheduled Expiration Time the condition set
forth in either Section 8.03(a) or 8.03(e) shall not have been satisfied
or waived; provided, that in no event shall the Company be entitled,
pursuant to this sentence, to extend the Exchange Offer beyond the 30th
NYSE trading day after the date on which the Exchange Offer is commenced.
(ii) Subject to the terms and conditions of the Exchange Offer and this
Agreement and the satisfaction (or waiver to the extent permitted by this
Agreement) of the conditions set forth in Article VIII, the Company and
the Investors (in accordance with the provisions of Section 2.01(b)(iii))
shall accept for purchase and/or exchange all XXXXx, up to the Maximum
Amount of XXXXx (or if less, the amount of XXXXx described in Section
2.01(b)(iii)), validly tendered and not validly withdrawn pursuant to the
Exchange Offer that the Company and the Investors become obligated to
accept pursuant to the Exchange Offer as soon as practicable after the
Expiration Date and shall pay for and/or exchange all such XXXXx promptly
after such acceptance.
(iii) XXXXx validly tendered, not validly withdrawn and accepted for
purchase and/or exchange shall be purchased by and as between the Company and
Investors in the following order: (A) first, all XXXXx up to the Maximum
Amount of XXXXx, validly tendered, not validly withdrawn and accepted for
purchase and exchange in exchange for the Mixed Consideration shall be
purchased and (B) second, the number of XXXXx purchasable, at a price
equal to the Cash Consideration, for an aggregate amount of cash equal to
the lesser of (x) $200 million minus the aggregate amount of cash paid for
XXXXx accepted for purchase pursuant to clause (a) above, and (y) the
Maximum Amount of XXXXx minus the number of XXXXx purchased pursuant to
clause (a) above, validly tendered, not validly withdrawn and accepted for
purchase and exchange in exchange for the Cash Consideration shall be
purchased, with (I) the consideration for all such purchases being
provided as follows: (x) the Company shall
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provide all of the Company Common Stock Consideration, and (y) the Company
shall determine the proportionate amount of cash, if any, to be provided by each
of the Company and the Investors; provided that, (1) if necessary to satisfy
tenders, the Company will provide up to $100 million and (2) the Investors shall
not be required to provide in excess of $100 million, and (II) the aggregate
principal amount at maturity of XXXXx acquired by the Investors shall be equal
to the total principal amount at maturity of XXXXx acquired in the Exchange
Offer multiplied by a fraction, the numerator of which is the Investor Cash
Amount and the denominator of which is the sum of the Investor Cash Amount, the
Company Cash Amount and the Company Common Stock Value and (III) the Company
shall be deemed to have purchased the remainder of such XXXXx.
(c) (i) In connection with the Exchange Offer, each holder of XXXXx
validly tendered and not validly withdrawn pursuant to the Exchange Offer
shall be entitled to elect to receive the Offer Consideration in respect
of such tendered XXXXx in the form of either the Mixed Consideration or
the Cash Consideration; provided, however, that (A) elections to receive
Mixed Consideration shall be satisfied prior to any elections to receive
the Cash Consideration, and (B) elections to receive Cash Consideration
shall be limited such that the aggregate amount of cash that may be paid
to holders of XXXXx electing the Cash Consideration is equal to the
difference of (I) $200 million, minus (II) the amount of cash paid to
holders of XXXXx electing the Mixed Consideration; and, provided, further,
that the letter of transmittal in respect of the Exchange Offer shall
require that each holder of XXXXx shall elect either the Mixed
Consideration or the Cash Consideration for all XXXXx tendered by such
holder. To the extent that a holder of XXXXx has validly tendered XXXXx
and not validly withdrawn them but has not indicated in the letter of
transmittal whether such holder elects the Mixed Consideration or the Cash
Consideration with respect to such XXXXx tendered, such holder shall be
deemed to have elected to receive the Mixed Consideration for all XXXXx
tendered by such holder. Notwithstanding anything in this Agreement to the
contrary: (x) the Company Cash Amount shall not exceed $100 million, (y)
the Investor Cash Amount shall not exceed $100 million, and (z) the
aggregate principal amount at maturity of XXXXx that the Company and the
Investors will be obligated to acquire in the Exchange Offer shall not
exceed, in the aggregate, the Maximum Amount of XXXXx.
(ii) The Mixed Consideration and any other applicable numbers or amounts
shall be adjusted to the extent necessary to reflect appropriately the effect of
any stock split, reverse stock split, stock dividend (including any
distribution or dividend of securities convertible into or exchangeable
for Common Stock), extraordinary cash dividend, reorganization,
reclassification, combination, exchange of shares or other like change
with respect to Common Stock (other than the Exchange Offer) occurring or
having a record date on or after the date of this Agreement and prior to
the completion of the Exchange Offer.
(iii) The Exchange Agent shall make all computations as to the allocation
and the proration contemplated by this Section 2.01(c), and any such
computation shall be conclusive and binding on each holder of XXXXx
tendering XXXXx in the Exchange Offer. The Company and the Investors may
agree to make such rules as are consistent with the Exchange Offer and
this Section 2.01(c) for the implementation of
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the provisions of this Section 2.01(c) as shall be necessary or desirable to
fully effect such provisions.
SECTION 2.02. Required Filings. On or as soon as practicable after the date
of this Agreement, the Company shall prepare and file with the Commission a
registration statement on Form S-4 (in the form set forth in Exhibit B), to
register the offer and sale of Common Stock pursuant to the Exchange Offer
(together with all amendments and supplements thereto, and including all
exhibits thereto, the "Offer Registration Statement"). The Offer Registration
Statement, as declared effective by the Commission, will include a prospectus
containing the information required under Rule 14d-4(b) promulgated under the
Exchange Act (the "Prospectus"). As soon as practicable on the date the
Exchange Offer is commenced, the Company and the Investors shall file with the
Commission a Exchange Offer Statement on Schedule TO (in the form included in
Exhibit B) (which shall include any information required by Rule 13e-4 under the
Exchange Act) with respect to the Exchange Offer (together with all amendments
and supplements thereto, and including all exhibits thereto, the "Schedule TO")
and cause the Offer Documents, in form and substance reasonably acceptable to
the Company and the Investors, to be disseminated to the holders of the XXXXx
as and to the extent required by the Securities Act, the Exchange Act and
other Applicable Law. The Schedule TO shall contain as an exhibit or
incorporate by reference a prospectus containing the information required under
Rule 14d-4(b) promulgated under the Exchange Act (or portions thereof)
and forms of the related letter of transmittal and summary advertisement, if
any. Subject to the obligations of the Investors set forth in this Section
2.02, the Company shall cause the Schedule TO, the Prospectus, and all
amendments or supplements thereto (which, together, collectively constitute
the "Offer Documents") to comply in all material respects with the Securities
Act, the Exchange Act and other Applicable Law, and the Company further agrees
that the Offer Documents, on the date first published, sent or given to the
holders of the XXXXx, shall not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that no representation or
warranty is made by the Company with respect to information supplied by the
Investors in writing specifically for inclusion or incorporation by reference
in the Offer Documents, which information consists solely of that information
contained in the Letter Agreement. The Investors agree to provide all
information about the Investors required to be disclosed in the Offer Documents
by the Securities Act and the Exchange Act and that the information provided
by the Investors in writing specifically for inclusion or incorporation by
reference in the Offer Documents shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the Company
and the Investors shall promptly correct any information provided by it for use
in the Offer Registration Statement or the Offer Documents if and to the
extent that such information shall have become false or misleading in any
material respect, and the Company shall take all steps necessary to cause
the Offer Documents as so corrected to be filed with the Commission and to be
disseminated to the holders of the XXXXx, in each case, as and to the extent
required by the Securities Act, the Exchange Act and Applicable Law. The
Investors and their counsel shall be given reasonable opportunity to review and
comment on the Offer Registration Statement and the Offer Documents prior to the
filing thereof with the Commission. The Company agrees to provide in writing to
the Investors and their counsel any comments the Company or its counsel may
receive, and the Investors agree to
-12-
provide in writing to the Company and its counsel any comments the Investors
receive, from the Commission or its staff with respect to the Offer Documents
promptly after receipt of such comments, and shall provide the Investors and
their counsel, or the Company and its counsel, as the case may be, with a
reasonable opportunity to participate in the response of the Company or the
Investors, as the case may be, to such comments.
ARTICLE III.
Warrant Grants; Adjustments; Exercise and Conversion
----------------------------------------------------
SECTION 3.01. Grants and Exercise Price Adjustments. (a) Concurrently
with the execution of this Agreement, the Company has granted to the Investors
Series C Warrants as set forth in Schedule 1.
(b) At the Subsequent Closing, the Company shall grant to the Investors
Series D Warrants having terms determined in accordance with this Section
3.01(b).
(i) Subject to the immediately following sentence, the exercise
price per Warrant Share that may be acquired pursuant to the Series D Warrants
and the term of the Series D Warrants shall be determined by the Investors, in
their sole discretion, and the Investors shall provide the Company with written
notice thereof at least five Business Days prior to the Subsequent Closing.
Notwithstanding the foregoing, (A) the exercise price per Warrant Share of the
Series D Warrants shall be not less than 125% and not more than 150% of the
Market Value of a share of Common Stock, and (B) the term of the Series D
Warrants shall be not less than three and not more than five years.
(ii) The number of shares of Common Stock that may be acquired, in the
aggregate, upon exercise for cash of the Series D Warrants shall be equal to the
quotient of (A) the product of (I) $5 million, times (II) the quotient of (x)
the lesser of (1) the Investor Cash Amount, and (2) $50 million, divided by
(y) $50 million, divided by (B) the Series D Black-Scholes Value.
Notwithstanding the foregoing, in the event that any circumstance or event
occurs (following the date of this Agreement but prior to the issuance of the
Series D Warrants), that would (had such circumstance or event occurred
following issuance of the Series D Warrants) require adjustment of the exercise
price and/or the number of Warrant Shares issuable upon exercise of the Series
D Warrants in accordance with Section 13 of the Series D Warrants, then the
exercise price and or number of Warrant Shares that may be issuable upon
exercise of the Series D Warrants shall be appropriately adjusted.
(c) (i) Effective as of the 11th Business Day following the Expiration
Date, pursuant to Section 13(J) of the Warrants and a resolution of the
Board of Directors adopted on or prior to the date of this Agreement (in
the form set forth in Exhibit C), the Board of Directors shall (A) reduce
the Exercise Price of all of the Series A and Series B Warrants so that
all such Warrants may be exercised for $0.01 per share of Common Stock,
and (B) subject to the final sentence of this Section 3.01(c)(i), increase
the number of Warrant Shares that may be purchased upon exercise of the
Series A Warrants and increase the number of Warrant Shares that may be
purchasable upon exercise of the Series B Warrants, to the extent
necessary so that
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the Series A and the Series B Warrants can be exercised for an
aggregate of (I) the Aggregate Agreed Upon Number of Shares plus (II) the
Exercise Price Shares plus (III) 100,000 shares of Common Stock.
Any such adjustment in the number of shares of Common Stock that may be
issuable upon exercise of such Warrants shall be made pro rata to both the
Series A Warrants and the Series B Warrants. The number of shares of
Common Stock issuable upon exercise of the Series A Warrants and the
Series B Warrants need not be increased pursuant to this Section
3.01(c)(i) if the sum of (w) Aggregate Agreed Upon Number of Shares plus
(x) the Exercise Price Shares is equal to or less than the difference of
(y) the number of shares of Common Stock issuable upon exercise of the
Series A Warrants and the Series B Warrants immediately prior to the
consummation of the Exchange Offer minus (z) 100,000, without giving
regard to any such adjustment.
(ii) The Investors agree that, until the Exercise Price is readjusted as
contemplated by the next sentence of this Section 3.01(c)(ii), they shall
not exercise Series A Warrants or Series B Warrants to acquire more than
the Aggregate Agreed Upon Number of Shares plus the Exercise Price Shares.
Following the time that the Investors have, in the aggregate, been validly
issued the Aggregate Agreed Upon Number of Shares plus the Exercise Price
Shares in connection with the Exercise, the Exercise Price of any portion
of the Series A Warrants and the Series B Warrants that remains
outstanding shall be adjusted so that such Exercise Price is that price
that would be in effect had this Agreement never been entered into.
(iii) The Exercise Price, and the number of Warrant Shares that may be
purchased upon exercise of the Warrants, shall continue to be further adjusted
if, as and when required by the terms of Section 13 of the Warrants.
SECTION 3.02. Agreement to Exercise. Not less than 11 and not more than 15
Business Days following the Expiration Date, and upon the terms and subject to
the conditions set forth in this Agreement, each Investor, severally and not
jointly, shall exercise, for cash, a portion of the Series A and the Series B
Warrants owned by it necessary to purchase, in the aggregate, the Aggregate
Agreed Upon Number of Shares plus the Exercise Price Shares, and the Company
shall issue such number of shares of Common Stock upon such exercise to each
such Investor. Such exercise shall first be made of the Series A Warrants and
then of the Series B Warrants.
SECTION 3.03. Agreement to Convert. Not less than 11 and not more than 15
Business Days following the Expiration Date, and upon the terms and subject to
the conditions set forth in this Agreement, each Investor, severally and not
jointly, shall convert, pursuant to the terms of Article V of the XXXXx
Indenture, all XXXXx acquired by it in connection with the Exchange Offer into
shares of Common Stock, and the Company shall issue such shares of Common Stock
upon the Conversion to each such Investor.
SECTION 3.04. Expiration Time Deliveries. At or prior to the Expiration
Time, (a) each Investor shall deliver to the Company the officer's certificate
contemplated by Section 8.01(c) and (b) the Company shall deliver to each
Investor (i) an opinion of Weil, Gotshal & Xxxxxx LLP, dated the Expiration
Date, in the form set forth in Exhibit D and (ii) the officer's certificate
contemplated by Section 8.02(d).
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SECTION 3.05. Closing. The Closing of the Exchange Offer shall occur as
promptly as practicable following the Expiration Date, subject to the
satisfaction, as of the Expiration Time, of the conditions set forth in
Article VIII (other than those conditions that by their nature are to be
satisfied at the Closing) (consummation of the Exchange Offer is referred to as
the "Closing", and such date and time is referred to as the "Closing Date"),
at the offices of Weil, Gotshal & Xxxxxx LLP, located at 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 or at such other place as the parties to this
Agreement shall agree in writing.
SECTION 3.06. Closing Deliveries. At the Closing:
(a) The Company shall deliver to the Exchange Agent, to be distributed
to holders of XXXXX validly tendered, not validly withdrawn and accepted
for exchange in the Exchange Offer:
(i) an amount equal to the Company Cash Amount via wire transfer of
immediately available funds to such bank account as the Exchange Agent
shall designate not later than two Business Days prior to the Closing
Date; and
(ii) the number of shares of Common Stock equal to the Company
Common Stock Consideration; and
(b) The Investors shall deliver to the Exchange Agent, to be distributed
to holders of XXXXx validly tendered, not validly withdrawn and accepted
for purchase in the Exchange Offer, an amount equal to the Investor Cash
Amount via wire transfer of immediately available funds to such bank
account as the Exchange Agent shall designate not later than two Business
Days prior to the Closing Date.
SECTION 3.07. Exercise and Conversion Mechanics. (a) Not less than 11 or
more than 15 Business Days following the Expiration Date (the "Subsequent
Closing Period"), at a subsequent closing (the "Subsequent Closing"), (i) the
XXXXx purchased by the Investors shall be converted into Conversion Shares in
accordance with the terms of Article V of the XXXXx Indenture and Section 3.03,
(ii) the Series D Warrants shall be issued and (iii) the relevant portion of the
Series A Warrants and the Series B Warrants shall be exercised for Warrant
Shares in accordance with the terms of Sections 3(A)(i) and 4 of the Warrants
and Section 3.02. The Subsequent Closing shall occur on a date determined by the
Investors (upon at least two Business Days written notice to the Company and
subject to the previous sentence) at the offices of Weil, Gotshal & Xxxxxx LLP,
located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or such other place as the
parties to this Agreement may agree in writing.
(b) At the Subsequent Closing, in connection with the exercise of the
Series A and the Series B Warrants and the Conversion,
(i) the Investors shall deliver to the Company:
(A) the Series A Warrants and the Series B Warrants to be exercised
by such Investor pursuant to Section 3.02, together with a duly
executed notice of exercise specifying the number of Warrant
Shares for which such Warrants are being exercised in accordance
with Section 3(A) of the Warrants.
-15-
Unless the Warrant Shares issuable upon such exercise are to be issued in the
same name as the name in which that Warrant is being exercised is registered,
each Warrant being exercised shall be accompanied by instruments of transfer,
in form reasonably satisfactory to the Company, duly executed by the holder or
the holder's duly authorized attorney and an amount sufficient to pay any
transfer or similar tax in accordance with Section 7 of the Warrants;
(B) an amount equal to the aggregate Exercise Price of that
portion of the Series A Warrants and the Series B Warrants being exercised by
such Investor pursuant to Section 3.02 via wire transfer of immediately
available funds to such bank account as the Company shall designate not later
than two Business Days prior to the date of the Subsequent Closing; and
(C) the XXXXx to be converted by such Investor pursuant to
Section 3.03, together with a duly executed notice of conversion specifying the
number of Conversion Shares for which such XXXXx are being converted in
accordance with Article V of the XXXXx Indenture. Each LYON being converted
shall be accompanied by instruments of transfer, in form reasonably satisfactory
to the Company, duly executed by the holder or the holder's duly authorized
attorney; and
(ii) the Company shall deliver to the Investors:
(A) certificates representing the Series D Warrants issuable pursuant to
Section 3.01(b), which shall be in definitive form and registered in
the name of such Investor or its nominee or designee and in such
denominations as such Investor shall request not later than two
Business Days prior to the date of the Subsequent Closing;
(B) a certificate or certificates representing the Warrant Shares for
which portions of the Series A Warrants and the Series B Warrants
have been exercised by such Investor pursuant to Section 3.02, which
shall be in definitive form and registered in the name of such
Investor or its nominee or designee and in such denominations as
such Investor shall request not later than two Business Days prior
to the date of the Subsequent Closing;
(C) certificates representing the portions of the Series A Warrants and
the Series B Warrants not exercised by such Investor pursuant to
Section 3.02, which shall be in definitive form and registered in
the name of such Investor or its nominee or designee and in such
denominations as such Investor shall request not later than two
Business Days prior to the date of the Subsequent Closing; and
(D) a certificate or certificates representing the Conversion Shares
into which the XXXXx are being converted by such Investor pursuant
to Section 3.03, which shall be in definitive form and registered in
the name of such Investor or its nominee or designee and in such
denominations as such Investor
-16-
shall request not later than two Business Days prior to the date of the
Subsequent Closing.
(c) The Exercise and the Conversion shall be deemed to have been
effected at the close of business on the date during the Subsequent
Closing Period on which the Investors deliver to the Company the
items described in Sections 3.07(b)(i)(A)-(C). As of such time, all
Warrant Shares issuable in connection with the Exercise and all
Conversion Shares shall, upon delivery, be duly and validly
authorized and issued, fully paid and nonassessable, free from all
preemptive rights and free from all Liens (other than Liens or
charges created by or imposed upon the holder or taxes in respect of
any transfer occurring contemporaneously therewith), and shall not
have been issued in violation of any Applicable Law.
SECTION 3.08. Tax Treatment. The parties to this Agreement agree that for
all tax purposes, the Conversion Shares, the Series D Warrants and the Warrant
Shares are being acquired in exchange for the Investor Cash Amount, and the
parties to this Agreement further agree that the Investor Cash Amount shall be
allocated for tax purposes in the manner reasonably determined by the Investors.
ARTICLE IV
Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to each Investor on the date of
this Agreement and on and as of the Expiration Time as follows:
SECTION 4.01. Organization and Standing. (a) The Company is duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has all requisite corporate power and authority to own its
properties and assets and to carry on its business as it is now being conducted.
The Company has provided to the Investors true and correct copies of the
Company's certificate of incorporation and by-laws, each as amended through the
date of this Agreement.
(b) Each direct and indirect material Subsidiary is duly incorporated,
validly existing and, where applicable, in good standing under the laws of its
jurisdiction of incorporation and has all requisite power and authority to own
its properties and assets and to carry on its business as it is currently
conducted, and each such material Subsidiary is qualified to transact business,
and in good standing, in each jurisdiction in which the properties owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary, except, in all cases, as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 4.02. Capital Stock. (a) The authorized Capital Stock of the
Company consists solely of (i) 1.5 billion shares of Common Stock, of which,
as of November 29, 2002, 365,801,780 shares were issued and outstanding, and
(ii) 200 million shares of preferred stock, par value $1.00 per share, of which
15 million shares have been designated as Series A Junior Participating
Preferred Stock. As of the date of this Agreement, no shares of Series A Junior
Participating Preferred Stock are issued or outstanding. Each share of Capital
-17-
Stock of the Company that is issued and outstanding is duly authorized and
validly issued and fully paid and nonassessable, and the issuance thereof was
not subject to any preemptive rights or made in violation of any Applicable Law.
(b) Except pursuant to, or as addressed in, the Original Purchase
Agreement, the Conversion Agreement, the Stock Purchase Agreement or this
Agreement, there are (i) as of the date of this Agreement, no outstanding
options, warrants, agreements, conversion rights, exchange rights, preemptive
rights or other rights (whether contingent or not) to subscribe for, purchase or
acquire any issued or unissued shares of Capital Stock of the Company (other
than pursuant to employee benefit plans or the XXXXx), and (ii) no restrictions
upon, or Contracts or understandings of the Company with respect to, the voting
or transfer of any shares of Capital Stock of the Company. As of the date of
this Agreement, there are issued and outstanding XXXXx with an aggregate
principal amount at maturity of $943.632 million, none of which XXXXx are owned
by the Company or any of its Subsidiaries.
SECTION 4.03. Authorization; Enforceability. The Company has the power and
authority to execute, deliver and perform the terms and provisions of this
Agreement and has taken all action necessary to authorize the execution,
delivery and performance by it of this Agreement and to consummate the
Transactions. No other corporate proceeding on the part of the Company or any of
its stockholders is necessary for such authorization, execution and delivery of
this Agreement or for the consummation of the Transactions under any provision
of the certificate of incorporation or by-laws or other governing documents of
the Company or under any Applicable Law. The Company has duly executed and
delivered this Agreement. This Agreement constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
SECTION 4.04. No Violation; Consents. (a) Subject to the governmental
filings and other matters referred to in Section 4.04(b), the execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the Transactions do not and will not contravene any Applicable
Law, except for any such contravention that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Except as
set forth in Schedule 4.04, the execution, delivery and performance by the
Company of this Agreement and the consummation of the Transactions (i) will not
(A) violate, result in a breach of or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under any Contract, or (B) result in the creation
or imposition of any Lien upon any of the assets of the Company or any
Subsidiary, except for any such violations, breaches, defaults or Liens that
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and (ii) will not conflict with or violate any
provision of the certificate of incorporation or by-laws or other governing
documents of the Company or any Subsidiary. The Company has provided to the
Investors true and complete copies of all correspondence with the NYSE relating
to the Transactions.
(b) Except for (i) the filings by the Company, if any, required by the HSR
Act and any other applicable foreign antitrust law, regulation or rule and the
expiration or termination of the applicable waiting period with respect thereto,
(ii) the filings contemplated by Section 2.02, (iii) applicable filings, if any,
with the Commission under the Exchange Act and
-18-
the NYSE in connection with the listing of the Warrant Shares and the Conversion
Shares, (iv) filings under state securities or "blue sky" laws, and (v) such
customary items as may be required in connection with the registration of
securities for public offer and sale pursuant to the Registration Rights
Provisions, no consent, authorization or order of, or filing or registration
with, any Governmental Authority or other Person is required to be obtained or
made by the Company or any Subsidiary for the execution, delivery and
performance of this Agreement or the consummation of the Transactions, except
where the failure to obtain such consents, authorizations or orders, or to make
such filings or registrations, would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 4.05. Commission Filings; Financial Statements. (a) The Company has
timely filed all registration statements, prospectuses, forms, reports and
documents required to be filed by it under the Securities Act or the Exchange
Act, as the case may be, since September 30, 2001 (those filings that have been
made on or prior to the date of this Agreement, collectively, the "Company
Commission Filings"). The Company Commission Filings (i) as of their respective
dates, were prepared in accordance with the requirements of the Securities Act
or the Exchange Act, as the case may be, and (ii) did not, at the time they were
filed, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. As of the date of this Agreement, no Subsidiary is subject
to the periodic reporting requirements of the Exchange Act.
(b) Each of the historical financial statements of the Company and its
Subsidiaries (including, in each case, any related notes or schedules) contained
in the Company Commission Filings was prepared in accordance with GAAP (except
in the case of unaudited quarterly financial statements as permitted by Form
10-Q under the Exchange Act) on a consistent basis throughout the periods
indicated, and each fairly presented the consolidated financial position of the
Company and its consolidated subsidiaries as of the respective dates thereof and
the results of operations, cash flows and changes in invested equity of the
Company and its consolidated subsidiaries for the respective periods indicated
therein (subject, in the case of unaudited statements, to normal year-end
adjustments that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect).
SECTION 4.06. No Material Adverse Effect. Since September 30, 2002, except
as specifically contemplated or permitted by this Agreement or as set forth in
the Company Commission Filings, there has not been any Material Adverse Effect
or an event or development that would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, other than to the
extent such effect results from (a) changes in general economic conditions,
(b) changes in the industry of providing communications systems and software for
enterprises, including businesses, government agencies and other organizations,
and (c) accounting charges resulting from the execution of this Agreement and
the consummation of the transactions contemplated hereby, except, in the cases
of clauses (a) and (b), for such changes as have a materially disproportionate
effect on the Company.
SECTION 4.07. Contracts; Debt Instruments. Except for this Agreement or as set
forth in the Company Commission Filings, neither the Company nor any of the
Subsidiaries is a party to or bound by any contract, arrangement, commitment or
understanding
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(whether written or oral) that is a "material contract" (as defined in Item
601(b)(10) of Regulation S-K of the Commission). Each contract, arrangement,
commitment or understanding of the type described in this Section
4.07 is referred to in this Agreement as a "Material Contract." Each Material
Contract is valid and binding on the Company or a Subsidiary, as applicable, and
is in full force and effect, and the Company and any Subsidiary that is a party
thereto have in all material respects performed all obligations required to be
performed by them to the date of this Agreement under each Material Contract,
except as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Neither the Company nor any Subsidiary knows of,
or has received notice of, any violation or default under (or any condition that
with the passage of time or the giving of notice would cause such a violation of
or default under) any Material Contract or any other loan or credit agreement,
note, bond, mortgage or indenture to which it is a party or by which it or any
of its properties or assets is bound, except for violations or defaults that
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect.
SECTION 4.08. Compliance with Laws. The Company and the Subsidiaries are in
compliance in all material respects with all Applicable Laws, except for
instances of noncompliance that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
SECTION 4.09. Compliance with Constituent Documents. None of the Company or
any material Subsidiary is in breach or violation of or in default in the
performance or observance of any term or provision of, and no event has occurred
that, with lapse of time or action by a third party, would result in a default
under the respective articles or certificate of incorporation, by-laws or
similar organizational instruments of such entities.
SECTION 4.10. Opinion of Financial Advisor. Xxxxxx Xxxxxxx & Co.
Incorporated has delivered to the Board of Directors its written opinion that,
as of December 19, 2002, the consideration to be provided to the Investors for
their participation in the Exchange Offer pursuant to this Agreement, consisting
of (a) the adjustments to the exercise price and number of shares issuable upon
exercise of the Series A and Series B Warrants as contemplated by Section
3.01(c), (b) the New Warrants and (c) the Conversion Shares, is fair from a
financial point of view to the Company.
SECTION 4.11. Section 355. Neither the execution and delivery of this
Agreement nor the consummation of the Transactions are reasonably likely to have
the effect of causing (a) the Distribution to be taxable in any respect to
Lucent or its stockholders, or (b) the Private Letter Ruling to be inapplicable
in any respect.
SECTION 4.12. DGCL Section 203. The Company has taken all necessary actions
such that the provisions of DGCL Section 203 do not and will not apply to this
Agreement or to any of the Transactions.
SECTION 4.13. Rights Agreement. The Company has taken all necessary action
to ensure that none of (a) the entering into of this Agreement, (b) the
consummation of the Transactions, or (c) the exercise by the Investors (in whole
or in part) of any of the Series C Warrants or the Series D Warrants does or
will result in the ability of any Person to exercise any
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rights under the Rights Agreement or enable or require the rights to separate
from the shares of Common Stock to which they are attached or to become
triggered or exercisable. No "Distribution Date" or "Shares Acquisition Date"
(as such terms are defined in the Rights Agreement) has occurred as a result of
entering into this Agreement, or will occur as a result of the consummation of
the Transactions, the exercise by the Investors (in whole or in part) of any of
the Series C Warrants or the Series D Warrants.
ARTICLE V
Representations and Warranties of the Investors
-----------------------------------------------
Each Investor severally as to itself only, and not jointly,
represents and warrants to the Company on the date of this Agreement and as of
the Expiration Time, as follows:
SECTION 5.01. Organization; Authorization; Enforceability. Such Investor is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and has all requisite power and authority to
own its properties and assets and to carry on its business as it is now being
conducted and as currently proposed to be conducted. Such Investor has the power
to execute, deliver and perform its obligations under this Agreement, and has
taken all necessary action to authorize the execution, delivery and performance
by it of this Agreement and to consummate the Transactions. No other proceedings
on the part of such Investor are necessary for such authorization, execution,
delivery and consummation. Such Investor has duly executed and delivered this
Agreement. This Agreement constitutes a legal, valid and binding obligation of
such Investor, enforceable against such Investor in accordance with its terms.
SECTION 5.02. Private Placement. (a) Such Investor understands that the
issuance of the Warrant Shares, the Series C Warrants and the Series D Warrants
by the Company is intended to be exempt from registration under the Securities
Act pursuant to Section 4(2) thereof.
(b) Such Investor (i) is a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) or (ii) is an institutional "accredited
investor" (as such term is defined in Rule 501(a) of Regulation D under the
Securities Act).
(c) Such Investor is acquiring the Warrant Shares, the Series C Warrants
and the Series D Warrants for its own account (or for accounts over which it
exercises investment authority), for investment and not with a view to the
resale or distribution thereof in violation of any securities law.
(d) Such Investor understands that the Warrant Shares, the Series C
Warrants and the Series D Warrants will be issued in Transactions exempt from
the registration or qualification requirements of the Securities Act and
applicable state securities laws, and that such securities must be held
indefinitely unless a subsequent disposition thereof is registered or qualified
under the Securities Act and such state securities laws or is exempt from such
registration or qualification.
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(e) Such Investor (i) has been furnished with or has had full access to
all the information that it considers necessary or appropriate to make an
informed investment decision with respect to the Warrant Shares, the Series C
Warrants and the Series D Warrants and that it has requested from the Company,
(ii) has had an opportunity to discuss with management of the Company the
intended business and financial affairs of the Company and to obtain information
(to the extent the Company possessed such information or could acquire it
without unreasonable effort or expense) necessary to verify any information
furnished to it or to which it had access, and (iii) can bear the economic risk
of (A) an investment in the Warrant Shares, the Series C Warrants and the Series
D Warrants indefinitely and (B) a total loss in respect of such investment, and
(iv) has such knowledge and experience in business and financial matters so as
to enable it to understand and evaluate the risks of and form an investment
decision with respect to its investment in the Warrant Shares, the Series C
Warrants and the Series D Warrants and to protect its own interest in connection
with such investment. Such Investor has made the decision to make such
investment based on its review of all information it deems relevant and has not
relied on any advice, recommendation or information provided by the Company's
financial advisor.
SECTION 5.03. No Violation; Consents. (a) Subject to the governmental
filings and other matters referred to in Section 5.03(b), the execution,
delivery and performance by such Investor of this Agreement and the consummation
by such Investor of the Transactions do not and will not contravene any
Applicable Law, except for any such contravention that would not, individually
or in the aggregate, reasonably be expected to have a material adverse effect on
the ability of such Investor to timely perform its obligations under this
Agreement. The execution, delivery and performance by such Investor of this
Agreement and the consummation of the Transactions (i) will not (A) violate,
result in a breach of or constitute (with or without due notice or lapse of time
or both) a default (or give rise to any right of termination, cancellation or
acceleration) under any Contract to which such Investor is party or by which
such Investor is bound or to which any of its assets is subject, or (B) result
in the creation or imposition of any Lien upon any of the assets of such
Investor, except for any such violations, breaches, defaults or Liens that would
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Investor to timely perform its obligations
under this Agreement; and (ii) will not conflict with or violate any provision
of the certificate of incorporation or by-laws or other governing documents of
such Investor.
(b) Except for (i) the filings by such Investor, if any, required by the
HSR Act and any other applicable foreign antitrust law, regulation or rule and
the expiration or termination of the applicable waiting period with respect
thereto, (ii) those filings described in Section 2.02, and (iii) applicable
filings, if any, with the Commission pursuant to the Exchange Act, no consent,
authorization or order of, or filing or registration with, any Governmental
Authority or other Person is required to be obtained or made by such Investor
for the execution, delivery and performance of this Agreement or the
consummation of any of the Transactions, except where the failure to obtain such
consents, authorizations or orders, or make such filings or registrations, would
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Investor to timely perform its obligations
under this Agreement.
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SECTION 5.04. Financing. Such Investor will have (a) on the Closing Date
available funds to deliver the Investor Cash Amount to the Exchange Agent and
(b) on the date of the Subsequent Closing available funds to consummate the
Exercise.
SECTION 5.05. Ownership of Securities. Such Investor does not own, directly
or indirectly, or have any option or right to acquire, any securities of the
Company (including the XXXXx) other than (a) the Warrants and the New Warrants,
(b) shares of Common Stock issuable upon exercise of such Warrants and New
Warrants, (c) an aggregate of 53,050,000 additional shares of Common Stock owned
by the Warburg Group, and (d) any options to purchase Common Stock issued to any
"Warburg Group Director" (as defined in Section 5.09(a) of the Original Purchase
Agreement).
SECTION 5.06. Future Acquisitions. Such Investor has no present plan or
intention to acquire, directly or indirectly, 50% or more of the "total voting
power" or "total fair market value" (as such terms are interpreted for purposes
of Section 355) of all shares of outstanding Capital Stock of the Company.
ARTICLE VI
Covenants of the Company
------------------------
SECTION 6.01. Conduct of Business Pending the Expiration Date. The Company
agrees that, between the date of this Agreement and the Expiration Time (or
earlier termination of this Agreement), except as specifically permitted or
contemplated by any other provision of this Agreement, unless the Investors
shall otherwise agree in writing, the business of the Company and the
Subsidiaries shall be conducted in the ordinary course of business. Except as
specifically permitted or contemplated by any other provision of this Agreement,
the Company shall not, between the date of this Agreement and the Expiration
Time, directly or indirectly, do, or agree to do, any of the following without
the prior written consent of the Investors: (a) amend or otherwise change its
certificate of incorporation or by-laws; (b) except as may be required by the
Rights Agreement, declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock (other than dividends paid by wholly-owned Subsidiaries to
the Company or to other wholly-owned Subsidiaries); (c) reclassify, combine,
split, subdivide or redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock; (d) take any action that is intended or
would reasonably be expected to result in any of the conditions set forth in
Article VIII not being satisfied; or (e) authorize or enter into any agreement
or otherwise make any commitment to do any of the foregoing.
SECTION 6.02. Access to Books and Records. The Company shall afford to each
of the Investors and the Investors' Representatives full access during normal
business hours throughout the period prior to the Expiration Time (or the
earlier termination of this Agreement pursuant to Section 9.04) to all
properties, books, Contracts, commitments and records of the Company, and,
during such period, shall, upon request, furnish promptly to each of the
Investors all other information concerning the Company or the Subsidiaries as
the Investors may reasonably request; provided, that no investigation or receipt
of information pursuant to this Section 6.02 shall affect any representation or
warranty of the Company or the
-23-
conditions to the obligations of the Investors. All requests pursuant to this
Section 6.02 shall be made to the Persons designated from time to time by the
Company for this purpose.
SECTION 6.03. Compliance with Conditions; Commercially Reasonable Efforts.
Subject to the last sentence of Section 2.01(a), the Company shall use all
commercially reasonable efforts to cause all conditions precedent to the
obligations of the Company and the Investors to be satisfied. Upon the terms and
subject to the conditions of this Agreement, the Company will use all
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary, proper or advisable consistent
with Applicable Law to consummate and make effective in the most expeditious
manner practicable the Transactions in accordance with the terms of this
Agreement.
SECTION 6.04. HSR Act Notification. To the extent required by the HSR Act,
the Company shall (a) use all commercially reasonable efforts to file or cause
to be filed, as promptly as practicable after the execution and delivery of this
Agreement (and, in any event, within two Business Days of such execution and
delivery), with the United States Federal Trade Commission and the Antitrust
Division of the United States Department of Justice, all reports and other
documents required to be filed by it under the HSR Act concerning the
Transactions, and (b) use all commercially reasonable efforts to promptly comply
with or cause to be complied with any requests by the United States Federal
Trade Commission or the Antitrust Division of the United States Department of
Justice for additional information concerning the Transactions, in each case, so
that the waiting period applicable to this Agreement and the Transactions under
the HSR Act shall expire as soon as practicable after the execution and delivery
of this Agreement. The Company agrees to request, and to cooperate with the
Investors in requesting, early termination of any applicable waiting period
under the HSR Act. The Company shall pay all fees required in connection with
any filings to be made by the Company or any Investor under the HSR Act required
to be made in connection with this Agreement or the Transactions (regardless of
whether such fees are otherwise required to be paid by the Company or any
Investor).
SECTION 6.05. Consents and Approvals. The Company (a) shall use all
commercially reasonable efforts to obtain all necessary consents, waivers,
authorizations and approvals of all Governmental Authorities (other than as
expressly set forth in Section 6.04 regarding the HSR Act) and of all other
Persons required in connection with the execution, delivery and performance of
this Agreement or the consummation of the Transactions, and (b) shall diligently
assist and cooperate with the Investors in preparing and filing all documents
required to be submitted by the Investors to any Governmental Authority in
connection with the Transactions (which assistance and cooperation shall
include, without limitation, timely furnishing to the Investors all information
concerning the Company and its Subsidiaries that counsel to the Investors
reasonably determines is required to be included in such documents or would be
helpful in obtaining any such required consent, waiver, authorization or
approval).
SECTION 6.06. Certain Actions. As soon as practicable following execution
of this Agreement, and, in any event, prior to the 11th Business Day following
the Closing, the Company shall take such actions as may be required under the
Warrants to effect the Exercise Price Adjustment and the Warrant Shares
Adjustment. The Investors waive any notice
-24-
required under the Warrants with respect to the Exercise Price Adjustment and
the Warrant Shares Adjustment.
SECTION 6.07. Listing and Reservation of Shares. The Company shall use all
commercially reasonable efforts to cause the Warrant Shares to be reserved for
issuance and listed or otherwise eligible for trading on the NYSE prior to the
time that such shares of Common Stock are to be issued.
SECTION 6.08. Use of Proceeds. The Company shall use the proceeds from the
Exercise for general corporate purposes, including repayment of bank debt.
SECTION 6.09. Warburg Group Directors and Observer. (a) (i) From and after
the date of this Agreement, the Warburg Group shall be entitled to designate for
election to the Board of Directors an individual reasonably acceptable to the
Board of Directors (a "Warburg Group Director") for so long as the Investors and
the Permitted Transferees own a Qualifying Ownership Interest. It is understood
and agreed that Xxxxxx X. Xxxxx is reasonably acceptable to the Board of
Directors, and that Xx. Xxxxx shall be appointed to the Board of Directors as
soon as reasonably practicable following the date of this Agreement, but in any
event prior to the beginning of the next regular or special meeting of the Board
of Directors (or any committee thereof). The Warburg Group Director shall be
appointed to the class of directors whose terms expires in 2004.
(ii) In the event that $25 million or more of the Investor Cash
Amount is used to acquire XXXXx in the Exchange Offer (such event, a
"Qualifying Event"), and for so long thereafter as the Investors and the
Permitted Transferees own a Qualifying Ownership Interest, the Warburg
Group shall be entitled to designate for election to the Board of
Directors an additional individual reasonably acceptable to the Board of
Directors, provided that such individual shall not be an affiliate of the
Warburg Group (an "Unaffiliated Director").
(b) Immediately following the Closing, if there has been a Qualifying
Event, the Unaffiliated Director shall be appointed to the Board of
Directors to a class of directors whose term expires not earlier than
2005. If a vacancy shall exist in the office of Warburg Group Director or
Unaffiliated Director, the Warburg Group shall be entitled to designate a
successor to fill such office, reasonably acceptable to the Board of
Directors, and the Board of Directors shall elect such successor, and, in
connection with the meeting of shareholders of the Company next following
such election, nominate such successor for election as director by the
shareholders and use its commercially reasonable efforts to cause the
successor to be elected. Each Investor agrees that Warburg shall identify
the individuals proposed to serve as a Warburg Group Director and
Unaffiliated Director, and that the Company shall be entitled to rely
solely and exclusively on information provided by Warburg in connection
with the exercise of the Investors' rights pursuant to this Section 6.09.
(c) At any time the Investors and the Permitted Transferees cease to own
a Qualifying Ownership Interest, the Warburg Group shall use its
reasonable best efforts to cause each of the Warburg Group Director and
the Unaffiliated Director then on the Board of Directors to resign
promptly.
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(d) Each of the Warburg Group Director and the Unaffiliated Director
shall be entitled to such compensation as is customarily paid by the
Company to the Company's outside directors.
SECTION 6.10. Registration Rights. The Company shall use all commercially
reasonable efforts to file a registration statement covering, or cause an
existing effective registration statement to cover (such new or amended
registration statement, the "Registration Statement"), any transfers of the
Registrable Securities (including by means of any distribution to the limited or
general partners in any Investor) on behalf of the Investors and any Permitted
Transferees and limited or general partners thereof that received Registrable
Securities in a distribution from the Investors or any Permitted Transferee with
the Commission as soon as reasonably practicable after the date of this
Agreement, but, in no event, later than February 28, 2003. The expenses of the
preparation and filing of such Registration Statement shall be borne by the
Company. Upon filing the Registration Statement, the Company will use its
commercially reasonable efforts to cause the Registration Statement to be
declared effective by the Commission and to keep the Registration Statement
effective with the Commission so long as any Registrable Securities remain
outstanding. Provisions relating to the registration rights set forth in this
Section 6.10 are set forth in Exhibit E (the "Registration Rights Provisions").
"Registrable Securities" means all shares of Common Stock owned by the
Investors, together with the Series C Warrants, the Series D Warrants, the
Warrant Shares, the Conversion Shares and any securities that may be issued in
respect thereof. As to any particular Registrable Securities, such Registrable
Securities shall cease to be Registrable Securities as soon as they (a) have
been sold or otherwise disposed of pursuant to the Registration Statement or any
other registration statement that was filed with the Commission and declared
effective under the Securities Act, (b) are eligible for sale pursuant to Rule
144 under the Securities Act without being subject to the volume and manner of
sale limitations thereunder, (c) have been otherwise sold, transferred or
disposed of by an Investor to any Person that is not a Permitted Transferee
(other than through a distribution by an Investor or any Permitted Transferee to
its limited or general partners), or (d) have ceased to be outstanding. All
communications with the Company by the Investors and the Permitted Transferees
and any distributees thereof with respect to the registration rights granted
pursuant to this Section 6.10 shall be made by and through Warburg.
SECTION 6.11. Rights Agreement. The Company shall cooperate with the
Investors to segregate the shares of Common Stock acquired by the Investors upon
exercise of the Series A Warrants and the Series B Warrants from any other
shares of Common Stock beneficially owned by the Warburg Group, and shall take
all actions as may be necessary to ensure that such shares of Common Stock are
not deemed to be beneficially owned by the Investors for purposes of the Rights
Agreement.
SECTION 6.12. No Intended Distributions. The Company has no present plan or
intention to make any distribution to its stockholders in cash or property
within the meaning of Section 1.305-3(b)(4) of the Treasury Regulations
promulgated under the Internal Revenue Code of 1986, as from time to time
amended. As of the date of this Agreement, the Company is prohibited from paying
cash dividends pursuant to the Company's existing credit facility.
-26-
SECTION 6.13. Director's Insurance. Each individual that serves as a
Warburg Group Director or as an Unaffiliated Director will be covered by any
directors' and officers' liability insurance policy maintained by the Company
to the same extent as any other director of the Company serving on the Board of
Directors at the same time as such individual.
SECTION 6.14. Relationship with Lucent. Prior to the Expiration Date, the
Company shall take all actions required to be taken by it under the Distribution
Agreement to obtain the opinion of counsel contemplated by Section
10.3(a)(ii)(2) of the Distribution Agreement, and provide to the Investors a
copy thereof.
ARTICLE VII
Covenants of the Investors
--------------------------
SECTION 7.01. Compliance with Conditions; Commercially Reasonable Efforts.
Each Investor will use all commercially reasonable efforts to cause all
conditions precedent to the obligations of the Company and the Investors to be
satisfied. Upon the terms and subject to the conditions of this Agreement,
each Investor will use all commercially reasonable efforts to take, or cause to
be taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable consistent with Applicable Law to consummate and make
effective in the most expeditious manner practicable the Transactions of such
Investor in accordance with the terms of this Agreement.
SECTION 7.02. HSR Act Notification. To the extent required by the HSR Act,
each Investor shall, (a) use all commercially reasonable efforts to file or
cause to be filed, as promptly as practicable after the execution and delivery
of this Agreement (and, in any event, within two Business Days of such execution
and delivery), with the United States Federal Trade Commission and the Antitrust
Division of the United States Department of Justice, all reports and other
documents required to be filed by it under the HSR Act concerning the
Transactions, and (b) use all commercially reasonable efforts to promptly comply
with or cause to be complied with any requests by the United States Federal
Trade Commission or the Antitrust Division of the United States Department of
Justice for additional information concerning the Transactions, in each case, so
that the waiting period applicable to this Agreement and the Transactions under
the HSR Act shall expire as soon as practicable after the execution and delivery
of this Agreement. Each Investor agrees to request, and to cooperate with the
Company in requesting, early termination of any applicable waiting period under
the HSR Act.
SECTION 7.03. Consents and Approvals. Each Investor (a) shall use all
commercially reasonable efforts to promptly obtain all necessary consents,
waivers, authorizations and approvals of all Governmental Authorities (other
than as expressly set forth in Section 7.02 regarding the HSR Act) and of all
other Persons required in connection with the execution, delivery and
performance of this Agreement or the consummation of the Transactions, and (b)
shall diligently assist and cooperate with the Company in preparing and filing
all documents required to be submitted by the Company to any Governmental
Authority in connection with the Transactions (which assistance and cooperation
shall include, without limitation, timely furnishing to the Company all
information concerning such Investor that
-27-
counsel to the Company reasonably determines is required to be included in such
documents or would be helpful in obtaining any such required consent, waiver,
authorization or approval).
SECTION 7.04. Standstill. (a) Effective as of the date of this Agreement,
other than as contemplated by this Agreement, each Investor agrees that, prior
to August 8, 2005, it will not and will not permit any member of the Warburg
Group or any other controlled Affiliate to, in any manner, whether publicly or
otherwise, directly or indirectly, without the prior written consent of the
Company, (i) acquire, agree to acquire or make any public proposal to acquire,
directly or indirectly, beneficial ownership of any voting securities or assets
of the Company or any Subsidiary, (ii) enter into or publicly propose to enter
into, directly or indirectly, any merger or other business combination or
similar transaction or change of control involving the Company or any
Subsidiary, (iii) make, or in any way participate, directly or indirectly, in
any "solicitation" of "proxies" (as such terms are used in the proxy rules of
the Commission) to vote, or seek to advise or influence any Person with respect
to the voting of, any securities of the Company or any Subsidiary, (iv) call, or
seek to call, a meeting of the Company's stockholders or initiate any
stockholder proposal for action by stockholders of the Company, (v) bring any
action or otherwise act to contest the validity of this Section 7.04 or seek a
release of the restrictions contained in this Section 7.04, (vi) form, join or
in any way participate in a "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) with respect to any securities of the Company or any
Subsidiary, (vii) other than any seat on the Board of Directors expressly
granted to the Warburg Group by Section 6.09, seek representation on the Board
of Directors, the removal of any directors from the Board of Directors or a
change in the size or composition of the Board of Directors (including, without
limitation, voting for any directors not nominated by the Board of Directors),
(viii) enter into any discussions, negotiations, arrangements, understandings or
agreements (whether written or oral) with any other Person regarding any
possible purchase or sale of any securities or assets of the Company or any
Subsidiary, (ix) disclose any intention, plan or arrangement inconsistent with
the foregoing, (x) take, or solicit, propose to or agree with any other Person
to take, any similar actions designed to influence the management or control of
the Company or (xi) advise, assist or encourage any other Persons in connection
with any of the foregoing.
(b) Nothing in this Section 7.04 shall (i) limit any action taken by a
Warburg Group Director or an Unaffiliated Director in his or her capacity as a
member of the Board of Directors, (ii) prohibit or restrict any Investor, any
member of the Warburg Group or any other controlled Affiliate of any Investor
from responding to any inquiries from any stockholders of the Company as to such
Person's intention with respect to the voting of shares of Common Stock or any
other voting securities of the Company beneficially owned by such Investor, any
member of the Warburg Group or any other controlled Affiliate of any Investor so
long as such response is consistent with the terms of this Agreement, (iii)
prohibit or restrict a purchase, sale, merger, consolidation or other business
combination transaction involving any portfolio company of any Investor, any
member of the Warburg Group or any controlled Affiliate of any Investor so long
as the purpose of such transaction is not the acquisition of voting securities
or assets of the Company or any Subsidiary, (iv) prohibit the ownership,
purchase or other acquisition of beneficial ownership of (A) any of the Warrant
Shares or the Conversion Shares, or (B) any other securities in an amount that,
when taken together with the number of shares of Common Stock beneficially owned
by the Investors, the Warburg Group and the controlled Affiliates of any
Investor would not exceed the greater of (I) 29.9% of the outstanding Common
Stock
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(calculated in accordance with Rule 13d-3 under the Exchange Act), and
(II) the number of shares of Common Stock that are beneficially owned by such
Persons immediately following the consummation of the Transactions, (v) prohibit
or restrict any agreement, arrangement, understanding, negotiation, discussion,
disclosure or other action exclusively involving Warburg, its controlled
Affiliates (other than any portfolio companies), the Investors, any member of
the Warburg Group, and any employee, officer or director thereof, (vi) prohibit
any notice to limited partners of a Warburg Group member in respect of a
proposed distribution of securities of the Company to such limited partners,
(vii) prohibit or restrain any sale or other disposition by the Investors or any
Permitted Transferees of any securities owned by them, including any discussions
or negotiations concerning such sale or disposition between Warburg, any of its
Affiliates, the Investors, any member of the Warburg Group, and any employee,
officer or director thereof, on the one hand and any Person or group, on the
other hand, or (viii) prohibit or restrain any discussions or negotiations
between Warburg and the Company that were initiated or invited by the Company
(until the Company requests termination thereof), or the effectuation of any
transaction resulting from such discussions or negotiations (unless the Company
had previously requested termination of such discussions or negotiations).
SECTION 7.05. Voting Limitation. The Investors agree that (a) any Interim
Excess Shares, and following the occurrence of any event specified in clause
(b) of this Section 7.05, any Excess Shares, shall be voted by the Investors on
a particular matter being acted upon by holders of shares of Common Stock in a
manner that is proportionate to the manner in which all shares of Common Stock
have been voted with respect to such matter, and (b) that until (i) the earliest
of (A) a "Change of Control" (as defined in the BONY Indenture) of the Company
(other than as a result of a breach by the Investors of this Section 7.05), (B)
repayment of the indebtedness of the Company under the BONY Indenture, or (C)
the provisions in the BONY Indenture relating to a Change of Control no longer
being in effect, and (ii) the earliest to occur of (A) the occurrence of any
event specified in Section l(i) of Article VI of the Company's Amended and
Restated Five Year Competitive Advance and Revolving Credit Facility Agreement,
dated as of September 3, 2002 (the "Credit Facility") (other than as a result of
a breach by the Investors of this Section 7.05), or (B) the provisions of
Section l(i) of Article VI of the Credit Facility no longer being in effect, the
Investors shall not be entitled to vote any Excess Shares.
SECTION 7.06. Compliance with Section 355. No Investor shall take any
action (other than as contemplated under this Agreement) or omit to take any
action reasonably available to it and not materially burdensome to it (it being
understood that no Investor shall be required to divest any of its holdings)
that could reasonably be expected to materially contribute to a determination
that the Distribution would result in the recognition of gain to Lucent or the
Company by virtue of the Distribution failing to qualify under Section 355.
ARTICLE VIII
Conditions Precedent to the Consummation of the Exchange Offer
--------------------------------------------------------------
SECTION 8.01. Conditions to the Company's Obligations in Respect of the Exchange
Offer. The obligations of the Company to accept for purchase and/or exchange
XXXXx validly tendered and not validly withdrawn in the Exchange Offer shall be
subject, at the
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election of the Company, to the satisfaction or waiver, as of the Expiration
Time, of the following conditions:
(a) The representations and warranties of each Investor contained in this
Agreement shall have been true and correct when made, and, in addition, shall be
repeated and true and correct in all material respects on and as of the
Expiration Time with the same force and effect as though made on and as of the
Expiration Time.
(b) Each Investor shall have performed in all material respects all
obligations and agreements, and complied in all material respects with all
covenants contained in this Agreement to be performed and complied with by such
Investor on or prior to the Expiration Time, prior to the Expiration Time.
(c) Each Investor shall have delivered to the Company a certificate
executed by it or on its behalf by a duly authorized representative, dated the
Expiration Date, to the effect that each of the conditions specified in Sections
8.01(a) and (b) has been satisfied.
SECTION 8.02. Conditions to Each Investor's Obligations in Respect of the
Exchange Offer. The obligations of each Investor to accept for purchase XXXXx
validly tendered and not validly withdrawn in the Exchange Offer shall be
subject, at the election of the Investors acting jointly, to the satisfaction or
waiver, as of the Expiration Time, of the following conditions:
(a) The representations and warranties of the Company contained in this
Agreement (i) shall have been true and correct when made and (ii) shall be (A)
in the case of representations and warranties that are qualified as to
materiality or Material Adverse Effect, true and correct and (B) in all other
cases, true and correct in all material respects, in the case of clauses (A) and
(B) above, as of the Expiration Time with the same force and effect as though
made on and as of the Expiration Time (except with respect to representations or
warranties that speak as of a specific date, which representations and
warranties shall be, subject to the qualifications set forth above, true and
correct on and as of such specific date).
(b) The Company shall have performed in all material respects all of its
obligations, agreements and covenants contained in this Agreement to be
performed and complied with at or prior to the Expiration Time prior to the
Expiration Time.
(c) The Company shall have granted the Series C Warrants in accordance
with Section 3.01(a) and such Series C Warrants shall remain outstanding.
(d) The Company shall have delivered to the Investors a certificate
executed by it or on its behalf by a duly authorized representative, dated the
Expiration Date, to the effect that each of the conditions specified in Sections
8.02(a) through (c) has been satisfied.
(e) The Investors shall have received the opinion of counsel to the
Company, dated as of the Expiration Date, and addressed to the Investors,
substantially in the form set forth in Exhibit E.
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SECTION 8.03. Conditions to Each Party's Obligations in Respect of the
Exchange Offer. The respective obligations of the Company and each Investor to
accept for purchase and/or exchange XXXXx validly tendered and not validly
withdrawn in the Exchange Offer shall be subject to the satisfaction or waiver,
as of the Expiration Time, of the following additional conditions:
(a) Any waiting period under the HSR Act applicable to either the Exchange
Offer, the Conversion or the Exercise shall have expired or been terminated.
(b) No provision of any Applicable Law, injunction, order or decree of any
Governmental Entity shall be in effect that has the effect of making any of the
Transactions or the ownership by any Investor (other than as a result of such
Investor not being a U.S. person) of the Series C Warrants, the Series D
Warrants, the Warrant Shares or the Conversion Shares illegal, shall otherwise
prohibit the consummation of the Transactions or shall have any of the effects
referred to in clauses of Section 8.03(d)(i), (ii) or (iii).
(c) There shall not have occurred any revocation or material modification
of the Private Letter Ruling.
(d) There shall not be pending any suit, action, arbitration or proceeding
(i) challenging or seeking to restrain or prohibit the Closing or any of the
Transactions, (ii) seeking to prohibit or limit the ownership by any Investor or
any of its Affiliates of any Common Stock or other securities of the Company, or
to compel any Investor or any of its Affiliates to dispose of any Common Stock
or other securities of the Company, (iii) seeking to impose limitations on the
ability of the Investor to acquire or hold, or exercise full rights of ownership
of, the Common Stock or other securities of the Company, including the right to
vote the Common Stock on all matters properly presented to the stockholders of
the Company, or (iv) relating to the relationship, or any proposed or pending
transactions, between the Company and any Investor.
(e) The Offer Registration Statement shall have become effective and the
Warrant Shares and the Company Common Stock Consideration shall have been
approved for listing on the NYSE, subject to official notice of issuance.
(f) The Company shall have obtained and provided to the Investors a copy
of the opinion contemplated by Section 6.14.
(g) This Agreement shall not have been terminated in accordance with its
terms.
(h) There shall not have occurred (i) any general suspension of trading in
securities on the NYSE, (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States (whether or not
mandatory), (iii) a commencement of war, armed hostilities or other national or
international calamity involving the United States that would reasonably be
expected to have a material adverse effect on the capital markets of the United
States, (iv) any limitation (whether or not mandatory) by any United States
Government Authority on the extension of credit generally by banks or other
lending institutions, (v) a change in general financial, bank or other capital
market conditions that materially and
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adversely affects the ability of financial institutions in the United States to
extend credit or syndicate loans, (vi) a decline of at least 20% in the Standard
& Poor's 500 Index from the close of business on the date of this Agreement, or
(vii) in the case of any of the foregoing existing at the date of this
Agreement, a material acceleration or worsening thereof.
(i) There shall not have occurred a Material Adverse Effect from and after
the date of this Agreement.
(j) To the extent required under Section 10(b) of the Dealer Manager
Agreement, the representations and warranties made by the Company and the
Investors in Sections 7 and 8 in the Dealer Manager Agreement shall be true and
correct at and as of the Expiration Time with the same force and effect as
though expressly made at and as of the Expiration Time, and the Company and the
Investors shall have made the deliveries required by Section 10(b) of the Dealer
Manager Agreement.
ARTICLE IX
Miscellaneous
-------------
SECTION 9.01. Survival. Only those representations, warranties, agreements
and covenants of the parties to this Agreement contained in Section 3.07 and
Articles VI, VII and IX and requiring performance after the date of the
Subsequent Closing shall survive such date. All other representations,
warranties, agreements and covenants of the parties to this Agreement shall not
survive the date of the Subsequent Closing.
SECTION 9.02. Legends. So long as applicable, each certificate representing
any portion of the Warrant Shares or the Conversion Shares shall be stamped or
otherwise imprinted with a legend in the following form (in addition to any
legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN A
TRANSACTION THAT WAS NOT REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. SUCH SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION,
EXCEPT PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS AND
DELIVERY TO THE ISSUER OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
IT TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER
THOSE LAWS.
SECTION 9.03. Notices. All notices, demands, requests, consents, approvals
or other communications (collectively, "Notices") required or permitted to be
given hereunder, or that are given with respect to this Agreement, shall be in
writing, and shall be personally served, delivered by reputable air courier
service with charges prepaid, or transmitted by hand delivery, telegram, telex
or facsimile, addressed as set forth below, or to such other address as such
party shall have specified most recently by written notice. Notice shall be
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deemed given on the date of service or transmission if personally served or
transmitted by telegram, telex or facsimile. Notice otherwise sent as provided
in this Section 9.03 shall be deemed given on the next Business Day following
delivery of such notice to a reputable air courier service.
To the Company:
Avaya Inc.
000 Xxxxx Xxxx Xxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx X. XxXxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with copies to:
Avaya Inc.
000 Xxxxx Xxxx Xxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
and
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxx
Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
To the Investors:
To the address specified on Schedule 1, with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxxxx
Xxxxx X. Silk
Telephone: (000) 000-0000
Fax: (000) 000-0000
SECTION 9.04. Termination. (a) This Agreement may be terminated: (i) at any
time prior to the Expiration Time, by mutual written agreement of the Company
and the Investors, (ii) by the Investors, if as of the Expiration Time any
condition set forth in Article
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VIII shall not have been satisfied or waived, (iii) by either the Investors or
the Company, if the Exchange Offer shall have been terminated prior to the
purchase/exchange of XXXXx pursuant thereto, or (iv) by either the Investors or
the Company, if any Governmental Authority shall have issued a nonappealable
final order, decree or ruling or taken any other action having the effect of
permanently restraining, enjoining or otherwise prohibiting the Transactions,
provided that the right to terminate this Agreement pursuant to this Section
9.04(a)(iv) shall not be available to any party to this Agreement whose failure
to fulfill any obligation under this Agreement was the cause of, or resulted in,
such final order, decree or ruling.
(b) In the event of termination of this Agreement, the terminating party
shall give written notice to the other parties to this Agreement specifying the
provision of this Agreement pursuant to which such termination is made, and this
Agreement (except for the provisions of this Section 9.04, the last sentence of
Section 6.04 and Sections 6.09, 6.10, 7.04, 7.05, 9.03, 9.05, 9.06, 9.07, 9.08,
9.13, 9.14, 9.15 and 9.18, which shall survive such termination) shall become
null and void. The parties to this Agreement agree that following any
termination of this Agreement pursuant to this Section 9.04, the Exercise Price
and the number of shares that may be acquired upon exercise of the Series A and
the Series B Warrants shall automatically be adjusted to that level that would
be in effect had this Agreement never been entered into.
SECTION 9.05. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
INTERPRETED UNDER AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE AND FULLY PERFORMED WITHIN SUCH
STATE, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
SECTION 9.06. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED BY
THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT (A) CERTIFIES THAT NO
REPRESENTATIVE OF ANY OTHER PARTY TO THIS AGREEMENT HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES TO THIS AGREEMENT HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.06.
SECTION 9.07. Attorney Fees. A party in breach of this Agreement shall, on
demand, indemnify and hold harmless each other party to this Agreement for and
against all reasonable out-of-pocket expenses, including legal fees, incurred by
each such other party by reason of the enforcement and protection of its rights
under this Agreement. The payment of such expenses is in addition to any other
relief to which such other party may be entitled.
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SECTION 9.08. Entire Agreement. This Agreement (including all agreements
entered into pursuant to this Agreement and all certificates and instruments
delivered pursuant to this Agreement) constitute the entire agreement of the
parties to this Agreement with respect to the subject matter of this Agreement
and supersede all prior and contemporaneous agreements, representations,
understandings, negotiations and discussions between the parties to this
Agreement, whether oral or written, with respect to the subject matter of this
Agreement.
SECTION 9.09. Modifications and Amendments. No amendment, modification or
termination of this Agreement shall be binding upon any party unless executed in
writing by the parties to this Agreement intending to be bound thereby.
SECTION 9.10. Waivers and Extensions. Except as expressly provided in this
Agreement, any party to this Agreement may waive any condition, right, breach or
default that such party has the right to waive; provided that such waiver will
not be effective against the waiving party unless it is in writing, is signed by
such party, and specifically refers to this Agreement. Waivers may be made in
advance or after the right waived has arisen or the breach or default waived has
occurred. Any waiver may be conditional. No waiver of any breach of any
agreement or provision in this Agreement contained shall be deemed a waiver of
any preceding or succeeding breach thereof nor of any other agreement or
provision contained in this Agreement. No waiver or extension of time for
performance of any obligations or acts shall be deemed a waiver or extension of
the time for performance of any other obligations or acts.
SECTION 9.11. Titles and Headings; Rules of Construction. Titles and
headings of Sections of this Agreement are for convenience only and shall not
affect the construction of any provision of this Agreement. Unless the context
otherwise requires:
(a) a term has the meaning assigned to it;
(b) "or" is not exclusive;
(c) "including" means including without limitation; and
(d) words in the singular include the plural and words in the plural
include the singular.
SECTION 9.12. Exhibits and Schedules. Each of the exhibits and schedules
referred to in this Agreement and attached to this Agreement is an integral part
of this Agreement and is incorporated into this Agreement by reference.
SECTION 9.13. Expenses; Brokers. (a) Except as otherwise set forth in this
Agreement, all costs and expenses incurred in connection with this Agreement
shall be paid by the party incurring such cost or expense; provided, however,
that (i) the Company agrees to reimburse the Investors for any and all
out-of-pocket fees and expenses incurred by the Investors or any of their
Affiliates in connection with the Transactions up to a maximum amount of
$300,000, and (ii) and all printing, mailing and filing fees and expenses
incurred in connection with the Exchange Offer shall be borne by the Company.
Other than the use of Xxxxxx Xxxxxxx & Co. Incorporated by the Company, each of
the parties represents to the others that neither it nor any of its Affiliates
has used a broker or other financial intermediary in connection with the
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Transactions for whose fees or expenses any other party will be liable. Each
party agrees to indemnify and hold the other parties to this Agreement harmless
from and against any and all Claims with respect to any such fees or expenses
asserted by any Person on the basis of any act or statement alleged to have been
made by such party or any of its Affiliates.
(b) In addition to, and without limiting the provisions of, Section 9.18,
the Company agrees to reimburse the Investors for the reasonable attorney's fees
and expenses incurred by the Investors or any of their Affiliates in connection
with any Claim brought or asserted by any third party (whether filed in the name
of a stockholder of the Company or other third party or derivatively in the name
of the Company, and including any Claim in which the Investors or any of their
Affiliates is made a witness by subpoena or otherwise) challenging, or otherwise
arising out of or relating to, the Transactions whether or not the Investors or
any of their Affiliates are made party to such claim, suit, arbitration or
proceeding; provided that the Investors shall notify the Company promptly upon
becoming aware of, keep the Company reasonably apprised of all material
developments relating to, and cooperate reasonably with the Company in
connection with the defense or any proposed settlement of, any such Claim; and
provided, further, that unless in the reasonable judgment of the Investors there
exists an actual or potential conflict of interest between the Investors and any
of their Affiliates, this Section 9.13(b) shall apply only to one counsel in
each applicable jurisdiction (if more than one jurisdiction is involved). This
Section 9.13(b) shall not apply to any expenses incurred in connection with any
Claim brought or asserted by any Person in such Person's capacity as a limited
partner or other investor in any investment fund controlled or managed by the
Warburg Group.
SECTION 9.14. Press Releases and Public Announcements. All public
announcements or public disclosures relating to the Transactions shall be made
only if mutually agreed upon by the Company and the Investors, except to the
extent such disclosure is, in the opinion of counsel, required by law or by
stock exchange regulation; provided, that (a) any such required disclosure shall
only be made, to the extent consistent with law and stock exchange regulation,
after consultation with the Investors, (b) no such announcement or disclosure
(except as required by law or by stock exchange regulation) shall identify any
Investor without such Investor's prior consent, and (c) the Company consents to
the publication by Warburg, on one occasion following the Transactions but in as
many periodicals as Warburg may elect, of a customary "tombstone" advertisement
announcing the Transactions; provided, that Warburg shall provide the Company
with a copy of such advertisement prior to submitting such advertisement for
publication.
SECTION 9.15. Assignment; No Third Party Beneficiaries. This Agreement and
the rights, duties and obligations hereunder may not be assigned or delegated by
the Company without the prior written consent of the Investors, and may not be
assigned or delegated by any Investor without the Company's prior written
consent. Any assignment or delegation of rights, duties or obligations under
this Agreement made without such prior written consent shall be void and of no
effect. This Agreement and the provisions of this Agreement shall be binding
upon and shall inure to the benefit of each of the parties and their respective
successors and permitted assigns. This Agreement is not intended to confer any
rights or benefits on any Persons other than as expressly set forth in this
Section 9.15.
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SECTION 9.16. Severability. This Agreement shall be deemed severable, and
the invalidity or unenforceability of any term or provision of this Agreement
shall not affect the validity or enforceability of this Agreement or of any
other term or provision of this Agreement. Furthermore, in lieu of any such
invalid or unenforceable term or provision, the parties to this Agreement
intend that there shall be added, as a part of this Agreement, a provision as
similar in terms to such invalid or unenforceable provision as may be possible
and be valid and enforceable.
SECTION 9.17. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
SECTION 9.18. Indemnification. (a) The Company shall indemnify and hold
harmless each Investor and its partners, members, officers, directors, employees
and controlling Persons (within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act), if any, from and against any
and all any losses, claims, damages or liabilities to which each such
indemnified party may become subject, insofar as such losses, claims, damages
or liabilities, or actions or proceedings in respect thereof, including any
amounts paid in settlement as provided herein (including, without limitation,
any legal or other expenses reasonably incurred by such indemnified party in
connection with defending or investigating any such action or claim)
(collectively, "Claims") arise out of or are based (i) upon an untrue statement
or alleged untrue statement of a material fact contained in, or incorporated by
reference into, the Offer Documents, or arise out of or are based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that
the Company shall not be liable to any such indemnified party to the extent
that any such Claims arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with the information supplied by the Investors in
writing specifically for inclusion or incorporation by reference into the Offer
Documents, which information consists solely of that information described in
the Letter Agreement, or (ii) any Termination Claims.
(b) Each Investor shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, employees and controlling Persons
(within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act), if any, to the same extent as the foregoing indemnity from
the Company, but only with reference to information supplied by the Investors in
writing specifically for inclusion or incorporation by reference into the Offer
Documents, which information consists solely of that information described in
the Letter Agreement.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 9.18(a) or 9.18(b), such Person (the "Indemnified
Party") shall promptly notify the Person against whom such indemnity may be
sought (the "Indemnifying Party") in writing, and the Indemnifying Party, upon
the request of the Indemnified Party, shall retain counsel reasonably
satisfactory to such Indemnified Party to represent such Indemnified Party and
any others the Indemnifying Party may designate in such proceeding and shall pay
the fees and
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disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel (which counsel shall be reasonably accountable to the Indemnifying
Party), but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed in writing to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the Indemnified Party and the Indemnifying Party and, in the
written opinion of counsel for the Indemnified Party, representation of both
parties by the same counsel would be inappropriate due to actual or potential
conflicts of interests between them. It is understood that the Indemnifying
Party shall not, in connection with any proceeding or related proceedings
involving one or more Indemnified Parties in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel required under the circumstances) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are submitted in writing for payment. In the case of any such
separate firm of attorneys for the Indemnified Parties, such firm of attorneys
shall be designated in writing by the Indemnified Parties or, if the Indemnified
Parties include the Investors, by the Investors. The Indemnifying Party shall
not be liable for any settlement of any proceeding effected without its written
consent, but, if settled with such consent, or if there be a final judgment for
the plaintiff, the Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 9.18 is
unavailable to an Indemnified Party in respect of any Claims, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Claims (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and such Indemnified Party in the Transactions,
or (ii) if the allocation provided by clause (i) above is not permitted by
Applicable Law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and such Indemnified Party in connection with the statements or
omissions that resulted in such Claims, as well as any other relevant equitable
considerations. The relative benefits received by the Company and such
Indemnified Party shall be deemed to be in the same respective proportions as
the value of the consideration provided by such party for purchase of XXXXx in
the Exchange Offer. The relative fault of the Company and such Indemnified Party
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and each Indemnified
Party agree that it would not be just and equitable if contribution pursuant to
this Section 9.18(d) were determined by pro rata allocation or by any other
method of allocation that does not take account of the equitable considerations
referred to in this Section 9.18(d). The amount paid or payable by an
Indemnified Party as a result of the Claims referred to in this Section 9.18(d)
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
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SECTION 9.19. Conversion Agreement and Stock Purchase Agreement. Effective
(a) as of the date of this Agreement, Sections 5.09, 5.10, 5.11 and 6.04 of the
Conversion Agreement and Sections 5.08, 5.10, 6.04 and 6.05 of the Stock
Purchase Agreement, and (b) as of the Expiration Date, Sections 5.13, 6.06 and
6.07 of the Conversion Agreement and Sections 5.11 and 6.06 of the Stock
Purchase Agreement, shall be terminated and without further force and effect,
with the other provisions of the Conversion Agreement and the Stock Purchase
Agreement to survive in accordance with their terms. Clause (b) of this Section
9.19 shall be without force or effect if this Agreement is terminated pursuant
to Section 9.04.
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IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the date first above written.
AVAYA INC.
By: /s/ Xxxxx X. XxXxxxx
--------------------------
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
WARBURG, XXXXXX NETHERLANDS EQUITY
PARTNERS I, C.V.
by: WARBURG, XXXXXX & CO.,
its General Partner
by: /s/ Xxxxxxx Xxx
---------------------
Name: Xxxxxxx Xxx
Title: Partner
WARBURG, XXXXXX NETHERLANDS EQUITY
PARTNERS II, C.V.
by: WARBURG, XXXXXX & CO.,
its General Partner
by: /s/ Xxxxxxx Xxx
---------------------
Name: Xxxxxxx Xxx
Title: Partner
WARBURG, XXXXXX NETHERLANDS EQUITY
PARTNERS III, C.V.
by: WARBURG, XXXXXX & CO.,
its General Partner
by: /s/ Xxxxxxx Xxx
---------------------
Name: Xxxxxxx Xxx
Title: Partner
-00-
XXXXXXX, XXXXXX EQUITY PARTNERS, L.P.
by: WARBURG, XXXXXX & CO.,
its General Partner
by: /s/ Xxxxxxx Xxx
---------------------
Name: Xxxxxxx Xxx
Title: Partner
-41-
