EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made and
entered into as of November 11, 2001, among Juniper Networks, Inc., a Delaware
corporation (the "Company") and Pacific Broadband Communications, Inc., a
Delaware corporation ("PBC").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement, PBC and the
Company intend to enter into a transaction whereby PBC will merge with and into
the Company.
B. The consideration will be in the form of the Company's common stock as
provided herein.
C. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code") to the maximum extent possible.
AGREEMENTS
The parties hereby agree as follows:
1. TRANSACTION.
1.1 ACQUISITION. The Company will acquire 100% of the outstanding shares
of stock of PBC. PBC will merge with and into the Company (the "Merger") in a
straight merger, with the Company as the surviving corporation. Except for
stockholders of PBC holding Dissenting Shares (as such term is defined in
Section 2.4 herein), the stockholders of PBC will receive shares of the common
stock of the Company, par value $.00001 per share (the "Shares"), as provided in
Section 1.2 below.
1.2 EXCHANGE RATIO.
1.2.1 COMMON STOCK EXCHANGE RATIO. The number of Shares to be
received by each PBC stockholder holding shares of PBC common stock shall be
determined by multiplying the number of shares of PBC common stock held by such
stockholder by the Common Stock Exchange Ratio. The "Common Stock Exchange
Ratio" is defined as the quotient obtained by dividing (i) the quotient obtained
by dividing $73,000,000 by the "Juniper Per Share Price" (as defined below) by
(ii) the aggregate number of "PBC Common Securities" (as defined below). Each
holder of PBC issued and outstanding shares of common stock who does not demand
appraisal rights in accordance with Delaware Law or California Law, shall
receive the number of Shares equal to the number of Shares determined by
applying the Common Stock Exchange Ratio as defined in the preceding sentence.
In utilizing the Common Stock Exchange Ratio to calculate the amount of stock
consideration or the number or exercise price for option shares, all share
amounts will be rounded down to the nearest whole number and all dollar amounts
will be rounded up to the nearest cent.
1.2.2 SERIES A EXCHANGE RATIO. The number of Shares to be received
by each PBC stockholder holding shares of PBC series A preferred stock shall be
determined by multiplying the number of shares of PBC series A preferred stock
held by such stockholder by the Series A Exchange Ratio. The "Series A Exchange
Ratio" is defined as the quotient obtained by dividing (i) the quotient obtained
by dividing $9,000,000 by the "Juniper Per Share Price" by (ii) the aggregate
number of "PBC Series A Preferred Securities" (as defined below). Each holder of
PBC issued and outstanding shares of series A preferred stock who does not
demand appraisal rights in accordance with Delaware Law or California Law, shall
receive the number of Shares equal to the number of Shares determined by
applying the Series A Exchange Ratio as defined in the preceding sentence. In
utilizing the Series A Exchange Ratio to calculate the amount of stock
consideration or the number or exercise price for option shares, all share
amounts will be rounded down to the nearest whole number and all dollar amounts
will be rounded up to the nearest cent.
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1.2.3 SERIES B EXCHANGE RATIO. The number of Shares to be received
by each PBC stockholder holding shares of PBC series B preferred stock shall be
determined by multiplying the number of shares of PBC series B preferred stock
held by such stockholder by the Series B Exchange Ratio. The "Series B Exchange
Ratio" is defined as the quotient obtained by dividing (i) the quotient obtained
by dividing $53,000,000 by the "Juniper Per Share Price" by (ii) the aggregate
number of "PBC Series B Preferred Securities" (as defined below). Each holder of
PBC issued and outstanding shares of series B preferred stock who does not
demand appraisal rights in accordance with Delaware Law or California Law, shall
receive the number of Shares equal to the number of Shares determined by
applying the Series B Exchange Ratio as defined in the preceding sentence. In
utilizing the Series B Exchange Ratio to calculate the amount of stock
consideration or the number or exercise price for option shares, all share
amounts will be rounded down to the nearest whole number and all dollar amounts
will be rounded up to the nearest cent.
1.2.4 "JUNIPER PER SHARE PRICE" shall mean the average of the
closing price of the common stock of the Company for the 10 trading days
immediately preceding and including the date of this Agreement.
1.2.5 "PBC COMMON SECURITIES" shall mean all outstanding shares of
common stock of PBC (whether restricted or not), options (whether vested or
unvested), all other shares that are reserved for issuance under any stock
option plans, including the Additional Employee Shares (as defined below).
1.2.6 "PBC SERIES A SECURITIES" shall mean all outstanding shares of
series A preferred stock of PBC.
1.2.7 "PBC SERIES B SECURITIES" shall mean all outstanding shares of
series B preferred stock of PBC.
1.2.8 "ADDITIONAL EMPLOYEE SHARES" shall mean the 3,335,690 shares
of PBC common stock that remain unissued out of the common stock currently
reserved for issuance under the PBC 2000 Stock Incentive Plan.
1.2.9 "EARNOUT SHARES" shall mean a number of Shares calculated by
dividing $59,000,000 by the Juniper Per Share Price.
1.3 ADDITIONAL PAYMENTS. The following payments shall be made at the
Effective Time:
1.3.1 $5,000,000 shall be paid to Raza Foundries, Inc. in the form
of common stock of the Company. The number of shares to be delivered to Raza
Foundries, Inc. hereunder shall be calculated by dividing $5,000,000 by the
Juniper Purchase Price.
1.3.2 $1,420,310 shall be paid to Xxxxxx Capital and its affiliates
in the form of common stock of the Company. The number of shares to be delivered
to Xxxxxx hereunder shall be calculated by dividing $1,420,310 by the Juniper
Purchase Price.
1.4 OPTIONS FOR PBC COMMON STOCK; ACCELERATION.
1.4.1 ASSUMPTION OF OPTIONS BY THE COMPANY. Except as otherwise
provided in this Agreement, as a result of the Merger all of the outstanding
options to acquire PBC common stock granted on or prior to the Closing Date
shall be converted into options to acquire common stock of the Company and shall
be assumed by the Company. The number of shares and the exercise price of such
PBC options shall, except as otherwise provided herein, be adjusted in
accordance with the Exchange Ratio (the number of shares shall be multiplied by
the Exchange Ratio and the exercise price per share shall be divided by the
Exchange Ratio). Except as otherwise provided in this Agreement, the original
vesting schedules of the converted and assumed options shall be retained and the
options shall have the same
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terms upon conversion. The Company covenants that it shall not do anything in it
assumption of the PBC options to cause the options which have been granted as
incentive stock options to lose their status as incentive stock options under
the Code. The Company shall register the converted and assumed option shares on
Form S-8 within 20 days following the Closing Date.
1.4.2 ACCELERATION. Each PBC employee shall waive his or her rights
to acceleration of vesting (if any) that may be applicable as a result of the
transaction contemplated by this Agreement or otherwise upon any change of
control or sale of all or any part of the assets or capital stock of PBC.
1.5 REGISTRATION OF SHARES. The Company will use its best efforts to
complete the filings required to register the Shares on Form S-3 as soon as
practicable following the Closing Date; provided that such filing shall be
completed no later than 10 days following the Closing Date and the Company will
use its best efforts to have such filing declared effective as soon as
practicable following the Closing Date.
1.5.1 ISSUANCE OF SHARES. The Shares to be issued under this
Agreement shall be issued pursuant to Section 4(2) of the Securities Act of 1933
(the "Security Act") and pursuant to the national market system exemption under
the California Corporations Code. Each PBC stockholder will execute and deliver
to the Company the "Investment Representation Statement" in the form attached
hereto as Schedule 1.4.1 at the Closing.
1.6 TAX TREATMENT. The parties intend that the Merger shall, to the
maximum extent possible, constitute a reorganization within the meaning of
Section 368 of the Code. The parties hereto adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Income Tax Regulations.
1.7 ACCOUNTING TREATMENT. The parties intend to treat the Merger as a
purchase for accounting purposes.
1.8 EMPLOYMENT. All employees of PBC set forth on Schedule 1.8 , such
schedule to be agreed upon by PBC and the Company prior to the Closing, shall be
employed as at-will employees of the Company or become at-will employees of the
Company (except to the extent they wish to terminate their employment), in any
event, at the salary levels consistent with Company's salary structure, and
shall be eligible for employee benefits in accordance with the Company's current
policies and practices. The Company's current policies and practices with
respect to its various benefits programs are that there are no waiting periods
for participation except that the Company's employee stock purchase plan does
not accept new enrollees except during enrollment for a new offering period
(which occurs twice a year during January and July for participation which
begins in February and August, respectively).
2. THE MERGER. At the Effective Time (as defined below) and subject to and upon
the terms and conditions of this Agreement and the applicable provisions of the
laws of the State of Delaware ("Delaware Law"), PBC shall be merged with and
into the Company, the separate corporate existence of PBC shall cease and the
Company shall continue as the surviving corporation.
2.1 EFFECTIVE TIME; CLOSING. Subject to the provisions of this Agreement,
the parties shall cause the Merger to be consummated by filing an Agreement of
Merger, substantially in the form of Schedule 2.1 hereto (the "Agreement Of
Merger") with the Secretary of State of the State of Delaware in accordance with
the relevant provisions of Delaware Law on the Closing Date. The time of such
filing (or such later time as may be agreed in writing by the parties and
specified in the Agreement of Merger) shall be the "Effective Time". The Closing
of the Merger shall take place at a time and date to be specified by the parties
(described herein as the "Closing" or the "Closing Date").
2.2 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of Delaware
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the property, rights, privileges, powers and
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franchises of PBC shall vest in the surviving corporation, and all debts,
liabilities and duties of PBC shall become the debts, liabilities and duties of
the surviving corporation.
2.3 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of PBC, the Company or the holders of
any of the following securities:
2.3.1 CONVERSION OF PBC COMMON STOCK. Each share of the PBC common
stock issued and outstanding immediately prior to the Effective Time, other than
any Dissenting Shares (as defined below) will be canceled and extinguished and
automatically converted into the right to receive such number of Shares as
determined by multiplying the number of shares of PBC common stock held by such
stockholder by the Common Stock Exchange Ratio, upon surrender of the
certificates representing the shares of PBC common stock in the manner provided
in Section 2.7 (or in the case of a lost, stolen or destroyed certificate, upon
delivery of an affidavit and bond, if required) by the Transfer Agent (as
defined in Section 2.7)).
2.3.2 CONVERSION OF PBC PREFERRED STOCK.
(a) Each share of PBC series A preferred stock issued and
outstanding immediately prior to the Effective Time, other than any
Dissenting Shares will be canceled and extinguished and automatically
converted into the right to receive such number of Shares as determined by
multiplying the number of shares of PBC series A preferred stock held by
such stockholder by the Series A Exchange Ratio, upon surrender of the
certificates representing the shares of PBC series A preferred stock in
the manner provided in Section 2.7 (or in the case of a lost, stolen or
destroyed certificate, upon delivery of an affidavit and bond, if
required) by the Transfer Agent.
(b) Each share of PBC series B preferred stock issued and
outstanding immediately prior to the Effective Time, other than any
Dissenting Shares will be canceled and extinguished and automatically
converted into the right to receive such number of Shares as determined by
multiplying the number of shares of PBC series B preferred stock held by
such stockholder by the Series B Exchange Ratio, upon surrender of the
certificates representing the shares of PBC series B preferred stock in
the same manner referred to in paragraph (a) of this Section 2.3.2.
2.3.3 PBC STOCK OPTIONS. At the Effective Time, all options to
purchase PBC common stock then outstanding under PBC's 2000 Stock Incentive Plan
and any other stock option plan contemplated by this Agreement, whether vested
or unvested, shall be assumed by the Company in accordance with Section 1.3
hereof.
2.3.4 FRACTIONAL SHARES. No fraction of a Share of will be issued,
but in lieu thereof, each holder of shares of PBC Common Stock (including PBC
Common Stock issuable upon exercise of outstanding PBC options at the Effective
Time) who would otherwise be entitled to a fraction of a Share (after
aggregating at the Closing all fractional Shares to be received by such holder)
shall be entitled to receive from Company an amount of cash (rounded to the
nearest whole cent) equal to the product of (i) such fraction, multiplied by
(ii) the Juniper Per Share Price.
2.3.5 ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, stock dividend,
reorganization, recapitalization, reclassification or other like change with
respect to PBC common stock or Company common stock occurring on or after the
date hereof and prior to the Effective Time.
2.4 DISSENTING SHARES. Notwithstanding any provision of this Agreement to
the contrary, the shares of any holder of PBC common stock or PBC preferred
stock who has demanded and perfected appraisal rights for such shares in
accordance with Delaware Law or California Law and who, as of the Effective
Time, has not effectively withdrawn or lost such appraisal rights (the
"Dissenting Shares"), shall not be converted into or represent a right to
receive the Company's common stock and cash pursuant hereto, but the holder
thereof shall only be entitled to such rights as are granted by
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Delaware Law or California Law, as the case may be. Notwithstanding the
foregoing, if any holder of shares of PBC common stock who demands appraisal of
such shares under Delaware law or California Law shall effectively withdraw or
lose (through failure to perfect or otherwise) the right to appraisal, then, as
of the later of the Effective Time or the occurrence of such event, such
holder's shares shall automatically be converted into and represent only the
right to the consideration as determined in Section 1.2 herein by applying the
applicable Exchange Ratio, without interest thereon, upon surrender of the
certificate representing such shares of PBC common stock or PBC preferred stock.
PBC shall give the Company (i) prompt notice of any written demands for
appraisal of any shares of PBC common stock, withdrawals of such demands, and
any other instruments served pursuant to Delaware law and received by PBC which
relate to any such demand for appraisal and (ii) the opportunity to participate
in all negotiations and proceedings which take place prior to the Effective Time
with respect to demands for appraisal under California law. PBC shall not,
except with the prior written consent of the Company or as may be required by
applicable law, voluntarily make any payment with respect to any demands for
appraisal of PBC common stock or PBC preferred stock, as the case may be, or
offer to settle or settle any such demands. Any payments made in respect of
Dissenting Shares shall be made by PBC or the Company as the case may be.
2.5 SURRENDER OF CERTIFICATES; ISSUANCE OF NEW CERTIFICATES. The holders
of the PBC share certificates shall surrender such certificates at the Closing.
The Company shall issue, through its transfer agent, Norwest Shareowner Services
(the "Transfer Agent"), shares of the Company's common stock in the amounts set
forth and as directed on Schedule 2.5 which schedule shall be agreed upon by PBC
and the Company prior to Closing and shall deliver certificates reflecting such
shares within 30 days after the Closing. The Shares issued in connection with
the Merger will be issued in a transaction exempt from the registration
requirements of the Security Act of 1933 (the "Securities Act") by reason of
Section 4(2) thereof and as such will be deemed "restricted securities" within
the meaning of Rule 144. Notwithstanding the foregoing, the Company shall
register the Shares pursuant to Section 1.4 herein.
2.6 EARNOUT SHARES. In connection with the Merger, at the Effective Time,
the Company will issue the Earnout Shares pursuant to the terms of the Earnout
Agreement, attached hereto as Schedule 2.6, through its transfer agent, Xxxxx
Fargo Shareowner Services (the "Transfer Agent"). Pending achievement of the
milestones set forth in the Earnout Agreement, the shares will remain as book
entries on the records of the Transfer Agent in the names of the individuals set
forth in the Earnout Agreement. Upon achievement of a milestone set forth in the
Earnout Agreement, the Company will promptly prepare and deliver instructions to
the Transfer Agent in appropriate form regarding such issuance and delivery. All
such Earnout Shares will be freely tradeable upon delivery.
3. REPRESENTATIONS AND WARRANTIES OF PBC. PBC represents and warrants to the
Company that the statements contained in this Article 3 are true and correct as
of the date hereof, subject to the exceptions specifically disclosed in writing
in the disclosure letter supplied by PBC to the Company dated as of the date
hereof and certified by a duly authorized officer of PBC (the "PBC Schedules").
3.1 ORGANIZATION.
3.1.1 DUE ORGANIZATION; SUBSIDIARIES. PBC is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. PBC has the requisite corporate power and
authority to own, lease and operate its assets and property and to carry on its
business as now being conducted and is duly qualified or licensed to do business
and is in good standing in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its activities makes
such qualification or licensing necessary, except where the failure to be so
qualified would not have a material adverse effect on PBC. Except for Pacific
Broadband Communications EURL, a company formed under the laws of France, PBC
has no subsidiaries.
3.1.2 CERTIFICATE OF INCORPORATION; BYLAWS. PBC has delivered or
made available to the Company a true and correct copy of its Certificate of
Incorporation and Bylaws as in effect on the date
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hereof, and each such instrument is in full force and effect. PBC is not in
violation of any of the provisions of its Certificate of Incorporation or
Bylaws.
3.1.3 CAPITAL STRUCTURE. The authorized capital stock of PBC
consists of 43,400,000 shares of common stock, par value of $.0005 per share, of
which there were 11,370,152 shares issued and outstanding as of the date hereof
and 16,600,000 shares of preferred stock, 15,383,926 of which are issued and
outstanding as of the date of this agreement. The preferred stock is divided
into 10,600,000 shares of authorized Series A Preferred Stock, of which there
are 10,098,500 shares issued and outstanding and 6,000,000 shares of Series B
Preferred Stock, of which there are 5,285,426 shares issued and outstanding. All
outstanding shares of PBC common stock are duly authorized, validly issued,
fully paid and nonassessable and are not subject to preemptive rights created by
statute, the Certificate of Incorporation or Bylaws of PBC or any agreement or
document to which PBC is a party or by which it is bound. As of the date hereof,
PBC has outstanding warrants to purchase 83,352 shares of Series B Preferred
Stock. As of the date hereof, PBC had reserved an aggregate of 12,000,000 shares
common stock for issuance to employees, consultants and non-employee directors
pursuant to its 2000 Stock Incentive Plan, 4,704,825 of which have been issued
and 3,335,690 of which are reserved for future issuance (including 1,311,000
that have been approved and are pending grant to specific individuals. Prior to
or at Closing, PBC will deliver Schedule 3.1.3 which lists all stock and option
positions for each stockholder and option holder of PBC.
3.1.4 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set forth
in Section 3.1.3, there are no equity securities, partnership interests or
similar ownership interests of any class of PBC security, or any securities
exchangeable or convertible into or exercisable for such equity securities,
partnership interests or similar ownership interests, issued, reserved for
issuance or outstanding. Except as set forth in Section 3.1.3, there are no
options, warrants, equity securities, partnership interests or similar ownership
interests, calls, rights (including preemptive rights), commitments or
agreements of any character to which PBC is a party or by which it is bound
obligating PBC to issue, deliver or sell, or cause to be issued, delivered or
sold, or repurchase, redeem or otherwise acquire, or cause the repurchase,
redemption or acquisition, of any shares of capital stock, partnership interests
or similar ownership interests of PBC or obligating PBC to grant, extend,
accelerate the vesting of or enter into any such option, warrant, equity
security, call, right, commitment or agreement. Except as set forth in PBC's
Amended and Restated Investors Rights Agreement dated as of October 17, 2000,
there are no registration rights and, to the knowledge of PBC, as of the date of
this Agreement, there are no voting trusts, proxies or other agreements or
understandings with respect to any equity security of any class of PBC.
3.2 AUTHORITY. PBC has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action on the part of PBC, subject only to the filing and recordation
of the Agreement of Merger, approval of the Merger by the stockholders of PBC
pursuant to Delaware Law and the Certificate of Incorporation of PBC. This
Agreement has been duly executed and delivered by PBC and, assuming the due
authorization, execution and delivery by the Company, constitutes the valid and
binding obligation of PBC, enforceable in accordance with its terms, except as
such enforceability may be limited by principles of public policy and subject to
the laws of general application relating to bankruptcy, insolvency and the
relief of debtors and rules of law governing specific performance, injunctive
relief or other equitable remedies. The execution and delivery of this Agreement
by PBC do not, and the performance of this Agreement by PBC will not, (i)
conflict with or violate the Certificate of Incorporation or Bylaws of PBC, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to PBC or by which its properties are bound or affected or (iii)
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or impair PBC's rights or
alter the rights or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the properties or assets of PBC
pursuant to, any material note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which PBC
is a party or by which PBC or its properties are bound or affected. The PBC
Schedules list all consents,
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waivers, and approvals under any of PBC's agreements, contracts, licenses or
leases required to be obtained in connection with the consummation of the
transactions contemplated hereby.
3.3 CONSENTS. No material consent, approval, order or authorization of, or
registration, declaration or filing with any court, administrative agency or
commission or other governmental authority or instrumentality, foreign or
domestic, is required by or with respect to PBC in connection with the execution
and delivery of this Agreement except for (i) the filing of the Agreement of
Merger with the Secretary of State of the State of Delaware, (ii) the filing of
any necessary tax clearance certificates and certificates of withdrawals by PBC
with the applicable authorities in California, (iii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal and state securities laws, (iv) the filing of
any documents required pursuant to the Xxxx-Xxxxx-Xxxxxx Act and (v) such other
consents, authorizations, declarations, orders, filings, approvals and
registrations which if not obtained or made would not be material to PBC or the
Company or have a material adverse effect on the ability of the parties to
consummate the Merger.
3.4 TAXES; TAX RETURNS. PBC has timely filed all federal, state, local and
foreign returns, estimates, information statements and other returns relating to
taxes required to be filed by PBC, except such returns which are not material,
and has paid all taxes shown to be due on such returns. PBC, as of the Effective
Time, will have withheld with respect to its employees all federal and state
income taxes, FICA, FUTA and other taxes required to be withheld. No audit or
other examination of any return of PBC is presently in progress, nor has PBC
been notified of any request for such an audit or other examination. No power of
attorney that is currently in force has been granted with respect to any matter
relating to taxes payable by PBC. PBC is not a party to or affected by any
tax-sharing or allocation agreement or arrangement.
3.5 INTELLECTUAL PROPERTY.
3.5.1 OWNERSHIP. To the knowledge of PBC, PBC owns or has the right
to use, sell or license all intellectual property necessary or required for the
conduct of its business as presently conducted (such intellectual property and
the rights thereto are collectively referred to herein as the "IP Rights").
3.5.2 NO VIOLATION. To the knowledge of PBC, neither the
manufacture, marketing, license, sale or intended use of any product or
technology currently licensed or sold or under development by PBC violates in
any material respect any license or agreement between PBC and any third party or
to the knowledge of PBC, infringes in any material respect any intellectual
property right of any other party; and there is no pending or, to the knowledge
of PBC, threatened claim or litigation contesting the validity, ownership or
right to use, sell, license or dispose of any IP Rights, nor has PBC received
any written notice asserting that any IP Rights or the proposed use, sale,
license or disposition thereof conflicts or will conflict with the rights of any
other party.
3.5.3 SAFEGUARD OF IP RIGHTS. PBC has taken reasonable and
practicable steps designed to safeguard and maintain the secrecy and
confidentiality of all IP Rights, and has entered into non-disclosure
agreements, where appropriate.
3.5.4 NO CONFLICT. To the knowledge of PBC, the execution and
delivery of and performance under this Agreement and the consummation of
the transactions contemplated hereby will not constitute a material breach
of any instrument or agreement governing any IP Rights, will not cause the
forfeiture or termination or give rise to a right of forfeiture or
termination of any IP Rights or materially impair the right of PBC or the
Company to use, sell or license any IP Rights or any portion thereof.
3.6 LITIGATION. There is no action, suit, proceeding, claim, arbitration
or investigation pending, or as to which PBC has received any notice of
assertion nor, to PBC's knowledge, is there a threatened action, suit,
proceeding, claim, arbitration or investigation against PBC which reasonably
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would be likely to be material to PBC, or which in any manner challenges or
seeks to prevent, enjoin, alter or delay any of the transactions contemplated by
this Agreement.
3.7 NO UNDISCLOSED LIABILITIES. To the knowledge of PBC, except as set
forth in the PBC Schedules, as of the date of the Agreement, PBC does not have
any liability, indebtedness, obligation, or guaranty, whether accrued, absolute,
contingent, matured, unmatured or other (whether or not required to be reflected
in financial statements in accordance with generally accepted accounting
principles), which individually or in the aggregate has not been reflected in
the financial statements delivered to the Company.
3.8 BROKERS' FEES. PBC has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with the Agreement or any transaction
contemplated hereby.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to PBC as follows:
4.1 ORGANIZATION, STANDING AND POWER. The Company is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation. The Company has the corporate power to own its properties and to
carry on its business as now being conducted, to own or use the properties and
assets that it purports to own or use, and to perform all of its obligations
under its contractual obligations. The Company is duly qualified or licensed to
do business and is in good standing as a foreign corporation in each
jurisdiction in which it conducts business except where the failure to be so
qualified would not have a material adverse effect on the Company.
4.2 AUTHORITY. The Company has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, and no further action is required
to authorize the Agreement and the transactions contemplated hereby. The
Agreement has been duly executed and delivered by the Company and, assuming the
due authorization, execution and delivery by PBC, constitutes the valid and
binding obligation of each of the Company, enforceable against each of them in
accordance with its terms, except as such enforceability may be limited by
principles of public policy and subject to the laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.
4.3 CONSENTS. No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any governmental entity, or any third
party is required by or with respect to the Company in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable securities laws, and (ii) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings which, if not obtained
or made, would not have a material adverse effect on the Company or the ability
of the parties to consummate the Merger.
4.4 BROKERS' AND FINDERS' FEES. The Company has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
4.5 SEC FILINGS; All statements, reports, schedules, forms and other
documents required to have been filed with the Securities and Exchange
Commission (the "SEC") by the Company (the "Company SEC Documents") have been so
filed. As of the time it was filed with the SEC (or, if amended or superseded by
a filing prior to the date of this Agreement, then on the date of such filing):
(x) each of the Company SEC Documents complied in all material respects with the
applicable requirements of the Securities Act or the Securities Exchange Act of
1934 (as the case may be); and
Page 8 of 14
(y) none of the Company SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
4.6 VALID ISSUANCE; COMPLIANCE WITH SECURITIES LAWS. The Shares will, when
issued in accordance with the provisions of this Agreement, be duly authorized,
validly issued, fully paid and nonassessable.
5. CONDUCT PRIOR TO THE EFFECTIVE TIME.
5.1 CONDUCT OF BUSINESS OF PBC. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, PBC agrees to use its best efforts to, except to the
extent that the Company shall otherwise consent in writing, carry on PBC's
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, to pay the debts and taxes of PBC when due, to
pay or perform other obligations when due, and, to the extent consistent with
such business, use its best efforts consistent with past practice and policies
to preserve intact PBC's present business organizations, keep available the
services of PBC's present officers and key employees and preserve PBC's
relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with it, all with the goal of preserving
unimpaired PBC's goodwill and ongoing businesses at the Effective Time. PBC
shall promptly notify the Company of any event or occurrence or emergency not in
the ordinary course of business of PBC and any material event involving PBC.
Except as expressly contemplated by this Agreement and as set forth in Section
5.1 of the Disclosure Schedule, PBC shall not, without the prior written consent
of the Company (such consent not to be unreasonably withheld):
(a) (i) sell, license or transfer to any person or entity any rights
to any PBC intellectual property or enter into any agreement with respect
to any PBC intellectual property with any person or entity or with respect
to any intellectual property of any person or entity, (ii) buy or license
any intellectual property or enter into any agreement with respect to the
intellectual property of any person or entity, (iii) enter into any
agreement with respect to the development of any intellectual property
with a third party;
(b) enter into or amend any contract pursuant to which any other
party is granted marketing, distribution, development or similar rights of
any type or scope with respect to any products or technology of PBC;
(c) commence or settle any litigation;
(d) declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any PBC
capital stock, or split, combine or reclassify any PBC capital stock or
issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of PBC capital stock, or repurchase,
redeem or otherwise acquire, directly or indirectly, any shares of PBC
capital stock (or options, warrants or other rights exercisable therefor)
except in accordance with the agreements evidencing PBC employee stock
options;
(e) issue, grant, deliver or sell or authorize or propose the
issuance, grant, delivery or sale of, or purchase or propose the purchase
of, any shares of capital stock of PBC or securities convertible into, or
subscriptions, rights, warrants or options to acquire, or other agreements
or commitments of any character obligating it to issue or purchase any
such shares or other convertible securities, except for (i) the issuance
of shares of capital stock upon the exercise of outstanding options and
(ii) with the written consent of the Company, which consent may be
withheld in the Company's sole discretion, the issuance of options under
the [PBC Stock Option Plan];
Page 9 of 14
(f) cause or permit any amendments to its certificate of
incorporation, bylaws or other organizational documents of PBC;
(g) acquire or agree to acquire by merging or consolidating with, or
by purchasing any assets or equity securities of, or by any other manner,
any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree
to acquire any assets which are material, individually or in the
aggregate, to PBC's business;
(h) sell, lease, license or otherwise dispose of any of its
properties or assets, except in the ordinary course of business and
consistent with past practices;
(i) incur any indebtedness or guarantee any indebtedness or issue or
sell any debt securities or guarantee any debt securities of others;
(j) grant any loans (other than the advance of funds for reasonable
business expenses to employees) to others or purchase debt securities of
others or amend the terms of any outstanding loan agreement;
(k) grant any severance or termination pay (i) to any director or
officer, or (ii) to any other employee except payments made pursuant to
standard written agreements outstanding on the date hereof and disclosed
in the Disclosure Schedule;
(l) adopt or amend any employee benefit plan, or enter into any
employment contract, pay or agree to pay any special bonus or special
remuneration to any director or employee, or increase the salaries, wage
rates or other compensation of its employees except payments made pursuant
to standard written agreements in place on the date hereof and disclosed
in the Disclosure Schedule;
(m) waive any material claim or right; or
(n) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1(a) through 4.1(m) hereof, or any other
action that would (x) prevent PBC from performing its covenants hereunder
or (y) cause or result in any or their respective representations and
warranties contained herein being untrue or incorrect.
5.2 INTERIM FUNDING OF PBC. During the period from the signing of this
agreement and the Closing of the Transaction, the Company shall provide to PBC
interim funding in the amount of $5,000,000 by December 1, 2001 and $5,000,000
by January 1, 2002.
5.3 NO SOLICITATION. Until the earlier of (i) the Effective Time, (ii)
January 31, 2002, or (iii) the date of termination of this Agreement pursuant to
the provisions of Section 8.1 hereof, PBC shall not and shall not permit, as
applicable, any of PBC's officers, directors, employees, stockholders, agents,
representatives or affiliates to, directly or indirectly, take any of the
following actions with any party other than the Company and its designees: (a)
solicit, encourage, initiate or participate in any inquiry, negotiations or
discussions, or enter into any agreement, with respect to any offer or proposal
to acquire all or any part of PBC's business, properties or technologies, or any
amount of PBC capital stock (whether or not outstanding), whether by merger,
purchase of assets, tender offer, license or otherwise, or effect any such
transaction, (b) disclose any information not customarily disclosed to any
person concerning PBC's business, technologies or properties, or afford to any
person or entity access to its properties, technologies, books or records, not
customarily afforded such access, (c) assist or cooperate with any person to
make any proposal to purchase all or any part of PBC capital stock or assets of
PBC, or (d) enter into any agreement with any person providing for the
acquisition of PBC, whether by merger, purchase of assets, license, tender offer
or otherwise. In the event that PBC receives, prior to the Effective Time or the
termination of this Agreement, any offer, proposal, or request, directly or
indirectly,
Page 10 of 14
of the type referenced in clause (a) or (c) above, or any request for disclosure
or access pursuant to clause (b) above, PBC shall immediately notify the Company
thereof, including information as to the identity of the offeror or the party
making any such offer or proposal and the specific terms of such offer or
proposal, as the case may be, and such other information related thereto as the
Company may reasonably request. The parties hereto agree that irreparable damage
would occur in the event that the provisions of this Section 5.3 were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed by the parties hereto that the Company shall be entitled
to seek an injunction or injunctions to prevent breaches of the provisions of
this Section 5.3 and to enforce specifically the terms and provisions hereof in
any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which the Company may be entitled at law or in
equity.
6. ADDITIONAL AGREEMENTS.
6.1 SATISFACTION OF CONDITIONS PRECEDENT. Each party shall use its best
efforts to satisfy or cause to be satisfied all the conditions precedent which
are set forth herein, and each party will use its best efforts to cause the
transactions contemplated by this Agreement to be consummated.
6.2 FURTHER ASSURANCES. Prior to and following the Closing, each party
agrees to cooperate fully with the other parties and to execute such further
instruments, documents and agreements and to give such further written
assurances, as may be reasonably requested by any other party to better evidence
and reflect the transactions described herein and contemplated hereby and to
carry into effect the intents and purposes of this Agreement.
6.3 AMENDED CERTIFICATE OF INCORPORATION. PBC shall cause to be filed an
amended and restated Certificate of Incorporation which revises the liquidation
preferences of the preferred stockholders in the form attached hereto as Exhibit
A .
6.4 PREFERRED STOCKHOLDERS AGREEMENT. As of the Closing, holders of a
majority of the series A preferred and series B preferred stockholders of PBC
shall have entered into a stockholders agreement waiving and releasing any
claims such stockholders may have and such agreement shall contain a detailed
schedule of the consideration to be paid to the stockholders of PBC in
connection with the Merger pursuant to Section 1 hereof.
6.5 NON-COMPETE. Subject to the terms of the Non-Compete Agreement,
certain key employees of PBC to be agreed upon by PBC and the Company prior to
the Closing shall enter into a non-compete agreement in a form to be agreed upon
by PBC and the Company, pursuant to which each such employee agrees not to
compete in for a period of two years from the date of termination of employment.
The scope of the non-compete shall be worldwide.
6.6 401(k). Any 401(k) plan operated by PBC shall terminate as of the
Closing Date and PBC shall provide a certified resolution of its board of
directors indicating that such plan has been terminated effective as of the
Closing Date. Employees of PBC shall be eligible to participate in the Company's
401(k) plan immediately in accordance with its terms and the Company will act in
accordance with company practices and procedures with respect to informing and
helping new enrollees enroll in and understand the Company's 401(k) plan and the
associated rollover provisions.
6.7 ADDITIONAL EMPLOYEE OPTIONS. PBC shall, with the advice and consent of
the Company, prior to Closing, issue the Additional Employee Options currently
reserved for issuance under its 2000 Stock Incentive Plan to PBC employees.
Notwithstanding the foregoing, the Company acknowledges and agrees that
1,311,000 of such Additional Employee Options have previously been allocated to
specific individuals and the Company consents to such allocations.
6.8 ADDITIONAL DOCUMENTS TO BE DELIVERED BY THE COMPANY. At the Closing
the Company shall deliver the following to PBC:
Page 11 of 14
6.8.1 certified resolutions of the Board of Directors of the Company
approving the Merger in accordance with the terms of this Agreement; and
6.8.2 an opinion of the Company's General Counsel, in form and
substance reasonably satisfactory to PBC.
6.9 ADDITIONAL DOCUMENTS TO BE DELIVERED BY PBC. At the Closing PBC shall
deliver the following to the Company :
6.9.1 certified resolutions of the Board of Directors and the
shareholders of PBC. approving the Merger in accordance with the terms of
this Agreement; and
6.9.2 an opinion from Pillsbury Winthrop LLP in form and substance
reasonably satisfactory to the Company.
7. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The respective
obligations of each party to this Agreement to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
7.1 STOCKHOLDER APPROVAL. This Agreement shall have been approved and
adopted, and the Merger shall have been duly approved, by the requisite vote
under applicable law, by the stockholders of PBC.
7.2 NO ORDER. No order, administrative agency or commission or other
governmental authority or instrumentality shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
that is in effect and that ha the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger.
8. TERMINATION; TERMINATION FEE.
8.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time of the Merger in the event that one or more of the conditions set
forth in Section 6 is not satisfied.
8.2 TERMINATION FEE. If the Merger is not consummated as of January 31,
2002 (unless extended by agreement of the parties and (i) PBC is ready and
willing to close the Merger in accordance with the terms of this Agreement and
(ii) all of the conditions set forth in Section 6 have been satisfied in all
material respects and (iii) the Company refuses to consummate the Merger then
the Company will pay PBC a fee of $10,000,000 by February 5, 2002. In addition,
if after such failure by the Company, if Carlyle Venture Partners (or another
venture capital firm of national reputation acceptable to PBC) declines to lead
an offering of PBC's Series C Preferred Stock resulting in net proceeds to PBC
of at least $25,000,000, the Company agrees to lead such Series C financing and
to purchase shares of Series C Preferred Stock in the minimum amount of
$10,000,000. If the Company is unable to secure commitments from other investors
for the purchase of the remaining $15,000,000, then the Company agrees to
purchase $25,000,000 worth of such shares by February 15, 2002. The terms of
such Series C financing shall be as set forth in the term sheet attached hereto
as Exhibit C.
9. MISCELLANEOUS.
9.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via facsimile (receipt confirmed) to the parties at
the following addresses or facsimile numbers (or at such other address or
facsimile numbers for a party as shall be specified by like notice):
Page 12 of 14
If to Company: Juniper Networks, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Telephone No.: (000)000-0000
Facsimile No.: (000) 000-0000
If to PBC: Pacific Broadband Communications, Inc.
0000 X. Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to: Pillsbury Winthrop LLP
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
9.2 INTERPRETATION. When a reference is made in this Agreement to
schedules, such reference shall be to a schedule to this Agreement unless
otherwise indicated. When a reference is made in this Agreement to Sections,
such reference shall be to a Section of this Agreement. Unless otherwise
indicated the words "include," "includes" and "including" when used herein shall
be deemed in each case to be followed by the words "without limitation." The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
9.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party. A facsimile signature shall be
deemed an original signature.
9.4 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement and all
schedules hereto constitute the entire agreement among the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, including the Term Sheet between the Company and PBC
dated October 31, 2001 (but excluding the Non-Disclosure Agreement) and the
amended Term Sheet dated November 9, 2001; and are not intended to confer upon
any other person any rights or remedies hereunder, except as specifically
provided herein. The stockholders of PBC shall be able to rely on this Agreement
and are third party beneficiaries hereunder.
9.5 SEVERABILITY. If any provision of this Agreement or the application
thereof, becomes or is declared by a court of competent jurisdiction to be
illegal, void or unenforceable, the remainder of this Agreement will continue in
full force and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of
such void or unenforceable provision.
9.6 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not
Page 13 of 14
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to seek an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
9.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, United States, regardless
of its conflicts of law rules.
9.8 ARBITRATION. The parties agree to first negotiate in good faith to
resolve any disputes arising out of or relating to or affecting the subject
matter of this Agreement. Any dispute arising out of or relating to or affecting
the subject matter of this Agreement not resolved by negotiation shall be
settled by binding arbitration in Santa Xxxxx County, California before the
Judicial Arbitration and Mediation Services, Inc. ("Jams") under the JAMS Rules
of Practice and Procedure. The arbitrator shall be a former judge of a court of
California. Discovery and other procedural matters shall be governed as through
the proceeding were an arbitration. Any judgment upon the award may be confirmed
and entered in any court having jurisdiction thereof. The arbitrator shall be
required to, in all determinations, apply California law without regard to its
conflicts of law provisions. Notwithstanding the foregoing, the arbitrator shall
be free to apply the substantive law of the state of incorporation of a party,
where applicable. The arbitrator is afforded the jurisdiction to order any
provisional remedies, including, without limitation, injunctive relief. The
arbitrator may award the prevailing party the costs of arbitration, including
reasonable attorneys' fees and expenses. The arbitrator's award shall be in
writing and shall state the reasons for the award. The parties stipulate that a
JAMS employee may be appointed as a judge pro tempore of the Superior Court of
Santa Xxxxx County if required to carry out the terms of this provision.
Arbitration shall be the sole and exclusive means to resolve any dispute.
9.9 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
9.10 ASSIGNMENT. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties which approval will not be unreasonably withheld. Subject
to the preceding sentence, this Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
JUNIPER NETWORKS, INC. PACIFIC BROADBAND COMMUNICATIONS, INC.
BY: /s/ Xxxxx Xxxxxx BY: /s/ Xxxx Xxxxxx
--------------------------------- -----------------------------------
NAME: Xxxxx Xxxxxx NAME: Xxxx Xxxxxx
------------------------------- ---------------------------------
TITLE: Chairman and CEO TITLE: President and CEO
------------------------------ --------------------------------
DATE: November 11, 2001 DATE: November 11, 2001
------------------------------- ---------------------------------
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