EXHIBIT 2.1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
NEWBRIDGE NETWORKS CORPORATION
SATURN ACQUISITION CORP.
AND
STANFORD TELECOMMUNICATIONS, INC.
Dated as of June 22, 1999 and
amended and restated as of November 10, 1999
DEFINITIONS
"Accounts Receivable"..................................... Section 3.19(a)
"Acquisition Proposal".................................... Section 5.2(c)
"Acquisition Transaction"................................. Section 5.2(c)
"Action".................................................. Section 3.12(a)
"Antitrust Division"...................................... Section 5.5
"Cash Consideration"...................................... Section 2.1(a)
"CERCLA".................................................. Section 3.24(a)(iii)
"CFIUS"................................................... Section 5.5
"Certificate of Merger"................................... Section 1.2
"Closing"................................................. Section 1.2
"Closing Date"............................................ Section 1.2
"COBRA"................................................... Section 3.15(b)
"Code".................................................... Section 3.22(b)(vi)
"Confidentiality Agreement"............................... Section 5.3
"Contractor".............................................. Section 3.24(a)(i)
"Delaware Law"............................................ Section 1.1
"Dissenting Shares"....................................... Section 2.5
"Dissenting Stockholder".................................. Section 2.5
"Effective Time".......................................... Section 1.2
"End Date"................................................ Section 8.1(b)
"Employee Benefit Plans".................................. Section 3.23(a)
"Environment"............................................. Section 3.24(a)(ii)
"Environmental Law"....................................... Section 3.24(a)(iii)
"Environmental Permit".................................... Section 3.24(a)(iv)
"ERISA"................................................... Section 3.23(a)
"ERISA Affiliate"......................................... Section 3.23(a)
"Exchange Act"............................................ Section 3.3
"Exon-Xxxxxx Amendment"................................... Section 3.3
"Foreign Plan"............................................ Section 3.23(n)
"FTC"..................................................... Section 5.5
"GAAP".................................................... Section 3.8
"Government Bid".......................................... Section 3.17(a)(ii)
"Government Contract"..................................... Section 3.17(a)(iii)
"Government Entity"....................................... Section 3.3
"Government Body"......................................... Section 3.17(a)(i)
"Group Health Plan"....................................... Section 3.23(k)
"Hazardous Material"...................................... Section 3.24(a)(v)
"Holder".................................................. Section 2.3(c)
"HSR Act"................................................. Section 3.3
"Indemnified Parties"..................................... Section 5.8(b)
"IRS"..................................................... Section 3.22(b)(iii)
"law"..................................................... Section 9.11
"Legal Requirement"....................................... Section 3.17(a)(iv)
"Merger".................................................. Recitals
"Merger Sub".............................................. Preamble
"Merger Sub Common Stock"................................. Section 2.1(d)
"Newbridge"............................................... Preamble
"Newbridge Disclosure Statement".......................... Article IV
"Newbridge Exchange Options".............................. Section 2.2(a)
DEFINITIONS--(Continued)
"Newbridge Material
Adverse Effect"........ Section 4.1(a)
"Newbridge Material
Subsidiaries".......... Section 4.1(a)
"Non-core Assets"....... Section 5.18
"Non-core Asset Sale"... Section 5.18
"Notice of Superior
Proposal".............. Section 5.4(c)
"Option Exchange
Ratio"................. Section 2.2(a)
"Paying Agent".......... Section 2.3(a)
"Pension Benefit
Plans"................. Section 3.23(a)
"Person"................ Section 2.1(g)
"Potential Acquiror".... Section 5.2(a)
"Proxy Statement"....... Section 3.3
"Real Property"......... Section 3.24(b)(iv)
"Reference Date"........ Section 3.8
"Returns"............... Section 3.22(b)(i)
"Stel".................. Preamble
"Stel Balance Sheet".... Section 3.8
"Stel Certificate"...... Section 2.3(c)
"Stel Common Stock"..... Recitals
"Stel Contract"......... Section 3.14(b)
"Stel Disclosure
Statement"............. Article III
"Stel Financial
Statements"............ Section 3.8
"Stel IP Rights"........ Section 3.18(a)
"Stel Material Adverse
Effect"................ Section 3.1(a)
"Stel Options".......... Section 2.2(a)
"Stel Purchase Plan".... Section 2.2(c)
"Stel Rights"........... Section 3.4
"Stel Rights Plan"...... Section 3.4
"Stel SEC Reports"...... Section 3.7(a)
"Stel Special Meeting".. Section 5.4(a)
"Stel Stock Plans"...... Section 2.2(a)
"Stel Triggering
Event"................. Section 8.1(i)
"SEC"................... Section 3.7(a)
"Securities Act"........ Section 3.7(a)
"Stock Option
Agreement"............. Recitals
"Subsidiary"............ Section 2.1(g)
"Superior Proposal"..... Section 5.2(d)
"Surviving
Corporation"........... Section 1.1
"Tax or Taxes".......... Section 3.22(a)
"Technology Option
Agreement"............. Recitals
"Termination Fee"....... Section 8.3(b)(i)
"Third Party"........... Section 5.2(c)
"Voting Agreements"..... Recitals
"Welfare Benefit
Plans"................. Section 3.23(a)
"Year 2000 Compliant"... Section 3.30
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
This AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this "Agreement") is
made and entered into as of June 22, 1999, amended as of August 20, 1999 and
amended and restated as of November 10, 1999 by and among Newbridge Networks
Corporation, a Canadian corporation ("Newbridge"), Saturn Acquisition Corp., a
Delaware corporation and wholly-owned subsidiary of Newbridge ("Merger Sub"),
and Stanford Telecommunications, Inc., a Delaware corporation ("Stel"), with
respect to the following facts:
A. The respective boards of directors of Newbridge, Merger Sub and Stel have
approved and declared advisable the merger of Merger Sub with and into Stel
(the "Merger"), upon the terms and subject to the conditions set forth herein,
and have determined that the Merger and the other transactions are fair to, and
in the best interests of, their respective stockholders.
B. Simultaneously with the execution and delivery of this Agreement and as a
condition and inducement to Newbridge's and the Merger Sub's willingness to
enter into this Agreement, Newbridge is entering into a Stock Option Agreement
dated the date hereof in the form of Exhibit A (the "Stock Option Agreement")
with Stel, pursuant to which Stel is granting to Newbridge the right and option
to purchase shares of Stel Common Stock, $.01 par value ("Stel Common Stock")
from Stel equal to up to 19.9% of issued and outstanding Stel Common Stock.
C. Simultaneously with the execution and delivery of this Agreement and as a
condition and inducement to Newbridge's and the Merger Sub's willingness to
enter into this Agreement, Newbridge is entering into the Wireless Broadband
Products Technology License Option Agreement in the form of Exhibit B
(the "Technology Option Agreement") with Stel.
D. Simultaneously with the execution and delivery of this Agreement and as a
condition and inducement to Newbridge's and the Merger Sub's willingness to
enter into this Agreement, Newbridge is entering into Voting Agreements in the
form of Exhibit C with certain directors and officers of Stel in their
respective capacities as stockholders of Stel (the "Voting Agreements").
E. For the purpose of this Agreement, the date of this Agreement and the
date of the execution and delivery of this Agreement shall be deemed to be June
22, 1999.
The parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware General Corporation Law (the "Delaware Law"),
(i) Merger Sub shall be merged with and into Stel, (ii) the separate corporate
existence of Merger Sub shall cease, and (iii) Stel shall be the surviving
corporation. Stel as the surviving corporation after the Merger is hereinafter
sometimes referred to as the "Surviving Corporation."
1.2 Closing; Effective Time. The closing of the Merger and the other
transactions contemplated hereby (the "Closing") will take place at 10:00 a.m.,
local time, on a date to be specified by the parties (the "Closing Date"),
which shall be no later than the first business day after satisfaction or
waiver of the conditions set forth in Articles VI and VII, unless another time
or date is agreed to by the parties hereto. The Closing shall take place at the
offices of Xxxxxx Xxxxxx White & XxXxxxxxx, 000 Xxxxxxxxxx Xxxxxx, Xxxx Xxxx,
Xxxxxxxxxx, or at such other location as the parties hereto shall mutually
agree. At the Closing, the parties hereto shall cause the
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Merger to be consummated by filing a certificate of merger substantially in the
form of Exhibit D (the "Certificate of Merger") with the Secretary of State of
the State of Delaware, in accordance with the relevant provisions of the
Delaware Law (the time of such filing, or such later time as may be agreed in
writing by the parties and specified in the Certificate of Merger, being the
"Effective Time").
1.3 Effects of the Merger. The effects of the Merger shall be as provided in
this Agreement, the Certificate of Merger and the applicable provisions of the
Delaware Law. Without limiting the foregoing, at the Effective Time all the
property, rights, privileges, powers and franchises of Stel and Merger Sub
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of Stel and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
1.4 Certificate of Incorporation; Bylaws.
(a) Subject to Section 5.8, from and after the Effective Time, the
certificate of incorporation of Stel, as in effect immediately prior to the
Effective Time, shall be the certificate of incorporation of the Surviving
Corporation, until changed or amended as provided by law.
(b) Subject to Section 5.8, from and after the Effective Time, the bylaws of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
bylaws of the Surviving Corporation.
1.5 Directors and Officers of the Surviving Corporation. The directors and
officers of Merger Sub immediately prior to the Effective Time shall serve as
the initial directors and officers of the Surviving Corporation, until their
respective successors are duly elected or appointed and qualified.
ARTICLE II
CONVERSION OF SHARES
2.1 Conversion of Stock. Pursuant to the Merger, and without any action on
the part of the holders of any outstanding shares of capital stock or other
securities of Stel or Merger Sub:
(a) As of the Effective Time each share of Stel Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares of Stel
Common Stock to be canceled pursuant to Section 2.1(c) or as provided in
Section 2.5 with respect to shares of Stel Common Stock as to which appraisal
rights have been exercised under Delaware Law) shall be automatically converted
into the right to receive in cash without interest an amount equal to U.S.
$34.22 (the "Cash Consideration").
(b) As of the Effective Time, each holder of a certificate or certificates
which immediately prior to the Effective Time represented outstanding shares of
Stel Common Stock shall cease to have any rights with respect thereto, except
the right to receive a cash payment equal to the number of shares represented
by such Stel Certificate multiplied by the Cash Consideration.
(c) As of the Effective Time, each share of Stel Common Stock held of record
immediately prior to the Effective Time by Stel, Merger Sub, Newbridge or any
wholly-owned subsidiary of Stel or of Newbridge shall be canceled and
extinguished without any conversion thereof.
(d) As of the Effective Time, each share of Common Stock, $0.01 par value,
of Merger Sub (the "Merger Sub Common Stock") issued and outstanding
immediately prior to the Effective Time shall be canceled, extinguished and
automatically converted into one validly issued, fully paid and nonassessable
share of Common Stock, $0.01 par value, of the Surviving Corporation. Each
certificate evidencing ownership of a number of shares of Merger Sub Common
Stock shall be deemed to evidence ownership of the same number of shares of
Common Stock, $0.01 par value, of the Surviving Corporation.
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(e) For purposes of this Agreement, the term "Subsidiary", when used with
respect to any Person, means any corporation or other organization, whether
incorporated or unincorporated, of which (A) at least a majority of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such Person (through ownership of securities,
by contract or otherwise) or (B) such Person or any Subsidiary of such Person
is a general partner of any general partnership or a manager of any limited
liability company. For the purposes of this Agreement, the term "Person" means
any individual, group, organization, corporation, partnership, joint venture,
limited liability company, trust or entity of any kind.
2.2 Stel Options; Stock Purchase Plan.
(a) As of the Effective Time, Newbridge shall, to the full extent permitted
by applicable law, assume all of the stock options of Stel outstanding
immediately prior to the Effective Time under the Stel Stock Plans (as defined
below) (the "Stel Options"). For purposes of this Agreement, "Stel Stock Plans"
means Stel's 1982 Stock Option Plan, and 1991 Stock Option Plan. Each Stel
Option, whether or not exercisable at the Effective Time, shall, to the full
extent permitted by applicable law, be assumed by Newbridge in such a manner
that it shall be exercisable upon the same terms and conditions as under the
Stel Stock Plan pursuant to which it was granted and the applicable option
agreement issued thereunder; provided that:
(i) each such option shall thereafter be exercisable for the number of
shares of Newbridge Common Stock (rounded down to the nearest whole share)
equal to the product obtained from multiplying the number of shares of Stel
Common Stock covered by such option immediately prior to the Effective Time
by a fraction (the "Option Exchange Ratio"), the numerator of which is the
Cash Consideration and the denominator of which is the average of the daily
averages of the high and low per share prices of Newbridge Common Stock as
reported on the New York Stock Exchange Composite Tape on the five trading
days ending on the second trading day immediately preceding the Stel
Special Meeting; and
(ii) the option price per share of Newbridge Common Stock thereafter
shall be equal to the quotient (rounded up to the nearest whole cent)
obtained from dividing the option price per share of Stel Common Stock
subject to such option in effect immediately prior to the Effective Time by
the Option Exchange Ratio.
Stel Options assumed in the manner described in this Section are referred to in
this Agreement as the "Newbridge Exchange Options". Prior to the Effective
Time, Stel shall make all adjustments provided for in the Stel Stock plan with
respect to the Stel Options to facilitate the implementation of the provisions
of this Section 2.2(a).
(b) Notwithstanding the provisions of clause (a) above, the holders of Stel
Options which are vested or will be vested as of the Effective Time shall have
the ability to exercise such options effective as of the Effective Time on a
"cash-out" basis. Newbridge and Stel will provide a mechanism whereby, after
the Effective Time, each such Stel Option holder who has so exercised will
receive a cash payment equal to (i) the product of (A) the number of shares of
Stel Common Stock exercised and (B) the excess of the Cash Consideration over
the exercise price per share of Stel Common Stock, less (ii) any applicable
withholding or employment taxes.
(c) All the purchase rights under Stel's 1992 Employee Stock Purchase Plan
("Stel Purchase Plan") shall terminate following the purchase of shares in
respect of the Participation Period (as defined in the Stel Purchase Plan)
beginning on or about June 30, 1999 and no Participation Period shall be
commended thereafter. All funds contributed to the Stel Purchase Plan that have
not been used to purchase shares of Stel Common Stock by the termination date
of the Stel Purchase Plan shall be returned after such termination date in
accordance with Section 8 of the Stel Purchase Plan.
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2.3 Paying Agent.
(a) At or prior to the Effective Time, Newbridge shall enter into an
agreement with a bank or trust company selected by Newbridge to act as the
paying agent for the Merger (the "Paying Agent").
(b) At or prior to the Effective Time, Newbridge shall supply or cause to be
supplied to or for the account of the Paying Agent in trust for the benefit of
the holders of Stel Common Stock the funds necessary to make the payments
contemplated by Section 2.1. Such funds shall be invested by the Paying Agent
as directed by Newbridge in accordance with Newbridge's investment policy.
(c) Promptly after the Effective Time, Newbridge shall mail or shall cause
to be mailed to each Holder a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Stel Certificates
shall pass, only upon proper delivery of the Stel Certificates to the Paying
Agent) and instructions for surrender of the Stel Certificates. Upon surrender
to the Paying Agent of a Stel Certificate, together with such letter of
transmittal duly executed, the Holder shall be entitled to receive in exchange
therefor a cash payment equal to the number of shares represented by such Stel
Certificate multiplied by the Cash Consideration, and such Stel Certificate so
surrendered shall forthwith be canceled. No cash payment will be issued to a
Person who is not the registered owner of a surrendered Stel Certificate,
unless (i) the Stel Certificate so surrendered has been properly endorsed or
otherwise is in proper form for transfer, and (ii) such Person shall either (A)
pay any transfer or other tax required by reason of such issuance or (B)
establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered in accordance with the
provisions of this Section 2.3, from and after the Effective Time, each Stel
Certificate shall be deemed to represent the right to receive a cash payment
equal to the number of shares represented by such Stel Certificate multiplied
by the Cash Consideration. For purposes of this Agreement, "Stel Certificate"
means a certificate which immediately prior to the Effective Time represented
shares of Stel Common Stock, and "Holder" means a person who holds one or more
Stel Certificates as of the Effective Time.
(d) Any portion of the funds supplied to the Paying Agent which remains
undistributed to the former stockholders of Stel for twelve (12) months after
the Effective Time shall be delivered to Newbridge, upon demand of Newbridge,
and any such former stockholders who have not theretofore complied with this
Section 2.3 shall thereafter look only to Newbridge (subject to abandoned
property, escheat and other similar laws) only as general creditors of
Newbridge with respect to any consideration set forth in Section 2.1 that may
be payable upon surrender of their Stel Certificates.
(e) Notwithstanding anything to the contrary in this Agreement, none of the
Paying Agent, Newbridge, the Surviving Corporation nor any party hereto shall
be liable to any holder of shares of Stel Common Stock for any consideration
set forth in Section 2.1 delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
2.4 Lost, Stolen or Destroyed Certificates. In the event that any Stel
Certificates shall have been lost, stolen or destroyed, the Paying Agent shall
make in respect of such lost, stolen or destroyed Stel Certificates, upon the
making of an affidavit of that fact by the holder thereof, a cash payment equal
to the number of shares represented by such Stel Certificate multiplied by the
Cash Consideration; provided, however, that Newbridge may, in its discretion
and as a condition precedent to the payment thereof, require the owner of such
lost, stolen or destroyed Stel Certificate to deliver a bond in such sum as
Newbridge may reasonably direct as indemnity against any claim that may be made
against Newbridge or the Paying Agent with respect to the Stel Certificates
alleged to have been lost, stolen or destroyed.
2.5 Appraisal Rights; Dissenting Shares. Any issued and outstanding shares
of Stel Common Stock held by a person who has properly demanded an appraisal
and perfected the right to dissent under Delaware Law and who has not
effectively withdrawn or lost such rights as of the Effective Time (the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Cash Consideration, and the holders thereof shall be entitled only
to such rights as are granted by Delaware Law. Stel shall give Newbridge prompt
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notice upon receipt by Stel of any such written demands for payment of the fair
value of such shares of Stel Common Stock and of withdrawals of such demands
and any other instruments provided pursuant to Delaware Law (any stockholder
duly making such demands being hereafter called a "Dissenting Stockholder").
Any payments made in respect of Dissenting Shares shall be made by Newbridge.
If any Dissenting Stockholder shall effectively withdraw or lose (through
failure to perfect or otherwise) his right to such payment at or prior to the
Effective Time, such holder's shares of Stel Common Stock shall be converted
into a right to receive the Cash Consideration in accordance with the
applicable provisions of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF STEL
Stel makes to Newbridge and Merger Sub the representations and warranties
contained in this Article III, in each case subject to the exceptions set forth
in the disclosure statement, dated as of the date hereof (the "Stel Disclosure
Statement". The Stel Disclosure Statement shall be arranged in schedules
corresponding to the numbered and lettered Sections of this Article III, and
the disclosure in any Schedule of the Stel Disclosure Statement shall qualify
only the corresponding Section of this Article III.
3.1 Organization, Etc.
(a) Each of Stel and its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Each of Stel and its Subsidiaries is duly qualified as a foreign Person to do
business, and is in good standing, in each jurisdiction where the character of
its owned or leased properties or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not, individually or in the aggregate, have a Stel Material
Adverse Effect. For the purposes of this Agreement, "Stel Material Adverse
Effect" means any change, event or effect that is materially adverse to either
(i) the business, operations or assets of Stel's wireless broadband products
division or its telecom products components division, or (ii) the general
affairs, business, operations, assets, condition (financial or otherwise) or
results of operations of Stel and its Subsidiaries taken as a whole.
(b) Stel is not in violation of any provision of its certificate of
incorporation or bylaws. None of Stel's Subsidiaries is in violation of its
certificate of incorporation or other charter document or in material violation
of its bylaws. Schedule 3.1(b) of the Stel Disclosure Statement sets forth (i)
the full name of each Subsidiary of Stel, its capitalization and the ownership
interest of Stel and each other Person (if any) therein, (ii) the jurisdiction
in which each such Subsidiary is organized, (iii) each jurisdiction in which
Stel and each Subsidiary of Stel is qualified to do business as a foreign
Person, (iv) a brief summary of the business and material operations of each
Subsidiary of Stel, and (v) the names of the current directors and officers of
Stel and of each Subsidiary of Stel. Stel has made available to Newbridge
accurate and complete copies of the certificate of incorporation, bylaws and
any other charter documents, as currently in effect, of Stel and each of its
Subsidiaries.
3.2 Authority Relative to This Agreement. Stel has full corporate power and
authority to (i) execute and deliver this Agreement, (ii) execute and deliver
the Stock Option Agreement, (iii) execute and deliver the Technology Option
Agreement, (iv) consummate the transactions contemplated by the Stock Option
Agreement and Technology Option Agreement, and (v) assuming the approval of the
Merger and the approval of the sale of Stel's government business assets by a
majority of the outstanding shares of Stel Common Stock at the Stel Special
Meeting or any adjournment or postponement thereof in accordance with Delaware
Law, consummate the Merger and the other transactions contemplated hereby. The
execution and delivery of this Agreement, the Stock Option Agreement and the
Technology Option Agreement, and the consummation of the Merger, the sale of
the government business assets and the other transactions contemplated hereby
and thereby, have been duly
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and validly authorized by the unanimous vote of the board of directors of Stel,
and no other corporate proceedings on the part of Stel are necessary to
authorize this Agreement, the Stock Option Agreement and the Technology Option
Agreement or to consummate the Merger and the other transactions contemplated
hereby and thereby (other than, (a) with respect to the Merger, the approval of
the Merger by a majority of the outstanding shares of Stel Common Stock at the
Stel Special Meeting or any adjournment or postponement thereof in accordance
with the Delaware Law or (b) with respect to the sale of the government
business assets, the approval of such sale by a majority of the outstanding
shares of Stel Common Stock). Each of this Agreement, the Stock Option
Agreement and the Technology Option Agreement has been duly and validly
executed and delivered by Stel and, assuming due authorization, execution and
delivery by Newbridge and, in the case of this Agreement, by Merger Sub,
constitutes a valid and binding agreement of Stel, enforceable against Stel in
accordance with its terms, except to the extent that its enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally or by
general equitable principles.
3.3 No Violations, Etc. No filing with or notification to, and no permit,
authorization, consent or approval of, any court, administrative agency,
commission, or other governmental or regulatory body, authority or
instrumentality ("Government Entity") is necessary on the part of Stel for the
consummation by Stel of the Merger and the other transactions contemplated
hereby and by the Stock Option Agreement and the Technology Option Agreement,
or for the exercise by Newbridge and the Surviving Corporation of full rights
to own and operate the business of Stel and its Subsidiaries as presently being
conducted, except for (i) the filing of the Certificate of Merger as required
by Delaware Law, (ii) compliance with the applicable requirements of the
Securities Exchange Act of 1934, as amended (together with the Rules and
Regulations promulgated thereunder, the "Exchange Act") including the filing of
a proxy statement on Schedule 14A (the "Proxy Statement"), state securities or
"blue sky" laws and state takeover laws, (iii) any filing required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx") and (iv)
the voluntary notice to be filed under Section 721 of the Defense Production
Act of 1950, as amended by Section 5021 of the Omnibus Trade and
Competitiveness Act of 1988 (the "Exon-Xxxxxx Amendment"). Neither the
execution and delivery of this Agreement, the Stock Option Agreement, and the
Technology Option Agreement nor the consummation of the Merger and the other
transactions contemplated hereby and thereby nor compliance by Stel with all of
the provisions hereof and thereof, nor the exercise by Newbridge and the
Surviving Corporation of full rights to own and operate the business of Stel
and its Subsidiaries as presently being conducted will, subject to obtaining
the approval of this Agreement by the holders of a majority of the outstanding
shares of Stel Common Stock at the Stel Special Meeting or any adjournment
thereof in accordance with Delaware Law, (i) conflict with or result in any
breach of any provision of the certificate of incorporation, bylaws or other
charter document of Stel or any of its Subsidiaries, (ii) violate any material
order, writ, injunction, decree, statute, rule or regulation applicable to
Stel, or any of its Subsidiaries, or by which any of their properties or assets
may be bound, or (iii) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default under, or result in
any material change in, or give rise to any right of termination, cancellation,
acceleration, redemption or repurchase under, any of the terms, conditions or
provisions of any material note, bond, mortgage, indenture, deed of trust,
license, lease, contract, agreement or other instrument or obligation to which
Stel or any of its Subsidiaries is a party or by which any of them or any of
their properties or assets may be bound. Schedule 3.3 of the Stel Disclosure
Statement lists all consents, waivers and approvals required to be obtained in
connection with the consummation of the transactions contemplated hereby or by
the Stock Option Agreement or Technology Option Agreement under any of Stel's
or any of its Subsidiaries' notes, bonds, mortgages, indentures, deeds of
trust, licenses or leases, contracts, agreements or other instruments or
obligations the failure to obtain which would have a Stel Material Adverse
Effect.
3.4 Board Recommendation. The board of directors of Stel has unanimously (i)
approved and adopted this Agreement, the Stock Option Agreement and the
Technology Option Agreement (ii) determined that this Agreement is fair to and
in the best interests of the stockholders of Stel, (iii) resolved to recommend
approval of this Agreement to the stockholders of Stel, (iv) resolved that Stel
take all action necessary to exempt the execution and delivery of this
Agreement, the Stock Option Agreement and the Technology Option Agreement
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and the consummation of the transactions contemplated hereby and thereby from
the provisions of all applicable state antitakeover statutes and regulations,
including, but not limited to, Section 203 of the Delaware Law, and (v) amended
the Stel Rights Agreement (the "Stel Rights Plan") dated as of May 9, 1995
between Stel and the First National Bank of Boston to render the rights issued
thereunder (the "Stel Rights") inapplicable to the Merger, this Agreement, the
Stock Option Agreement and the Technology Option Agreement and the other
transactions contemplated hereby, and to terminate the Stel Rights Plan as of
the Effective Time.
3.5 Fairness Opinion. Stel has received the opinion of Ferris, Baker, Xxxxx
dated June 21, 1999, as amended on November 10, 1999, to the effect that the
consideration to be received by the Stel stockholders in the merger is fair the
Stel stockholders from a financial point of view, and has provided a copy of
the written opinion to Newbridge.
3.6 Capitalization.
(a) The authorized capital stock of Stel consists of 25,000,000 shares of
Stel Common Stock. As of June 16, 1999, there were (i) 13,152,959 shares of
Stel Common Stock outstanding, and (ii) no treasury shares.
(b) Other than the Stel Common Stock, there are no equity securities of any
class of Stel, or any securities convertible into or exercisable for any such
equity securities, issued, reserved for issuance or outstanding. Except for the
Stel Options, Stel Rights, and purchase rights under the Stel Purchase Plan
there are no warrants, options, convertible securities, calls, rights, stock
appreciation rights, preemptive rights, rights of first refusal, or agreements
or commitments of any nature obligating Stel to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other equity interests of Stel, or obligating Stel to grant, issue, extend,
accelerate the vesting of, or enter into, any such warrant, option, convertible
security, call, right, stock appreciation right, preemptive right, right of
first refusal, agreement or commitment. To the knowledge of Stel, except for
the Voting Agreements, there are no voting trusts, proxies or other agreements
or understandings with respect to the capital stock of Stel.
(c) True and complete copies of each Stel Stock Plan and the Stel Purchase
Plan, and of the forms of all agreements and instruments relating to or issued
under each thereof, have been made available to Newbridge. Such agreements,
instruments, and forms have not been amended, modified or supplemented, and
there are no agreements to amend, modify or supplement any such agreements,
instruments or forms.
(d) Schedule 3.6(d) of the Stel Disclosure Statement sets forth the
following information with respect to Stel Options outstanding as of June 16,
1999: the aggregate number of shares issuable thereunder, the type of option,
the grant date, the expiration date, the exercise price and the vesting
schedule. Each Stel Option was granted in accordance with the terms of the Stel
Stock Plan applicable thereto. The terms of each of the Stel Stock Plans do not
prohibit the assumption of the Stel Options as provided in Section 2.2(a).
Consummation of the Merger will accelerate vesting of all Stel Options, except
those which have been outstanding for less than one year as of the Effective
Time.
3.7 SEC Filings.
(a) Stel has filed with the Securities and Exchange Commission (the "SEC")
all required forms, reports, registration statements and documents required to
be filed by it with the SEC (collectively, all such forms, reports,
registration statements and documents filed since April 1, 1996 are referred to
herein as the "Stel SEC Reports"). All of the Stel SEC Reports complied as to
form, when filed, in all material respects with the applicable provisions of
the Securities Act of 1933, as amended (together with the rules and regulations
promulgated thereunder, the "Securities Act") and the Exchange Act. Accurate
and complete copies of the Stel SEC Reports have been made available to
Newbridge. As of their respective dates, the Stel SEC Reports (including all
exhibits and schedules thereto and documents incorporated by reference therein)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary
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to make the statements therein, in light of the circumstances under which they
were made, not misleading. Stel has been advised by each of its officers and
directors that each such person and such persons affiliates have complied with
all filing requirements under Section 13 and Section 16(a) of the Exchange Act.
3.8 Financial Statements. Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the Stel SEC
Reports (the "Stel Financial Statements"), (a) was prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto or, in the case of unaudited interim financial statements, as may be
permitted by the SEC on Form 10-Q under the Exchange Act) and (b) fairly
presented the consolidated financial position of Stel and its Subsidiaries as
at the respective dates thereof and the consolidated results of its operations
and cash flows for the periods indicated, consistent with the books and records
of Stel, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not, or are not
expected to be, material in amount. The balance sheet of Stel contained in
Stel's Annual Report to Stockholders for the year ended March 31, 1999 (the
"Reference Date") is hereinafter referred to as the "Stel Balance Sheet".
3.9 Absence of Undisclosed Liabilities. Neither Stel nor any of its
Subsidiaries has any liabilities (absolute, accrued, contingent or otherwise)
other than (i) liabilities included in the Stel Balance Sheet and the related
notes to the financial statements, (ii) normal or recurring liabilities
incurred since the Reference Date in the ordinary course of business consistent
with past practice which, individually or in the aggregate, would not be
reasonably likely to have a Stel Material Adverse Effect, and (iii) liabilities
under this Agreement, the Stock Option Agreement and the Technology Option
Agreement.
3.10 Absence of Changes or Events. Except as contemplated by this Agreement,
since the Reference Date no Stel Material Adverse Effect has occurred and, in
addition, Stel and its Subsidiaries have not, directly or indirectly:
(a) purchased, otherwise acquired, or agreed to purchase or otherwise
acquire, any shares of capital stock of Stel or any of its Subsidiaries, or
declared, set aside or paid any dividend or otherwise made a distribution
(whether in cash, stock or property or any combination thereof) in respect of
their capital stock (other than dividends or other distributions payable solely
to Stel or a wholly owned Subsidiary of Stel);
(b) authorized for issuance, issued, sold, delivered, granted or issued any
options, warrants, calls, subscriptions or other rights for, or otherwise
agreed or committed to issue, sell or deliver any shares of any class of
capital stock of Stel or its Subsidiaries or any securities convertible into or
exchangeable or exercisable for shares of any class of capital stock of Stel or
its Subsidiaries, other than pursuant to and in accordance with the Stel Stock
Plans;
(c)(i) created or incurred any indebtedness for borrowed money exceeding
U.S. $100,000 in the aggregate, (ii) assumed, guaranteed, endorsed or otherwise
as an accommodation become responsible for the obligations of any other
individual, firm or corporation, made any loans or advances to any other
individual, firm or corporation exceeding U.S. $100,000 in the aggregate, (iii)
entered into any oral or written material agreement or any commitment or
transaction or incurred any liabilities material to Stel and its Subsidiaries
taken as a whole, or involving in excess of U.S. $100,000;
(d) instituted any change in accounting methods, principles or practices
other than as required by GAAP or the rules and regulations promulgated by the
SEC and disclosed in the notes to the Stel Financial Statements;
(e) revalued any assets, including without limitation, writing down the
value of inventory or writing off notes or accounts receivable in excess of
amounts previously reserved as reflected in the Stel Balance Sheet;
(f) suffered any damage, destruction or loss, whether covered by insurance
or not, except for such as would not, individually and in the aggregate exceed
$250,000;
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(g)(i) increased in any manner the compensation of any of its directors,
officers or, other than in the ordinary course of business and consistent with
past practice, non-officer employees, (ii) granted any severance or termination
pay to any Person; (iii) entered into any oral or written employment,
consulting, indemnification or severance agreement with any Person; (iv)
adopted, become obligated under, or amended any employee benefit plan, program
or arrangement; or (v) repriced any Stel Options;
(h) sold, transferred, leased, licensed, pledged, mortgaged, encumbered, or
otherwise disposed of, or agreed to sell, transfer, lease, license, pledge,
mortgage, encumber, or otherwise dispose of, any material properties,
(including intangibles, real, personal or mixed);
(i) amended its certificate of incorporation, bylaws, or any other charter
document, or effected or been a party to any merger, consolidation, share
exchange, business combination, recapitalization, reclassification of shares,
stock split, reverse stock split or similar transaction;
(j) made any capital expenditure in any calendar month which, when added to
all other capital expenditures made by or on behalf of Stel and its
Subsidiaries in such calendar month resulted in such capital expenditures
exceeding U.S. $250,000 in the aggregate;
(k) paid, discharged or satisfied any material claims, liabilities or
obligations (absolute, accrued, contingent or otherwise), other than the
payment, discharge or satisfaction of liabilities (including accounts payable)
in the ordinary course of business and consistent with past practice, or
collected, or accelerated the collection of, any amounts owed (including
accounts receivable) other than their collection in the ordinary course of
business;
(l) waived, released, assigned, settled or compromised any material claim or
litigation, or commenced a lawsuit other than for the routine collection of
bills;
(m) agreed or proposed to do any of the things described in the preceding
clauses (a) through (l) other than as expressly contemplated or provided for in
this Agreement.
3.11 Capital Stock of Subsidiaries. Stel is directly or indirectly the
record and beneficial owner of all of the outstanding shares of capital stock
or other equity interests of each of its Subsidiaries (other than qualifying
shares, the ownership of which is set forth in Schedule 3.11 of the Stel
Disclosure Statement). All of such shares have been duly authorized and are
validly issued, fully paid, nonassessable and free of preemptive rights with
respect thereto and are owned by Stel free and clear of any claim, lien or
encumbrance of any kind with respect thereto. There are no proxies or voting
agreements with respect to such shares, and there are not any existing options,
warrants, calls, subscriptions, or other rights or other agreements or
commitments obligating Stel or any Subsidiaries to issue, transfer or sell any
shares of capital stock of any Subsidiary or any other securities convertible
into, exercisable for, or evidencing the right to subscribe for any such
shares. Stel does not directly or indirectly own any interest in any Person
except the Subsidiaries.
3.12 Litigation.
(a) There is no private or governmental claim, action, suit (whether in law
or in equity), investigation or proceeding of any nature ("Action") pending or,
to the knowledge of Stel, threatened against Stel or any of its Subsidiaries,
or any of their respective officers and directors (in their capacities as
such), or involving any of their assets, before any court, governmental or
regulatory authority or body, or arbitration tribunal, except for those Actions
which, individually and in the aggregate, would not have a Stel Material
Adverse Effect. There is no Action pending or, to the knowledge of Stel,
threatened which in any manner challenges, seeks to, or is reasonably likely to
prevent, enjoin, alter or delay the transactions contemplated by this
Agreement, the Stock Option Agreement or the Technology Option Agreement.
(b) There is no outstanding judgment, order, writ, injunction or decree of
any court, governmental or regulatory authority or body, or arbitration
tribunal in a proceeding to which Stel, any Subsidiary of Stel, or any of their
assets is or was a party or by which Stel, any Subsidiary of Stel, or any of
their assets is bound.
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3.13 Insurance. Schedule 3.13 of the Stel Disclosure Statement lists all
insurance policies (including without limitation workers compensation insurance
policies) covering the business, properties or assets of Stel and its
Subsidiaries, the premiums and coverages of such policies, and all claims in
excess of U.S. $50,000 made against any such policies since April 1, 1996. All
such policies are in effect, and true and complete copies of all such policies
have been made available to Newbridge. Stel has not received notice of the
cancellation or threat of cancellation of any of such policy.
3.14 Contracts and Commitments.
(a) Except as filed as an exhibit to Stel's SEC Reports, neither Stel nor
its Subsidiaries is a party to or bound by any oral or written contract,
obligation or commitment of any type in any of the following categories:
(i) agreements or arrangements that contain severance pay,
understandings with respect to tax arrangements, understandings with
respect to expatriate benefits, or post-employment liabilities or
obligations;
(ii) agreements or plans under which benefits will be increased or
accelerated by the occurrence of any of the transactions contemplated by
this Agreement, or the Stock Option Agreement or under which the value of
the benefits will be calculated on the basis of any of the transactions
contemplated by this Agreement or the Stock Option Agreement;
(iii) agreements, contracts or commitments currently in force relating
to the disposition or acquisition of material assets other than in the
ordinary course of business, or relating to an ownership interest in any
corporation, partnership, joint venture or other business enterprise;
(iv) agreements, contracts or commitments (A) relating to the
acquisition, transfer, development, sharing, license (to or by Stel), or
use of any Stel IP Right (except for any contract pursuant to which any
Stel IP Right is licensed to Stel under any third party software license
generally available to the public), or (B) with respect to the
manufacturing, distribution or marketing of any products of Stel;
(v) agreements, contracts or commitments for the purchase of materials,
supplies or equipment which provide for purchase prices substantially
greater than those presently prevailing for such materials, supplies or
equipment, or which are with sole or single source suppliers, other than
those which if terminated would not constitute a Material Adverse Effect;
(vi) guarantees or other agreements, contracts or commitments under
which Stel or any of its Subsidiaries is absolutely or contingently liable
for (A) the performance of any other person, firm or corporation (other
than Stel or its Subsidiaries), or (B) the whole or any part of the
indebtedness or liabilities of any other person, firm or corporation (other
than Stel or its Subsidiaries);
(vii) powers of attorney authorizing the incurrence of a material
obligation on the part of Stel or its Subsidiaries;
(viii) agreements, contracts or commitments which limit or restrict (A)
where Stel or any of its Subsidiaries may conduct business, (B) the type or
lines of business (current or future) in which they may engage, or (C) any
acquisition of assets or stock (tangible or intangible) by Stel or any of
its Subsidiaries;
(ix) agreements, contracts or commitments containing any agreement with
respect to a change of control of Stel or any of its Subsidiaries;
(x) agreements, contracts or commitments for the borrowing or lending of
money, or the availability of credit (except credit extended by Stel or any
of its Subsidiaries to customers in the ordinary course of business and
consistent with past practice); and
(xi) any hedging, option, derivative or other similar transaction and
any foreign exchange position or contract for the exchange of currency;
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(b) Neither Stel nor any of its Subsidiaries, nor to Stel's knowledge any
other party to a Stel Contract (as defined below), has breached, violated or
defaulted under, or received notice that it has breached, violated or defaulted
under, (nor does there exist any condition under which, with the passage of
time or the giving of notice or both, could reasonably be expected to cause
such a breach, violation or default under), any material agreement, contract or
commitment to which Stel or any of its Subsidiaries is a party or by which any
of them or any of their properties or assets may be bound (any such agreement,
contract or commitment, a "Stel Contract"), other than any breaches, violations
or defaults which individually or in the aggregate would not have a Stel
Material Adverse Effect.
(c) Each Stel Contract is a valid, binding and enforceable obligation of
Stel and to Stel's knowledge, of the other party or parties thereto, in
accordance with its terms, and in full force and effect, except where the
failure to be valid, binding, enforceable and in full force and effect would
not have a Stel Material Adverse Effect and to the extent enforcement may be
limited by applicable bankruptcy, insolvency, moratorium or other laws
affecting the enforcement of creditors rights governing or by general
principles of equity.
(d) An accurate and complete copy of each Stel Contract has been made
available to Newbridge.
3.15 Labor Matters; Employment and Labor Contracts.
(a) None of Stel or any of its Subsidiaries is a party to any union contract
or other collective bargaining agreement, nor to the knowledge of Stel or any
of its Subsidiaries are there any activities or proceedings of any labor union
to organize any of its employees. Each of Stel and its Subsidiaries is in
compliance with all applicable (i) laws, regulations and agreements respecting
employment and employment practices, (ii) terms and conditions of employment,
and (iii) occupational health and safety requirements, except for those
failures to comply which, individually or in the aggregate, would not have a
Stel Material Adverse Effect.
(b) There is no labor strike, slowdown or stoppage pending (or any labor
strike or stoppage threatened) against Stel or any of its Subsidiaries. No
petition for certification has been filed and is pending before the National
Labor Relations Board with respect to any employees of Stel or any of its
Subsidiaries who are not currently organized. Neither Stel nor any of its
Subsidiaries has any obligations under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), with respect to any former
employees or qualifying beneficiaries thereunder, except for obligations that
would not have, individually or in the aggregate, a Stel Material Adverse
Effect. There are no controversies pending or, to the knowledge of Stel or any
of its Subsidiaries, threatened, between Stel or any of its Subsidiaries and
any of their respective employees, which controversies would have, individually
or in the aggregate, a Stel Material Adverse Effect.
(c) Neither Stel nor any of its Subsidiaries is a party to or bound by any
employment agreements or arrangements that are not terminable at will by Stel
or its Subsidiaries.
3.16 Compliance with Laws. Neither Stel nor any of its Subsidiaries has
violated or failed to comply with any statute, law, ordinance, rule or
regulation (including without limitation relating to the export or import of
goods or technology) of any foreign, federal, state or local government or any
other governmental department or agency, except where any such violations or
failures to comply would not, individually or in the aggregate, have a Stel
Material Adverse Effect. Stel and its Subsidiaries have all permits, licenses
and franchises from governmental agencies required to conduct their businesses
as now being conducted and as proposed to be conducted, except for those, the
absence of which, would not, individually or in the aggregate, have a Stel
Material Adverse Effect.
3.17 Government Contracts.
(a) For purposes of this Agreement:
(i) "Government Body" shall mean any: (A) nation, state, commonwealth,
province, territory, county, municipality, district or other jurisdiction
of any nature; (B) federal, state, local, municipal, foreign
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or other government; or (C) governmental or quasi-governmental authority of
any nature (including any governmental division, department, agency,
commission, instrumentality, official, organization, unit, body or entity
and any court or other tribunal).
(ii) "Government Bid" shall mean any quotation, bid or proposal
submitted to any Government Body or any proposed prime contractor or
higher-tier subcontractor of any Government Body.
(iii) "Government Contract" shall mean any prime contract, subcontract,
letter contract, purchase order or delivery order executed or submitted to
or on behalf of any Government Body or any prime contractor or higher-tier
subcontractor, or under which any Government Body or any such prime
contractor or subcontractor otherwise has or may acquire any right or
interest.
(iv) "Legal Requirement" shall mean any federal, state, local,
municipal, foreign or other law, statute, constitution, resolution,
ordinance, code, edict, decree, rule, regulation, ruling or requirement
issued, enacted, adopted, promulgated, implemented or otherwise put into
effect by or under the authority of any Government Body.
(b) Since April 1, 1996, except as set forth in Schedule 3.17 of the Stel
Disclosure Statement:
(i) neither Stel nor any Subsidiary has had any determination of
noncompliance, entered into any consent order or undertaken any internal
investigation relating directly or indirectly to any Government Contract or
Government Bid;
(ii) neither Stel nor any Subsidiary has failed to comply in all
material respects with all Legal Requirements with respect to all
Government Contracts and Government Bids;
(iii) neither Stel nor any Subsidiary has, in obtaining or performing
any Government Contract, violated any applicable procurement law or
regulation or other material Legal Requirement;
(iv) all facts set forth in or acknowledged by Stel or any Subsidiary in
any certification, representation or disclosure statement submitted by Stel
or any Subsidiary with respect to any Government Contract or Government Bid
were current, accurate and complete as of the date of submission;
(v) neither Stel nor any Subsidiary has, nor to the best of Stel's
knowledge, have any of their respective employees been debarred or
suspended from doing business with any Government Body, nor have any
proceedings been initiated against Stel, any Subsidiary or, to the best of
Stel's knowledge, any employee of Stel or any Subsidiary that might result
in such debarment or suspension;
(vi) no negative determination of responsibility has been issued against
Stel or any Subsidiary in connection with any Government Contract or
Government Bid;
(vii) no direct or indirect costs incurred by Stel or any Subsidiary
have been questioned or disallowed as a result of a finding or
determination of any kind by any Government Body;
(viii) no Government Body, or prime contractor or higher-tier
subcontractor of any Government Body, has withheld or set off, or
threatened to withhold or set off, any amount due to Stel or any Subsidiary
under any Government Contract;
(ix) there have been no material irregularities, misstatements or
omissions relating to any Government Contract or Government Bid that have
led to or have a reasonable prospect of leading to (A) any administrative,
civil, criminal or other investigation, legal proceeding or indictment
involving Stel, any Subsidiary or any of their employees, (B) the
questioning or disallowance of any costs submitted for payment by Stel or
any Subsidiary, (C) the recoupment of any payments previously made to Stel
or any Subsidiary, (D) a finding or claim of fraud, defective pricing,
mischarging or improper payments on the part of Stel or any Subsidiary, or
(E) the assessment of any penalties or damages of any kind against Stel or
any Subsidiary;
(x) there are not nor have there been any (A) outstanding claims against
Stel or any Subsidiary by, or dispute involving Stel or any Subsidiary
with, any prime contractor, subcontractor, vendor or other Person
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arising under or relating to the award or performance of any Government
Contract, (B) facts known by Stel upon which any such claim may be based or
which may give rise to any such dispute, (C) final decisions of any
Government Body against Stel or any Subsidiary;
(xi) neither Stel nor any Subsidiary is undergoing, or has undergone an
audit, and Stel has no knowledge of any impending audit, arising under or
relating to any Government Contract (other than normal routine audits
conducted in the ordinary course of business);
(xii) neither Stel nor any Subsidiary has entered into any financing
arrangement or assignment of proceeds with respect to the performance of
any Government Contract;
(xiii) no payment has been made by Stel or any Subsidiary or by any
Person acting on Stel's or any Subsidiary's behalf to any Person (other
than to any bona fide employee or agent of Stel or any Subsidiary) which is
or was contingent upon the award of any Government Contract or which would
otherwise be in violation of any applicable procurement law or regulation
or any other Legal Requirement;
(xiv) Stel's and each of its Subsidiaries cost accounting system is in
material compliance with applicable regulations and other applicable Legal
Requirements, and has not has been determined by any Government Body not to
be in material compliance with any Legal Requirement;
(xv) to the best of Stel's knowledge, Stel and its Subsidiaries have
complied with all applicable regulations and other Legal Requirements and
with all applicable contractual requirements relating to the placement of
legends or restrictive markings on technical data, computer software and
other intellectual property;
(xvi) neither Stel nor any Subsidiary has made any disclosure to any
Government Body pursuant to any formal agency disclosure program;
(xvii) Stel and its Subsidiaries have reached agreement with the
cognizant government representatives approving and closing all indirect
costs charged to Government Contracts;
(xviii) the responsible government representatives have agreed with Stel
and each Subsidiary on the forward pricing rates that Stel or such
Subsidiary is charging on cost-type Government Contracts and including in
Government Bids; and
(xix) with the exception of potential novation or change-of-name
agreement that may be required by a Government Body under applicable Legal
Requirements, neither Stel nor any Subsidiary is or will be required to
make any filing with or give any notice to, or to obtain any consent from,
any Government Body under or in connection with any Government Contract or
Government Bid as a result of or by virtue of (A) the execution, delivery
or performance of this Agreement or any of the other agreements referred to
in this Agreement, or (B) the consummation of the transactions contemplated
by this Agreement, the Stock Option Agreement and the Technology Option
Agreement.
3.18 Intellectual Property Rights.
(a) Stel and its Subsidiaries own or have the right to use all intellectual
property used in or necessary to conduct their respective businesses (such
intellectual property and the rights thereto are collectively referred to
herein as the "Stel IP Rights").
(b) Schedule 3.18 of Stel Disclosure Statement sets forth, with respect to
all Stel IP Rights registered with any Government Body or for which an
application has been filed with any Government Body, (i) a brief description of
such Stel IP Rights, and (ii) the names of the jurisdictions covered by the
applicable registration or application. Schedule 3.18 of Stel Disclosure
Statement identifies and provides a brief description of, and identifies any
ongoing royalty or payment obligations with respect to, each Stel IP Right that
is licensed or otherwise made available to Stel by any Person (except for any
Stel IP Right that is licensed to Stel under any third party software license
generally available to the public), and identifies the agreement under which
such Stel IP Right is being licensed or otherwise made available to Stel. Stel
has good, valid and marketable title to
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all of Stel IP Rights (except for licensed rights), free and clear of all
encumbrances, except (i) as set forth in Schedule 3.18 of the Stel Disclosure
Statement, (ii) for any lien for current taxes not yet due and payable, and
(iii) for minor liens that have arisen in the ordinary course of business and
that do not (individually or in the aggregate) materially detract from the
value of the rights subject thereto or materially impair the operations of
Stel. To Stel's knowledge, Stel has a valid right to use, license and otherwise
exploit all Stel IP Rights. Except as set forth in Schedule 3.18 of Stel
Disclosure Statement, Stel has not developed jointly or does not jointly own or
have joint rights with any other Person any Stel IP Right that is material to
the business of Stel. Except as set forth in Schedule 3.18 of the Stel
Disclosure Statement, there is no agreement or arrangement pursuant to which
any Person has any right (whether or not currently exercisable) to use, license
or otherwise exploit any Stel IP Rights.
(c) Stel has taken all commercially reasonable measures and precautions to
protect and maintain the confidentiality and secrecy of all Stel IP Rights
(except Stel IP Rights whose value would be unimpaired by public disclosure)
and otherwise to maintain and protect the value of all Stel IP Rights.
(d) To the knowledge of Stel, Stel is not misappropriating or making any
unlawful use of, and Stel has not at any time misappropriated or made any
unlawful use, of, or received any notice or other communication (in writing or
otherwise) of any actual, alleged, possible or potential infringement,
misappropriation or unlawful use of, any intellectual property rights owned or
used by any other Person. Stel is not aware that any Person is
misappropriating, or making unlawful use of any of the Stel IP Rights.
(e) Stel has not licensed any of the Stel IP Rights to any Person on an
exclusive basis.
(f) The execution, delivery and performance of this Agreement, the Stock
Option Agreement or the Technology Option Agreement and the consummation of the
transactions contemplated hereby will not constitute a material breach of any
instrument or agreement governing any Stel IP Rights, and will not (i) cause
the modification of any terms of any licenses or agreements relating to any
Stel IP Rights, (ii) cause the forfeiture or termination of any Stel IP Rights,
(iii) give rise to a right of forfeiture or termination of any Stel IP Rights
or (iv) materially impair the right of Stel, the Surviving Corporation or
Newbridge to use, sell or license any Stel IP Rights or portion thereof.
(g) Neither the manufacture, marketing, license, sale nor intended use of
any product or technology currently licensed or sold or under development by
Stel or any of its Subsidiaries (i) violates in any material respect any
license or agreement between Stel or any of its Subsidiaries and any third
party or (ii) infringes in any material respect any patents or other
intellectual property rights of any other party; and there is no pending or
threatened claim or litigation contesting the validity, ownership or right to
use, sell, license or dispose of any Stel IP Rights, or asserting that any Stel
IP Rights or the proposed use, sale, license or disposition thereof, or the
manufacture, use or sale of any Stel products, conflicts or will conflict with
the rights of any other party.
(h) Stel has provided to Newbridge a true and complete copy of its standard
form of employee confidentiality agreement and taken all commercially
reasonably necessary steps to ensure that all employees have executed such an
agreement. All consultants or third parties with access to proprietary
information of Stel have executed appropriate non-disclosure agreements which
adequately protect the Stel IP Rights.
(i) Neither Stel nor any of its Subsidiaries is aware or has reason to
believe that any of its employees or consultants is obligated under any
contract, covenant or other agreement or commitment of any nature, or subject
to any judgment, decree or order of any court or administrative agency, that
would interfere with the use of such employees or consultants best efforts to
promote the interests of Stel and its Subsidiaries or that would conflict with
the business of Stel as presently conducted or proposed to be conducted.
Neither Stel nor any of its Subsidiaries has entered into any agreement to
indemnify any other person, including but not limited to any employee or
consultant of Stel or any of its Subsidiaries, against any charge of
infringement, misappropriation or misuse of any intellectual property, other
than indemnification provisions contained in purchase orders or customer
agreements arising in the ordinary course of business. All current and former
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employees of Stel or any of its Subsidiaries, and all current and former
consultants of Stel or any of its Subsidiaries who have provided services
related to Stel IP Rights, have signed valid and enforceable written
assignments to Stel or its Subsidiaries of any and all rights or claims in any
intellectual property that any such employee or consultant has or may have by
reason of any contribution, participation or other role in the development,
conception, creation, reduction to practice or authorship of any invention,
innovation, development or work of authorship or any other intellectual
property that is used in the business of Stel, and Stel and its Subsidiaries
possess signed copies of all such written assignments by such employees and
consultants.
3.19 Accounts Receivable; Inventories.
(a) Except as set forth in the Stel Balance Sheet, (i) each account
receivable of Stel and its Subsidiaries (the "Accounts Receivable") represents
a sale made in the ordinary course of business and which arose pursuant to an
enforceable contract for a bona fide sale of goods or for services performed,
and Stel and its Subsidiaries have performed all of their obligations to
produce the goods or perform the services to which such Accounts Receivable
relate, other than amounts recorded as deferred revenue, and (ii) no Account
Receivable is subject to any claim for reduction, counterclaim, set-off,
recoupment or other claim for credit, allowances or adjustment by the obligor
thereof.
(b) Subject to amounts reserved therefor on the Stel Balance Sheet, the
values at which all inventories are carried on the Stel Balance Sheet reflect
the historical inventory valuation policy of Stel and its Subsidiaries set
forth in the Stel SEC Reports. Stel and its Subsidiaries have good and
marketable title to the inventories free and clear of all liens and
encumbrances. The inventories do not consist of, in any material amount, items
that are obsolete, damaged or slow-moving beyond amounts reserved on the Stel
Balance Sheet. The inventories do not consist of any items held on consignment.
Neither Stel nor any of its Subsidiaries is under any obligation or liability
with respect to accepting returns of items of inventory or merchandise in the
possession of their customers other than in the ordinary course of business and
consistent with past practice. No clearance or extraordinary sale of the
inventories has been conducted since the Stel Reference Date. Subject to the
amounts reserved therefor on the Stel Balance Sheet, the inventories are in
good and merchantable condition in all material respects, are suitable and
usable for the purposes for which they are intended and are in a condition such
that they can be sold in the ordinary course of business consistent with past
practice.
3.20 Order Backlog. Schedule 3.20 of the Stel Disclosure Statement contains
a list of the aggregate orders for the products of Stel and its Subsidiaries as
of the Stel Reference Date and as of April 30, 1999, and identifies each
customer included in the backlog and the range of products and prices by
customer constituting the backlog. Except as set forth on Schedule 3.20, all
such orders have been included in backlog on a basis consistent with Stel's
historical practices and Stel is not aware of any customer who has placed an
order included in such backlog having refused or who intends to refuse delivery
of any ordered products in accordance with the terms of such orders.
3.21 Product and Service Warranties. The standard written forms of product
and service warranties and guarantees utilized by Stel and its Subsidiaries as
of the date of this Agreement have been provided to Newbridge. Except as set
forth on Schedule 3.21 of the Stel Disclosure Statement, during a period of
three years prior to the date of this Agreement, neither Stel nor any
Subsidiary or any of their affiliates have made any other written material
warranties (which remain in effect) with regard to products and/or services
supplied by Stel or its Subsidiaries.
3.22 Taxes.
(a) For the purposes of this Agreement, a "Tax" or, collectively, "Taxes",
means (i) any and all federal, state, local, foreign and other taxes,
assessments and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
gains, franchise, capital stock, severance, withholding, payroll, recapture,
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employment, excise, unemployment insurance, social security, business license,
occupation, business organization, stamp, environmental and property taxes,
together with all interest, penalties and additions imposed with respect to
such amounts; (ii) any liability for the payment of any amounts described in
clause (i) as a result of being a successor to or transferee of any individual
or entity or a member of an affiliated, consolidated or unitary group for any
period (including pursuant to Treas. Reg. (S)1.1502-6 or comparable provisions
of state, local or foreign tax law); and (iii) any liability for the payment of
amounts described in clause (i) or clause (ii) as a result of any express or
implied obligation to indemnify any Person or as a result of any obligations
under agreements or arrangements with any Person.
(b)(i) Stel and each of its Subsidiaries have filed all material returns,
estimates, information statements and reports relating to Taxes ("Returns")
required to be filed by them prior to Closing, and such Returns are true and
correct and completed in accordance with applicable law. Schedule 3.22 of the
Stel Disclosure Statement lists all jurisdictions in which Returns are required
to be filed by Stel and its Subsidiaries (or have been required since April 1,
1996 of the Stel) and the types of Returns required to be filed in each such
jurisdiction.
(ii) Stel and each of its Subsidiaries have (A) timely paid all Taxes
due and payable by them as shown on the Returns, (B) timely paid all Taxes
for which a notice of assessment or collection has been received (other
than amounts properly accrued on the Stel Financial Statements, described
in paragraph (iii), below, and being contested in good faith by appropriate
proceedings), (C) accrued on the Stel Financial Statements all Taxes
attributable to periods covered by such statements that are not yet due and
payable, and (D) properly reserved, in accordance with GAAP, for all Taxes
not yet due but which are expected to become due and payable in the future.
(iii) Neither the Internal Revenue Service (the "IRS") nor any other
taxing authority has asserted any claim for Taxes in writing, or to the
actual knowledge of the executive officers of Stel, is threatening to
assert any claims for Taxes. No Tax deficiency notice or notice of
assessment of collection has been received in writing by Stel except as
described on Schedule 3.22 of the Stel Disclosure Statement. No audit or,
to Stel's knowledge, other examination of any Return of Stel or any of its
Subsidiaries is presently in progress, nor have Stel or any of its
Subsidiaries been notified in writing of any request for such an audit or
other examination. No power of attorney to deal with Tax matters or waiver
of any statute of limitations with respect to Taxes has been granted by
Stel or its Subsidiaries. Except as described on Schedule 3.22 of the Stel
Disclosure Statement the relevant statute of limitations for the assessment
or proposal of a deficiency for Taxes has expired for all years before
fiscal year 1995. None of Stel or its Subsidiaries has availed itself of
any Tax Amnesty, tax holiday or similar relief in any jurisdiction.
(iv) Stel and its Subsidiaries have withheld or collected and paid over
to the appropriate governmental authorities (or are properly holding for
such payment) all Taxes required by law to be withheld or collected with
respect to their operations, including withholdings on payments to Stel or
its Subsidiaries for sales and use taxes or payments by Stel or its
Subsidiaries to employees or independent contractors on account of federal,
state, and foreign income Taxes, the Federal Insurance Contribution Act,
and the Federal Unemployment Tax Act.
(v) There are no liens for Taxes upon the assets of Stel or any of its
Subsidiaries (other than liens for property Taxes that are not yet due or
delinquent).
(vi) There is no contract, agreement, plan or arrangement, including but
not limited to the provisions of this Agreement, covering any employee or
former employee of Stel or any of its Subsidiaries that, individually or
collectively, could give rise to the payment of any amount that would not
be deductible pursuant to Sections 280G, 404 or 162 of the Internal Revenue
Code of 1986, as amended (the "Code").
(vii) None of Stel nor any of its Subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as defined in Section 341(f)(4) of the Code) owned by Stel.
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(viii) Neither Stel nor any of its Subsidiaries is or has been a member
of an affiliated group of corporations filing a consolidated federal income
tax return (or a group of corporations filing a consolidated, combined or
unitary income tax return under comparable provisions of state, local or
foreign tax law) other than a group the common parent of which is or was
Stel.
(ix) Neither Stel nor any of its Subsidiaries has any obligation under
any agreement or arrangement with any other Person with respect to Taxes of
such other Person (including pursuant to Treas. Reg. (S)1.1502-6 or
comparable provisions of state, local or foreign tax law) and including any
liability for Taxes of any predecessor entity.
(x) Stel has made available to Newbridge true copies of all Returns that
Stel or its Subsidiaries have filed since April 1, 1996 and true copies of
all correspondence and other written submissions to or communications with
any Tax authorities.
(xi) None of the assets of Stel is "tax-exempt use property" within the
meaning of Section 168(h) of the Code.
(xii) Stel has not agreed to make, nor is it required to make, any
adjustment under Section 481 of the Code by reason of a change in
accounting method or otherwise.
(xiii) Except as set forth in Schedule 3.22 of the Disclosure Statement,
Stel is not and has not been a party to any joint venture, partnership, or
other arrangement or contract that could be treated as a partnership for
federal income tax purposes.
(xiv) None of Stel nor any of its Subsidiaries has indemnified any
person against Tax in connection with any arrangement for the leasing of
real or personal property, except for indemnity with respect to acts of
Stel or its Subsidiaries.
(xv) None of Stel and its Subsidiaries has or has had operations or
assets outside of the United States taxable as a branch by the United
States or as a permanent establishment by any foreign country.
(xvi) None of Stel and its Subsidiaries is aware of any reason why the
Merger will fail to qualify as a reorganization under the provisions of
Section 368(a) of the Code.
3.23 Employee Benefit Plans; ERISA.
(a) Except as set forth on Schedule 3.23 of the Stel Disclosure Statement,
there are no employee pension benefit plans as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") ("Pension
Plans"), welfare benefit plans as defined in Section 3(1) of ERISA ("Welfare
Plans"), or stock bonus, stock option, restricted stock, stock appreciation
right, stock purchase, bonus, incentive, deferred compensation, severance,
holiday, or vacation plans, or any other employee benefit plan, program, policy
or arrangement covering employees (or former employees) employed in the United
States that either is maintained or contributed to by Stel or any of its
Subsidiaries or any of their ERISA Affiliates (as hereinafter defined) or to
which Stel or any of its Subsidiaries or any of their ERISA Affiliates is
obligated to make payments or otherwise may have any liability (collectively,
the "Employee Benefit Plans") with respect to employees or former employees of
Stel, its Subsidiaries, or any of their ERISA Affiliates. For purposes of this
Agreement, "ERISA Affiliate" shall mean any person (as defined in Section 3(9)
of ERISA) that is or has been a member of any group of persons described in
Section 414(b), (c), (m) or (o) of the Code, including without limitation Stel
or a Subsidiary.
(b) Stel and each of its Subsidiaries, and each of the Pension Plans and
Welfare Plans, are in compliance with the applicable provisions of ERISA, the
Code and other applicable laws, except where the failure to comply would not,
individually or in the aggregate, have a Stel Material Adverse Effect.
(c) All contributions to, and payments from, the Pension Plans which are
required to have been made in accordance with the Pension Plans have been
timely made, except where the failure to make such contributions or payments on
a timely basis would not, individually or in the aggregate, have a Stel
Material Adverse Effect.
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(d) All of Stel's Pension Plans intended to qualify under Section 401 of the
Code have been determined by the Internal Revenue Service ("IRS") to be so
qualified, and no event has occurred and no condition exists with respect to
the form or operation of such Pension Plans which would cause the loss of such
qualification or exemption or the imposition of any material liability, penalty
or tax under ERISA or the Code.
(e) To the best of Stel's knowledge, there are no (i) investigations pending
by any Government Entity involving the Pension Plans or Welfare Plans, nor (ii)
pending or threatened claims (other than routine claims for benefits), suits or
proceedings against any Pension or Welfare Plan, against the assets of any of
the trusts under any Pension or Welfare Plan or against any fiduciary of any
Pension or Welfare Plan with respect to the operation of such plan or asserting
any rights or claims to benefits under any Pension Plan or against the assets
of any trust under such plan, except for those which would not, individually or
in the aggregate, give rise to any liability which would have a Stel Material
Adverse Effect. To the best of Stel's knowledge, there are no facts which would
give rise to any liability under this Section 3.24(e) except for those which
would not, individually or in the aggregate, have a Stel Material Adverse
Effect in the event of any such investigation, claim, suit or proceeding.
(f) None of Stel, any of its Subsidiaries or any employee of the foregoing,
nor any trustee, administrator, other fiduciary or any other party in interest
or disqualified person with respect to the Pension Plans or Welfare Plans, has
engaged in a prohibited transaction (as such term is defined in Section 4975 of
the Code or Section 406 of ERISA), other than such transactions that would not,
individually or in the aggregate, have a Stel Material Adverse Effect.
(g) None of Stel, any of its Subsidiaries, or any of their ERISA Affiliates
maintain or contribute to, nor have they ever maintained or contributed to, any
pension plan subject to Title IV of ERISA or Section 412 of the Code or Section
302 of ERISA.
(h) Neither Stel nor any Subsidiary of Stel nor any ERISA Affiliate has
incurred any material liability under Title IV of ERISA that has not been
satisfied in full.
(i) Neither Stel, any of its Subsidiaries nor any of their ERISA Affiliates
has any material liability (including any contingent liability under Section
4204 of ERISA) with respect to any multiemployer plan, within the meaning of
Section 3(37) of ERISA, covering employees (or former employees) employed in
the United States.
(j) With respect to each of the Employee Benefit Plans, true, correct and
complete copies of the following documents have been made available to
Newbridge: (i) the plan document and any related trust agreement, including
amendments thereto, (ii) any current summary plan descriptions and other
material communications to participants relating to the Employee Benefit Plans,
(iii) the three most recent Forms 5500, if applicable, and (iv) the most recent
IRS determination letter, if applicable.
(k) None of the Welfare Plans maintained by Stel or any of its Subsidiaries
provides for continuing benefits or coverage for any participant or any
beneficiary of a participant following termination of employment, except as may
be required under COBRA, or except at the expense of the participant or the
participant's beneficiary. Stel and each of its Subsidiaries which maintain a
"group health plan" within the meaning of Section 5000(b)(1) of the Code have
complied with the notice and continuation requirements of Section 4980B of the
Code, COBRA, Part 6 of Subtitle B of Title I of ERISA and the regulations
thereunder, except where the failure to comply would not, individually or in
the aggregate, have a Stel Material Adverse Effect.
(l) No liability under any Pension Plan or Welfare Plan has been funded nor
has any such obligation been satisfied with the purchase of a contract from an
insurance company as to which Stel or any of its Subsidiaries has received
notice that such insurance company is in rehabilitation or a comparable
proceeding.
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(m) The consummation of the transactions contemplated by this Agreement will
not result in an increase in the amount of compensation or benefits or
accelerate the vesting or timing of payment of any benefits or compensation
payable to or in respect of any employee of Stel or any of its Subsidiaries
under any Employee Benefit Plan.
(n) Schedule 3.23(n) of the Stel Disclosure Statement lists each Foreign
Plan (as hereinafter defined). Stel and each of its Subsidiaries and each of
the Foreign Plans are in compliance with applicable laws, and all required
contributions have been made to the Foreign Plans, except where the failure to
comply or make contributions would not, individually or in the aggregate, have
a Stel Material Adverse Effect. Each of the Foreign Plans that is a funded
defined benefit plan has a fair market value of plan assets that is greater
than the plans liabilities, as determined in accordance with applicable laws.
For purposes hereof, the term "Foreign Plan" shall mean any plan, program,
policy, arrangement or agreement maintained or contributed to by, or entered
into with, Stel or any Subsidiary with respect to employees (or former
employees) employed outside the United States to the extent the benefits
provided thereunder are not mandated by the laws of the applicable foreign
jurisdiction.
(o) To the best of Stel's knowledge, there are no claims, suits or facts
concerning the operation or benefits of any Employee Benefit Plan other than a
Pension or Welfare Plan except for those which would not, individually or in
the aggregate, give rise to any liability which would have a Stel Material
Adverse Effect.
(p) Each of the Employee Benefit Plans and the Foreign Plans can be
terminated by Stel within a period of 30 days following the Effective Time in
accordance with the terms of such Plan (and the provisions of ERISA and the
Code), without any additional contribution to such Employee Benefit Plan or
Foreign Plan or the payment of any additional compensation or amount or the
additional vesting or acceleration of any vesting provided under the Employee
Benefit Plan or Foreign Plan.
3.24 Enviromental Matters.
(a) For purposes of this Agreement:
(i) "Contractor" shall mean any person or entity, including but not
limited to partners, licensors, and licensees, with which Stel formerly or
presently has any agreement or arrangement (whether oral or written) under
which such person or entity has or had physical possession of, and was or
is obligated to develop, test, process, manufacture or produce any product
or substance on behalf of Stel.
(ii) "Environment" shall mean any land including, without limitation,
surface land and sub-surface strata, seabed or river bed and any water
(including, without limitation, coastal and inland waters, surface waters
and ground waters and water in drains and sewers) and air (including,
without limitation, air within buildings) and other natural or manmade
structures above or below ground.
(iii) "Environmental Law" means any law or regulation, now or hereafter
in effect and as amended, and any judicial or administrative interpretation
thereof, in each case relating to the Environment or harm to or the
protection of human health or animals or plants, including, without
limitation, laws relating to public and workers health and safety,
emissions, discharges or releases of chemicals or any other pollutants or
contaminants or industrial, radioactive, dangerous, toxic or hazardous
substances or wastes (whether in solid or liquid form or in the form of a
gas or vapor and including noise and genetically modified organisms) into
the Environment or otherwise relating to the manufacture, processing, use,
treatment, storage, distribution, disposal transport or handling of
substances or wastes. Environmental Laws include, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended 42 USC 9601 et seq. ("CERCLA"), the Resource Conservation and
Recovery Act 42 USC, 6901 et seq., the Hazardous Materials Transportation
Act 49 USC, 6901 et seq., the Clean Water Act 33, 1251 et seq., the Toxic
Substances Control Act 15 USC, 2601 et seq., the Clean Air Act 42 USC, 7401
et seq., the Safe Drinking Water Act 42 USC, 300f et seq., the Atomic
Energy Act 42 USC, 2201 et seq., the Federal Food Drug and Cosmetic Act 21
USC, 136 et seq., and the Federal Food Drug and Cosmetic Act 21 USC, 301 et
seq., and equivalent state and local ordinances and statutes, and statutes
and ordinances in countries other than the United States of America.
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(iv) "Environmental Permit" shall mean any permit, license, consent,
approval, certificate, qualification, specification, registration and other
authorization, and the filing of all notifications, reports and
assessments, required by any federal, state, local or foreign government or
regulatory entity pursuant to any Environmental Law.
(v) "Hazardous Material" shall mean any pollutant, contaminant, or
hazardous, toxic, medical, biohazardous, infectious or dangerous waste,
substance, gas, constituent or material, defined or regulated as such in,
or for purposes of, any Environmental Law, including, without limitation,
any asbestos, any petroleum, oil (including crude oil or any fraction
thereof), any radioactive substance, any polychlorinated biphenyls, any
toxin, chemical, virus, infectious disease or disease causing agent, and
any other substance that can give rise to liability under any Environmental
Law.
(b) Except for such cases that, individually or in the aggregate, have not
and would not reasonably be expected to have a Stel Material Adverse Effect:
(i) Each of Stel and its Subsidiaries possesses all Environmental
Permits required under applicable Environmental Laws to conduct its current
business and to use and occupy the Real Property for its current business.
All Environmental Permits are in full force and effect and Stel and each of
its Subsidiaries are, and to Stels knowledge have, at all times been in
compliance with the terms and conditions of such Environmental Permits.
(ii) There are no facts or circumstances indicating that any
Environmental Permits possessed by Stel or any of its Subsidiaries would or
might be revoked, suspended, canceled or not renewed, and all appropriate
necessary action in connection with the renewal or extension of any
Environmental Permits possessed by Stel or any of its Subsidiaries relating
to their current business and the Real Property has been taken. There are
no facts or circumstances indicating that any Environmental Permits
possessed by Stel or any of its Subsidiaries would or might be revoked,
suspended, canceled or not renewed, and all appropriate necessary action in
connection with the renewal or extension of any Environmental Permits
possessed by Stel or any of its Subsidiaries relating to their current
business and the Real Property has been taken.
(iii) The execution and delivery of this Agreement and the Stock Option
Agreement and the consummation by Stel of the Merger and other transactions
contemplated hereby (and thereby) and the exercise by Newbridge and the
Surviving Corporation of rights to own and operate the business of Stel and
its Subsidiaries and use and occupy the Real Property and carry on its
business substantially as presently conducted will not affect the validity
or require the transfer of any Environmental Permits held by Stel or any of
its Subsidiaries and will not require any notification, disclosure,
registration, reporting, filing, investigation or remediation under any
Environmental Law.
(iv) Stel and each of its Subsidiaries and, to the knowledge of Stel,
all previous owners, lessees and occupants of the real property now or
previously owned, leased or occupied by Stel and its Subsidiaries (the
"Real Property"), are in compliance with, and within the period of all
applicable statutes of limitation, have complied with all applicable
Environmental Laws and have not received notice of any liability under any
Environmental Law; and neither Stel or any of its Subsidiaries nor any
portion of the Real Property is in violation of any Environmental Law.
(v) There is no civil, criminal or administrative action, suit, demand,
claim, complaint, hearing, notice of violation, notice or demand letter,
proceeding or request for information pending or any liability (whether
actual or contingent) to make good, repair, reinstate, sample, investigate
or clean up any of the Real Property, including but not limited to ground
water beneath such Real Property. There is no act, omission, event or
circumstance giving rise or likely to give rise in the future to any such
action, suit, demand, claim, complaint, hearing, notice of violation,
notice or demand letter, proceeding, or request or any such liability or
other liabilities (A) against Stel or any of its Subsidiaries, or (B)
against any person or entity, including but not limited to any Contractor,
in connection with which liability could reasonably be imputed or
attributed by law or contract to Stel or any of its Subsidiaries.
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(vi) No property or facility presently or formerly owned operated or
leased by Stel or any of its present or former Subsidiaries or by any
respective predecessor in interest is listed or proposed for listing, nor
are there are any facts or circumstances which would or might give rise to
such an entry on the National Priorities List or the CERCLA Information
System ("CERCLIS"), both under the CERCLA or on any comparable list
established under any state or local Environmental Law of a country other
than the United States of America, nor has Stel or any of its Subsidiaries
received any notification of potential or actual liability or any request
for information under CERCLA or any comparable foreign, state or local law.
(vii) There has not been any disposal, spill, discharge, or release of
any Hazardous Material generated, used, owned, stored, or controlled by
Stel, any of its Subsidiaries, or respective predecessors in interest, on,
at, or under any property presently or formerly owned, leased, or operated
by Stel, its Subsidiaries, any predecessor in interest, or any Contractor,
and there are no Hazardous Materials located in, at, on, or under, or in
the vicinity of, any such facility or property, or at any other location,
in either case that could reasonably be expected to require investigation,
removal, remedial, or corrective action by Stel or any of its Subsidiaries
or that would reasonably likely result in liability of, or costs in excess
of, U.S. $250,000, individually or in the aggregate, to Stel or any of its
Subsidiaries under any Environmental Law.
(viii)(A) Other than cleaning and office supplies normally used in the
operation of an office, Hazardous Materials have not been generated, used,
treated, handled or stored on, or transported to or from, or released on
any Real Property or, any property adjoining any Real Property; (B) Stel
and its Subsidiaries have disposed of all wastes, including those wastes
containing Hazardous Materials, in compliance with all applicable
Environmental Law and Environmental Permits; and (C) neither Stel nor any
of its Subsidiaries has transported or arranged for the transportation of
any Hazardous materials to any location that is listed or proposed for
listing on the National Priorities List under CERCLA or on the CERCLIS or
any analogous state or country list or which is the subject of any
environmental claim.
(ix) There has not been any underground or aboveground storage tank or
other underground storage receptacle or related piping, or any impoundment
or other disposal area containing Hazardous Materials located on any Real
Property owned, leased or operated by Stel, any of its Subsidiaries, or
respective predecessors in interest during the period of such ownership,
lease or operation, and no asbestos or polychlorinated biphenyls have been
used or disposed of, or have been located at, on, or under any such
facility or property during the period of such ownership lease or
operation;
(x) Stel and its Subsidiaries have taken all actions necessary under
applicable requirements of Environmental Law to register any products or
materials required to be registered by Stel or any of its Subsidiaries (or
any of their respective agents) thereunder.
(c) After a reasonable investigation made by Stel, Stel has made available
to Newbridge all records and files, including, but not limited to, all
assessments, reports, studies, audits, analyses, tests and data in possession
of Stel and its Subsidiaries concerning the existence of Hazardous Materials at
facilities or properties currently or formerly owned, operated, or leased by
Stel or any present or former Subsidiary or predecessor in interest, or
concerning compliance by Stel and its Subsidiaries with, or liability under,
any Environmental Law.
3.25 [Reserved].
3.26 [Reserved].
3.27 Finders or Brokers. Except for Xxxxxx, Xxxxx Xxxxx, Incorporated, whose
fees have been disclosed to Newbridge, neither Stel nor any of its Subsidiaries
has employed any investment banker, broker, finder or intermediary in
connection with the transactions contemplated hereby who might be entitled to a
fee or any commission the receipt of which is conditioned upon consummation of
the Merger.
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3.28 Proxy Statement. The information supplied by Stel for inclusion in the
Proxy Statement to be sent to the stockholders of Stel in connection with the
Stel Special Meeting, at the date the Proxy Statement is first mailed to
stockholders, at the time of the Stel Special Meeting and at the Effective Time
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. If at any time prior to the Effective Time any event with
respect to Stel or any of its Subsidiaries shall occur which is required to be
described in the Proxy Statement, such event shall be so described, and an
amendment or supplement shall be promptly filed with the SEC and, as required
by law, disseminated to the stockholders of Stel.
3.29 Title to Property. Stel and its Subsidiaries have good and valid title
to all of their respective properties, interests in properties and assets, real
and personal, reflected in the Stel Balance Sheet or acquired after the
Reference Date, and have valid leasehold interests in all leased properties and
assets, in each case free and clear of all mortgages, liens, pledges, charges
or encumbrances of any kind or character, except (i) liens for current taxes
not yet due and payable, (ii) such imperfections of title, liens and easements
as do not and will not materially detract from or interfere with the use of the
properties subject thereto or affected thereby, or otherwise materially impair
business operations involving such properties, (iii) liens securing debt
reflected on the Stel Balance Sheet, (iv) liens recorded pursuant to any
Environmental Law or (v) liens which would not, individually or in the
aggregate, have a Stel Material Adverse Effect. Schedule 3.29 of the Stel
Disclosure Statement identifies each parcel of real property owned or leased by
Stel or any of its Subsidiaries.
3.30 Year 2000 Compliance. All of Stel's products (including products sold
to date, products currently being sold or products under development), both
individually and when operating in conjunction with all other systems or
products with which they are designed to interface, and all computer software
and hardware (including microcode, firmware, system and application programs,
files, databases, computer services, and microcontrollers, including those
embedded in computer and noncomputer equipment) contained in Stel's products
(including products sold to date, products currently being sold or products
under development) are Year 2000 Compliant. "Year 2000 Compliant" means that
such hardware or software will: (a) process date data from at least the years
1900 through 2101 without error or interruption; (b) maintain functionality
with respect to the introduction, processing, or output of records containing
dates falling on or after January 1, 2000; and (c) be interoperable with other
software or hardware which may deliver records to, receive records from, or
interact with such hardware or software in the course of conducting the
business of Stel, including processing data and manufacturing the products of
Stel. All of Stel's internal computer systems are, both individually and in
conjunction with all other systems with which they interface, Year 2000
Compliant. Stel has made inquiries of its manufacturers, suppliers and
customers and, to its knowledge, Stel is not relying on any third party whose
systems are not Year 2000 Compliant. Stel does not have any material expenses
or other material liabilities associated with securing Year 2000 Compliance, or
making contingency arrangements to address Year 2000 Compliance issues, with
respect to Stel's products (including products sold to date, products currently
being sold or products under development), internal computer systems or the
computer systems or products or services of Stel's manufacturers, suppliers or
customers.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NEWBRIDGE AND MERGER SUB
Newbridge and Merger Sub make to Stel the representations and warranties
contained in this Article IV, in each case subject to the exceptions set forth
in the disclosure statement, dated as of the date hereof, delivered by
Newbridge to Stel in connection with the execution of this Agreement (the
"Newbridge Disclosure Statement"). The Newbridge Disclosure Statement shall be
arranged in schedules corresponding to the numbered and lettered Sections of
this Article IV, and the disclosure in any schedule of the Newbridge Disclosure
Statement shall qualify only the corresponding Section of this Article IV.
4.1 Organization, Etc.
(a) Each of Newbridge, its material subsidiaries listed on Section 4.1(a) of
the Newbridge Disclosure Statement (the "Newbridge Material Subsidiaries") and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Newbridge and the Newbridge
Material Subsidiary are each duly qualified as a foreign Person to do business,
and are each in good standing, in each jurisdiction where the character of its
owned or leased properties or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not, individually and in the aggregate, have an Newbridge
Material Adverse Effect. None of Newbridge or any Newbridge Material Subsidiary
is in violation of any provision of its certificate of incorporation, bylaws or
any other charter document. For the purposes of this Agreement, "Newbridge
Material Adverse Effect" means any change, event or effect that is materially
adverse to the general affairs, business, operations, assets, condition
(financial or otherwise) or results of operations of Newbridge and the
Newbridge Material Subsidiaries taken as a whole.
(b) Neither Newbridge, the Newbridge Material Subsidiaries nor Merger Sub is
in violation of any provision of its certificate of incorporation, bylaws or
other charter documents.
4.2 Authority Relative to This Agreement. Each of Newbridge and Merger Sub
has full corporate power and authority to execute and deliver this Agreement,
the Stock Option Agreement and the Technology Option Agreement, as applicable,
and to consummate the Merger and the other transactions contemplated hereby and
thereby. The execution and delivery of this Agreement, the Stock Option
Agreement and the Technology Option Agreement, and the consummation of the
Merger and the other transactions contemplated hereby and thereby, have been
duly and validly authorized by the board of directors of each of Newbridge and
Merger Sub, as applicable, and no other corporate proceedings on the part of
either Newbridge or Merger Sub are necessary to authorize this Agreement, the
Stock Option Agreement or the Technology Option Agreement or to consummate the
Merger and the other transactions contemplated hereby and thereby. Each of this
Agreement, the Stock Option Agreement and the Technology Option Agreement has
been duly and validly executed and delivered by Newbridge and Merger Sub, as
applicable, and, assuming due authorization, execution and delivery by Stel,
constitutes a valid and binding agreement of each of Newbridge and Merger Sub
as applicable, enforceable against each of them in accordance with its terms,
except to the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally or by general equitable principles.
4.3 No Violations, Etc. No filing with or notification to, and no permit,
authorization, consent or approval of, any Government Entity is necessary on
the part of either Newbridge or Merger Sub for the consummation by Newbridge or
Merger Sub of the Merger or the other transactions contemplated hereby, and by
the Stock Option Agreement and the Technology Option Agreement, except for (i)
the filing of the Certificate of Merger as required by Delaware Law, (ii) the
applicable requirements of the Exchange Act, state
or Canadian provincial securities or "blue sky" laws, state takeover laws and
the listing requirements of the NYSE and the Toronto Stock Exchange, (iii) any
filings required under and in compliance with the HSR Act, and (iv) the
voluntary notice under the Exon-Xxxxxx Amendment. Neither the execution and
delivery of this
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Agreement, the Stock Option Agreement and the Technology Option Agreement, nor
the consummation of the Merger or the other transactions contemplated hereby or
thereby, nor compliance by Newbridge and Merger Sub with all of the provisions
hereof and thereof will (i) conflict with or result in any breach of any
provision of the certificate of incorporation, bylaws or other charter
documents of Newbridge or any Newbridge Material Subsidiary, (ii) violate any
material order, writ, injunction, decree, statute, rule or regulation
applicable to Newbridge, any Newbridge Material Subsidiary or by which any of
their properties or assets may be bound, or (iii) result in a violation or
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,
acceleration, redemption or repurchase under, any of the terms, conditions or
provisions of any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Newbridge
or any Newbridge Material Subsidiary is a party or by which any of them or any
of their properties or assets may be bound.
4.4 Proxy Statement. The information supplied by Newbridge for inclusion in
the Proxy Statement as it relates to Newbridge or Merger Sub, at the time the
Proxy Statement is first mailed to stockholders, at the time of the Stel
Special Meeting and at the Effective Time, 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 not
misleading. If at any time prior to the Effective Time any event with respect
to Newbridge or any Newbridge Material Subsidiary shall occur which is required
to be described in the Proxy Statement, such event shall be so described, and
an amendment or supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the shareholders of Stel.
4.5 Litigation. Except as set forth in the Newbridge's forms, reports,
registration statements and documents required to be filed with the SEC, there
is no Action pending or, to the knowledge of Newbridge, threatened against
Newbridge or any of its Subsidiaries, or any of their respective officers and
directors (in their capacities as such), or involving any of their assets,
before any court, or governmental or regulatory authority or body, or
arbitration tribunal, except for those Actions which, individually or in the
aggregate, would not have an Newbridge Material Adverse Effect. There is no
Action pending or, to the knowledge of Newbridge, threatened which in any
manner challenges, seeks to, or is reasonably likely to prevent, enjoin, alter
or delay the transactions anticipated by this Agreement.
4.6 Financial Resources. As of November 10, 1999, Newbridge has the
financial resources to consummate the transactions contemplated by this
Agreement and to pay the consideration in the Merger set forth in Article II.
ARTICLE V
COVENANTS
5.1 Conduct of Business During Interim Period. Except as contemplated or
required by this Agreement or as expressly consented to in writing by
Newbridge, during the period from the date of this Agreement to the earlier of
the termination of this Agreement or the Effective Time, each of Stel and its
Subsidiaries will (i) conduct its operations according to its ordinary and
usual course of business consistent with past practice, (ii) use all
commercially reasonable efforts to preserve intact its business organization,
to keep available the services of its officers and employees in each business
function and to maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with it, and
(iii) not take any action which would adversely affect its ability to
consummate the Merger or the other transactions contemplated by this Agreement,
the Stock Option Agreement or the Technology Option Agreement. Without limiting
the generality of the foregoing, and except as otherwise expressly provided in
this Agreement, prior to the earlier of the termination of this Agreement or
Effective Time neither Stel nor any of its Subsidiaries will, without the prior
written consent of Newbridge, directly or indirectly, do any of the following:
(a) enter into, violate, amend or otherwise modify or waive any of the terms
of, (i) any license or partnership, joint venture, or other agreement relating
to the joint development or transfer of technology or
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Stel IP Rights; or (ii) any other agreements, commitments or contracts, except
in the ordinary course of business and consistent with past practice;
(b)(i) with respect to Stel's wireless broadband and satellite personal
communications products, accept any new or incremental work orders from current
customers or enter into any new contractual obligations with customers other
than Newbridge and, (ii) with respect to Stel's telcom component products,
agree to undertake research and development work for any third party with a
term extending beyond May 31, 2000;
(c) authorize, solicit, propose or announce an intention to authorize,
recommend or propose, or enter into any agreement in principle or an agreement
with any other person with respect to, any plan of liquidation or dissolution,
any acquisition of a material amount of assets or securities, any disposition
of a material amount of assets or securities, any material change in
capitalization, or any partnership, association, joint venture, joint
development, technology transfer, or other material business alliance;
(d) fail to renew any insurance policy naming it as a beneficiary or a loss
payee, or take any steps or fail to take any steps that would permit any
insurance policy naming it as a beneficiary or a loss payee to be canceled,
terminated or materially altered, except in the ordinary course of business and
consistent with past practice and following written notice to Newbridge;
(e) maintain its books and records in a manner other than in the ordinary
course of business and consistent with past practice;
(f) enter into any hedging, option, derivative or other similar transaction
or any foreign exchange position or contract for the exchange of currency other
than in the ordinary course of business and consistent with past practice;
(g) institute any change in its accounting methods, principles or practices
other than as required by GAAP, or the rules and regulations promulgated by the
SEC, or revalue any of its respective assets, including without limitation,
writing down the value of inventory or writing off notes or accounts
receivables;
(h) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, contingent or otherwise), other than the
payment, discharge or satisfaction of liabilities (including accounts payable)
in the ordinary course of business and consistent with past practice, or
collect, or accelerate the collection of, any amounts owed (including accounts
receivable) other than the collection in the ordinary course of business;
(i) split, combine or reclassify any shares of its capital stock;
(j) issue any capital stock or other options, warrants or rights to purchase
or acquire capital stock or change the terms of any such outstanding
securities, except that Stel may (i) issue capital stock upon the exercise of
options, warrants or rights outstanding as of the date of this Agreement and
(ii) accelerate those Stel Options that are not to be assumed or substituted
with equivalent options or other economic benefits by Newbridge or by the
purchasers of Stel's Non-core Assets;
(k) waive, release, assign, settle or compromise any material claim or
litigation, or commence a lawsuit other than (i) for the routine collection of
bills, (ii) the settlement of the litigation with Cabletron Systems, Inc.,
(iii) in such cases where Stel determines in good faith that failure to
commence suit would result in the material impairment of a valuable aspect of
its business, provided that Stel consults with Newbridge prior to the filing of
such a suit, or (iv) for a breach of this Agreement;
(l) in respect of any Taxes, make or change any material election change any
accounting method, enter into any closing agreement, settle any material claim
or assessment, or consent to any extension or waiver of the limitation period
applicable to any material claim or assessment except as required by applicable
law;
A-25
(m) take or agree to take, any of the actions described in Section 3.10, or
any action which would make any of its representations or warranties contained
in this Agreement untrue or incorrect or prevent it from performing or cause it
not to perform its covenants hereunder.
5.2 No Solicitation.
(a) From and after the date of this Agreement until the Effective Time or
termination of this Agreement pursuant to Article VIII, Stel and its
Subsidiaries will not, nor will they authorize or permit any of their
respective officers, directors, affiliates, agents or employees or any
investment banker, attorney or other advisor or representative retained by any
of them to, directly or indirectly, (i) solicit, initiate, encourage or induce
the making, submission or announcement of any Acquisition Proposal (as defined
in Section 5.2(c)), (ii) participate in any discussions or negotiations
regarding, or furnish to any person any non-public information with respect to,
or take any other action to facilitate any inquiries or the making of any
proposal that constitutes or may reasonably be expected to lead to, any
Acquisition Proposal, (iii) engage in discussions with any person with respect
to any Acquisition Proposal, (iv) approve, endorse or recommend any Acquisition
Proposal or (v) enter into any letter of intent or similar document or any
agreement or commitment contemplating or otherwise relating to any Acquisition
Transaction (as defined in Section 5.2(c)). Notwithstanding anything to the
contrary contained in this Section 5.2 or in any other provision of this
Agreement, Stel and its board of directors (i) may participate in discussions
or negotiations with or furnish non-public information to any third party that
has made an unsolicited Acquisition Proposal (a "Potential Acquiror") and/or
(ii) subject to the provisions of Section 5.4(c), may approve or accept an
unsolicited Acquisition Proposal, in each case only if the board of directors
of Stel determines in good faith (A) after receiving written advice from its
financial advisor, that such Acquisition Proposal is a Superior Proposal (as
defined in Section 5.2(d) hereof), and (B) following consultation with outside
legal counsel, that the failure to participate in such discussions or
negotiations or to furnish such information or approve or accept an Acquisition
Proposal would violate the board's fiduciary duties under applicable law. Stel
may not furnish any non-public information to a Potential Acquiror unless it is
furnished pursuant to a confidentiality agreement containing provisions at
least as favorable to Stel as the confidentiality provisions of the
Confidentiality Agreement (as defined in Section 5.3) and is simultaneously
provided to Newbridge. Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in this Section 5.2(a) by any
officer, director or employee of Stel or any of its Subsidiaries or any
investment banker, attorney or other advisor or representative of Stel or any
of its Subsidiaries shall be deemed to be a breach of this Section 5.2.
(b) In addition to the obligations of Stel set forth in Section 5.2(a), Stel
as promptly as practicable, and in any event within 24 hours, shall advise
Newbridge orally and in writing of any Acquisition Proposal or any request for
non-public information or inquiry which Stel reasonably believes would lead to
an Acquisition Proposal or to any Acquisition Transaction, the material terms
and conditions of such Acquisition Proposal, request or inquiry, and the
identity of the person or group making any such Acquisition Proposal, request
or inquiry. Stel will keep Newbridge informed as promptly as practicable in all
material respects of the status and details (including material amendments or
proposed material amendments) of any such Acquisition Proposal, request or
inquiry.
(c) For purposes of this Agreement, "Acquisition Proposal" shall mean any
offer or proposal made by a Third Party (as defined below) relating to any
Acquisition Transaction. For purposes of this Agreement, "Acquisition
Transaction" shall mean any transaction or series of related transactions
involving: (i) any purchase from Stel or acquisition by any Person (or any
group of Persons acting in concert for the specific purpose of allowing Stel to
evade the provisions of this Section 5.2) other than Newbridge, Stel or Merger
Sub or any affiliate thereof (a "Third Party") of 15% or more of the total
interest in the total outstanding voting securities of Stel or any of its
Subsidiaries or any tender offer or exchange offer that if consummated would
result in any Third Person (or its shareholder) beneficially owning 15% or more
of the total outstanding voting securities of Stel or any of its Subsidiaries;
(ii) any merger, consolidation, business combination or similar transaction
involving Stel or any of its Subsidiaries; (iii) any sale, lease (other than in
the ordinary course of business), exchange, transfer, license (other than in
the ordinary course of business), acquisition or disposition of a material
portion of the assets of Stel (excluding the Non-core Assets); (iv) any
liquidation or dissolution of
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Stel; or (v) the acquisition by a Third Party (or potential acquisition upon
the completion of a transaction or series of related transactions) of control
of the board of directors of Stel or the election or appointment of nominees of
a Third Party (or the ability of a Third Party to elect or appoint its
nominees) to a majority of the seats on the board of directors of Stel.
(d) The term "Superior Proposal" means any bona fide Acquisition Proposal,
made in writing and not initiated, solicited or encouraged in violation of
Section 5.2(a) of this Agreement, on terms which the board of directors of Stel
determines in good faith to be more favorable to Stel and its stockholders or
to its stockholders than the Merger (after receiving the written advice from
Stel's financial advisor that the value of the consideration provided for in
such proposal is superior to the value of the consideration provided for in the
Merger), for which financing, to the extent required, is then committed or
which, in the good faith judgment of the board of directors of Stel, after
receiving written advice from its financial advisor, is reasonably capable of
being financed by the Potential Acquiror.
5.3 Access to Information. From the date of this Agreement until the
Effective Time, Stel will afford Newbridge and its authorized representatives
(including counsel, environmental and other consultants, accountants, auditors
and agents) full access during normal business hours and upon reasonable notice
to all of its facilities, personnel and operations and to all books and records
of it and its Subsidiaries, will permit Newbridge and its authorized
representatives to conduct inspections as they may reasonably request and will
instruct its officers and those of its Subsidiaries to furnish such persons
with such financial and operating data and other information with respect to
its business and properties as they may from time to time request, subject to
the restrictions set forth in the Confidentiality Agreement (as defined below).
Newbridge and Merger Sub agree that each of them will treat any such
information in accordance with the Confidentiality Agreement, effective as of
March 1, 1999, between Newbridge and Stel (the "Confidentiality Agreement"),
which Confidentiality Agreement, except for the standstill provisions, shall
remain in full force and effect in accordance with its terms.
5.4 Special Meeting; Board Recommendation.
(a) Promptly after the date hereof, Stel will take all action necessary in
accordance with Delaware Law and its certificate of incorporation and bylaws to
convene a meeting of Stel's stockholders to consider adoption and approval of
this Agreement and approval of the Merger (the "Stel Special Meeting") to be
held as promptly as practicable, and in any event (to the extent permissible
under applicable law) within 45 days after the expiration of the 10-day waiting
period on the preliminary Proxy Statement or, if Stel receives SEC comments on
the Proxy Statement, the date that all such comments are cleared with the SEC.
Subject to Section 5.4(c), Stel will use its commercially reasonable efforts to
solicit from its stockholders proxies in favor of the adoption and approval of
this Agreement and the approval of the Merger and will take all other action
necessary or advisable to secure the vote or consent of its stockholders
required by the rules of Nasdaq or Delaware Law to obtain such approvals.
Notwithstanding anything to the contrary contained in this Agreement, Stel may
adjourn or postpone the Stel Special Meeting to the extent necessary to ensure
that any necessary supplement or amendment to the Proxy Statement is provided
to Stel's stockholders in advance of a vote on the Merger and this Agreement
or, if as of the time for which the Stel Special Meeting is originally
scheduled (as set forth in the Proxy Statement) there are insufficient shares
of Stel Common Stock represented (either in person or by proxy) to constitute a
quorum necessary to conduct the business of the Stel Special Meeting. Stel
shall ensure that the Stel Special Meeting is called, noticed, convened, held
and conducted, and that all proxies solicited by Stel in connection with the
Stel Special Meeting are solicited, in compliance with the Delaware Law, Stel's
certificate of incorporation and bylaws, the rules of Nasdaq and all other
applicable legal requirements. Stel's obligation to call, give notice of,
convene and hold the Stel Special Meeting in accordance with this Section
5.4(a) shall not be limited to or otherwise affected by the commencement,
disclosure, announcement or submission to Stel of any Acquisition Proposal, or
by any withdrawal, amendment or modification of the recommendation of the board
of directors of Stel with respect to the Merger and/or this Agreement.
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(b) Subject to Section 5.4(c), (i) the board of directors of Stel shall
unanimously recommend that Stel's stockholders vote in favor of and adopt and
approve this Agreement and approve the Merger at the Stel Special Meeting; (ii)
Stel shall cause the Proxy Statement to include a statement to the effect that
the board of directors of Stel has unanimously recommended that Stel's
stockholders vote in favor of and adopt and approve this Agreement and the
Merger at the Stel Special Meeting; and (iii) neither the board of directors of
Stel nor any committee thereof shall withdraw, amend or modify, or propose or
resolve to withdraw, amend or modify in a manner adverse to Newbridge, the
unanimous recommendation of the board of directors of Stel that Stel's
stockholders vote in favor of and adopt and approve this Agreement and the
Merger. For purposes of this Agreement, said recommendation of the board of
directors shall be deemed to have been modified in a manner adverse to
Newbridge if said recommendation shall no longer be unanimous, provided that,
for all purposes of this Agreement, an action by any board of directors or
committee thereof shall be unanimous if each member of such board of directors
or committee has approved such action other than (i) any such member who has
appropriately abstained from voting on such matter because of an actual or
potential conflict of interest and (ii) any such member who is unable to vote
in connection with such action as a result of death or disability.
(c) Nothing in Section 5.4(b) shall prevent the board of directors of Stel
from withholding, withdrawing, amending or modifying its unanimous
recommendation that Stel stockholders vote in favor of and adopt and approve
this Agreement and approve the Merger if (i) a Superior Proposal is made to
Stel and is not withdrawn, (ii) Stel shall have provided written notice to
Newbridge (a "Notice of Superior Proposal") advising Newbridge that Stel has
received a Superior Proposal, specifying the material terms and conditions of
such Superior Proposal and identifying the person or entity making such
Superior Proposal, (iii) Newbridge shall not have, within five business days of
Newbridge's receipt of the Notice of Superior Proposal, made an offer that the
board of directors of Stel by a majority vote determines in its good faith
judgment (based on the written advice of its financial advisor) to be at least
as favorable to Stel's stockholders as such Superior Proposal (it being agreed
that the board of directors of Stel shall convene a meeting to consider any
such offer by Newbridge promptly following the receipt thereof), (iv) after
such board meeting, the board of directors of Stel shall have concluded in good
faith, after consultation with its outside counsel, that, in light of such
Superior Proposal, the withholding, withdrawal, amendment or modification of
such recommendation is required in order for the board of directors of Stel to
comply with its fiduciary obligations to Stel's stockholders under applicable
law and (v) Stel shall not have violated any of the restrictions set forth in
Section 5.2 or this Section 5.4(c). Subject to applicable laws, nothing
contained in this Section 5.4(c) shall limit Stel's obligation to hold and
convene the Stel Special Meeting (regardless of whether the unanimous
recommendation of the board of directors of Stel shall have been withheld,
withdrawn, amended or modified). If the Stel board has withheld, withdrawn,
amended or modified its recommendation as provided in this Section 5.4(c), Stel
shall not be required to solicit proxies from its stockholders to vote in favor
of and approve and adopt this Agreement and the Merger; provided that Stel
shall use its commercially reasonable efforts to solicit a sufficient number of
proxies (without regard to the manner in which votes are cast by those proxies)
to ensure the presence of a quorum of stockholders at the Stel Special Meeting.
(d) Nothing contained in this Agreement shall prohibit Stel or its board of
directors from complying with the requirements of Rules 14d-9 and 14e-2(a)
promulgated under the Exchange Act.
(e) As promptly as practicable after the execution of this Agreement, Stel
and Newbridge shall mutually prepare, and Stel shall file with the SEC, a
preliminary form of the Proxy Statement. As promptly as practicable following
receipt of SEC comments on such preliminary Proxy Statement, Newbridge and Stel
shall mutually prepare a response to such comments. Newbridge and Stel shall
use all commercially reasonable efforts to have the preliminary Proxy Statement
cleared by the SEC. Newbridge and Stel shall promptly furnish to each other all
information, and take such other actions (including without limitation using
all commercially reasonable efforts to provide any required consents of their
respective independent auditors), as may reasonably be requested in connection
with any action by any of them in connection with the preceding sentences of
this Section 5.4(e). Whenever any party learns of the occurrence of any event
which is required to be set forth in an amendment or supplement to the Proxy
Statement or any other filing made pursuant to this Section 5.4(e),
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Newbridge or Stel, as the case may be, shall promptly inform the other of such
occurrence and cooperate in filing with the SEC or its staff and/or mailing to
stockholders of Stel such amendment or supplement.
5.5 Commercially Reasonable Efforts. Subject to the terms and conditions
herein provided, Newbridge, Merger Sub and Stel shall use all commercially
reasonable efforts to take, or cause to be taken, all other actions and do, or
cause to be done, all other things necessary, proper or appropriate under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation, (a)
promptly filing Notification and Report Forms under the HSR Act with the
Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") and responding as promptly as
practicable to any inquiries received from the FTC or the Antitrust Division
for additional information or documentation, (b) promptly filing a notification
with the Committee on Foreign Investment in the United States ("CFIUS") under
the Exon-Xxxxxx Amendment and responding as promptly as practicable to any
inquiries received from CFIUS for additional information or documentation,
including, without limitation, taking such actions as may be required by the
U.S. Department of Defense to mitigate foreign ownership, control or influence
with respect to the performance of classified Government Contracts; (c)
obtaining all necessary governmental and private party consents, approvals or
waivers, and (d) lifting any legal bar to the Merger and the exercise of the
option granted in the Stock Option Agreement. Newbridge shall cause Merger Sub
to perform all of its obligations under this Agreement and shall not take any
action which would cause Stel to fail to perform its obligations hereunder.
Stel shall not take any action which would cause Newbridge or Merger Sub to
fail to perform their obligations hereunder.
5.6 Public Announcements. Before issuing any press release or otherwise
making any public statement with respect to the Merger or any of the other
transactions contemplated hereby, Newbridge, Merger Sub and Stel agree to
consult with each other as to its form and substance, and agree not to issue
any such press release or general communication to employees or make any public
statement prior to obtaining the consent of the other (which shall not be
unreasonably withheld or delayed), except as may be required by applicable law
or by the rules and regulations of or listing agreement with the NYSE, the
Nasdaq, The Toronto Stock Exchange or as may otherwise be required by of the
NYSE, Nasdaq, the SEC or Canadian securities authorities.
5.7 Notification of Certain Matters. Each of Stel and Newbridge shall
promptly notify the other party of the occurrence or non-occurrence of any
event the respective occurrence or non-occurrence of which would be likely to
cause any condition to the obligations of the notifying party to effect the
Merger not to be fulfilled. Each of Stel and Newbridge shall also give prompt
notice to the other of any communication from any Person alleging that the
consent of such Person is or may be required in connection with the Merger or
other transactions contemplated hereby.
5.8 Indemnification.
(a) The certificate of incorporation and bylaws of the Surviving Corporation
shall contain, and Newbridge shall cause the Surviving Corporation to fulfill
and honor, the provisions with respect to indemnification set forth in the
certificate of incorporation and bylaws of Stel as of the date of this
Agreement, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who, immediately
prior to the Effective Time, were directors and officers of Stel, unless such
modification is required by law.
(b) After the Effective Time the Surviving Corporation, to the fullest
extent permitted under applicable law or under the Surviving Corporation's
certificate of incorporation or bylaws, shall hold harmless, (i) each present
director or officer of Stel and each of its Subsidiaries, and (ii) each person
identified on Schedule 5.8(b) as presently serving at the request of Stel or
any Subsidiary of Stel as a director, officer, trustee, partner, fiduciary,
employee or agent of another corporation, partnership, joint venture, trust,
pension or other employee
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benefit plan or enterprise (collectively, the "Indemnified Parties") against
any costs or expenses (including attorney's fees), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in connection with
any claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, to the extent arising out of or pertaining to
any action or omission in his or her capacity as a director or officer of Stel
arising out of or pertaining to the transactions contemplated by this Agreement
for a period of six years after the date hereof. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) any counsel retained by the Indemnified Parties
for any period after the Effective Time must be reasonably satisfactory to
Newbridge, (ii) after the Effective Time, Newbridge shall cause the Surviving
Corporation to pay the reasonable fees and expenses of such counsel, promptly
after statements therefor are received and (iii) Newbridge shall cause the
Surviving Corporation to cooperate in the defense of any such matter; provided,
however, that neither Newbridge nor the Surviving Corporation shall be liable
for any settlement effected without its written consent (which consent shall
not be unreasonably withheld); and provided, further, that, in the event that
any claim or claims for indemnification are asserted or made within such six-
year period, all rights to indemnification in respect of any such claim or
claims shall continue until the disposition of any and all such claims; and
provided, further, that nothing in this Section 5.8 shall impair any rights or
obligations of any present or former directors or officers of Stel. The
Indemnified Parties as a group may retain only one law firm (in addition to
local counsel) to represent them with respect to any single action unless there
is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
In the event Newbridge or the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any Person, then, and in each such case, to the
extent necessary to effectuate the purposes of this Section 5.8, proper
provision shall be made so that the successors and assigns of Newbridge and the
Surviving Corporation assume the obligations of such party set forth in this
Section 5.8 and none of the actions described in clause (i) or (ii) shall be
taken until such provision is made.
(c) For a period of six years after the Effective Time, Newbridge shall or
shall cause the Surviving Corporation to maintain in effect, if available,
directors' and officers' liability insurance covering those persons who are
currently covered by Stel's directors' and officers' liability insurance policy
on terms comparable to those applicable under the policy of directors' and
officers' liability insurance currently maintained by Stel; provided, however,
that in no event shall Newbridge or the Surviving Corporation be required to
expend in excess of 150% of the annual premium currently paid by Stel for such
coverage, and that if the annual premiums of such insurance coverage exceed
such amount, the Surviving Corporation shall be obligated instead to obtain a
policy with the greatest coverage available for a cost not exceeding such
amount.
(d) Newbridge shall cause the Surviving Corporation to perform its
obligations under this Section 5.8 and shall, in addition, guarantee, as co-
obligor with the Surviving Corporation, the performance of such obligations by
the Surviving Corporation.
5.9 [Reserved].
5.10 Listings. Newbridge shall use commercially reasonable efforts to list
on the NYSE, upon official notice of issuance, the shares of Newbridge Common
Stock to be issued upon exercise of the Newbridge Exchange Options. Newbridge
shall use commercially reasonable efforts to list on the Toronto Stock
Exchange, subject to the satisfaction of customary conditions, the shares of
Newbridge Common Stock issued upon exercise of the Newbridge Exchange Options.
5.11 Resignation of Directors and Officers. Prior to the Effective Time,
Stel shall deliver to Newbridge the resignations of such directors and officers
of Stel and its Subsidiaries as Newbridge shall specify at least ten business
days prior to the Closing, effective at the Effective Time.
5.12 Form S-8. No later than ten business days after the Effective Time,
Newbridge shall file with the SEC a Registration Statement, on Form S-8 or
other appropriate form under the Securities Act to register the
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Newbridge Common Stock issuable upon exercise of the Newbridge Exchange
Options. Newbridge shall use commercially reasonable efforts to cause such
Registration Statement to remain effective until the exercise or expiration of
such options.
5.13 Stel SEC Filings. Stel will deliver promptly to Newbridge true and
complete copies of each report, registration statement or statement mailed by
it to its security holders generally or filed by it with the SEC, in each case
subsequent to the date hereof and prior to the Effective Time. As of their
respective dates, such reports, including the consolidated financial statements
included therein, and statements (excluding any information therein provided by
Newbridge or Merger Sub, as to which Stel makes no representation) will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading and
will comply in all material respects with all applicable requirements of law.
Each of the consolidated financial statements (including, in each case, any
related notes thereto) contained in such reports, (i) shall comply as to form
in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, (ii) shall be
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q under the Exchange Act) and (iii) shall fairly present the
consolidated financial position of Stel and its Subsidiaries as at the
respective dates thereof and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not, or are not expected to be, material in amount.
5.14 Employee Matters. Newbridge agrees to make severance payments to
persons who are Stel employees immediately prior to the Effective Time and who
are terminated on or within 90 days of the Effective Time and to pay the other
benefits as set forth in Schedule 5.14.
5.15 Termination of Stel Purchase Plan. Stel, acting through its board of
directors, shall take all action necessary to discontinue the Stel Purchase
Plan effective upon purchase of Stel Common Stock for the Participation Period
ending September 30, 1999.
5.16 Stock Option Agreement. Stel agrees not to take any action that would
impede, bar, restrict or otherwise interfere in any manner with Newbridge's
rights under the Stock Option Agreement.
5.17 Technology Option Agreement. Stel agrees not to take any action that
would impede, bar, restrict or otherwise interfere in any manner with
Newbridge's rights under the Technology Option Agreement.
5.18 Non-core Asset Sale. Stel shall use its best efforts to cause the sale
or sales (the "Non-core Asset" Sale) of all assets (or the shares of the legal
entity or entities to which they belong) of all Stel's current operating
divisions other than its wireless broadband products division, its telecom
component products division and its satellite personal communications division
(the "Non-core Assets") for an aggregate purchase price which will result in
after-tax net cash proceeds of not less than U.S. $102,000,000. Newbridge
agrees that the Non-core Asset Sale may include net cash generated by the Non-
core Assets subsequent to March 31, 1999. Stel agrees that it will inform
Newbridge of any proposals, discussions or negotiations concerning the sale of
such divisions and that it will include Newbridge and Newbridge's advisors,
including CIBC World Markets, in all such discussions and negotiations
regarding the Non-core Asset Sale. Newbridge and Stel agree to use commercially
reasonable efforts to maximize the proceeds of the Non-core Asset Sale.
5.19 Assumption of Options. The parties will use all commercially reasonable
efforts to obtain the agreement of purchasers of the Non-core Assets to assume
or substitute equivalent options or other economic benefits for the unvested
Stel Options that would not qualify for accelerated vesting pursuant to Stel's
Stock Option Plan as of the Effective Time held by Stel employees to be hired
by such purchasers.
5.20 Transitional Contract-Manufacturing Arrangement. Stel and Newbridge
will use all commercially reasonable efforts to enter into a transitional
contract manufacturing arrangement with the contract manufacturing facility
that will be sold as part of the Non-core Asset Sale.
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5.21 Stel IP Rights. Stel will use all commercially reasonable efforts to
amend any agreements giving any Third Party rights to Stel IP Rights as a
result of the execution and delivery of this Agreement, the Stock Option
Agreement, the Technology Option Agreement or the consummation of the Merger
and the other transactions contemplated hereby or thereby.
5.22 Appraisal Rights. Stel and Newbridge will take all necessary and
appropriate action to enable the holders of Stel Common Stock to exercise
appraisal rights under Section 262 of the Delaware Law and otherwise to comply
with the terms of such statute.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF EACH PARTY
The respective obligations of each party to this Agreement to effect the
Merger shall be subject to the fulfillment on or before the Effective Time of
each of the following conditions, any one or more of which may be waived in
writing by all the parties hereto:
6.1 [Reserved].
6.2 Stockholder Approval. The approval of the holders representing a
majority of the outstanding shares of Stel Common Stock for adoption of the
Merger Agreement and approval of the Merger shall have been obtained at the
Stel Special Meeting or any adjournment or postponement thereof.
6.3 [Reserved].
6.4 Government Clearances. The waiting periods applicable to consummation of
the Merger under the HSR Act and Exon-Xxxxxx Amendment shall have expired or
been terminated. Other than the filing of the Certificate of Merger which shall
be accomplished as provided in Section 1.2, all authorizations, consents,
orders or approvals of, or declarations or filings with, or expirations of
waiting periods imposed by, any Government Entity the failure of which to
obtain or comply with prior to the Effective Time would be reasonably likely to
have a Stel Material Adverse Effect or a Newbridge Material Adverse Effect
shall have been obtained or filed.
6.5 Statute or Decree. No writ, order, temporary restraining order,
preliminary injunction or injunction shall have been enacted, entered,
promulgated or enforced by any court or other tribunal or governmental body or
authority, which remains in effect, and prohibits the consummation of the
Merger or otherwise makes it illegal, nor shall any governmental agency have
instituted any action, suit or proceeding which remains pending and which
seeks, and which is reasonably likely, to enjoin, restrain or prohibit the
consummation of the Merger in accordance with the terms of this Agreement.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF STEL AND NEWBRIDGE
7.1 Additional Conditions To The Obligations Of Stel. The obligations of
Stel to effect the Merger shall be subject to the fulfillment of each of the
following additional conditions, any one or more of which may be waived in
writing by Stel:
(a) The representations and warranties of Newbridge and Merger Sub contained
in this Agreement (without regard to any materiality exceptions or provisions
therein) shall be true and correct, in all material respects, as of the
Effective Time, with the same force and effect as if made at the Effective
Time, except (i) for changes specifically permitted by the terms of this
Agreement, (ii) that the accuracy of the representations and warranties that by
their terms speak as of the date of this Agreement or some other date
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will be determined as of such date, and (iii) for such inaccuracies as, in the
aggregate, would not reasonably be expected to have a Newbridge Material
Adverse Effect.
(b) Newbridge and Merger Sub shall have performed and complied in all
material respects with all agreements, obligations and conditions required by
this Agreement to be performed or complied with by them on or prior to the
Closing Date.
(c) Newbridge and Merger Sub shall have furnished certificates of their
respective officers to evidence compliance with the conditions set forth in
Sections 7.1(a) and (b) of this Agreement.
7.2 Additional Conditions To The Obligations Of Newbridge And Merger
Sub. The obligations of Newbridge and Merger Sub to effect the Merger shall be
subject to the fulfillment of each of the following additional conditions, any
one or more of which may be waived in writing by Newbridge:
(a) The representations and warranties of Stel contained in this Agreement
(without regard to any materiality exceptions or provisions therein) shall be
true and correct, in all material respects, as of the Effective Time, with the
same force and effect as if made at the Effective Time, except, (i) for changes
related to the balance sheets or assets of the Non-core Assets, (ii) for
changes in the prospects of Stel's constellation project, (iii) for other
changes specifically permitted by the terms of this Agreement, (iv) that the
accuracy of the representations and warranties that by their terms speak as of
the date of this Agreement or some other date will be determined as of such
date, and (v) for such inaccuracies as, in the aggregate, would not have a Stel
Material Adverse Effect.
(b) Stel shall have performed and complied in all material respects with all
agreements, obligations and conditions required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
(c) Stel shall have furnished certificates of its officers to evidence
compliance with the conditions set forth in Sections 7.2(a) and (b) of this
Agreement.
(d) Any consents, approvals, notifications, disclosures, and filings and
registrations listed in Schedule 3.3 of the Stel Disclosure Statement shall
have been obtained or made.
(e) Stel shall have entered into binding agreements reasonably acceptable to
Newbridge with respect to the Non-core Asset Sale for an aggregate purchase
price which will result in after-tax net cash proceeds to Stel of not less than
U.S. $102,000,000.
(f) Stel shall have delivered to Newbridge a statement that the interest in
Stel is not a United States real property interest as contemplated by Section
1.1445-2(c)(3) of the regulations promulgated under the Code.
(g) Stel shall have entered into employment agreements or achieved retention
arrangements which are satisfactory to Newbridge with Stel employees listed on
Schedule 7.1(h).
(h) Stel shall have delivered to Newbridge the resignations of such
directors and officers of Stel and its Subsidiaries as Newbridge shall specify
at least ten days prior to the Closing, effective at the Effective Time.
(i) The aggregate number of shares of Stel Common Stock demanding or
purporting to demand appraisal rights under Section 262 of the Delaware Law
shall not exceed 10% of the outstanding shares of Stel Common Stock immediately
prior to the Effective Time.
(j) There shall not have occurred, since the date hereof, any Stel Material
Adverse Effect, except for the occurrence of conditions specifically excepted
in clauses (i) and (ii) of Section 7.2(a) hereof.
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ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after the requisite approval of the
stockholders of Stel:
(a) by mutual written consent duly authorized by the boards of directors of
Newbridge, Stel and Merger Sub;
(b) by either Stel or Newbridge if the Merger shall not have been
consummated by January 31, 2000 (the "End Date"), which date may be extended by
mutual consent of the parties hereto; provided, however, that the right to
terminate this Agreement under this Section 8.1(b) shall not be available to
any party whose action or failure to act has proximately contributed to the
failure of the Merger to occur on or before such date and such action or
failure to act constitutes a material breach of this Agreement;
(c) by either Stel or Newbridge if (i) a statute, rule, regulation or
executive order shall have been enacted, entered or promulgated prohibiting the
consummation of the Merger substantially on the terms contemplated hereby or
(ii) a court of competent jurisdiction or other Government Entity shall have
issued an order, decree, ruling or injunction, or taken any other action,
having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger substantially on the terms contemplated hereby, and such
order, decree, ruling, injunction or other action shall have become final and
non-appealable; provided, that a party shall not be permitted to terminate this
Agreement pursuant to this Section 8.1(c) unless such party shall have used its
reasonable efforts to remove such order, decree, ruling or injunction;
(d) by either Stel or Newbridge if the required approval of the stockholders
of Stel contemplated by this Agreement shall not have been obtained by reason
of the failure to obtain the required vote at a meeting of Stel stockholders
duly convened therefore or at any adjournment thereof; provided, however, that
the right to terminate this Agreement under this Section 8.1(d) shall not be
available to Stel where (i) Stel shall have breached in any material respect
its obligations under this Agreement in any manner that shall have proximately
contributed to the failure to obtain such stockholder approval (it being
specifically understood that a withholding, withdrawal, amendment or
modification of the board of directors recommendation to Stel stockholders to
vote in favor of and approve and adopt this Agreement and approve the Merger in
accordance with the conditions of Section 5.4(c) is not a breach of this
Agreement) or (ii) such failure was caused by a breach of any Voting Agreement
by a party thereto other than Newbridge;
(e) by Newbridge if a Stel Triggering Event (as defined below) shall have
occurred;
(f) [Reserved].
(g) by Stel, if there exists a breach or breaches of any representation or
warranty of Newbridge or Merger Sub contained in this Agreement such that the
Closing condition set forth in Section 7.1(a) or Section 7.1(b) would not be
satisfied; provided, however, that if such breach or breaches are capable of
being cured prior to the Effective Time such that such condition would be
satisfied, then Stel shall not be permitted to terminate this Agreement
pursuant to this Section 8.3(g) unless Stel shall have delivered to Newbridge
written notice of such breach or breaches and such breach or breaches shall not
have been so cured within 30 days after delivery to Newbridge of such written
notice; provided, further, that Stel shall not be permitted to terminate this
Agreement pursuant to this Section 8.3(g) if Stel shall have breached in any
material respect its obligations under this Agreement in any manner that shall
have proximately caused such breach or breaches of Newbridge; or
(h) by Newbridge, if there exists a breach or breaches of any representation
or warranty of Stel contained in this Agreement such that the Closing condition
set forth in Section 7.2(a) or 7.2(b) would not be satisfied; provided,
however, that if such breach or breaches are capable of being cured prior to
the Effective Time such
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that such condition would be satisfied, then Newbridge shall not be permitted
to terminate this Agreement pursuant to this Section 8.1(h) unless Newbridge
shall have delivered to Stel written notice of such breach or breaches and such
breach or breaches shall not have been so cured within 30 days after delivery
to Stel of such written notice; provided, further that Newbridge shall not be
permitted to terminate this Agreement pursuant to this Section 8.2(h) if
Newbridge shall have breached in any material respect its obligations under
this Agreement in any manner that shall have proximately caused such breach or
breaches of Stel.
(i) For the purposes of this Agreement, a "Stel Triggering Event" shall be
deemed to have occurred if: (i) the board of directors of Stel or any committee
thereof shall for any reason have withdrawn or shall have amended or modified
in a manner adverse to Newbridge its unanimous recommendation in favor of, the
adoption and approval of the Agreement or the approval of the Merger; (ii) Stel
shall have failed to include or maintain in the Proxy Statement the unanimous
recommendation of the board of directors of Stel in favor of the adoption and
approval of the Agreement and the approval of the Merger; (iii) the board of
directors of Stel shall have failed to reaffirm its unanimous recommendation in
favor of the adoption and approval of the Agreement and the approval of the
Merger within five days after Newbridge requests in writing that such
recommendation be reaffirmed; (iv) the board of directors of Stel or any
committee thereof shall have failed to reject any Acquisition Proposal; (v)
Stel shall have entered into any letter or intent or similar document or any
agreement or commitment contemplating or otherwise relating to an Acquisition
Proposal; (vi) subject to Stel's ability to adjourn or postpone a meeting
pursuant to the third sentence of Section 5.4(a), Stel shall have failed to
hold the Stel Special Meeting as promptly as practicable and in any event (to
the extent permissible under applicable law) within 45 days after the
expiration of the 10-day waiting period on the preliminary Proxy Statement or,
if Stel receives SEC comments on the Proxy Statement, the date that all such
comments are cleared with the SEC; (vii) a tender or exchange offer relating to
securities of Stel shall have been commenced by a Person unaffiliated with
Newbridge and Stel shall not have sent to its security holders pursuant to
Rule 14e-2 promulgated under the Securities Act, within ten business days after
such tender or exchange offer is first published, sent or given, a statement
disclosing that the board of directors of Stel recommends rejection of such
tender or exchange offer; or (viii) Stel shall have breached any of its
obligations under Section 5.2 of this Agreement.
8.2 Notice of Termination; Effect of Termination. Any termination of this
Agreement under Section 8.1 will be effective immediately upon the delivery of
a valid written notice of the terminating party to the other parties hereto. In
the event of the termination of this Agreement as provided in Section 8.1, this
Agreement shall be of no further force or effect, except (i) as set forth in
the last sentence of Section 5.3, this Section 8.2, Section 8.3, Sections 9.4,
9.5, 9.6, 9.10, 9.11 and 9.12, each of which shall survive the termination of
this Agreement, and (ii) nothing herein shall relieve any party from liability
for any willful breach of this Agreement. No termination of this Agreement
shall affect the obligations of the parties contained in the Confidentiality
Agreement, the Stock Option Agreement or the Technology Option Agreement, all
of which obligations shall survive termination of this Agreement in accordance
with their terms.
8.3 Fees and Expenses.
(a) General. Except as set forth in this Section 8.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses whether or not the
Merger is consummated; provided, however, that Newbridge and Stel shall share
equally all fees and expenses, other than attorneys' and accountants' fees and
expenses, incurred in relation to the printing and filing (with the SEC) of the
Proxy Statement (including any preliminary materials related thereto) and any
registration statement (including financial statements and exhibits) and any
amendments or supplements thereto.
(b) Stel Payments.
(i) In the event that this Agreement is terminated by Newbridge pursuant
to Section 8.1(e), Stel shall promptly, but in no event later than ten
business days after the date of such termination, pay Newbridge a
nonrefundable fee equal to U.S. $25 million in immediately available funds
(the "Termination Fee").
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(ii) In the event that this Agreement is terminated by Newbridge or
Stel, as applicable, pursuant to Section 8.1 (b) or (d), (A) Stel shall pay
Newbridge the Termination Fee only if following the date hereof and prior
to the termination of this Agreement, a Third Party has publicly announced
an Acquisition Proposal and within 12 months following the termination of
this Agreement, Stel executes with a Third Party an agreement providing for
an Acquisition Transaction or an Acquisition Transaction has been
consummated and (B) such payment shall be made promptly, but in no event
later than ten business days after the execution of such agreement.
(iii) In the event that this Agreement is terminated by Newbridge or
Stel pursuant to Section 8.1(d) and Stel is not required to pay Newbridge
the Termination Fee, Stel shall reimburse Newbridge for all documented
expenses incurred by Newbridge in connection with this Agreement, the Stock
Option Agreement, the Technology Option Agreement and the transactions
contemplated hereby (the "Newbridge Expenses") in immediately available
funds not later than ten business days after the first anniversary of the
execution of this Agreement.
(iv) In the event that this Agreement is terminated by Newbridge
pursuant to Section 8.1(h) because the Closing condition set forth in
Section 7.2(b) is not satisfied, Stel shall promptly, but in no event later
than ten business days after the date of such termination, reimburse
Newbridge for the Newbridge Expenses in immediately available funds.
(v) Stel acknowledges that the agreements contained in this Section
8.3(b) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Newbridge would not enter
into this Agreement; accordingly, if Stel fails to pay in a timely manner
the amounts due pursuant to this Section 8.3(b), and, in order to obtain
such payment, Newbridge makes a claim that results in a judgment against
Stel for the amounts set forth in this Section 8.3(b), Stel shall pay to
Newbridge its reasonable costs and expenses (including reasonable
attorneys' fees and expenses) in connection with such suit, together with
interest on the amounts set forth in this Section 8.3(b) at the prime rate
of The Chase Manhattan Bank in effect on the date such payment was required
to be made. Payment of the fees described in this Section 8.3(b) shall not
be in lieu of damages incurred in the event of breach of this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 Amendment and Modification. Subject to applicable law, this Agreement
may be amended, modified or supplemented only by written agreement of
Newbridge, Merger Sub and Stel at any time prior to the Effective Time;
provided, however, that after approval of this Agreement by the stockholders of
Stel, no such amendment or modification shall change the amount or form of the
consideration to be received by Stel's stockholders in the Merger.
9.2 Waiver of Compliance; Consents. Any failure of Newbridge or Merger Sub,
on the one hand, or Stel, on the other hand, to comply with any obligation,
covenant, agreement or condition herein may be waived by Stel or Newbridge or
Merger Sub, respectively, only by a written instrument signed by the party
granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
9.2.
9.3 Survival; Investigations. The respective representations and warranties
of Newbridge, Merger Sub and Stel contained herein or in any certificates or
other documents delivered prior to or at the Closing shall not be deemed waived
or otherwise affected by any investigation made by any party hereto and shall
not survive the Effective Time.
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9.4 Notices. All notices and other communications hereunder shall be in
writing and shall be delivered personally by overnight courier or similar means
or sent by facsimile with written confirmation of receipt, to the parties at
the addresses specified below (or at such other address for a party as shall be
specified by like notice. Any such notice shall be effective upon receipt, if
personally delivered or on the next business day following transmittal if sent
by confirmed facsimile. Notices, including oral notices, shall be delivered as
follows:
if to Stel, to: Stanford Telecommunications, Inc.
0000 Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxx
with a copy to: Xxxxxx Xxxx & Priest LLP
000 Xxxx Xxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxx X. Xxxxxxxxx
if to Newbridge,
or Merger Sub, to:
Newbridge Networks Corporation
000 Xxxxx Xxxx, X.X. Xxx 00000
Xxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx
with a copy to: Xxxxxx Xxxxxx White & XxXxxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
(Matter #21969-0009)
9.5 Assignment; Third Party Beneficiaries. Neither this Agreement nor any
right, interest or obligation hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement is not intended to
confer any rights or remedies upon any Person other than the parties hereto,
with respect only to Section 5.8, the officers and directors of Stel, or as
otherwise expressly provided herein.
9.6 Governing Law. This Agreement shall be governed by the laws of the State
of Delaware without reference to principles of conflicts of laws.
9.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.8 Severability. In case any one or more of the provisions contained in
this Agreement should be finally determined to be invalid, illegal or
unenforceable in any respect against a party hereto, it shall be
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adjusted if possible to effect the intent of the parties. In any event, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby, and such
invalidity, illegality or unenforceability shall only apply as to such party in
the specific jurisdiction where such final determination shall have been made.
9.9 Interpretation. The Article and Section headings contained in this
Agreement are solely for the purpose of reference and shall not in any way
affect the meaning or interpretation of this Agreement.
9.10 Entire Agreement. This Agreement, including the exhibits hereto and the
documents and instruments referred to herein, embody the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no representations, promises, warranties, covenants, or
undertakings, other than those expressly set forth or referred to herein and
therein.
9.11 Definition of "law". When used in this Agreement "law" refers to any
applicable law (whether civil, criminal or administrative) including, without
limitation, common law, statute, statutory instrument, treaty, regulation,
directive, decision, code, order, decree, injunction, resolution or judgment of
any government, quasi-government, supranational, federal, state or local
government, statutory or regulatory body, court, or agency.
9.12 Rules of Construction. Each party to this Agreement has been
represented by counsel during the preparation and execution of this Agreement,
and therefore waives any rule of construction that would construe ambiguities
against the party drafting the agreement.
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IN WITNESS WHEREOF, Newbridge Networks Corporation, Saturn Acquisition Corp.
and Stanford Telecommunications, Inc. have caused this Agreement to be signed
by their respective duly authorized officers as of the date first above
written.
NEWBRIDGE NETWORKS CORPORATION
By: /s/ Xxxxx Xxxxxx
___________________________________
Title: Corporate Vice President,
General Counsel
By: /s/ Xxxx Xxxxxx
___________________________________
Title: Corporate Secretary
SATURN ACQUISITION CORP.
By: /s/ Xxxxx Xxxxxx
___________________________________
Title: President, Treasurer and Secretary
STANFORD TELECOMMUNICATIONS, INC.
By: /s/ Xxx X. Xxxxxx
___________________________________
Title: President and Chief Executive
Officer
By: /s/ Xxxxx X. Xxxxxxx, Xx.
___________________________________
Title: Chairman of the Board
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