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EXHIBIT 1
FIRST AMENDMENT TO RIGHTS AGREEMENT
This FIRST AMENDMENT TO RIGHTS AGREEMENT (the "Amendment") is entered
into as of February 22, 2000 by and between PAIRGAIN TECHNOLOGIES, INC., a
Delaware corporation (the "Company"), and U.S. STOCK TRANSFER CORP., a
California banking corporation, as Rights Agent (in such capacity, the "Rights
Agent").
RECITALS:
A. The Company and the Rights Agent are parties to that certain Rights
Agreement, dated as of December 3, 1998 (the "Rights Agreement"). Unless
otherwise defined herein, capitalized terms used herein shall have the
respective meanings ascribed thereto in the Rights Agreement; and
B. The Company proposes to enter into an Agreement and Plan of Merger,
dated as of February 22, 2000 (the "Merger Agreement"), by and among the
Company, ADC Telecommunications, Inc., a Minnesota corporation ("Parent") and
Roman Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of
Parent ("Merger Sub"), pursuant to which Merger Sub will be merged with and into
the Company, with the Company as the surviving corporation (the "Merger"), and
as a result of which Merger each share of common stock, par value $.0005 per
share, of the Company (the "Common Stock") which is issued and outstanding
immediately prior to the effective time of the Merger will be converted into the
right to receive 0.43 shares of common stock of Parent, on the terms and subject
to the conditions set forth in the Merger Agreement; and
C. Parent and certain stockholders of the Company propose to enter into
a Voting Agreement, dated as of February 22, 2000 (the "Voting Agreement"),
pursuant to which such stockholders will agree to vote in favor of the approval
and adoption of the Merger Agreement and the Merger (the "Voting Agreement"),
and the Company and Parent propose to enter into a Stock Option Agreement, dated
as of February 22, 2000, (the "Option Agreement"), pursuant to which the Company
will grant Parent an option to acquire shares representing up to 19.9% of the
issued and outstanding shares of Common Stock on the terms and subject to the
conditions set forth in the Option Agreement; and
D. Pursuant to Section 27 of the Rights Agreement, the Company and the
Rights Agent desire to amend the Rights Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises, subject to the
execution and delivery of the Merger Agreement, the Voting Agreement and the
Option Agreement, the parties hereby amend the Rights Agreement as follows:
1. The definition of "Acquiring Person" in Section 1 of the Agreement
shall be amended by inserting the following at the end of such definition:
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"Notwithstanding the foregoing or any provision to the contrary in this
Agreement, none of ADC Communications, Inc., a Minnesota corporation
("Parent"), Roman Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of Parent ("Merger Sub"), or any of their
respective subsidiaries, Affiliates or Associates shall be deemed an
Acquiring Person pursuant to this Agreement solely by virtue of the
approval, execution or delivery of the Agreement and Plan of Merger of
even date herewith among Parent, Merger Sub and the Company (the
"Merger Agreement") or the consummation of the transactions
contemplated by the Merger Agreement, including the Merger (as defined
in the Merger Agreement), the approval, execution or delivery of the
ancillary agreements relating to the Merger, including the Option
Agreement and the Voting Agreement (as such are defined in the Merger
Agreement) (collectively, the "Related Agreements"), the consummation
of the transactions contemplated by the Related Agreements or the
exercise by the parties thereto of their respective rights under the
Related Agreements, or any public announcement of the foregoing."
2. The definition of "Shares Acquisition Date" in Section 1 of the
Rights Agreement shall be amended by inserting the following at the end of such
definition:
"Notwithstanding the foregoing or any provision to the contrary in this
Agreement, a Shares Acquisition Date shall not occur solely by virtue
of the approval, execution or delivery of the Merger Agreement or the
consummation of the transactions contemplated by the Merger Agreement,
including the Merger, the approval, execution or delivery of the
Related Agreements, the consummation of the transactions contemplated
by the Related Agreements or the exercise by the parties thereto of
their respective rights under the Related Agreements, or any public
announcement of the foregoing."
3. Section 3(a) of the Rights Agreement shall be amended by inserting
the following at the end of Section 3(a):
"Notwithstanding the foregoing or any provision to the contrary in this
Agreement, a Distribution Date shall not occur solely by virtue of the
approval, execution or delivery of the Merger Agreement or the
consummation of the transactions contemplated by the Merger Agreement,
including the Merger, the approval, execution or delivery of the
Related Agreements, the consummation of the transactions contemplated
by the Related Agreements or the exercise by the parties thereto of
their respective rights under the Related Agreements, or any public
announcement of the foregoing."
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4. Section 11(a) of the Rights Agreement shall be amended by inserting
the following at the end of the last sentence of Section 11(a)(ii):
"; provided, further, that the provisions of this Section 11(a) shall
be inapplicable to, and shall not be triggered by, the approval,
execution or delivery of the Merger Agreement or the consummation of
the transactions contemplated by the Merger Agreement, including the
Merger, the approval, execution or delivery of the Related Agreements,
the consummation of the transactions contemplated by the Related
Agreements or the exercise by the parties thereto of their respective
rights under the Related Agreements, or any public announcement of the
foregoing."
5. Section 13(a) of the Rights Agreement shall be amended by inserting
the following at the end of Section 13(a):
"Notwithstanding the foregoing or any provision to the contrary in this
Agreement, this Section 13 shall not be triggered by virtue of the
approval, execution or delivery of the Merger Agreement or the
consummation of the transactions contemplated by the Merger Agreement,
including the Merger, the approval, execution or delivery of the
Related Agreements, the consummation of the transactions contemplated
by the Related Agreements or the exercise by the parties thereto of
their respective rights under the Related Agreements, or any public
announcement of the foregoing."
6. Section 23 of the Rights Agreement shall be amended by inserting the
following as paragraph (d) thereof:
(d) "Termination. Notwithstanding any provision in this Agreement to
the contrary, this Agreement shall terminate and be of no further force
and effect immediately upon the Effective Time (as defined in the
Merger Agreement) and the Rights shall thereupon be canceled without
the payment of any consideration to the holders of the Rights,
including, without limitation, the Redemption Price."
7. This Amendment shall be deemed to be entered into under the laws of
the State of California and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
8. This Amendment may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
9. Except as amended hereby, all of the terms and conditions of the
Rights Agreement are hereby ratified and confirmed.
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10. This Amendment shall constitute an amendment entered into in
accordance with the terms and provisions of Section 27 of the Rights Agreement.
IN WITNESS WHEREOF, the undersigned have executed this First Amendment
to Rights Agreement as of the day and year first above written.
PAIRGAIN TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ XXXXXX X. XXXXX
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Name: Xxxxxx X. Xxxxx
Title: Senior Vice President,
Chief Financial Officer
U.S. STOCK TRANSFER CORP.
By: /s/ XXXXXXX X. XXXXX
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Authorized Officer
Name: Xxxxxxx X. Xxxxx
Title: Vice President
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