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