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EXHIBIT 2
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AMENDMENT NO. 1 TO RIGHTS AGREEMENT
This Amendment dated March 1, 1999 ("Amendment") to the Preferred Shares
Rights Agreement ("Rights Agreement"), dated as of April 17, 1997, is between
Xylan Corporation, a California corporation (the "Company"), and BankBoston,
N.A., a national banking association (f/k/a The First National Bank of Boston)
(the "Rights Agent").
WHEREAS, the Company and the Rights Agent have heretofore executed and
entered into the Rights Agreement.
WHEREAS, the Company, Alcatel, a corporation organized under the laws of
France ("Alcatel"), and Zeus Acquisition Corp., a California corporation
("Sub"), a contemplate entering into an Agreement and Plan of Merger (the
"Merger Agreement") pursuant to which, among other things, Sub will commence a
cash tender offer (the "Offer") to purchase all the outstanding shares of the
Company and, following the commencement of the Offer, Sub would merge with and
into the Company (the "Merger").
WHEREAS, Alcatel, Sub and each of Xxxxx X. Xxx (and trust controlled by
him) and Xxxx Xxxxxxx (and trusts controlled by him) (each of Xxxxx X. Xxx and
his trusts and Xxxx Xxxxxxx and his trusts are referred to as a "Founding
Shareholder"), also contemplate entering into Shareholder Agreements (each, a
"Shareholder Agreement"), pursuant to which, among other things, the Founding
Shareholder would agree (i) to tender his shares of Common Stock, par value
$.001 per share of the Company (the "Common Share") into the Offer, (ii) grant
to Alcatel an irrevocable proxy to vote his Common Shares in favor of the
Merger, the Merger Agreement and the transactions contemplated thereby and (iii)
grant Sub an option to purchase all the shares of Common Shares owned by each
Founding Shareholder under certain circumstances.
WHEREAS, Alcatel, Sub and the Company also contemplate entering into a
Stock Option Agreement (the "Stock Option Agreement") pursuant to which the
Company would agree to issue Common Shares in connection with the Offer in order
to achieve at least 90% of the outstanding Common Shares tendered in the Offer.
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company and
the Rights Agent may from time to time supplement and amend the Rights Agreement
in order to make any change which the Company may deem necessary or desirable
and which shall be consistent with, and for the purposes of fulfilling, the
objectives of the Board of Directors of the Company in adopting the Rights
Agreement.
WHEREAS, the Board of Directors of the Company has determined that an
amendment to the Rights Agreement as set forth herein is necessary and desirable
and is consistent with the objectives of the Board of Directors of the Company
in adopting the Rights Agreement, and the Company and the Rights Agent desire to
evidence such amendment in writing.
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WHEREAS, all acts and things necessary to make this Amendment a valid
agreement, enforceable according to its terms, have been done and performed, and
the execution and delivery of this Amendment by the Company and the Rights Agent
have been in all respects duly authorized by the Company and the Rights Agent.
NOW, THEREFORE, the parties hereto agree as follows:
1. Amendment to Section 1. Section 1 of the Rights Agreement is
supplemented to add the following definitions in the appropriate locations:
"'Xxx Shareholder Agreement' shall mean the Shareholder Agreement dated as
of March 1, 1999 by and among Alcatel, Zeus Acquisition Corp., Xxxx Xxxxxxx,
Xxxxxxx 1995 Irrevocable Trust, Xxxxxxx Trust and Xxxxxxx Irrevocable
Children's Trust."
"'Merger' shall have the meaning set forth in the Merger Agreement."
"'Merger Agreement' shall mean the Agreement and Plan of Merger, dated as
of March 1, 1999, by and among Alcatel, Zeus Acquisition Corp. and Xylan
Corporation, as it may be amended from time to time."
"'Offer' shall have the meaning set forth in the Merger Agreement."
"'Xxxxxxx Shareholder Agreement' shall mean the Shareholder Agreement
dated as of March 1, 1999 by and among Alcatel, Zeus Acquisition Corp. and
Xxxxxx X. Xxx, Xxxxx X. Xxx Living Trust and Xxx Irrevocable Children's Trust."
"'Shareholder Agreements' shall mean collectively, the Xxx Shareholder
Agreement, the Xxxxxxx Shareholder Agreement and the Walecka Shareholder
Agreement."
"'Stock Option Agreement' shall mean the Stock Option Agreement dated as
of March 1, 1999 by and among Alcatel, Zeus Acquisition Corp. and Xylan
Corporation."
"'Top-Up Option' shall have the meaning set forth in the Stock Option
Agreement."
"'Walecka Shareholder Agreement' shall mean the Shareholder Agreement
dated as of March 1, 1999 by and among Alcatel, Zeus Acquisition Corp. and Xxxx
Xxxxxxx."
2. Amendment of the definition of "Acquiring Person." The definition of
"Acquiring Person" in Section 1(a) of the Rights Agreement shall be amended by
adding the following at the end of Section 1(a):
"Notwithstanding the foregoing or any provision to the contrary in this
Agreement none of Alcatel, Zeus Acquisition Corp., or any of
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their respective Affiliates or Associates shall, individually or
collectively, be deemed to be an Acquiring Person pursuant to this
Agreement by virtue of (i) the execution of the Merger Agreement, the
Shareholder Agreements or the Stock Option Agreement, (ii) the
commencement or the consummation of the Offer, (iii) the acquisition
of Common Shares by Zeus Acquisition Corp., Alcatel or any of their
respective Affiliates or Associates pursuant to the Offer, the
Shareholder Agreements or the exercise of the Top-Up Option and (iv)
the consummation of the Merger or the other transactions contemplated
in the Merger Agreement, each of the Shareholders Agreements and the
Stock Option Agreement."
3. Amendment of the definition of "Business Day." The definition of
"Business Day" in Section 1(d) of the Rights Agreement is amended and restated
to read in its entirety as follows:
"'Business Day' shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the Commonwealth of Massachusetts
are authorized or obligated by law or executive order to close."
4. Amendment of the definition of "Close of Business." The
definition of "Close of Business" in Section 1(e) of the Rights Agreement is
amended and restated to read in its entirety as follows:
"'Close of Business' on any given date shall mean 5:00 P.M.,
Massachusetts time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 P.M., Massachusetts time, on
the next succeeding Business Day."
5. Amendment of the definition of "Distribution Date." The
definition of "Distribution Date" in Section 1(h) of the Rights Agreement is
amended by adding the following sentence at the end thereof:
"Notwithstanding the foregoing or any provision to the contrary in
this Agreement, a Distribution Date shall not be deemed to occur by
reason of (i) the execution of the Merger Agreement, the Shareholder
Agreements or the Stock Option Agreement, (ii) the commencement or
consummation of the Offer, (iii) the acquisition of Common Shares by
Zeus Acquisition Corp., Alcatel or any of their respective Affiliates
or Associates pursuant to the Offer, the Shareholder Agreements or the
exercise of the Top-Up Option, (iv) the consummation of the Merger, or
the other transactions contemplated in the Merger Agreement, each of
the Shareholder
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Agreements and the Stock Option Agreement and (v) the announcement of
the Offer, the Merger or the other transactions contemplated by the Merger
Agreement, the Shareholder Agreements and the Stock Option Agreement."
6. Amendment of the definition of "Expiration Date". Section 1(j) of
the Rights Agreement is amended and restated to read in its entirety as follows:
"Expiration Date" shall mean the earliest of (i) immediately prior to
the consummation of the Offer, (ii) the Redemption Date, (iii) the time at which
the Board of Directors orders the exchange of the Rights as provided in Section
24 hereof and (iv) the Close of Business on the Final Expiration Date."
7. Amendment of the definition of "Permitted Offer." Section 1(l) of
the Rights Agreement is amended and restated to read in its entirety as follows:
"'Permitted Offer' shall mean a tender offer for all outstanding
Common Shares, or for 49.99% of the Common Shares, in either case, followed by a
merger, such tender offer to be made in a manner prescribed by Section 14(d) of
the Exchange Act and the rules and regulations thereunder; provided, however,
that the tender offer occurs at a time when Continuing Directors are in office
and a majority of the Continuing Directors then in office has determined that
the offer is both adequate and otherwise in the best interests of the Company
and its shareholders (taking into account all factors that such Continuing
Directors deem relevant, including without limitation, prices that could
reasonably be achieved if the Company or its assets were sold on an orderly
basis designed to realize maximum value)."
8. Amendment of the definition of "Shares Acquisition Date." Section
l(u) of the Rights Agreement by adding the following sentence at the end
thereof:
"Notwithstanding the foregoing or any provision to the contrary in
this Agreement, a Shares Acquisition Date shall not be deemed to occur by virtue
of (i) the execution of the Merger Agreement, the Shareholder Agreements or the
Stock Option Agreement, (ii) the consummation of the Offer, (iii) the
acquisition of Common Shares by Zeus Acquisition Corp., Alcatel or any of their
respective Affiliates or Associates pursuant to the Offer, the Shareholder
Agreements or the exercise of the Top-Up-Option, (iv) the consummation of the
Merger, or the other transactions contemplated in the Merger Agreement, each of
the Shareholder
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Agreements and the Stock Option Agreement and (v) the announcement of the
Offer, the Merger or the other transactions contemplated by the Merger
Agreement, the Shareholder Agreements and the Stock Option Agreement."
9. Amendment to Section 30. Section 30 of the Rights Agreement is
amended to add the following sentence at the end thereof:
"Nothing in this Agreement shall be construed to give any holder of Rights
or any other Person any legal or equitable rights, remedies or claims under
this Agreement by virtue of the execution of the Merger Agreement, the
Shareholder Agreements or the Stock Option Agreement or by virtue of any of
the transactions contemplated by the Merger Agreement, the Shareholder
Agreements or the Stock Option Agreement."
10. Section 26 of the Rights Agreement is amended to replace the address
of the Rights Agent with the following:
Bank Boston, N.A.
c/o Equiserve Limited Partnership
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Client Administration
11. This Amendment shall be deemed to be entered into under the laws of
the State of California and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to contracts to be made
and performed entirely within such State.
12. This Amendment may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same instrument.
13. As amended hereby, the Agreement shall remain in full force and
effect.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the
date first written above.
XYLAN CORPORATION
By: /s/ Xxxx X. Xxxxxx
_________________________________
Name: Xxxx X. Xxxxxx
Title: Vice President and
Chief Financial Officer
Attest: /s/ Xxxx X. Xxxxxxxx
_____________________________
BANKBOSTON, N.A.,
as Rights Agent
(f/k/a The First National Bank of Boston)
By: /s/ Xxxxx X. Xxxxxx-Xxxx
_________________________________
Signature of Authorized Signatory
Xxxxx X. Xxxxxx-Xxxx
Administration Manager
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