EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
TELLABS, INC.,
CHARDONNAY MERGER CORP.
AND
ADVANCED FIBRE COMMUNICATIONS, INC.
DATED AS OF MAY 19, 2004
AGREEMENT OF PLAN AND MERGER
TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER AND SUBSEQUENT MERGER..................................................... 1
Section 1.1 The Merger....................................................................... 1
Section 1.2 Effective Time................................................................... 2
Section 1.3 Effects of the Merger............................................................ 2
Section 1.4 Charter and Bylaws; Directors and Officers....................................... 2
Section 1.5 Conversion of Securities......................................................... 2
Section 1.6 Parent to Make Certificates Available............................................ 4
Section 1.7 Dividends; Transfer Taxes; Withholding........................................... 4
Section 1.8 No Fractional Securities......................................................... 5
Section 1.9 Return of Exchange Fund.......................................................... 5
Section 1.10 Adjustment of Per Share Merger Consideration..................................... 6
Section 1.11 No Further Ownership Rights in Company Common Stock.............................. 6
Section 1.12 Closing of Company Transfer Books................................................ 6
Section 1.13 Lost Certificates................................................................ 6
Section 1.14 Further Assurances............................................................... 6
Section 1.15 Closing; Closing Deliveries...................................................... 7
Section 1.16 Subsequent Merger................................................................ 8
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB..................................... 9
Section 2.1 Organization, Standing and Power................................................. 9
Section 2.2 Capital Structure................................................................ 10
Section 2.3 Authority........................................................................ 11
Section 2.4 Consents and Approvals; No Violation............................................. 12
Section 2.5 SEC Documents and Other Reports.................................................. 13
Section 2.6 Registration Statement and Joint Proxy Statement................................. 14
Section 2.7 Absence of Certain Changes or Events............................................. 14
Section 2.8 Permits and Compliance........................................................... 15
Section 2.9 Tax Matters...................................................................... 15
Section 2.10 Actions, Proceedings and Violations.............................................. 16
Section 2.11 Certain Agreements............................................................... 17
Section 2.12 ERISA............................................................................ 17
Section 2.13 Compliance with Worker Safety and Environmental Laws............................. 18
Section 2.14 Labor Matters.................................................................... 18
Section 2.15 Intellectual Property............................................................ 19
Section 2.16 Opinion of Financial Advisor..................................................... 19
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Section 2.17 Required Vote of Parent Stockholders............................................. 19
Section 2.18 Reorganization................................................................... 20
Section 2.19 Brokers.......................................................................... 20
Section 2.20 Operations of Sub................................................................ 20
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................ 20
Section 3.1 Organization, Standing and Power................................................. 20
Section 3.2 Capital Structure................................................................ 20
Section 3.3 Authority........................................................................ 22
Section 3.4 Consents and Approvals; No Violation............................................. 22
Section 3.5 SEC Documents and Other Reports.................................................. 23
Section 3.6 Registration Statement and Joint Proxy Statement................................. 24
Section 3.7 Absence of Certain Changes or Events............................................. 24
Section 3.8 Permits and Compliance........................................................... 25
Section 3.9 Tax Matters...................................................................... 26
Section 3.10 Actions, Proceedings and Violations.............................................. 27
Section 3.11 Certain Agreements............................................................... 27
Section 3.12 ERISA............................................................................ 29
Section 3.13 Compliance with Worker Safety and Environmental Laws............................. 31
Section 3.14 Labor Matters.................................................................... 31
Section 3.15 Intellectual Property............................................................ 31
Section 3.16 Opinion of Financial Advisor..................................................... 32
Section 3.17 State Takeover Statutes; Certain Charter Provisions.............................. 32
Section 3.18 Required Vote of Company Stockholders............................................ 32
Section 3.19 Reorganization................................................................... 32
Section 3.20 Brokers.......................................................................... 33
Section 3.21 Rights Agreement................................................................. 33
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS............................................ 33
Section 4.1 Conduct of Business Pending the Merger........................................... 33
Section 4.2 No Solicitation.................................................................. 38
Section 4.3 Third Party Standstill Agreements................................................ 39
Section 4.4 Reorganization................................................................... 40
ARTICLE V ADDITIONAL AGREEMENTS................................................................ 40
Section 5.1 Stockholder Meetings............................................................. 40
Section 5.2 Preparation of the Registration Statement and the Joint Proxy Statement.......... 41
Section 5.3 Access to Information............................................................ 41
Section 5.4 Compliance with the Securities Act............................................... 42
Section 5.5 Current Nasdaq Quotation......................................................... 42
Section 5.6 Fees and Expenses................................................................ 42
Section 5.7 Company Stock Plans and Company Stock Purchase Plan.............................. 44
Section 5.8 Reasonable Best Efforts.......................................................... 46
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Section 5.9 Public Announcements............................................................. 47
Section 5.10 State Takeover Laws.............................................................. 47
Section 5.11 Indemnification; Directors and Officers Insurance................................ 47
Section 5.12 Notification of Certain Matters.................................................. 49
Section 5.13 Employee Benefit Plans and Agreements............................................ 49
Section 5.14 Nasdaq........................................................................... 51
Section 5.15 Rights Agreement................................................................. 51
Section 5.16 Board of Directors Representative................................................ 51
Section 5.17 Section 16 Matters............................................................... 52
ARTICLE VI CONDITIONS PRECEDENT TO THE MERGER................................................... 52
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger....................... 52
Section 6.2 Conditions to Obligation of the Company to Effect the Merger..................... 53
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the Merger................. 54
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.................................................... 55
Section 7.1 Termination...................................................................... 55
Section 7.2 Effect of Termination............................................................ 58
Section 7.3 Amendment........................................................................ 58
Section 7.4 Waiver........................................................................... 58
ARTICLE VIII GENERAL PROVISIONS................................................................... 58
Section 8.1 Non-Survival of Representations and Warranties................................... 58
Section 8.2 Notices.......................................................................... 58
Section 8.3 Interpretation................................................................... 59
Section 8.4 Counterparts..................................................................... 59
Section 8.5 Entire Agreement; No Third-Party Beneficiaries................................... 60
Section 8.6 Governing Law and Venue; Waiver of Jury Trial.................................... 60
Section 8.7 Assignment....................................................................... 61
Section 8.8 Severability..................................................................... 61
Section 8.9 Enforcement of this Agreement.................................................... 61
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TABLE OF DEFINED TERMS
Defined Term Section
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Acquisition Transaction............................................................................ 4.2
Affiliate.......................................................................................... 1.16(e)
Agreement.......................................................................................... Introduction
Blue Sky Laws...................................................................................... 2.4
Certificate of Merger.............................................................................. 1.2
Certificates....................................................................................... 1.6(b)
Closing............................................................................................ 1.15(a)
Closing Date....................................................................................... 1.15(a)
Code............................................................................................... Recitals
Company............................................................................................ Introduction
Company Acquisition Transaction.................................................................... 5.6(g)
Company Affiliate Letter........................................................................... 5.4
Company Business Personnel......................................................................... 3.14
Company Bylaws..................................................................................... 1.15(d)(iii)
Company Charter.................................................................................... 1.4(a)
Company Common Stock............................................................................... Recitals
Company Contracts.................................................................................. 3.11(a)
Company Key Customers.............................................................................. 3.7(b)
Company Foreign Benefit Plan....................................................................... 3.12(f)
Company Letter..................................................................................... 3.2(b)
Company Multiemployer Plan......................................................................... 3.12(c)
Company Permits.................................................................................... 3.8(a)
Company Plan....................................................................................... 3.12(c)
Company Preferred Stock............................................................................ 3.2(a)
Company Series A Preferred Stock................................................................... 3.2(a)
Company SEC Documents.............................................................................. 3.5
Company Stock Option Plans......................................................................... 3.2(a)
Company Stock Options.............................................................................. 3.2(a)
Company Stock Purchase Plan........................................................................ 3.2(a)
Company Stockholder Approval....................................................................... 5.1(a)
Company Stockholder Meeting........................................................................ 5.1(a)
Company's Current Premium.......................................................................... 5.11(b)
Confidentiality Agreement.......................................................................... 5.3
Constituent Corporations........................................................................... Introduction
Contract........................................................................................... 2.2(a)
Costs.............................................................................................. 5.11(a)
Dissenting Shares.................................................................................. 1.5(d)
DGCL............................................................................................... 1.1
D&O Insurance...................................................................................... 5.11(b)
Effective Time..................................................................................... 1.2
Employee Agreement................................................................................. 3.11(c)
End Date........................................................................................... 7.1(d)
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Environmental Laws................................................................................. 2.13
ERISA.............................................................................................. 2.12(a)
ERISA Affiliate.................................................................................... 2.12(c)
Exchange Act....................................................................................... 2.4
Exchange Agent..................................................................................... 1.6(a)
Exchange Fund...................................................................................... 1.6(a)
Exchange Ratio..................................................................................... 1.5(c)
GAAP............................................................................................... 2.5
Governmental Entity................................................................................ 2.4
HSR Act............................................................................................ 2.4
Indemnified Party.................................................................................. 5.11(a)
Intellectual Property Rights....................................................................... 2.15(a)
IRS................................................................................................ 2.9
Joint Proxy Statement.............................................................................. 2.6
Joint Venture...................................................................................... 2.2(c)
Knowledge of Parent................................................................................ 2.8(a)
Knowledge of the Company........................................................................... 3.8(a)
Marconi............................................................................................ 5.13(e)
Material Adverse Change............................................................................ 2.1
Material Adverse Effect............................................................................ 2.1
Merger............................................................................................. Recitals
MIP................................................................................................ 5.13(g)
Nasdaq............................................................................................. 1.8
Non-ERISA Benefits................................................................................. 5.13(a)
Option Exchange Ratio.............................................................................. 5.7(a)
Order.............................................................................................. 6.1(e)
Parent............................................................................................. Introduction
Parent Acquisition Transaction..................................................................... 7.1
Parent Business Personnel.......................................................................... 2.14
Parent Bylaws...................................................................................... 1.15(a)(iii)
Parent Charter..................................................................................... 1.15(b)(i)
Parent Common Stock................................................................................ Recitals
Parent Contract.................................................................................... 2.11
Parent Key Customers............................................................................... 2.7(b)
Parent Letter...................................................................................... 2.2(b)
Parent Multiemployer Plan.......................................................................... 2.12(c)
Parent Permits..................................................................................... 2.8(a)
Parent Plan........................................................................................ 2.12(c)
Parent SEC Documents............................................................................... 2.5
Parent Stock Plans................................................................................. 2.2(a)
Parent Stockholder Approval........................................................................ 5.1(a)
Parent Stockholder Meeting......................................................................... 5.1(a)
Per Share Cash Consideration....................................................................... 1.5(c)
Per Share Merger Consideration..................................................................... 1.5(c)
Per Share Stock Consideration...................................................................... 1.5(c)
Person............................................................................................. 1.6(a)
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Registration Statement............................................................................. 2.3
Rights............................................................................................. 3.2(a)
Rights Agreement................................................................................... 3.2(a)
Rule 145 Affiliates................................................................................ 5.4
Sabbatical Program................................................................................. 5.13(e)
SAR................................................................................................ 5.7(a)
Xxxxxxxx-Xxxxx Act................................................................................. 2.8(b)
SEC................................................................................................ 2.2(b)
Securities Act..................................................................................... 2.3
Share Issuance..................................................................................... 2.3
Sister Subsidiary.................................................................................. 1.16(a)
State Takeover Approvals........................................................................... 2.4
Stockholder Meetings............................................................................... 5.1(a)
Sub................................................................................................ Introduction
Subsequent Certificate of Merger................................................................... 1.16(a)
Subsequent Merger.................................................................................. 1.16(a)
Subsidiary......................................................................................... 2.1
Substitute Option.................................................................................. 5.7(a)
Superior Proposal.................................................................................. 4.2(a)
Surviving Corporation.............................................................................. 1.1
Takeover Proposal.................................................................................. 4.2(a)
Tax Return......................................................................................... 2.9
Taxes.............................................................................................. 2.9
Termination Fee.................................................................................... 5.6(c)
Third Party........................................................................................ 4.2
Transmittal Letter................................................................................. 1.6(b)
Unvested Company Share............................................................................. 5.7(b)
Unvested Share Restrictions........................................................................ 5.7(b)
Worker Safety Laws................................................................................. 2.13
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 19, 2004 (this
"Agreement"), among Tellabs, Inc., a Delaware corporation ("Parent"), Chardonnay
Merger Corp., a Delaware corporation and a direct wholly owned subsidiary of
Parent ("Sub"), and Advanced Fibre Communications, Inc., a Delaware corporation
(the "Company") (Sub and the Company being hereinafter collectively referred to
as the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved and declared advisable the merger of Sub with and into
the Company (the "Merger"), upon the terms and subject to the conditions set
forth herein, whereby each issued and outstanding share of common stock, $0.01
par value, of the Company ("Company Common Stock"), together with the associated
Rights (as hereinafter defined) under the Rights Agreement (as hereinafter
defined), not owned directly or indirectly by Parent or the Company, will be
converted into the right to receive (i) shares of common stock, $0.01 par value,
of Parent ("Parent Common Stock") and (ii) the Per Share Cash Consideration (as
hereinafter defined);
WHEREAS, the respective Boards of Directors of Parent and the
Company have determined that the Merger is in furtherance of and consistent with
their respective long-term business strategies and is fair to, and in the best
interest of, their respective stockholders;
WHEREAS, immediately following the Merger, Parent will cause
the surviving corporation in the Merger to merge with and into a newly created
direct, wholly owned Subsidiary of Parent pursuant to the Subsequent Merger (as
hereinafter defined); and
WHEREAS, this Agreement is intended to constitute a "plan of
reorganization" with respect to the Merger and the Subsequent Merger for United
States federal income tax purposes pursuant to which the Merger and the
Subsequent Merger, taken together, are to be treated as a "reorganization" under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises,
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE MERGER AND SUBSEQUENT MERGER
Section 1.1 The Merger. Upon the terms and subject to
the conditions set forth in this Agreement, and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), Sub shall be merged with
and into the Company at the Effective Time (as hereinafter defined). Following
the Merger, the separate corporate existence of Sub shall cease and the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of Sub in accordance
with the DGCL. Notwithstanding anything to the contrary herein, at the election
of Parent, any direct wholly owned Subsidiary (as hereinafter defined) of Parent
may be substituted for Sub as a constituent
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corporation in the Merger; provided that such substituted corporation is a
Delaware corporation which is formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and has engaged in no other business
activities. In such event, the parties agree to execute an appropriate amendment
to this Agreement, in form and substance reasonably satisfactory to Parent and
the Company, in order to reflect such substitution.
Section 1.2 Effective Time. The Merger shall become
effective when a certificate of merger (the "Certificate of Merger"), executed
in accordance with the relevant provisions of the DGCL, is filed with the
Secretary of State of the State of Delaware; provided, however, that, upon
mutual consent of the Constituent Corporations, the Certificate of Merger may
provide for a later date of effectiveness of the Merger not more than 30 days
after the date the Certificate of Merger is filed. When used in this Agreement,
the term "Effective Time" shall mean the date and time at which the Certificate
of Merger is accepted for recording or such later time set forth in the
Certificate of Merger. The filing of the Certificate of Merger shall be made on
the date of the Closing (as hereinafter defined).
Section 1.3 Effects of the Merger. The Merger shall have
the effects set forth in this Agreement and in Section 259 of the DGCL.
Section 1.4 Charter and Bylaws; Directors and Officers.
(a) At the Effective Time, the Fifth Amended and Restated Certificate of
Incorporation, as amended, of the Company (the "Company Charter"), as in effect
immediately prior to the Effective Time, shall be amended so that Article FOURTH
of the Company Charter reads in its entirety as follows: "The total number of
shares of all classes of capital stock which the Corporation shall have
authority to issue is 1,000 shares of Common Stock, $0.01 par value." As so
amended, the Company Charter shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law. At the Effective Time, the Bylaws of Sub, as in effect
immediately prior to the Effective Time, shall become the Bylaws of the
Surviving Corporation until thereafter changed or amended as provided therein or
in the Certificate of Incorporation of the Surviving Corporation.
(b) The directors of Sub at the Effective Time shall be the
directors of the Surviving Corporation, until the earlier of their resignation
or removal or until their respective successors are duly elected and qualified,
as the case may be. The officers of the Company at the Effective Time shall be
the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
Section 1.5 Conversion of Securities. At the Effective
Time, by virtue of the Merger and without any action on the part of Parent, Sub,
the Company or the holders of any securities of the Constituent Corporations:
(a) Each issued and outstanding share of common stock, $0.01
par value, of Sub shall be converted into one validly issued, fully paid and
nonassessable share of common stock, $0.01 par value, of the Surviving
Corporation.
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(b) All shares of Company Common Stock, together with the
associated Rights, that are held in the treasury of the Company or by any wholly
owned Subsidiary of the Company and any shares of Company Common Stock, together
with the associated Rights, owned by Parent or any wholly owned Subsidiary of
Parent shall be canceled and no capital stock of Parent or other consideration
shall be delivered in exchange therefor.
(c) Subject to the provisions of Sections 1.8 and 1.10 hereof,
each share of Company Common Stock issued and outstanding immediately prior to
the Effective Time (together with the associated Rights), other than Dissenting
Shares (as hereinafter defined) and shares to be canceled in accordance with
Section 1.5(b), shall be converted into the right to receive (i) 1.55 (such
number being the "Exchange Ratio") validly issued, fully paid and nonassessable
shares of Parent Common Stock (the "Per Share Stock Consideration") and (ii)
$7.00 in cash, without interest (the "Per Share Cash Consideration" and,
together with the Per Share Stock Consideration, the "Per Share Merger
Consideration"). All such shares of Company Common Stock and the associated
Rights, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive any dividends and other distributions in
accordance with Section 1.7, certificates representing the shares of Parent
Common Stock into which such shares are converted, the Per Share Cash
Consideration and any cash, without interest, in lieu of fractional shares to be
issued or paid in consideration therefor upon the surrender of such certificate
in accordance with Section 1.6.
(d) Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time, together with the associated Rights, which are held
of record by stockholders who shall not have approved the Merger and who shall
have demanded properly in writing appraisal of such shares in accordance with
Section 262 of the DGCL ("Dissenting Shares") shall not be converted into the
right to receive the Per Share Merger Consideration as set forth in Section
1.5(c), but the holders thereof instead shall be entitled to, and the Dissenting
Shares shall only represent the right to receive, payment of the fair value of
such shares in accordance with the provisions of Section 262 of the DGCL;
provided, however, that (i) if such a holder fails to demand properly in writing
from the Surviving Corporation the appraisal of his or its shares in accordance
with Section 262(d) of the DGCL or, after making such demand, subsequently
delivers an effective written withdrawal of such demand, or fails to establish
his or its entitlement to appraisal rights as provided in Section 262 of the
DGCL, if so required, or (ii) if a court shall determine that such holder is not
entitled to receive payment for his or its shares or such holder shall otherwise
lose his or its appraisal rights, then, in any such case, each share of Company
Common Stock, together with the associated Rights, held of record by such holder
or holders shall automatically be converted into and represent only the right to
receive the Per Share Merger Consideration as set forth in Section 1.5(c), upon
surrender of the certificate or certificates representing such Dissenting
Shares. The Company shall give Parent and Sub prompt notice of any demands
received by the Company for appraisal of such shares, and Parent and Sub shall
have the right to participate in all negotiations and proceedings with respect
to such demands except as required by applicable law. The Company shall not,
except with the prior written consent of Parent, voluntarily make any payment
with respect to any demands for fair value for Dissenting Shares or offer to
settle, settle or negotiate in respect of any such demands.
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Section 1.6 Parent to Make Certificates Available. (a)
Parent shall authorize a commercial bank (or such other Person as shall be
reasonably acceptable to Parent and the Company) to act as Exchange Agent
hereunder (the "Exchange Agent"). As soon as practicable after the Effective
Time, Parent shall deposit, or cause to be deposited, with the Exchange Agent
for exchange with certificates which represented outstanding shares of Company
Common Stock immediately prior to the Effective Time, together with the
associated Rights, all cash and certificates representing the shares of Parent
Common Stock payable or issuable pursuant to Section 1.5(c) and cash, as
required to make payments in lieu of any fractional shares pursuant to Section
1.8 (such cash and shares of Parent Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund"). The Exchange Agent shall deliver the Per Share Merger
Consideration contemplated to be issued and paid pursuant to Section 1.5(c) out
of the Exchange Fund. For purposes of this Agreement, "Person" means any
individual, corporation, partnership, limited liability company, joint venture,
association, joint-stock company, estate, Governmental Entity (as hereinafter
defined), trust or unincorporated organization.
(b) Parent shall instruct the Exchange Agent, as soon as
practicable after the Effective Time, to mail to each record holder of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock, together with the
associated Rights, converted in the Merger (the "Certificates"), a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon actual delivery of the
Certificates to the Exchange Agent, and shall contain instructions for use in
effecting the surrender of such Certificates in exchange for the Per Share Cash
Consideration and certificates representing shares of Parent Common Stock and
cash in lieu of fractional shares and which shall be reasonably satisfactory to
the Company (the "Transmittal Letter")). Upon surrender for cancellation to the
Exchange Agent of all Certificates held by any record holder of a Certificate,
together with the Transmittal Letter, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor the Per Share Cash
Consideration and a certificate representing that number of whole shares of
Parent Common Stock into which the shares represented by the Certificate so
surrendered shall have been converted at the Effective Time pursuant to this
Article I, cash in lieu of any fractional share in accordance with Section 1.8
and certain dividends and other distributions in accordance with Section 1.7,
and any Certificate so surrendered shall forthwith be canceled.
Section 1.7 Dividends; Transfer Taxes; Withholding. No
dividends or other distributions that are declared on or after the Effective
Time on Parent Common Stock, or are payable to the holders of record thereof on
or after the Effective Time, will be paid to any Person entitled by reason of
the Merger to receive a certificate representing Parent Common Stock until such
Person surrenders the related Certificate or Certificates, as provided in
Section 1.6. Subject to the effect of applicable law, there shall be paid to
each record holder of a new certificate representing such Parent Common Stock:
(i) at the time of such surrender or as promptly as practicable thereafter, the
amount of any dividends or other distributions theretofore paid with respect to
the shares of Parent Common Stock represented by such new certificate and having
a record date on or after the Effective Time and a payment date prior to such
surrender; and (ii) at the appropriate payment date or as promptly as
practicable thereafter, the amount of any dividends or other distributions
payable with respect to such shares of Parent Common Stock and having a record
date on or after the Effective Time but prior to such surrender and a payment
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date on or subsequent to such surrender. In no event shall the Person entitled
to receive such dividends or other distributions be entitled to receive interest
on such dividends or other distributions. If any cash or certificate
representing shares of Parent Common Stock is to be paid to or issued in a name
other than that in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed and otherwise in proper form for transfer
and that the Person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of certificates for
such shares of Parent Common Stock in a name other than that of the registered
holder of the Certificate surrendered, or shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable. Parent or
the Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any Person such
amounts as Parent or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the Code or under any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Parent or the Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the Person who otherwise would
have received the payment in respect of which such deduction and withholding was
made by Parent or the Exchange Agent.
Section 1.8 No Fractional Securities. No certificates or
scrip representing fractional shares of Parent Common Stock shall be issued upon
the surrender for exchange of Certificates pursuant to this Article I; no Parent
dividend or other distribution or stock split shall relate to any fractional
share; and no fractional share shall entitle the owner thereof to vote or to any
other rights of a securityholder of Parent. In lieu of any such fractional
share, each holder of Company Common Stock who would otherwise have been
entitled to a fraction of a share of Parent Common Stock upon surrender of
Certificates for exchange pursuant to this Article I will be paid an amount in
cash (without interest), rounded down to the nearest cent, determined by
multiplying (i) the last reported sale price per share of Parent Common Stock on
The Nasdaq National Market ("Nasdaq") on the date of the Effective Time (or, if
the shares of Parent Common Stock do not trade on Nasdaq on such date, the first
date of trading of shares of Parent Common Stock on Nasdaq after the Effective
Time) by (ii) the fractional interest of a share of Parent Common Stock to which
such holder would otherwise be entitled. As promptly as practicable after the
determination of the amount of cash, if any, to be paid to holders of fractional
share interests, the Exchange Agent shall so notify Parent, and Parent shall
deposit such amount with the Exchange Agent and shall cause the Exchange Agent
to forward payments to such holders of fractional share interests subject to and
in accordance with the terms of this Section 1.8. No cash payment in lieu of
fractional shares will be paid to any Person until such Person surrenders the
related Certificate or Certificates.
Section 1.9 Return of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the former stockholders of the
Company for twelve (12) months after the Effective Time shall be delivered to
Parent, upon demand of Parent, and any such former stockholders who have not
theretofore complied with this Article I shall thereafter look only to Parent
for payment of their claim for Parent Common Stock, Per Share Cash
Consideration, any cash in lieu of fractional shares of Parent Common Stock and
any dividends or distributions with respect to Parent Common Stock. None of
Parent, the Surviving Corporation or the Exchange Agent shall be liable to any
former holder of Company Common Stock for any such shares of Parent Common
Stock, Per Share Cash Consideration, cash in lieu
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of fractional shares of Parent Common Stock and dividends and distributions
which are delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
Section 1.10 Adjustment of Per Share Merger
Consideration. In the event of any reclassification, stock split or stock
dividend (including any dividend or distribution of securities convertible into
or exercisable for Parent Common Stock or Company Common Stock) with respect to
Parent Common Stock or Company Common Stock or any change or conversion of
Parent Common Stock or Company Common Stock into other securities (or if a
record date with respect to any of the foregoing should occur) on or after the
date of this Agreement and prior to the Effective Time, appropriate and
proportionate adjustments, if any, shall be made to the Per Share Merger
Consideration, Exchange Ratio, Per Share Stock Consideration and Per Share Cash
Consideration and all references to the Per Share Merger Consideration, Exchange
Ratio, Per Share Stock Consideration and Per Share Cash Consideration in this
Agreement shall be deemed to be to the Per Share Merger Consideration, Exchange
Ratio, Per Share Stock Consideration and Per Share Cash Consideration as so
adjusted.
Section 1.11 No Further Ownership Rights in Company
Common Stock. All shares of Parent Common Stock issued and the Per Share Cash
Consideration paid upon the surrender for exchange of Certificates in accordance
with the terms hereof (including any cash paid pursuant to Section 1.8) shall be
deemed to have been issued and paid in full satisfaction of all rights
pertaining to the shares of Company Common Stock, together with the associated
Rights, represented by such Certificates.
Section 1.12 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed, and no
transfer of shares of Company Common Stock shall thereafter be made on the
records of the Company. If, after the Effective Time, Certificates are presented
to the Surviving Corporation, the Exchange Agent or Parent, such Certificates
shall be canceled and exchanged as provided in this Article I.
Section 1.13 Lost Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent or the Exchange Agent, the posting by such Person of
a bond, in such reasonable amount as Parent or the Exchange Agent may direct as
indemnity against any claim that may be made against Parent, the Surviving
Corporation or the Exchange Agent with respect to such Certificate, the Exchange
Agent or Parent will issue and pay or cause to be issued and paid in exchange
for such lost, stolen or destroyed Certificate the shares of Parent Common
Stock, Per Share Cash Consideration, any cash in lieu of fractional shares of
Parent Common Stock to which the holder thereof is entitled pursuant to Section
1.8, and any dividends or other distributions to which the holder thereof is
entitled pursuant to Section 1.7.
Section 1.14 Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the
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Surviving Corporation and its proper officers and directors or their designees
shall be authorized to execute and deliver, in the name and on behalf of either
of the Constituent Corporations, all such deeds, bills of sale, assignments and
assurances and to do, in the name and on behalf of either Constituent
Corporation, all such other acts and things as may be necessary, desirable or
proper to vest, perfect or confirm the Surviving Corporation's right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to carry out
the purposes of this Agreement.
Section 1.15 Closing; Closing Deliveries.
(a) The closing of the transactions contemplated by this
Agreement (the "Closing") and all actions specified in this Agreement to occur
at the Closing shall take place at the offices of Sidley Xxxxxx Xxxxx & Xxxx
LLP, Bank One Plaza, 00 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, at 10:00 a.m.,
local time, no later than the second business day following the day on which the
last of the conditions set forth in Article VI (other than those conditions that
by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions) shall have been fulfilled or waived
(if permissible) in accordance with this Agreement or at such other time and
place as Parent and the Company shall agree (the "Closing Date").
(b) Subject to fulfillment or waiver of the conditions set
forth in Article VI, at the Closing Parent shall deliver to the Company all of
the following:
(i) a copy of the Restated Certificate of Incorporation,
as amended, of Parent (the "Parent Charter"), certified as of a recent
date by the Secretary of State of the State of Delaware;
(ii) a certificate of good standing of Parent, issued as
of a recent date by the Secretary of State of the State of Delaware;
and
(iii) a certificate of the Secretary or an Assistant
Secretary of Parent, dated the Closing Date, in form and substance
reasonably satisfactory to the Company, as to (A) no amendments to the
Parent Charter since a specified date, (B) the Amended and Restated
Bylaws of Parent (the "Parent Bylaws"), (C) the resolutions of the
Board of Directors of Parent authorizing the execution and performance
of this Agreement and the transactions contemplated herein, (D) the
resolutions of the stockholders of Parent authorizing the Share
Issuance (as hereinafter defined) and (E) the incumbency and signatures
of the officers of Parent executing this Agreement.
(c) Subject to fulfillment or waiver of the conditions set
forth in Article VI, at the Closing Sub shall deliver to the Company all of the
following:
(i) a copy of the Certificate of Incorporation of Sub,
certified as of a recent date by the Secretary of State of the State of
Delaware;
(ii) a certificate of good standing of Sub, issued as of a
recent date by the Secretary of State of the State of Delaware; and
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(iii) a certificate of the Secretary or an Assistant
Secretary of Sub, dated the Closing Date, in form and substance
reasonably satisfactory to the Company, as to (A) no amendments to the
Certificate of Incorporation of Sub since a specified date, (B) the
Bylaws of Sub, (C) the resolutions of the Board of Directors of Sub
authorizing the execution and performance of this Agreement and the
transactions contemplated herein, (D) the written consent of Parent in
its capacity as sole stockholder of Sub approving and adopting this
Agreement in accordance with Section 251 of the DGCL and (E) the
incumbency and signatures of the officers of Sub executing this
Agreement and any other agreement or certificate executed by Sub in
connection with the Closing.
(d) Subject to fulfillment or waiver of the conditions set
forth in Article VI, at the Closing the Company shall deliver to Parent all of
the following:
(i) a copy of the Company Charter, certified as of a
recent date by the Secretary of State of the State of Delaware;
(ii) a certificate of good standing of the Company, issued
as of a recent date by the Secretary of State of the State of Delaware;
and
(iii) certificate of the Secretary or an Assistant
Secretary of the Company, dated the Closing Date, in form and substance
reasonably satisfactory to Parent, as to (A) no amendments to the
Company Charter since a specified date, (B) the Bylaws of the Company
(the "Company Bylaws"), (C) the resolutions of the Board of Directors
of the Company authorizing the execution and performance of this
Agreement and the transactions contemplated herein, (D) the resolutions
of the stockholders of the Company approving and adopting this
Agreement in accordance with Section 251 of the DGCL and (E) the
incumbency and signatures of the officers of the Company executing this
Agreement.
Section 1.16 Subsequent Merger.
(a) Immediately after the Effective Time, Parent will cause
the Surviving Corporation to merge with and into a newly created limited
liability company which is a direct, wholly owned Subsidiary of Parent (the
"Sister Subsidiary") and the separate corporate existence of the Surviving
Corporation shall thereupon cease (the "Subsequent Merger"). The Subsequent
Merger shall become effective upon the filing of a certificate of merger (the
"Subsequent Certificate of Merger"), executed in accordance with the relevant
provisions of the Delaware Limited Liability Company Act, with the Secretary of
State of the State of Delaware or such later time as may be specified in the
Subsequent Certificate of Merger; provided, however, that, in any event, the
Subsequent Merger shall be effective immediately after the Effective Time (it
being understood that in all events the Subsequent Merger shall be effective not
later than the end of the same day as the Merger).
(b) At the effective time of the Subsequent Merger, each
issued and outstanding share of common stock, $0.01 par value, of the Surviving
Corporation shall be converted into one validly issued membership interest in
the surviving entity in the Subsequent Merger.
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(c) At the effective time of the Subsequent Merger, each
issued and outstanding membership interest of the Sister Subsidiary shall be
canceled and no consideration shall be delivered in exchange therefor.
(d) The Merger and Subsequent Merger, taken together, are
intended to be treated for federal income tax purposes as a "reorganization"
under Section 368(a) of the Code (to which each of Parent and the Company are to
be parties under Section 368(b) of the Code) in which the Company is to be
treated as merging directly with and into Parent, with the Company Common Stock,
together with the associated Rights, converted in such merger into the right to
receive the consideration provided for hereunder.
(e) Each of the parties hereto shall, and shall cause its
Affiliates to, treat the Merger and Subsequent Merger for all Tax (as
hereinafter defined) purposes consistent with Section 1.16(d). For purposes of
this Agreement, "Affiliate" means, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by or is under common
control with such Person.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as
follows:
Section 2.1 Organization, Standing and Power. Each of
Parent and Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite corporate
power and authority to carry on its business as now being conducted. Each
Subsidiary (as hereinafter defined) of Parent is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized and has the requisite corporate (in the case of a Subsidiary that is a
corporation) or other power and authority to carry on its business as now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power or authority would not, individually or in the
aggregate, have a Material Adverse Effect (as hereinafter defined) on Parent.
Parent and each of its Subsidiaries are duly qualified to do business, and are
in good standing, in each jurisdiction where the character of their properties
owned or held under lease or the nature of their activities makes such
qualification or good standing necessary, except where the failure to be so
qualified and in good standing would not, individually or in the aggregate, have
a Material Adverse Effect on Parent. For purposes of this Agreement (a)
"Material Adverse Change" or "Material Adverse Effect" means, when used with
respect to Parent or the Company, as the case may be, any event, effect, change
or development that, individually or when taken together with all other events,
effects, changes or developments, is, or would reasonably be expected to be,
materially adverse to the business, assets, liabilities, financial condition or
results of operations of Parent and its Subsidiaries, taken as a whole, or the
Company and its Subsidiaries, taken as a whole, as the case may be; provided,
however, that to the extent any event, effect, change or development is caused
by or results from any of the following, it shall not be taken into account in
determining whether there has been (or would reasonably be expected to be) a
"Material Adverse Change" and "Material Adverse Effect": (i) the fact that
Parent (as opposed to any other Person) is a party to the Merger Agreement with
respect to a
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Material Adverse Effect on the Company or the fact that the Company (as opposed
to any other Person) is a party to the Merger Agreement with respect to a
Material Adverse Effect on Parent; (ii) compliance by Parent or the Company, as
the case may be, with their respective covenants contained in this Agreement;
(iii) factors affecting the industry in which the Company or Parent, as the case
may be, operates generally or affecting the economy or financial markets as a
whole (which factors in each case do not disproportionately affect Parent or the
Company, as the case may be, as compared to other comparable companies in their
industry in any material respect); (iv) changes in any applicable law,
ordinance, administrative or governmental rule or regulation after the date
hereof; and (v) any failure by Parent or the Company, as the case may be, to
meet analysts revenue or earnings projections, in and of itself, or the trading
price of the Company Common Stock or Parent Common Stock, as the case may be, in
and of itself (it being understood that any event, effect, change or development
which affects or otherwise relates to the failure to meet analysts revenue or
earnings projections or the trading price, other than an event, effect, change
or development set forth in clauses (i) through (iv) above, may be deemed to
constitute, or be taken into account in determining whether there has been, or
would reasonably be expected to be, a Material Adverse Change or Material
Adverse Effect), and (b) "Subsidiary" means any corporation, partnership,
limited liability company, joint venture, trust, association or other entity of
which Parent or the Company, as the case may be (either alone or through or
together with any other Subsidiary), owns, directly or indirectly, (i) 50% or
more of the stock or other equity interests the holders of which are generally
entitled to elect at least a majority of the Board of Directors or other
governing body of such corporation, partnership, limited liability company,
joint venture, trust, association or other entity or (ii) if there are no such
voting interests, 50% or more of the equity interests in such corporation,
partnership, limited liability company, joint venture, trust, association or
other entity.
Section 2.2 Capital Structure. (a) As of the date
hereof, the authorized capital stock of Parent consists of 1,000,000,000 shares
of Parent Common Stock and 5,000,000 shares of preferred stock $0.01 par value
per share. At the close of business on May 17, 2004, (i) 416,092,491 shares of
Parent Common Stock were issued and outstanding; (ii) 3,250,000 shares of Parent
Common Stock were held in the treasury of Parent and no shares of Parent Common
Stock were held by Subsidiaries of Parent; (iii) 38,324,281 shares of Parent
Common Stock were reserved for issuance pursuant to outstanding options,
warrants, restricted stock units or other rights to purchase or otherwise
acquire shares of Parent Common Stock under Parent's plans or other arrangements
or pursuant to any plans or arrangements assumed by Parent in connection with
any acquisition, business combination or similar transaction (collectively, the
"Parent Stock Plans"); and (iv) 159,448 stock appreciation rights are
outstanding pursuant to the Parent Stock Plans. Between May 17, 2004 and the
date of this Agreement, except as set forth above and except for the issuance of
shares of Parent Common Stock pursuant to the Parent Stock Plans, no shares of
capital stock or other voting securities of Parent were issued, reserved for
issuance or outstanding. All of the shares of Parent Common Stock issuable upon
conversion of Company Common Stock at the Effective Time in accordance with this
Agreement will be, when so issued, duly authorized, validly issued, fully paid
and nonassessable and free of preemptive rights. As of the date of this
Agreement, except for (i) this Agreement and (ii) as set forth above, there are
no options, warrants, calls, rights, puts or Contracts (as hereinafter defined)
to which Parent or any of its Subsidiaries is a party or by which any of them is
bound obligating Parent or any of its Subsidiaries to issue, deliver, sell,
redeem or otherwise acquire, or cause to be issued, delivered, sold, redeemed or
otherwise acquired, any additional shares of capital stock
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(or other voting securities or equity equivalents) of Parent or any of its
Subsidiaries or obligating Parent or any of its Subsidiaries to grant, extend or
enter into any such option, warrant, call, right, put or Contract. As of the
date of this Agreement, Parent does not have any outstanding bonds, debentures,
notes or other obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to vote) with
the stockholders of Parent on any matter. There are no Contracts to which Parent
or its Subsidiaries or, to the Knowledge of Parent, any of their respective
officers or directors is a party concerning the voting of any capital stock of
Parent or any of its Subsidiaries. For purposes of this Agreement, "Contract"
means any contract, agreement, instrument, guarantee, indenture, note, bond,
mortgage, permit, franchise, concession, commitment, lease, license,
arrangement, obligation or understanding, whether written or oral.
(b) Except as set forth in Section 2.2(b) of the letter dated
the date hereof and delivered on the date hereof by Parent to the Company, which
letter relates to this Agreement and is designated the Parent Letter (the
"Parent Letter"), each outstanding share of capital stock (or other voting
security or equity equivalent, as the case may be) of each material Subsidiary
of Parent is duly authorized, validly issued, fully paid and nonassessable and,
except for director or qualifying shares, each such share (or other voting
security or equity equivalent) is owned by Parent or another Subsidiary of
Parent, free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, limitations on voting rights, charges and
other encumbrances of any nature whatsoever. Exhibit 21 to Parent's Annual
Report on Form 10-K for the year ended January 2, 2004, as filed with the
Securities and Exchange Commission (the "SEC"), constituted a true, accurate and
correct statement in all material respects of all of the information required to
be set forth therein by the regulations of the SEC as of the date thereof.
(c) Section 2.2(c) of the Parent Letter sets forth a list as
of the date hereof of all material Subsidiaries and Joint Ventures (as
hereinafter defined) of Parent and the jurisdiction in which such Subsidiary or
Joint Venture is organized. Section 2.2(c) of the Parent Letter also sets forth
as of the date hereof the extent of the ownership and voting interests held by
Parent in each such Joint Venture. As of the date hereof, Parent has no
obligation to make any capital contributions, or otherwise provide assets or
cash, to any Joint Venture. As used in this Agreement, "Joint Venture" means,
with respect to a party, any corporation, limited liability company,
partnership, joint venture, trust or other entity which is not a Subsidiary of
such party and in which (i) such party, directly or indirectly, owns or controls
any shares of any class of the outstanding voting securities or other equity
interests (other than the ownership of securities primarily for investment
purposes as part of routine cash management or investments of 1% or less in
publicly traded companies) or (ii) such party or a Subsidiary of such party is a
general partner.
(d) As of the date hereof, neither Parent nor any of its
Affiliates or associates (as that term is defined in Rule 12b-2 under the
Exchange Act (as defined below) beneficially owns, or, within the last two
years, has owned, directly or indirectly, 15% or more of the then issued and
outstanding shares of capital stock of the Company.
Section 2.3 Authority. On or prior to the date of this
Agreement, the Boards of Directors of Parent and Sub have declared this
Agreement and the Merger advisable and fair to and in the best interest of
Parent and Sub, respectively, and their respective stockholders, and
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Parent, as sole stockholder of Sub, has approved and adopted this Agreement in
accordance with the DGCL, and the Board of Directors of Parent has resolved to
recommend the approval by Parent's stockholders of the issuance of Parent Common
Stock in connection with the Merger (the "Share Issuance"). Each of Parent and
Sub has all requisite corporate power and authority to enter into this Agreement
and, subject to approval by the stockholders of Parent of the Share Issuance, to
consummate the Merger, the Subsequent Merger and the other transactions
contemplated hereby. The execution and delivery of this Agreement by Parent and
Sub and the consummation by Parent and Sub of the Merger, the Subsequent Merger
and the other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and Sub, subject to (x)
approval by the stockholders of Parent of the Share Issuance and (y) the filing
of the Certificate of Merger and the Subsequent Certificate of Merger. This
Agreement has been duly executed and delivered by Parent and Sub and (assuming
the valid authorization, execution and delivery of this Agreement by the Company
and the validity and binding effect hereof on the Company) except to the extent
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law), this Agreement constitutes the valid and binding obligation of Parent and
Sub enforceable against each of them in accordance with its terms. The Share
Issuance and the filing of a registration statement on Form S-4 with the SEC by
Parent under the Securities Act of 1933, as amended (together with the rules and
regulations promulgated thereunder, the "Securities Act"), for the purpose of
registering the shares of Parent Common Stock to be issued in the Merger
(together with any amendments or supplements thereto, whether prior to or after
the effective date thereof, the "Registration Statement") have been duly
authorized by Parent's Board of Directors. Parent has made available to the
Company complete and correct copies of the Parent Charter and the Parent Bylaws
and the Certificate of Incorporation and Bylaws of Sub.
Section 2.4 Consents and Approvals; No Violation.
Assuming that all consents, approvals, authorizations and other actions
described in this Section 2.4 have been obtained and all filings and obligations
described in this Section 2.4 have been made, except as set forth in Section 2.4
of the Parent Letter, the execution and delivery of this Agreement does not, and
the consummation of the Merger, the Subsequent Merger and the other transactions
contemplated hereby and compliance with the provisions hereof will not, result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give to others a right of termination or cancellation or
accelerate any obligation of Parent or result in the loss of a material benefit
to Parent or any of its Subsidiaries under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Parent or any of its Subsidiaries under, any provision of (i) the
Parent Charter or the Parent Bylaws; (ii) the comparable charter or
organizational documents of any of Parent's Subsidiaries; (iii) any material
Contract applicable to Parent or any of its Subsidiaries or any of their
respective properties or assets; or (iv) any judgment, order, decree,
injunction, statute, law, ordinance, rule or regulation applicable to Parent or
any of its Subsidiaries or any of their respective properties or assets, other
than, in the case of clause (iv), any such violations, defaults, rights, liens,
security interests, charges or encumbrances that would not, individually or in
the aggregate, have a Material Adverse Effect on Parent or prevent or delay
beyond the End Date the consummation of the Merger, the Subsequent Merger or any
of the other transactions contemplated hereby by Parent or Sub. No filing or
registration with, or authorization, consent or approval of, any
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domestic (federal and state), foreign or supranational court, commission,
governmental body, regulatory agency, authority or tribunal (a "Governmental
Entity") is required by or with respect to Parent or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by Parent or Sub or
is necessary for the consummation by Parent or Sub of the Merger, the Subsequent
Merger and the other transactions contemplated by this Agreement, except for (i)
in connection, or in compliance, with the provisions of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (together with the rules and
regulations promulgated thereunder, the "HSR Act"), the Securities Act and the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "Exchange Act"); (ii) the filing of the
Certificate of Merger and the Subsequent Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate documents with the
relevant authorities of other states in which the Company or any of its
Subsidiaries is qualified to do business; (iii) such filings, authorizations,
orders and approvals as may be required by state takeover laws (the "State
Takeover Approvals"); (iv) applicable requirements, if any, of state securities
or "blue sky" laws ("Blue Sky Laws") and Nasdaq; (v) applicable requirements, if
any, under foreign or supranational laws relating to antitrust and to
competition clearances; and (vi) such other consents, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made would not, individually or in the aggregate, have a Material Adverse Effect
on Parent or prevent or delay beyond the End Date the consummation of the
Merger, the Subsequent Merger or any of the other transactions contemplated
hereby by Parent or Sub.
Section 2.5 SEC Documents and Other Reports. Parent has
timely filed with the SEC all documents required to be filed by it since
December 28, 2001 under the Securities Act or the Exchange Act (the "Parent SEC
Documents"). As of their respective filing dates, or, if amended, as of the date
of the last amendment prior to the date hereof, the Parent SEC Documents
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and, at the respective times they were
filed, none of the Parent SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements
(including, in each case, any notes thereto) of Parent included in the Parent
SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with generally accepted accounting
principles ("GAAP") (except, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly presented in all material respects the consolidated financial
position of Parent and its consolidated subsidiaries as at the respective dates
thereof and the consolidated results of their operations and their consolidated
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and to any other adjustments
described therein). Except as disclosed in the Parent SEC Documents filed with
the SEC prior to the date hereof or as required by GAAP, Parent has not, between
January 2, 2004 and the date hereof, made or adopted any material change in its
accounting methods, practices or policies in effect on January 2, 2004.
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Section 2.6 Registration Statement and Joint Proxy
Statement. None of the information to be supplied by Parent or Sub for inclusion
or incorporation by reference in the Registration Statement or the proxy
statement/prospectus included therein relating to the Stockholder Meetings (as
defined in Section 5.1) (together with any amendments or supplements thereto,
the "Joint Proxy Statement") will (i) in the case of the Registration Statement,
at the time it becomes effective, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading or (ii) in the
case of the Joint Proxy Statement, at the time of the mailing of the Joint Proxy
Statement and at the time of each of the Stockholder Meetings, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. If, at any
time prior to the Stockholder Meetings, any event with respect to Parent, its
officers and directors or any of its Subsidiaries shall occur which is required
at that time to be described in the Joint Proxy Statement or the Registration
Statement, such event shall be so described, and (subject to Section 5.2) an
appropriate amendment or supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of Parent and the Company. The
Registration Statement will comply (with respect to Parent) as to form in all
material respects with the provisions of the Securities Act, and the Joint Proxy
Statement will comply (with respect to Parent) as to form in all material
respects with the provisions of the Exchange Act.
Section 2.7 Absence of Certain Changes or Events. (a)
Except as disclosed in the Parent SEC Documents filed with the SEC prior to the
date of this Agreement, since December 31, 2003, (i) Parent and its Subsidiaries
have not incurred any liability or obligation (indirect, direct or contingent)
that would, after taking into consideration any related benefits or value
(indirect, direct or contingent), individually or in the aggregate, have a
Material Adverse Effect on Parent; (ii) Parent and its Subsidiaries have not
sustained any loss or interference with their business or properties from fire,
flood, windstorm, accident or other calamity (whether or not covered by
insurance) that has, individually or in the aggregate, had a Material Adverse
Effect on Parent; (iii) through the date hereof, there has not been any split,
combination or reclassification of any of Parent's capital stock or any issuance
or the authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for shares of Parent's capital stock or dividend or
distribution of any kind declared, set aside, paid or made by Parent on any
class of its stock; and (iv) through the date hereof, there has been no Material
Adverse Change with respect to Parent.
(b) Section 2.7(b) of the Parent Letter sets forth a list
(without specifying the identity of any customer listed thereon) for the twelve
months ended December 31, 2003 of the top ten revenue producing customers of
Parent and its Subsidiaries (collectively, the "Parent Key Customers"),
including the amount of revenue received from such Parent Key Customers for the
twelve months ended December 31, 2003. Since January 1, 2004 there has been no
actual or, to the Knowledge of Parent, threatened termination, cancellation or
limitation of, or adverse modification or change in, the business relationship
of Parent or any of its Subsidiaries with any one or more of the Parent Key
Customers, other than as would not, individually or in the aggregate, have a
Material Adverse Effect on Parent.
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Section 2.8 Permits and Compliance. (a) Each of Parent
and its Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, charters, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for
Parent or any of its Subsidiaries to own, lease and operate its properties or to
carry on its business as it is now being conducted (the "Parent Permits"),
except where the failure to have any such Parent Permit would not, individually
or in the aggregate, have a Material Adverse Effect on Parent, and no suspension
or cancellation of any such Parent Permits is pending or, to the Knowledge of
Parent (as hereinafter defined), threatened, except where the suspension or
cancellation of any such Parent Permit would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. Neither Parent nor any of
its Subsidiaries is in violation of (i) its charter, bylaws or other
organizational documents; (ii) any applicable law, ordinance, administrative or
governmental rule or regulation; or (iii) any order, decree or judgment of any
Governmental Entity having jurisdiction over Parent or any of its Subsidiaries,
except, in the case of clauses (ii) and (iii), for any violations that would
not, individually or in the aggregate, have a Material Adverse Effect on Parent.
No notice of any such violation or non-compliance has been received by the
Parent or any of its Subsidiaries since December 31, 2002. For purposes of this
Agreement, "Knowledge of Parent" means the actual knowledge of the individuals
identified in Section 2.8(a) of the Parent Letter.
(b) Parent is in compliance in all material respects with (i)
the applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the related
rules and regulations promulgated thereunder or under the Exchange Act (the
"Xxxxxxxx-Xxxxx Act") and (ii) the applicable listing and corporate governance
rules and regulations of Nasdaq. Except as permitted by the Exchange Act,
including Sections 13(k)(2) and (3), since the enactment of the Xxxxxxxx-Xxxxx
Act, neither Parent nor any of its Affiliates has made, arranged or modified (in
any material way) personal loans to any executive officer or director of Parent.
(c) Parent has (i) designed disclosure controls and procedures
to ensure that material information relating to Parent, including its
consolidated Subsidiaries, is made known to the management of Parent by others
within those entities and (ii) to the extent required by applicable laws,
disclosed, based on its most recent evaluation, to Parent's auditors and the
audit committee of Parent's Board of Directors (A) any significant deficiencies
and material weaknesses in the design or operation of internal controls over
financial reporting which are reasonably likely to adversely affect Parent's
ability to record, process, summarize and report financial information and (B)
any fraud, whether or not material, that involves management or other employees
who have a significant role in Parent's internal control over financial
reporting. Parent has made available to the Company a summary of any such
disclosure made by management to Parent's auditors and audit committee since
January 1, 2002.
Section 2.9 Tax Matters. Except as otherwise set forth
in Section 2.9 of the Parent Letter, (i) Parent and each of its Subsidiaries
have filed all federal, and all material state, local and foreign, Tax Returns
(as hereinafter defined) required to have been filed or appropriate extensions
therefor have been properly obtained, and such Tax Returns are correct and
complete, except to the extent that any failure to so file or any failure to be
correct and complete would not, individually or in the aggregate, have a
Material Adverse Effect on Parent; (ii) all Taxes (as hereinafter defined) shown
to be due on such Tax Returns have been timely paid or extensions for payment
have been properly obtained, except to the extent that any failure to so pay or
so
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obtain such an extension would not, individually or in the aggregate, have a
Material Adverse Effect on Parent; (iii) Parent and each of its Subsidiaries
have complied in all material respects with all rules and regulations relating
to the withholding of Taxes except to the extent that any failure to comply with
such rules and regulations would not, individually or in the aggregate, have a
Material Adverse Effect on Parent; (iv) any Tax Returns referred to in clause
(i) relating to federal income Taxes have been examined by the Internal Revenue
Service (the "IRS") or the period for assessment of the Taxes in respect of
which such Tax Returns were required to be filed has expired; (v) no material
issues that have been raised in writing by the relevant taxing authority in
connection with the examination of the Tax Returns referred to in clause (i) are
currently pending; (vi) all material deficiencies asserted or assessments made
in writing as a result of any examination of such Tax Returns by any taxing
authority have been paid in full; (vii) during the past three years, neither
Parent nor any of its Subsidiaries has been a distributing or controlled
corporation in a transaction intended to qualify for tax-free treatment under
Section 355 of the Code; (viii) during the last five years, neither Parent nor
any of its Subsidiaries has been a party to any "listed transaction" within the
meaning of Treasury Regulation section 1.6011-4(b)(2) identified by the IRS;
(ix) during the most recently ended five taxable years (and during the period
since the end of the most recently ended taxable year), neither Parent nor any
of its Subsidiaries (nor any predecessor thereof) has for United States federal
income tax purposes, filed Tax Returns on a consolidated basis with any group of
corporations other than a group consisting solely of Parent, one or more
Subsidiaries thereof, or any combination thereof; and (x) during the most
recently ended five taxable years (and during the period since the end of the
most recently ended taxable year) no Subsidiary of Parent organized under the
laws of a jurisdiction outside the United States (and, with respect to Parent or
any of its Subsidiaries, no predecessor thereof organized under the laws of a
jurisdiction outside the United States) has been acquired from any third party
(directly or indirectly) by Parent or any Subsidiary thereof. For purposes of
this Agreement: (i) "Taxes" means any federal, state, local or foreign income,
gross receipts, property, sales, use, license, excise, franchise, employment,
payroll, withholding, alternative or added minimum, ad valorem, value-added,
transfer or excise tax, or other tax, custom, duty, governmental fee or other
like assessment or charge of any kind whatsoever, together with any interest or
penalty imposed by any Governmental Entity and (ii) "Tax Return" means any
return, report or similar statement (including the attached schedules) required
to be filed with respect to any Tax, including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax.
Section 2.10 Actions, Proceedings and Violations. Except
as set forth in the Parent SEC Documents filed prior to the date of this
Agreement and except as set forth in Section 2.10 of the Parent Letter, there
are no outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against or involving Parent or any of its Subsidiaries or,
to the Knowledge of Parent, against or involving any of the present or former
directors, officers, employees or agents of Parent or any of its Subsidiaries,
in each case, in connection with their employment by or service to Parent or any
of its Subsidiaries, or any of its or their properties,
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assets or business that would, individually or in the aggregate, have a Material
Adverse Effect on Parent or prevent or delay beyond the End Date the
consummation of the Merger, the Subsequent Merger or any of the other
transactions contemplated hereby. Except as set forth in the Parent SEC
Documents filed prior to the date of this Agreement and except as set forth in
Section 2.10 of the Parent Letter, there are no actions, suits or claims or
legal, administrative or arbitration proceedings or investigations pending or,
to the Knowledge of Parent, threatened against or involving Parent or any of its
Subsidiaries or, to the Knowledge of Parent, any of its or their present or
former directors, officers, employees or agents, in each case, in connection
with their employment by or service to Parent or any of its Subsidiaries, or any
of its or their properties, assets or business that would, individually or in
the aggregate, have a Material Adverse Effect on Parent or prevent or delay
beyond the End Date the consummation of the Merger, the Subsequent Merger or any
other of the other transactions contemplated hereby. As of the date hereof,
there are no actions, suits, labor disputes or other litigation, legal or
administrative proceedings or governmental investigations relating to the
Merger, the Subsequent Merger or any of the other transactions contemplated
hereby pending or, to the Knowledge of Parent, threatened against or affecting
Parent or any of its Subsidiaries or, to the Knowledge of Parent, any of its or
their present or former officers, directors, employees or agents in connection
with their employment by or service to Parent or any of its Subsidiaries, or any
of its or their properties, assets or business.
Section 2.11 Certain Agreements. All of the Parent
Contracts are valid and in full force and effect (except those which are
cancelled, rescinded or terminated after the date hereof in accordance with
their terms), except where the failure to be in full force and effect would not,
individually or in the aggregate, have a Material Adverse Effect on Parent. To
the Knowledge of Parent, no Person is challenging the validity or enforceability
of any Parent Contract, except such challenges which would not, individually or
in the aggregate, have a Material Adverse Effect on Parent. Neither Parent nor
any of its Subsidiaries and, to the Knowledge of Parent, none of the other
parties thereto, is in breach of any provision of, or committed or failed to
perform any act which (with or without notice or lapse of time or both) would
constitute a default under the provisions of, any Parent Contract, except for
those violations and defaults which would not, individually or in the aggregate,
have a Material Adverse Effect on Parent. For purposes of this Agreement,
"Parent Contract" means any Contract, regardless of whether it was entered into
before or after the date hereof, to which Parent or any of its Subsidiaries is a
party or by which Parent or any of its Subsidiaries is bound that is material to
Parent and its Subsidiaries, taken as a whole.
Section 2.12 ERISA. (a) Except as would not, individually
or in the aggregate, have a Material Adverse Effect on Parent, (i) each Parent
Plan (as hereinafter defined) complies in all respects with Title IV of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the Code
and all other applicable statutes and governmental rules and regulations and
(ii) no "reportable event" (within the meaning of Section 4043 of ERISA) has
occurred with respect to any Parent Plan. Neither Parent nor any of its ERISA
Affiliates (as hereinafter defined) has withdrawn from any Parent Plan or Parent
Multiemployer Plan (as hereinafter defined) or instituted, or is currently
considering taking, any action to do so. Except as would not, individually or in
the aggregate, have a Material Adverse Effect on Parent, no Parent Plan, nor any
trust created thereunder, has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived.
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(b) With respect to the Parent Plans, no event or set of
circumstances has occurred and, to the Knowledge of Parent, there exists no
condition or set of circumstances in connection with which Parent or any of its
ERISA Affiliates or Parent Plan fiduciary are or could reasonably be expected to
be subject to any liability under the terms of such Parent Plans, ERISA, the
Code or any other applicable law, other than liabilities for benefits payable in
the normal course, which would, individually or in the aggregate, have a
Material Adverse Effect on Parent.
(c) As used herein, (i) "Parent Plan" means a "pension plan"
(as defined in Section 3(2) of ERISA (other than a Parent Multiemployer Plan)),
a "welfare plan" (as defined in Section 3(1) of ERISA) or any bonus, profit
sharing, deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, holiday pay, vacation, severance, death
benefit, sick leave, fringe benefit, insurance or other plan, arrangement or
understanding, in each case established or maintained by Parent or any of its
ERISA Affiliates or as to which Parent or any of its ERISA Affiliates has
contributed or otherwise may have any liability; (ii) "Parent Multiemployer
Plan" means a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA)
to which Parent or any of its ERISA Affiliates is or has been obligated to
contribute or otherwise may have any liability; and (iii) with respect to any
Person, "ERISA Affiliate" means any trade or business (whether or not
incorporated) which is under common control or would be considered a single
employer with such Person pursuant to Section 414(b), (c), (m) or (o) of the
Code and the rules and regulations promulgated under those sections or pursuant
to Section 4001(b) of ERISA and the rules and regulations promulgated
thereunder.
Section 2.13 Compliance with Worker Safety and
Environmental Laws. The properties, assets and operations of Parent and its
Subsidiaries are in compliance with all applicable federal, state, local and
foreign laws, rules and regulations, orders, decrees, judgments, permits and
licenses relating to public and worker health and safety (collectively, "Worker
Safety Laws") and the protection and clean-up of the environment and activities
or conditions related thereto, including those relating to the generation,
handling, disposal, transportation or release of hazardous materials
(collectively, "Environmental Laws"), except for any violations that would not,
individually or in the aggregate, have a Material Adverse Effect on Parent. With
respect to such properties, assets and operations, including any previously
owned, leased or operated properties, assets or operations, there are no events,
conditions, circumstances, activities, practices, incidents, actions or plans of
Parent or any of its Subsidiaries that may interfere with or prevent compliance
or continued compliance with applicable Worker Safety Laws and Environmental
Laws, other than any such interference or prevention as would not, individually
or in the aggregate, have a Material Adverse Effect on Parent.
Section 2.14 Labor Matters. As of the date hereof,
neither Parent nor any of its Subsidiaries is a party to any collective
bargaining Contract. Neither Parent nor any of its Subsidiaries has engaged in
any unfair labor practice with respect to any Persons employed by or otherwise
performing services primarily for Parent or any of its Subsidiaries (the "Parent
Business Personnel"), and there is no unfair labor practice complaint or
grievance against Parent or any of its Subsidiaries by the National Labor
Relations Board or any comparable state agency pending or threatened in writing
with respect to the Parent Business Personnel, except where such unfair labor
practice, complaint or grievance would not, individually or in the aggregate,
have a Material Adverse Effect on Parent. There is no labor strike, dispute,
slowdown or
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stoppage pending or, to the Knowledge of Parent, threatened against or affecting
Parent or any of its Subsidiaries, except such dispute, strike or work stoppage
which would not, individually or in the aggregate, have a Material Adverse
Effect on Parent.
Section 2.15 Intellectual Property.
(a) Except as set forth in Section 2.15(a) of the Parent
Letter, Parent and its Subsidiaries own or have a valid right to use all
patents, trademarks, trade names, service marks, domain names, copyrights and
any applications and registrations for any of the foregoing, trade secrets,
know-how, technology, computer software and other tangible and intangible
proprietary information and intellectual property rights (collectively,
"Intellectual Property Rights") as are necessary to conduct the business of
Parent and its Subsidiaries as currently conducted or planned to be conducted by
Parent and its Subsidiaries, taken as a whole, except where the failure to have
such Intellectual Property Rights would not, individually or in the aggregate,
have a Material Adverse Effect on Parent. Neither Parent nor any of its
Subsidiaries has infringed, misappropriated or violated in any material respect
any Intellectual Property Rights of any third party, except where such
infringement, misappropriation or violation would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. No third party infringes,
misappropriates or violates any Intellectual Property Rights owned or
exclusively licensed by or to Parent or any of its Subsidiaries, except where
such infringement, misappropriation or violation would not, individually or in
the aggregate, have a Material Adverse Effect on Parent.
(b) Except as set forth in the Parent SEC Documents filed
prior to the date of this Agreement or in Section 2.15(b) of the Parent Letter,
(i) as of the date of this Agreement, to the Knowledge of Parent, there are no
actions, suits or claims, or administrative proceedings or investigations
pending or threatened that challenge or question the Intellectual Property
Rights of Parent or any of its Subsidiaries and (ii) there are no actions, suits
or claims, or administrative proceedings or investigations pending or, to the
Knowledge of Parent, threatened that challenge or question the Intellectual
Property Rights of Parent or any of its Subsidiaries and that, if adversely
decided, would, individually or in the aggregate, have a Material Adverse Effect
on Parent.
Section 2.16 Opinion of Financial Advisor. Parent has
received the opinion of Credit Suisse First Boston LLC, as of the date hereof,
to the effect that, as of the date hereof, the Per Share Merger Consideration is
fair to Parent from a financial point of view.
Section 2.17 Required Vote of Parent Stockholders. The
affirmative vote of a majority of the shares present in person or by proxy at
the Parent Stockholder Meeting (as hereinafter defined) and entitled to vote on
the Share Issuance is required to approve the Share Issuance. No other vote of
the securityholders of Parent is required by law, the Parent Charter or the
Parent Bylaws or otherwise in order for Parent to consummate the Merger, the
Subsequent Merger and the transactions contemplated hereby.
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Section 2.18 Reorganization. Neither Parent nor any of
its Subsidiaries has taken any action or failed to take any action which action
or failure would, to the Knowledge of Parent, jeopardize the qualification of
the Merger and the Subsequent Merger, taken together, as a "reorganization"
within the meaning of Section 368(a) of the Code. Parent does not have any
knowledge of any fact or circumstance that, to the Knowledge of Parent, would
prevent the Merger and the Subsequent Merger, taken together, from qualifying as
a "reorganization" within the meaning of Section 368(a) of the Code.
Section 2.19 Brokers. No broker, investment banker or
other Person, other than Credit Suisse First Boston LLC, the fees and expenses
of which will be paid by Parent, is entitled to any broker's, finder's or other
similar fee or commission in connection with the Merger, the Subsequent Merger
or any of the other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or any of its Subsidiaries.
Section 2.20 Operations of Sub. Sub is a direct, wholly
owned subsidiary of Parent, was formed solely for the purpose of engaging in the
transactions contemplated hereby, has engaged in no other business activities
and has conducted its operations only as contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
Section 3.1 Organization, Standing and Power. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate power
and authority to carry on its business as now being conducted. Each Subsidiary
of the Company is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has the requisite
corporate (in the case of a Subsidiary that is a corporation) or other power and
authority to carry on its business as now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power
or authority would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. The Company and each of its Subsidiaries are duly
qualified to do business, and are in good standing, in each jurisdiction where
the character of their properties owned or held under lease or the nature of
their activities makes such qualification or good standing necessary, except
where the failure to be so qualified and in good standing would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Section 3.2 Capital Structure. (a) The authorized
capital stock of the Company consists of (i) 200,000,000 shares of Company
Common Stock and (ii) 5,000,000 shares of preferred stock, $0.01 par value per
share ("Company Preferred Stock"), of which 200,000 shares have been designated
as Series A Junior Participating Preferred Stock (the "Company Series A
Preferred Stock"). At the close of business on May 17, 2004, (i) 87,988,464
shares of Company Common Stock were issued and outstanding, all of which were
validly issued, fully paid and nonassessable and free of preemptive rights; (ii)
62,676 shares of Company
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Common Stock were held in the treasury of the Company or by Subsidiaries of the
Company; (iii) 16,086,776 shares of Company Common Stock were reserved for
issuance pursuant to outstanding options (the "Company Stock Options") to
purchase shares of Company Common Stock pursuant to (A) the Company's 1996 Stock
Incentive Plan, (B) the Company's 1993 Stock Option/Stock Issuance Plan, as
amended, and (C) the AccessLan Communications, Inc. 1997 Stock Plan
(collectively, the "Company Stock Option Plans"); (iv) 1,229,224 shares of
Company Common Stock were reserved for issuance pursuant to the Company's 1996
Employee Stock Purchase Plan (the "Company Stock Purchase Plan") and (v) no
shares of Company Preferred Stock were reserved for issuance, other than 200,000
shares of Company Series A Preferred Stock reserved for issuance pursuant to the
Rights Agreement, dated as of May 13, 1998, between the Company and Equiserve
Trust Company, N.A. (as the successor in interest to BankBoston, N.A.),as
amended by First Amendment to the Rights Agreement, dated as of October 19, 1998
(the "Rights Agreement") providing for rights to acquire shares of Company
Series A Preferred Stock (the "Rights"). The Company Stock Option Plans and the
Company Stock Purchase Plan are the only benefit plans of the Company or its
Subsidiaries under which any securities of the Company or any of its
Subsidiaries are issuable. Each share of Company Common Stock which may be
issued pursuant to any Company Stock Option Plan or the Company Stock Purchase
Plan has been duly authorized and, if and when issued pursuant to the terms
thereof, will be validly issued, fully paid and nonassessable and free of
preemptive rights. No shares of Company Preferred Stock are issued or
outstanding. Except as set forth above and except for the issuance of shares of
Company Common Stock upon the exercise of Company Stock Options outstanding on
May 17, 2004 in accordance with the terms thereof, no shares of capital stock or
other voting securities of the Company are issued, reserved for issuance or
outstanding. Except as set forth above, there are no options, warrants, calls,
rights, puts or Contracts to which the Company or any of its Subsidiaries is a
party or by which any of them is bound obligating the Company or any of its
Subsidiaries to issue, deliver, sell, redeem or otherwise acquire, or cause to
be issued, delivered, sold, redeemed or otherwise acquired, any additional
shares of capital stock (or other voting securities or equity equivalents) of
the Company or any of its Subsidiaries or obligating the Company or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
right, put or Contract. The Company does not have any outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or convertible into or exercisable for securities having the right to
vote) with the stockholders of the Company on any matter. There are no Contracts
to which the Company or its Subsidiaries or, to the Knowledge of the Company,
any of their respective officers or directors is a party concerning the voting
of any capital stock of the Company or any of its Subsidiaries.
(b) Except as set forth in Section 3.2(b) of the letter dated
the date hereof and delivered on the date hereof by the Company to Parent, which
letter relates to this Agreement and is designated the Company Letter (the
"Company Letter"), each outstanding share of capital stock (or other voting
security or equity equivalent, as the case may be) of each Subsidiary of the
Company is duly authorized, validly issued, fully paid and nonassessable, and,
each such share (or other voting security or equity equivalent, as the case may
be) is owned by the Company or a Subsidiary of the Company, free and clear of
all security interests, liens, claims, pledges, options, rights of first
refusal, limitations on voting rights, charges and other encumbrances of any
nature whatsoever. Exhibit 21.1 to the Company's Annual Report on Form 10-K for
the year ended December 31, 2003, as filed with the SEC, constituted a true,
accurate and correct statement in
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all material respects of all of the information required to be set forth therein
by the regulations of the SEC as of the date thereof.
(c) Section 3.2(c) of the Company Letter sets forth a list of
all Subsidiaries and Joint Ventures of the Company and the jurisdiction in which
such Subsidiary or Joint Venture is organized. Section 3.2(c) of the Company
Letter also sets forth the nature and extent of the ownership and voting
interests held by the Company in each such Joint Venture. The Company has no
obligation to make any capital contributions, or otherwise provide assets or
cash, to any Joint Venture.
Section 3.3 Authority. On or prior to the date of this
Agreement, the Board of Directors of the Company has declared this Agreement and
the Merger advisable and fair to and in the best interest of the Company and its
stockholders, approved and adopted this Agreement in accordance with the DGCL,
resolved to recommend the approval and adoption of this Agreement by the
Company's stockholders and directed that this Agreement be submitted to the
Company's stockholders for approval and adoption. The Company has all requisite
corporate power and authority to enter into this Agreement and, subject to
approval and adoption of this Agreement by the stockholders of the Company, to
consummate the Merger, the Subsequent Merger and the other transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the Merger, the Subsequent Merger and the
other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company, subject to (x) approval
and adoption of this Agreement by the stockholders of the Company and (y) the
filing of the Certificate of Merger and Subsequent Certificate of Merger. This
Agreement has been duly executed and delivered by the Company and (assuming the
valid authorization, execution and delivery of this Agreement by Parent and Sub
and the validity and binding effect of this Agreement on Parent and Sub) except
to the extent enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law), this Agreement constitutes the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms. The filing of the
Joint Proxy Statement with the SEC has been duly authorized by the Company's
Board of Directors. The Company has made available to Parent complete and
correct copies of the Company Charter and Company Bylaws and the Certificate of
Incorporation and Bylaws (or comparable organizational documents) of each of its
Subsidiaries.
Section 3.4 Consents and Approvals; No Violation.
Assuming that all consents, approvals, authorizations and other actions
described in this Section 3.4 have been obtained and all filings and obligations
described in this Section 3.4 have been made, except as set forth in Section 3.4
of the Company Letter, the execution and delivery of this Agreement does not,
and the consummation of the Merger, the Subsequent Merger and the other
transactions contemplated hereby and compliance with the provisions hereof will
not, result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give to others a right of termination or cancellation
or accelerate any obligation of the Company or result in the loss of a material
benefit to the Company or any of its Subsidiaries under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any of its Subsidiaries under, any
provision of (i) the Company Charter or the
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Company Bylaws; (ii) the comparable charter or organizational documents of any
of the Company's Subsidiaries; (iii) any material Contract applicable to the
Company or any of its Subsidiaries or any of their respective properties or
assets; or (iv) any judgment, order, decree, injunction, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, other than, in the
case of clause (iv), any such violations, defaults, rights, liens, security
interests, charges or encumbrances that would not, individually or in the
aggregate, have a Material Adverse Effect on the Company or prevent or delay
beyond the End Date the consummation of the Merger, the Subsequent Merger or any
of the other transactions contemplated hereby. No filing or registration with,
or authorization, consent or approval of, any Governmental Entity is required by
or with respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by the Company or is necessary for the
consummation of the Merger, the Subsequent Merger and the other transactions
contemplated by this Agreement, except for (i) in connection, or in compliance,
with the provisions of the HSR Act, the Securities Act and the Exchange Act;
(ii) the filing of the Certificate of Merger and the Subsequent Certificate of
Merger with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which the Company or
any of its Subsidiaries is qualified to do business; (iii) such filings,
authorizations, orders and approvals as may be required to obtain the State
Takeover Approvals; (iv) applicable requirements, if any, of Blue Sky Laws and
Nasdaq; (v) applicable requirements, if any, under foreign or supranational laws
relating to antitrust and to competition clearances; and (vi) such other
consents, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on the Company or prevent or delay
beyond the End Date the consummation of the Merger, the Subsequent Merger or any
of the other transactions contemplated hereby.
Section 3.5 SEC Documents and Other Reports. The Company
has timely filed with the SEC all documents required to be filed by it since
December 31, 2001 under the Securities Act or Exchange Act (the "Company SEC
Documents"). As of their respective filing dates, or, if amended, as of the date
of the last amendment prior to the date hereof, the Company SEC Documents
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and, at the respective times they were
filed, none of the Company SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements
(including, in each case, any notes thereto) of the Company included in the
Company SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, were prepared in accordance with GAAP (except, in
the case of the unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto) and fairly presented in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries as at the respective dates thereof and the consolidated results of
their operations and their consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein). Except as disclosed
in the Company SEC Documents filed with the SEC prior to the date hereof or as
required by
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GAAP, the Company has not, between December 31, 2003 and the date hereof, made
or adopted any change in its accounting methods, practices or policies in effect
on December 31, 2003.
Section 3.6 Registration Statement and Joint Proxy
Statement. None of the information to be supplied by the Company for inclusion
or incorporation by reference in the Registration Statement or the Joint Proxy
Statement will (i) in the case of the Registration Statement, at the time it
becomes effective, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading or (ii) in the case of the Joint
Proxy Statement, at the time of the mailing of the Joint Proxy Statement and at
the time of each of the Stockholder Meetings, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Stockholder Meetings any event with respect to the Company, its officers and
directors or any of its Subsidiaries shall occur which is required at that time
to be described in the Joint Proxy Statement or the Registration Statement, such
event shall be so described, and (subject to Section 5.2) an appropriate
amendment or supplement shall be promptly filed with the SEC and, as required by
law, disseminated to the stockholders of Parent and the Company. The
Registration Statement will comply (with respect to the Company) as to form in
all material respects with the provisions of the Securities Act, and the Joint
Proxy Statement will comply (with respect to the Company) as to form in all
material respects with the provisions of the Exchange Act.
Section 3.7 Absence of Certain Changes or Events.
(a) Except as disclosed in the Company SEC Documents filed
with the SEC prior to the date of this Agreement or as disclosed in Section
3.7(a) of the Company Letter, since December 31, 2003 (i) the Company and its
Subsidiaries have not incurred any liability or obligation (indirect, direct or
contingent), that would, after taking into consideration any related benefits or
value (indirect, direct or contingent), individually or in the aggregate, have a
Material Adverse Effect on the Company; (ii) the Company and its Subsidiaries
have not sustained any loss or interference with their business or properties
from fire, flood, windstorm, accident or other calamity (whether or not covered
by insurance) that has, individually or in the aggregate, had a Material Adverse
Effect on the Company; (iii) there has not been any split, combination or
reclassification of any of the Company's capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of the Company's capital stock or dividend or
distribution of any kind declared, set aside, paid or made by the Company on any
class of its stock; (iv) there has not been (x) any granting by the Company or
any of its Subsidiaries to any officer of the Company or any of its Subsidiaries
of any increase in compensation, except in the ordinary course of business
consistent with the Company's prior practice or as was required under employment
Contracts in effect as of the date of the most recent audited financial
statements included in the Company SEC Documents, (y) any granting by the
Company or any of its Subsidiaries to any employee of any increase in rights of
severance or (z) any entry by the Company or any of its Subsidiaries into any
employment, severance or termination Contract with any employee; and (v) through
the date hereof, there has been no Material Adverse Change with respect to the
Company.
-24-
(b) Section 3.7(b) of the Company Letter sets forth a list
(without specifying the identity of any customer listed thereon) for the twelve
months ended December 31, 2003 of the top ten revenue producing customers of the
Company and its Subsidiaries (collectively, the "Company Key Customers"),
including the amount of revenue received from such Company Key Customers for the
twelve months ended December 31, 2003. Except as disclosed in Section 3.7(b) of
the Company Letter, since January 1, 2004 there has been no actual or, to the
Knowledge of the Company, threatened termination, cancellation or limitation of,
or adverse modification or change in, the business relationship of the Company
or any of its Subsidiaries with any one or more of the Company Key Customers,
other than as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
Section 3.8 Permits and Compliance. (a) Each of the
Company and its Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, charters, easements, variances, exceptions,
consents, certificates, approvals and orders of any Governmental Entity
necessary for the Company or any of its Subsidiaries to own, lease and operate
its properties or to carry on its business as it is now being conducted (the
"Company Permits"), except where the failure to have any such Company Permit
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company, and no suspension or cancellation of any of the Company Permits is
pending or, to the Knowledge of the Company (as hereinafter defined),
threatened, except where the suspension or cancellation of such Company Permit
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company. Neither the Company nor any of its Subsidiaries is in violation of
(i) its charter, bylaws or other organizational documents; (ii) any applicable
law, ordinance, administrative or governmental rule or regulation; or (iii) any
order, decree or judgment of any Governmental Entity having jurisdiction over
the Company or any of its Subsidiaries, except, in the case of clauses (ii) and
(iii), for any violations that would not, individually or in the aggregate, have
a Material Adverse Effect on the Company. No notice of any such violation or
non-compliance has been received by the Company or any of its Subsidiaries since
December 31, 2002. For purposes of this Agreement, "Knowledge of the Company"
means the actual knowledge of the individuals identified in Section 3.8(a) of
the Company Letter.
(b) The Company is in compliance in all material respects with
(i) the applicable provisions of the Xxxxxxxx-Xxxxx Act and (ii) the applicable
listing and corporate governance rules and regulations of Nasdaq. Except as
permitted by the Exchange Act, including Sections 13(k)(2) and (3), since the
enactment of the Xxxxxxxx-Xxxxx Act, neither the Company nor any of its
Affiliates has made, arranged or modified (in any material way) personal loans
to any executive officer or director of the Company.
(c) The Company has (i) designed disclosure controls and
procedures to ensure that material information relating to the Company,
including its consolidated Subsidiaries, is made known to the management of the
Company by others within those entities and (ii) to the extent required by
applicable laws, disclosed, based on its most recent evaluation, to the
Company's auditors and the audit committee of the Company's Board of Directors
(A) any significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are reasonably
likely to adversely affect the Company's ability to record, process, summarize
and report financial information and (B) any fraud, whether or not material,
that involves management or other employees who have a significant role in the
-25-
Company's internal control over financial reporting. The Company has made
available to Parent a summary of any such disclosure made by management to the
Company's auditors and audit committee since January 1, 2002.
Section 3.9 Tax Matters. Except as otherwise set forth
in Section 3.9 of the Company Letter, (i) the Company and each of its
Subsidiaries have filed all federal, and all material state, local and foreign
Tax Returns required to have been filed or appropriate extensions therefor have
been properly obtained, and such Tax Returns are correct and complete, except to
the extent that any failure to so file or any failure to be correct and complete
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company; (ii) all Taxes shown to be due on such Tax Returns have been timely
paid or extensions for payment have been properly obtained, except to the extent
that any failure to so pay or so obtain such an extension would not,
individually or in the aggregate, have a Material Adverse Effect on the Company;
(iii) the Company and each of its Subsidiaries have complied in all material
respects with all rules and regulations relating to the withholding of Taxes
except to the extent that any failure to comply with such rules and regulations
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company; (iv) any Tax Returns referred to in clause (i) relating to federal
income Taxes have been examined by the IRS or the period for assessment of the
Taxes in respect of which such Tax Returns were required to be filed has
expired; (v) no material issues that have been raised in writing by the relevant
taxing authority in connection with the examination of the Tax Returns referred
to in clause (i) are currently pending; (vi) all material deficiencies asserted
or assessments made in writing as a result of any examination of such Tax
Returns by any taxing authority have been paid in full; (vii) during the past
three years, neither the Company nor any of its Subsidiaries has been a
distributing or controlled corporation in a transaction intended to qualify for
tax-free treatment under Section 355 of the Code; (viii) neither the Company nor
any of its Subsidiaries has been a United States real property holding
corporation (as defined in Section 897(c)(2) of the Code) during the five-year
period specified in Section 897(c)(1)(ii) of the Code ending on the Closing
Date; (ix) during the last five years, neither the Company nor any of its
Subsidiaries has been a party to any "listed transaction" within the meaning of
Treasury Regulation 1.6011-4(b)(2) identified by the IRS; (x) during the most
recently ended five taxable years (and during the period since the end of the
most recently ended taxable year), neither the Company nor any of its
Subsidiaries (nor any predecessor thereof) has for United States federal income
tax purposes filed Tax Returns on a consolidated basis with any group of
corporations other than a group consisting solely of the Company, one or more
Subsidiaries thereof, or any combination thereof; and (xi) during the most
recently ended five taxable years (and during the period since the end of the
most recently ended taxable year) no Subsidiary of the Company organized under
the laws of a jurisdiction outside the United States (and, with respect to the
Company or any of its Subsidiaries, no predecessor thereof organized under the
laws of a jurisdiction outside the United States) has been acquired from any
third party (directly or indirectly) by the Company or any Subsidiary thereof.
-26-
Section 3.10 Actions, Proceedings and Violations. Except
as set forth in the Company SEC Documents filed prior to the date of this
Agreement and except as set forth in Section 3.10 of the Company Letter, there
are no outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against or involving the Company or any of its Subsidiaries
or, to the Knowledge of the Company, against or involving any of the present or
former directors, officers, employees or agents of the Company or any of its
Subsidiaries, in each case, in connection with their employment by or service to
the Company or any of its Subsidiaries, or any of its or their properties,
assets or business or any Company Plan (as hereinafter defined) that would,
individually or in the aggregate, have a Material Adverse Effect on the Company
or prevent or delay beyond the End Date the consummation of the Merger, the
Subsequent Merger or any of the other transactions contemplated hereby. Except
as set forth in the Company SEC Documents filed prior to the date of this
Agreement and except as set forth in Section 3.10 of the Company Letter, there
are no actions, suits or claims or legal, administrative or arbitration
proceedings or investigations pending or, to the Knowledge of the Company,
threatened against or involving the Company or any of its Subsidiaries or, to
the Knowledge of the Company, any of its or their present or former directors,
officers, employees or agents, in each case, in connection with their employment
by or service to the Company or any of its Subsidiaries, or any of its or their
properties, assets or business or any Company Plan that would, individually or
in the aggregate, have a Material Adverse Effect on the Company or prevent or
delay beyond the End Date the consummation of the Merger, the Subsequent Merger
or any of the other transactions contemplated hereby. As of the date hereof,
there are no actions, suits, labor disputes or other litigation, legal or
administrative proceedings or governmental investigations relating to the
Merger, the Subsequent Merger or any of the other transactions contemplated
hereby pending or, to the Knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or, to the Knowledge of the
Company, any of its or their present or former officers, directors, employees or
agents, in each case, in connection with their employment by or service to the
Company or any of its Subsidiaries, or any of its or their properties, assets or
business.
Section 3.11 Certain Agreements. (a) Except as filed as
exhibits to the Company SEC Documents filed prior to the date hereof and except
as set forth in Section 3.11(a) of the Company Letter, as of the date hereof,
neither the Company nor any of its Subsidiaries is a party to or bound by (i)
any Contract which is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K under the Exchange Act); (ii) any Contract which
purports to materially limit or restrict any line of business or localities in
which the Company or any of its Affiliates (including Parent or any of its
Subsidiaries following the Merger) may conduct business, excluding any
limitations on scope or territory of use of third party Intellectual Property
Rights that may be set forth in licenses under which the Company or any of its
Subsidiaries is the licensee, or any material Contract which obligates the
Company or any of its Affiliates (including Parent or any of its Subsidiaries
following the Merger) to extend most favored nation pricing to any Person or any
Contract imposing exclusivity obligations on the Company or any of its
Affiliates (including Parent or any of its Subsidiaries following the Merger)
with respect to customers or suppliers or imposing obligations on the Company or
any of its Affiliates (including Parent or any of its Subsidiaries following the
Merger) with respect to non-solicitation of customers or suppliers; (iii) any
Contract which requires any payment by the Company or its Subsidiaries in excess
of $3,000,000 in any year and which is not terminable within one year without
penalty, or which requires any payment to the Company or its
-27-
Subsidiaries in excess of $1,000,000 in any year and which is not terminable
within one year without penalty; (iv) any Contract under which the Company or
any of its Subsidiaries is indebted for borrowed money (or may become so
indebted) or any guaranty by the Company or any of its Subsidiaries of
indebtedness for borrowed money; (v) any Contract relating to the acquisition or
disposition of any business (whether by merger, sale of stock, sale of assets,
or otherwise) entered into since January 1, 2001 or any Contract relating to the
acquisition or disposition of assets entered into since January 1, 2001, which
involves an asset value in excess of $5,000,000; (vi) any Employee Agreement (as
hereinafter defined); (vii) any material Contract of indemnification or any
guaranty of a material obligation (other than an obligation of the Company or
any of its Subsidiaries) by the Company or any of its Subsidiaries other than
any Contract entered into in connection with the sale or license by or to the
Company or any of its Subsidiaries of products or services in the ordinary
course of business; (viii) any Contract to provide source code to any third
party for any product or technology that is material to the Company and its
Subsidiaries, taken as a whole, except for Contracts providing for source code
to be released from escrow upon insolvency or bankruptcy; (ix) any material
Contract, to license any third party to use, manufacture or reproduce any
Company product, service or Intellectual Property Right or any material Contract
to sell, distribute or market any Company product, service or Intellectual
Property Right, other than, in each case, end-user license and sale Contracts
and related maintenance and support Contracts entered into in the ordinary
course of business; (x) any settlement Contract which materially affects the
conduct of the Company's or any of its Subsidiaries' businesses; and (xi) any
other Contract that is material to the Company and its Subsidiaries, taken as a
whole. Except for Contracts for which disclosure is prohibited by
confidentiality provisions, the Company has previously made available to Parent
complete and correct copies of each Contract of the type described in this
Section 3.11 which was entered into prior to the date hereof. All Contracts of
the type described in this Section 3.11 shall be referred to as "Company
Contracts" regardless of whether they were entered into before or after the date
hereof. All of the Company Contracts are valid and in full force and effect
(except those which are cancelled, rescinded or terminated after the date hereof
in accordance with their terms), except where the failure to be in full force
and effect would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. To the Knowledge of the Company, no Person is challenging
the validity or enforceability of any Company Contract, except such challenges
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. Except as set forth in Section 3.11(a) of the Company
Letter, neither the Company nor any of its Subsidiaries and, to the Knowledge of
the Company, none of the other parties thereto, is in breach of any provision
of, or committed or failed to perform any act which (with or without notice or
lapse of time or both) would constitute a default under the provisions of, any
Company Contract, except for those violations and defaults which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
(b) Except as set forth in Section 3.11(b) of the Company
Letter, neither the Company nor any of its Subsidiaries is a party to any
Contract or written or oral plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, with or
relating to any current or former employee, director, officer or consultant, any
of the benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of the Merger, the Subsequent
Merger or any of the other transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. No holder of any (i)
-28-
option to purchase shares of Company Common Stock; (ii) rights under the Company
Stock Purchase Plan; or (iii) shares of Company Common Stock granted in
connection with the performance of services for the Company or its Subsidiaries,
is or will be entitled to receive cash from the Company or any Subsidiary in
lieu of or in exchange for such option or shares in connection with the Merger,
the Subsequent Merger or any of the other transactions contemplated hereby.
Section 3.11(b) of the Company Letter sets forth the total amount of
indebtedness owed to the Company or its Subsidiaries from each officer or
director of the Company and its Subsidiaries.
(c) For purposes of this Agreement, "Employee Agreement" means
each management, employment, severance, retention, consulting or other Contract
between the Company, or any ERISA Affiliate, and any current or former employee,
director or officer of the Company or any ERISA Affiliate other than offer
letters used in the Company's ordinary course of business that do not provide
for severance or other payments after termination of employment or acceleration
of any equity award or termination letters or Contracts with respect to former
employees entered into in the ordinary course of business prior to the date
hereof if the Company and its Subsidiaries have no further payment or other
material obligations thereunder.
Section 3.12 ERISA. (a) Each Company Plan is listed in
Section 3.12(a) of the Company Letter. With respect to each Company Plan, the
Company has made available to Parent a true and correct copy of (i) the three
(3) most recent annual reports (Form 5500) filed with the IRS; (ii) each such
Company Plan that has been reduced to writing and all amendments thereto; (iii)
each trust, insurance or administrative Contract relating to each such Company
Plan; (iv) a written summary of each unwritten Company Plan; (v) the most recent
summary plan description or other written explanation of each Company Plan
provided to participants; (vi) the most recent determination letter and request
therefor, if any, issued by the IRS with respect to any Company Plan intended to
be qualified under Section 401(a) of the Code; (vii) any request for a
determination currently pending before the IRS; and (viii) all correspondence
with the IRS, the Department of Labor, the SEC or Pension Benefit Guaranty
Corporation relating to any outstanding controversy or audit. Each Company Plan
complies in all material respects with ERISA, the Code and all other applicable
statutes and governmental rules and regulations. Neither the Company nor any of
its ERISA Affiliates currently maintains, contributes to or has any liability
under or, at any time during the past six (6) years has maintained or
contributed to, any pension plan which is subject to Section 412 of the Code or
Section 302 of ERISA or Title IV of ERISA. Neither the Company nor any of its
ERISA Affiliates currently maintains, contributes to or has any liability under
or, at any time during the past six (6) years has maintained or contributed to,
any Company Multiemployer Plan (as hereinafter defined).
(b) Except as listed in Section 3.12(b) of the Company Letter,
with respect to the Company Plans, no event or set of circumstances has occurred
and, to the Knowledge of the Company, there exists no condition or set of
circumstances in connection with which the Company or any of its ERISA
Affiliates or any Company Plan fiduciary are, or would reasonably be expected to
be, subject to any liability under the terms of such Company Plans, ERISA, the
Code or any other applicable law, other than liabilities which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
All Company Plans that are intended by their terms to be, or are otherwise
treated by the Company as, qualified under Section 401(a) of the Code have been
determined by the IRS to be so qualified, or a timely
-29-
application for such determination is now pending and the Company is not aware
of any reason any such Company Plan is not so qualified in operation. Except as
set forth in Section 3.12(b) of the Company Letter, neither the Company nor any
of its ERISA Affiliates has any liability or obligation under any welfare plan
or Contract to provide benefits after termination of employment to any employee
or dependent other than as required by Section 4980B of the Code.
(c) For purposes of this Agreement, (i) "Company Plan" means a
"pension plan" (as defined in Section 3(2) of ERISA (other than a Company
Multiemployer Plan)), a "welfare plan" (as defined in Section 3(1) of ERISA) or
any bonus, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, holiday pay, vacation,
severance, death benefit, sick leave, fringe benefit, insurance or other plan,
arrangement or understanding, in each case established or maintained by the
Company or any of its ERISA Affiliates or as to which the Company or any of its
ERISA Affiliates has contributed or otherwise may have any liability and (ii)
"Company Multiemployer Plan" means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which the Company or any of its ERISA Affiliates is or
has been obligated to contribute or otherwise may have any liability.
(d) Section 3.12(d) of the Company Letter contains a list, as
of the date hereof, and the Company has heretofore made available to Parent a
complete and correct copy, of all (i) severance (other than termination letters
or Contracts with respect to former employees entered into in the ordinary
course of business prior to the date hereof if the Company and its Subsidiaries
have no further payment or other material obligations thereunder), employment
and material consulting Contracts with employees and consultants of the Company
and each of its ERISA Affiliates to which the Company is a party, (ii) severance
programs and policies of the Company and each of its ERISA Affiliates with or
relating to its employees and (iii) plans, programs, Contracts and other
arrangements of the Company and each of its ERISA Affiliates with or relating to
its current and former employees containing change of control or similar
provisions.
(e) Except as set forth in Section 3.12(e) of the Company
Letter, the Company is not a party to any Contract that would reasonably be
expected to result, separately or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of Section 280G of the Code as a
result of the Merger or the Subsequent Merger.
(f) With respect to each Company Plan not subject to United
States law (a "Company Foreign Benefit Plan"), (i) the fair market value of the
assets of each funded Company Foreign Benefit Plan, the liability of each
insurer for any Company Foreign Benefit Plan funded through insurance or the
reserve shown on the consolidated financial statements of the Company included
in the Company SEC Documents for any unfunded Company Foreign Benefit Plan,
together with any accrued contributions, is sufficient to procure or provide for
the projected benefit obligations, as of the Effective Time, with respect to all
current and former participants in such plan based on reasonable, country
specific actuarial assumptions and valuations and no transaction contemplated by
this Agreement shall cause such assets or insurance obligations or book reserve
to be less than such projected benefit obligations and (ii) each Company Foreign
Benefit Plan required to be registered has been registered and has been
maintained in good standing with the appropriate regulatory authorities.
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(g) The Company, with respect to employees outside of the
United States, (i) is not under any legal liability to pay pensions, gratuities,
superannuation allowances or the like to any past or present directors,
officers, employees or dependents of employees; (ii) has not made ex-gratia or
voluntary payments by way of superannuation allowance or pension; and/or (iii)
does not maintain any pension schemes or arrangements for payment of the
pensions or death benefits or similar arrangements.
Section 3.13 Compliance with Worker Safety and
Environmental Laws. The properties, assets and operations of the Company and its
Subsidiaries are in compliance with all applicable Worker Safety Laws and
Environmental Laws, except for any violations that would not, individually or in
the aggregate, have a Material Adverse Effect on the Company. With respect to
such properties, assets and operations, including any previously owned, leased
or operated properties, assets or operations, there are no events, conditions,
circumstances, activities, practices, incidents, actions or plans of the Company
or any of its Subsidiaries that may interfere with or prevent compliance or
continued compliance with applicable Worker Safety Laws and Environmental Laws,
other than any such interference or prevention as would not, individually or in
the aggregate, have a Material Adverse Effect on the Company.
Section 3.14 Labor Matters. Neither the Company nor any
of its Subsidiaries is a party to any collective bargaining Contract or, except
as set forth in Section 3.14 of the Company Letter, any labor Contract. Neither
the Company nor any of its Subsidiaries has engaged in any unfair labor practice
with respect to any Persons employed by or otherwise performing services
primarily for the Company or any of its Subsidiaries (the "Company Business
Personnel"), and there is no unfair labor practice complaint or grievance
against the Company or any of its Subsidiaries by the National Labor Relations
Board or any comparable state agency pending or threatened in writing with
respect to the Company Business Personnel, except where such unfair labor
practice, complaint or grievance would not, individually or in the aggregate,
have a Material Adverse Effect on the Company. There is no labor strike,
dispute, slowdown or stoppage pending or, to the Knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries, except
any such dispute, strike or work stoppage which would not, individually or in
the aggregate, have a Material Adverse Effect on the Company.
Section 3.15 Intellectual Property. (a) Except as set
forth in Section 3.15(a) of the Company Letter, the Company and its Subsidiaries
own or have a valid right to use all Intellectual Property Rights as are
necessary to conduct the business of the Company and its Subsidiaries as
currently conducted or planned to be conducted by the Company and its
Subsidiaries, taken as a whole, except where the failure to have such
Intellectual Property Rights would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. Neither the Company nor any of its
Subsidiaries has infringed, misappropriated or violated in any material respect
any Intellectual Property Rights of any third party, except where such
infringement, misappropriation or violation would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. No third party
infringes, misappropriates or violates any Intellectual Property Rights owned or
exclusively licensed by or to the Company or any of its Subsidiaries, except
where such infringement, misappropriation or violation would not, individually
or in the aggregate, have a Material Adverse Effect on the Company.
-31-
(b) Section 3.15(b) of the Company Letter contains a list as
of the date hereof of (i) all material registered United States, state and
foreign trademarks, service marks, logos, trade dress and trade names and
pending applications to register the foregoing; (ii) all United States and
material foreign patents and patent applications; and (iii) all material
registered United States and foreign copyrights and pending applications to
register the same, in each case owned by the Company and its Subsidiaries.
(c) Except as set forth in the Company SEC Documents filed
prior to the date of this Agreement or in Section 3.15(c) of the Company Letter,
(i) as of the date of this Agreement, to the Knowledge of the Company, there are
no actions, suits or claims or administrative proceedings or investigations
pending or threatened that challenge or question the Intellectual Property
Rights of the Company or any of its Subsidiaries and (ii) there are no actions,
suits or claims, or administrative proceedings or investigations pending or, to
the Knowledge of Company, threatened that challenge or question the Intellectual
Property Rights of the Company or any of its Subsidiaries and that, if adversely
decided, would, individually or in the aggregate, have a Material Adverse Effect
on the Company.
Section 3.16 Opinion of Financial Advisor. The Company
has received the opinion of Bear, Xxxxxxx & Co. Inc., as of the date hereof, to
the effect that, as of the date hereof, the Per Share Merger Consideration is
fair to the Company's stockholders from a financial point of view.
Section 3.17 State Takeover Statutes; Certain Charter
Provisions. The Board of Directors of the Company has, to the extent such
statutes are applicable, taken all action (including appropriate approvals of
the Board of Directors of the Company) necessary to exempt Parent, its
Subsidiaries and Affiliates, the Merger, the Subsequent Merger, this Agreement
and the transactions contemplated hereby from Section 203 of the DGCL and
Article EIGHTH of the Company Charter. To the Knowledge of the Company, no other
state takeover statutes or charter or bylaw provisions are applicable to the
Merger and/or the Subsequent Merger, this Agreement or the transactions
contemplated hereby.
Section 3.18 Required Vote of Company Stockholders. The
affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock is required to approve and adopt this Agreement. No other
vote of the securityholders of the Company is required by law, the Company
Charter, the Company Bylaws or otherwise in order for the Company to consummate
the Merger, the Subsequent Merger and the other transactions contemplated
hereby.
Section 3.19 Reorganization. Neither the Company nor any
of its Subsidiaries has taken any action or failed to take any action which
action or failure would, to the Knowledge of the Company, jeopardize the
qualification of the Merger and the Subsequent Merger, taken together, as a
"reorganization" within the meaning of Section 368(a) of the Code. The Company
does not have any knowledge of any fact or circumstance that, to the Knowledge
of the Company, would prevent the Merger and the Subsequent Merger, taken
together, from qualifying as a "reorganization" within the meaning of Section
368(a) of the Code.
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Section 3.20 Brokers. No broker, investment banker or
other Person, other than Bear, Xxxxxxx & Co. Inc., the fees and expenses of
which will be paid by the Company (as reflected in an agreement between Bear,
Xxxxxxx & Co. Inc. and the Company, dated March 23, 2004, a copy of which has
been furnished to Parent), is entitled to any broker's, finder's or other
similar fee or commission in connection with the Merger, the Subsequent Merger
or any of the other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company.
Section 3.21 Rights Agreement. The Company has amended
the Rights Agreement to (i) render the Rights Agreement inapplicable to the
Merger, the Subsequent Merger and the other transactions contemplated hereby and
(ii) provide that none of Sub, Parent or any Affiliate of Parent shall be deemed
an Acquiring Person (as defined in the Rights Agreement), the Distribution Date
(as defined in the Rights Agreement) shall not be deemed to occur and the Rights
will not separate from the shares of Company Common Stock as a result of
entering into this Agreement or consummating the Merger, the Subsequent Merger
or any of the other transactions contemplated hereby.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger. (a)
Except as expressly permitted by clauses (i) through (xix) of this Section
4.1(a), during the period from the date of this Agreement through the Effective
Time, the Company shall, and shall cause each of its Subsidiaries to, in all
material respects carry on its business in the ordinary course of its business
as currently conducted and, to the extent consistent therewith, use reasonable
best efforts to preserve intact its current business organizations, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business shall be unimpaired at the
Effective Time. Without limiting the generality of the foregoing, and except as
otherwise expressly contemplated by this Agreement or as set forth in Section
4.1 of the Company Letter (with specific reference to the applicable subsection
below), the Company shall not, and shall not permit any of its Subsidiaries to,
without the prior written consent of Parent (which consent shall not be
unreasonably withheld, conditioned or delayed):
(i) (A) declare, set aside or pay any dividends on, or
make any other actual, constructive or deemed distributions in respect
of, any of its capital stock, or otherwise make any payments to its
stockholders in their capacity as such other than dividends or
distributions from wholly owned Subsidiaries of the Company, (B) split,
combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (C) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any
Subsidiary or any other securities thereof or any rights, warrants or
options to acquire, any such shares or other securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock, any other voting securities
or equity equivalent or any securities
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convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities, equity equivalent or convertible
securities, other than (A) the issuance of shares of Company Common
Stock upon the exercise of Company Stock Options outstanding on the
date of this Agreement or issuances pursuant to options that are
granted after the date of this Agreement in accordance with Section
4.1(a)(ii)(C), in each case, in accordance with their respective terms;
(B) the issuance of shares of Company Common Stock pursuant to the
Company Stock Purchase Plan in accordance with its current terms; (C)
additional options to acquire shares of Company Common Stock granted
under the terms of any Company Stock Option Plan as in effect on the
date hereof in the ordinary course of business consistent with past
practice and which stock options have an exercise or purchase price at
least equal to the fair market value of the Company Common Stock of the
date of grant, provided that the aggregate number of shares of Company
Common Stock issuable upon exercise of options granted pursuant to this
Section 4.1(a)(ii)(C) following the date of this Agreement shall in no
event exceed the number of shares of Company Common Stock set forth in
Section 4.1(a)(ii)(C) of the Company Letter; (D) transfers or issuances
of shares of any Subsidiary of the Company to the Company or any of its
wholly-owned Subsidiaries; and (E) where required by applicable law,
issuances of director qualifying shares in jurisdictions other than the
United States; provided, however, that the Company shall take all
actions necessary so that no option issued in accordance with clause
(ii)(C) to any employee of the Company or any of its Subsidiaries who
is hired after the date hereof shall accelerate in connection with the
Merger, the Subsequent Merger or any of the other transactions
contemplated by this Agreement, including by reason of any subsequent
termination of employment or service;
(iii) amend its certificate of incorporation or bylaws or
other comparable organizational documents;
(iv) acquire or agree to acquire by merging or
consolidating with, by purchasing a substantial portion of the assets
of or equity in or by any other manner, any business or any
corporation, limited liability company, partnership, association or
other business organization or division thereof or otherwise acquire or
agree to acquire any assets, other than assets acquired in the ordinary
course of business and not material to the Company and its
Subsidiaries, taken as a whole;
(v) sell, transfer, lease, license (as licensor of
Intellectual Property Rights of the Company), mortgage, pledge,
encumber or otherwise dispose of any of its properties or assets, other
than sales, leases or licenses of inventory, products or services or
licenses of Intellectual Property Rights associated with the sale of
such products or services, in each case, in the ordinary course of
business and not material to the Company and its Subsidiaries, taken as
a whole;
(vi) incur any indebtedness for borrowed money, guarantee
any such indebtedness or make any loans, advances or capital
contributions to, or other investments in, any other Person, other than
(A) indebtedness, loans, advances, capital contributions and
investments between the Company and any of its wholly owned
Subsidiaries or between any of such wholly owned Subsidiaries; (B)
additional letters of
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credit under the Company's existing facility not exceeding $5,000,000;
(C) refinancings, refundings or replacements of indebtedness,
guarantees and investments in existence on the date hereof, provided
that the outstanding principal amount is not thereby increased; (D)
relocation loans and advances of travel, relocation and other business
expenses to employees, in each case, in the ordinary course of business
and consistent with past practice; and (E) indemnification advances to
directors and officers pursuant to applicable law, the Company Bylaws,
and/or indemnification agreements existing as of the date hereof;
(vii) merge, liquidate, reorganize or restructure or
otherwise alter in any fashion the corporate structure of the Company
or any of its Subsidiaries;
(viii) enter into, adopt or amend any severance plan,
Company Plan, Employee Agreement or material consulting Contract,
except as required by applicable law, including the Company Stock
Option Plans, other than any severance Contract with non-officer
employees involving payments to any such employee not in excess of
$100,000 individually (or $200,000 individually with respect to
officers) or $1,000,000 in the aggregate with respect to all employees
(including officers) so long as, in each case, such severance Contract
is in the ordinary course of business consistent with past practice and
contains a customary release from such employee to the benefit of the
Company and its Subsidiaries;
(ix) increase the compensation payable or to become
payable to its directors, officers or employees (except for increases
in the ordinary course of business consistent with past practice in
salaries or wages of employees of the Company or any of its
Subsidiaries who are not officers of the Company), other than as
required by law, or a Contract or Company Plan existing on the date
hereof, or establish, adopt, enter into or, except as may be required
to comply with applicable law, amend or take action to enhance or
accelerate any rights or benefits under, any labor, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance
or other plan, Contract, trust, fund, policy or arrangement for the
benefit of any current or former director, officer or employee;
provided, however, that prior to the Effective Time, the Company may
implement a retention plan for the benefit of those employees of the
Company and its Subsidiaries mutually selected by the Company and
Parent, which shall provide for the payment of retention benefits to
such employees in an aggregate amount not to exceed $3.65 million and
payable 12 months after the Effective Time, or at such earlier time and
subject to such other terms upon which the Company and Parent shall
mutually agree;
(x) knowingly violate or knowingly fail to perform any
obligation or duty imposed upon it or any Subsidiary by any applicable
material federal, state or local law, rule, regulation, guideline or
ordinance;
(xi) make or adopt any change to its accounting methods,
practices or policies (other than actions which are required to be
taken by GAAP or under SEC rules, regulations or requirements and
requirements communicated to the Company by its independent auditors);
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(xii) prepare or file any Tax Return in a manner that is
materially inconsistent with past practice or, on any such Tax Return,
take any material position, make any material election or adopt any
material method that is inconsistent with positions taken, elections
made or methods used in preparing or filing similar Tax Returns in
prior periods; provided, however, that no covenant described in this
Section 4.1(a) shall be deemed to be breached by reason of preparing or
filing a Tax Return (or, on any Tax Return, taking any position, making
any election, or adopting any method) consistent with a private letter
ruling received by the Company from the IRS after the date hereof;
(xiii) settle or compromise any material federal, state,
local or foreign income tax liability; provided, however, that no
covenant described in this Section 4.1(a) shall be deemed to be
breached by reason of a settlement or compromise of any Tax liability
consistent with a private letter ruling received by the Company from
the IRS after the date hereof;
(xiv) enter into any material Contract outside of the
ordinary course of business or that if entered into on or prior to the
date hereof would be required to be disclosed in the Company Letter
pursuant to clause (i) (excluding Contracts described in Item
601(b)(10)(iii) of Regulation S-K) or any of clauses (vii) through (ix)
of Section 3.11(a) (other than, with respect to Contracts described in
clause (ix) of Section 3.11(a), any distribution Contract entered into
in the ordinary course of business consistent with past practice with
existing U.S. distributors of the Company or any of its Subsidiaries)
or amend or terminate any Company Contract unless such amendment or
termination is in the ordinary course of business and would not be
materially adverse to the Company or any of its Subsidiaries;
(xv) enter into any Contract (A) that would, after the
Effective Time, restrict Parent or any of its Subsidiaries (including
the Company and its Subsidiaries) with respect to engaging in any line
of business or conducting business in any geographical area (other than
field of use or territorial restrictions of third party Intellectual
Property Rights in licenses under which the Company or any of its
Subsidiaries is the licensee and which are entered into in the ordinary
course of business), (B) that obligates the Company or any of its
Affiliates (including Parent or any of its Subsidiaries following the
Merger) to extend most favored nation pricing to any Person other than
Contracts with such provisions that are entered into in the ordinary
course of business consistent with the Company's past practices, or (C)
that imposes obligations on the Company or any of its Affiliates
(including Parent or any of its Subsidiaries following the Merger) with
respect to non-solicitation of customers or suppliers or imposes
exclusivity obligations on the Company or any of its Affiliates
(including Parent or any of its Subsidiaries following the Merger) with
respect to any customer or supplier;
(xvi) make or agree to make any new capital expenditure or
expenditures which, individually, is in excess of $1,000,000 or, in the
aggregate, are in excess of $10,000,000;
(xvii) waive or release any material right or claim or pay,
discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction, in the
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ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in the most recent Company SEC Documents filed prior to the
date hereof, or incurred in the ordinary course of business consistent
with past practice;
(xviii) initiate any material litigation or arbitration
proceeding, settle or compromise any material litigation or arbitration
proceeding or initiate, settle or compromise any claim involving
intellectual property; or
(xix) authorize or announce an intention to do any of the
foregoing or enter into any Contract to do any of the foregoing.
(b) During the period from the date of this Agreement to the
Effective Time, Parent shall not, and shall not permit any of its Subsidiaries
to, without the prior written consent of the Company (which consent shall not be
unreasonably withheld, conditioned or delayed):
(i) (A) declare, set aside or pay any dividends on, or
make any other actual, constructive or deemed distributions in respect
of, any capital stock of Parent, (B) split, combine or reclassify any
of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock, (C) purchase, redeem or otherwise acquire any shares
of capital stock of Parent or any Subsidiary or any other securities
thereof or any rights, warrants or options to acquire, any such shares
or other securities (other than pursuant to Contracts in existence on
the date hereof or pursuant to any Parent Stock Plan);
(ii) amend the Parent Charter or the Parent Bylaws except
as contemplated by clause (vi) below;
(iii) acquire or agree to acquire by merging or
consolidating with, by purchasing a substantial portion of the assets
of or equity in or by any other manner, any business or any
corporation, limited liability company, partnership, association or
other business organization or division thereof, other than
acquisitions in which the fair market value of the total consideration
(including the value of indebtedness acquired or assumed), determined
as of the date of any definitive agreement relating thereto, does not
exceed $100,000,000 in the aggregate and that would not prevent or
delay beyond the End Date the consummation of the Merger, the
Subsequent Merger or any of the other transactions contemplated hereby;
(iv) adopt a plan or agreement of complete or partial
liquidation or dissolution of Parent;
(v) sell or transfer all or substantially all of the
assets of Parent and its Subsidiaries, taken as a whole;
(vi) increase, or take any action to increase, the size of
the Board of Directors of Parent, except for adding up to four
directors (three of which will be added to comply with Section 5.16);
or
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(vii) authorize or announce an intention to do any of the
foregoing or enter into any Contract to do any of the foregoing.
Notwithstanding the foregoing, nothing contained in this
Agreement shall prohibit Parent from adopting a stockholder rights plan (so long
as any such plan shall not prevent or delay beyond the End Date the consummation
of the Merger, the Subsequent Merger or any of the other transactions
contemplated hereby) and issuing securities pursuant thereto or amending the
Parent Charter to increase the number of shares authorized thereby.
Section 4.2 No Solicitation. (a) From the date hereof
until the earlier of the Effective Time or the date on which this Agreement is
terminated in accordance with the terms hereof, the Company shall not, nor shall
it permit any of its Subsidiaries to, nor shall the Company authorize or permit
any officer, director or employee of or any financial advisor, attorney or other
advisor or representative of, the Company or any of its Subsidiaries to,
directly or indirectly, (i) solicit, initiate or knowingly encourage the
submission of, any Takeover Proposal (as hereinafter defined); (ii) enter into
any letter of intent or agreement with respect to any Takeover Proposal; or
(iii) participate in any discussions or negotiations regarding, or furnish to
any Third Party (as hereinafter defined) any information with respect to, or
take any other action to knowingly facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal; provided, however, that nothing contained in this Agreement
shall prevent the Company or its Board of Directors from (A) complying with
Rules 14d-9 and 14e-2 under the Exchange Act or (B) furnishing non-public
information regarding the Company to, or entering into discussions or
negotiations with, any Third Party in connection with an unsolicited bona fide
written Takeover Proposal by such Third Party, if and only to the extent that,
with respect to clause (B) above, (1) such Takeover Proposal is or is reasonably
likely to result in a Superior Proposal in the good faith judgment of the Board
of Directors of the Company, after consultation with its outside financial
advisors, (2) prior to furnishing such non-public information to, or entering
into discussions or negotiations with, such Third Party, such Board of Directors
receives from such Third Party an executed confidentiality agreement with
provisions not less favorable to the Company than those contained in the
Confidentiality Agreement (as hereinafter defined) and the Company provides 24
hours advance written notice to Parent of the identity of the Third Party or
entity making, and the proposed terms and conditions of, such Takeover Proposal,
(3) the Company shall have provided (or shall contemporaneously provide) to
Parent a copy of all written materials delivered to the Third Party making the
Takeover Proposal in connection with such Takeover Proposal and made available
to Parent all materials and information made available to the Third Party making
the Takeover Proposal in connection with such Takeover Proposal, in each case,
only to the extent not previously provided or made available to the other
parties hereto, and (4) the Company shall have fully complied with this Section
4.2. For purposes of this Agreement, (i) "Takeover Proposal" means any inquiry,
offer or proposal by a Third Party relating to any Acquisition Transaction; (ii)
"Acquisition Transaction" means any transaction or series of related
transactions other than the Merger involving: (A) any acquisition or purchase
from the Company by any Third Party of more than a 15% interest in the total
outstanding voting securities of the Company or any of its Subsidiaries or any
tender offer or exchange offer that if consummated would result in any Third
Party beneficially owning 15% or more of the total outstanding voting securities
of the Company or any of its Subsidiaries or any merger, consolidation, business
combination or similar transaction involving the Company pursuant to which the
stockholders of
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the Company immediately preceding such transaction hold less than 85% of the
equity interests in the surviving or resulting entity of such transaction, (B)
any sale, lease, exchange, transfer, license, acquisition or disposition of more
than 15% of the assets of the Company and its Subsidiaries, taken as a whole, or
(C) any liquidation, dissolution, recapitalization or other significant
corporate reorganization of the Company; (iii) "Superior Proposal" means a bona
fide binding written proposal reasonably capable of being consummated in the
good faith judgment of the Board of Directors of the Company made by a Third
Party to acquire, directly or indirectly, pursuant to a tender offer, exchange
offer, merger, consolidation or other business combination, all or substantially
all of the assets of the Company and its Subsidiaries, taken as a whole, or in
excess of 50% of the outstanding voting securities of the Company and as a
result of which the stockholders of the Company immediately preceding such
transaction would cease to hold at least 50% of the equity interests in the
surviving or resulting entity of such transaction, on terms that in the
reasonable good faith judgment of the Board of Directors of Company, after
consultation with its outside financial advisors, would cause the proposal, if
consummated, to be more favorable to Company's stockholders from a financial
point of view than the Merger and the Subsequent Merger, taken together, taking
into account all the terms and conditions of such proposal and this Agreement
(including any proposal by either party to amend the terms of this Agreement);
and (iv) "Third Party" means any Person or group (as defined under Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder) other
than Parent and its Affiliates.
(b) The Company agrees that it and its Subsidiaries shall, and
the Company shall direct its and its Subsidiaries' respective officers,
directors, employees, representatives and agents to, immediately cease and cause
to be terminated any activities, discussions or negotiations with any Third
Party with respect to any Takeover Proposal. The Company shall advise Parent
orally (within 48 hours) and in writing (as promptly as practicable) of (i) the
receipt of any Takeover Proposal or any inquiry with respect to or which could
lead to any Takeover Proposal; (ii) the proposed terms and conditions of such
Takeover Proposal; and (iii) the identity of the Third Party making any such
Takeover Proposal or inquiry. The Company will keep Parent fully informed on a
current basis of the status and details of any such Takeover Proposal or
inquiry. The Company also agrees that it will promptly request each Person that
has heretofore executed a confidentiality agreement in connection with any
Takeover Proposal to return or destroy all confidential information heretofore
furnished to such Third Party by or on behalf of it or any of its Subsidiaries.
Section 4.3 Third Party Standstill Agreements. During
the period from the date of this Agreement through the Effective Time, the
Company (a) shall not terminate, amend, modify or waive any provision of any
confidentiality agreement relating to a Takeover Proposal or standstill
agreement to which the Company or any of its Subsidiaries is a party (other than
any involving Parent) and (b) agrees to enforce, to the fullest extent permitted
under applicable law, the provisions of any such agreements, including obtaining
injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state thereof having jurisdiction; provided, that the Company shall not
be required to take, or be prohibited from taking, any action otherwise
prohibited by this Section 4.3, if, in the good faith judgment of the Company's
Board of Directors, after consultation with outside counsel of the Company, such
action or inaction, as the case may be,
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would violate the fiduciary duties of the Company's Board of Directors to the
Company's stockholders.
Section 4.4 Reorganization. During the period from the
date of this Agreement through the Effective Time, unless the other party shall
otherwise agree in writing, none of Parent, the Company or any of their
respective Subsidiaries (including, without limitation, Sub and Sister
Subsidiary) shall take or fail to take any action which action or failure would,
to its knowledge, jeopardize the qualification of the Merger and the Subsequent
Merger, taken together, as a "reorganization" within the meaning of Section
368(a) of the Code or otherwise cause counsel to be unable to render the tax
opinions set forth in Section 6.2(b) or 6.3(b); provided, that nothing herein
shall require any party to agree to amend the terms of this Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Stockholder Meetings. (a) The Company and
Parent will each, as soon as practicable following the date of this Agreement,
duly call, give notice of, convene and hold a meeting of stockholders
(respectively, the "Company Stockholder Meeting" and the "Parent Stockholder
Meeting" and, collectively, the "Stockholder Meetings" and, individually a
"Stockholder Meeting") to be held as promptly as practicable after the
declaration of effectiveness of the Registration Statement for the purpose of
the Company's stockholders duly approving and adopting this Agreement, in the
case of the Company (the "Company Stockholder Approval"), and Parent's
stockholders duly approving the Share Issuance, in the case of Parent (the
"Parent Stockholder Approval"). The Company and Parent shall coordinate and
cooperate with respect to the timing of such meetings and shall use their
reasonable best efforts to hold such meetings on the same day. Each of Parent
and the Company shall ensure that its respective Stockholder Meeting is called,
noticed, convened, held and conducted, and that all proxies solicited by it in
connection with its respective Stockholder Meeting are solicited in compliance
with the DGCL, its certificate of incorporation and bylaws, the rules of Nasdaq
and all other applicable laws, as applicable.
(b) Parent shall, through its Board of Directors, recommend to
its stockholders approval of the Share Issuance, shall use all reasonable
efforts to solicit such approval by its stockholders and such Board of Directors
or committee thereof shall not withhold, withdraw, qualify, amend or modify in a
manner adverse to the Company such recommendation or its declaration that this
Agreement and the Merger are advisable and fair to and in the best interest of
Parent and its stockholders or resolve or propose to do any of the foregoing,
except if in the good faith judgment of Parent's Board of Directors, after
consultation with the outside counsel of Parent, the making of, or the failure
to withhold, withdraw, qualify, amend or modify, such recommendation would
violate the fiduciary duties of such Board of Directors to Parent's stockholders
under applicable law. Parent agrees to submit the Share Issuance to its
stockholders for approval whether or not the Board of Directors of Parent
determines at any time subsequent to the date hereof that the Share Issuance is
no longer advisable and recommends that the stockholders of Parent reject it.
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(c) The Company shall, through its Board of Directors,
recommend to its stockholders approval and adoption of this Agreement, shall use
all reasonable efforts to solicit such approval and adoption by its stockholders
and such Board of Directors or committee thereof shall not withhold, withdraw,
qualify, amend or modify in a manner adverse to Parent such recommendation or
its declaration that this Agreement and the Merger are advisable and fair to and
in the best interest of the Company and its stockholders or resolve or propose
to do any of the foregoing, except if (i) the Company has complied with Section
4.2 and (ii) in the good faith judgment of the Company's Board of Directors,
after consultation with the outside counsel of the Company, the making of, or
the failure to withhold, withdraw, qualify, amend or modify, such recommendation
would violate the fiduciary duties of such Board of Directors to the Company's
stockholders under applicable law. The Company agrees to submit this Agreement
to its stockholders for approval and adoption whether or not the Board of
Directors of the Company determines at any time subsequent to the date hereof
that this Agreement is no longer advisable and recommends that the stockholders
of the Company reject it.
Section 5.2 Preparation of the Registration Statement
and the Joint Proxy Statement. As promptly as practicable after the date of this
Agreement (and within thirty (30) days if reasonably possible), the Company and
Parent shall promptly prepare and file with the SEC the Joint Proxy Statement
and Parent shall prepare and file with the SEC the Registration Statement, in
which the Joint Proxy Statement will be included as a prospectus. Each of Parent
and the Company shall promptly respond to any comments from the SEC and shall
use its reasonable best efforts to have the Registration Statement declared
effective under the Securities Act as promptly as practicable after such filing.
Each of Parent and the Company will notify the other promptly upon the receipt
of any comments from the SEC or its staff in connection with the filing of, or
amendments or supplements to, the Registration Statement and/or the Joint Proxy
Statement. Whenever any event occurs which, in the good faith judgment of Parent
or the Company, as the case may be, is required to be set forth in an amendment
or supplement to the Joint Proxy Statement or the Registration Statement, Parent
or the Company, as the case may be, will promptly inform the other of such
occurrence and cooperate in filing with the SEC and/or mailing to stockholders
of Parent and/or the Company, such amendment or supplement. Parent shall provide
the Company (and its counsel) with a reasonable opportunity to review and
comment on the Registration Statement and the Joint Proxy Statement, and any
amendment or supplement thereto, prior to filing such with the SEC, and will
provide the Company with a copy of such filings made with the SEC. The Company
will reasonably cooperate with Parent with respect to such filings. As promptly
as practicable after the Registration Statement shall have become effective,
each of Parent and the Company shall distribute the Joint Proxy Statement to its
respective stockholders. Parent shall also take any actions reasonably required
to be taken under applicable state securities laws in connection with the Share
Issuance.
Section 5.3 Access to Information. Subject to currently
existing contractual and legal restrictions applicable to Parent or to the
Company or any of their respective Subsidiaries, as the case may be, each of
Parent and the Company shall, and shall cause each of its Subsidiaries to, upon
reasonable notice, afford to the accountants, counsel, financial advisors and
other representatives of the other reasonable access to, and permit them to make
such inspections as they may reasonably require of, during normal business hours
during the period from the date of this Agreement through the Effective Time,
all of its employees, properties, books, contracts, commitments and records
(including the work papers of independent
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accountants, if available and subject to the consent of such independent
accountants), and, during such period, each of Parent and the Company shall, and
shall cause each of its Subsidiaries to, furnish promptly to the other (i) a
copy of each report, schedule, registration statement and other document filed
by it during such period pursuant to the requirements of federal or state
securities laws and (ii) all other information concerning its business,
properties and personnel as the other may reasonably request; provided, however,
that either the Company or Parent, as the case may be, may restrict the
foregoing access to the extent that disclosure of any such information or
document would result in the loss of the attorney-client privilege. All requests
for information and access made pursuant to this Section 5.3 shall be directed
to an executive officer of either Parent or the Company, as applicable, or such
person as may be designated by its executive officers. No investigation pursuant
to this Section 5.3 shall affect any representation or warranty in this
Agreement of any party hereto or any condition to the obligations of the parties
hereto. All information obtained pursuant to this Section 5.3 shall be kept
confidential and used only in accordance with the Confidentiality Agreement,
dated April 28, 2003, between Parent and the Company (the "Confidentiality
Agreement").
Section 5.4 Compliance with the Securities Act. Section
5.4 of the Company Letter contains a list identifying all Persons who, as of the
date hereof, may be deemed to be "affiliates" of the Company as that term is
used in paragraphs (c) and (d) of Rule 145 under the Securities Act (the "Rule
145 Affiliates"). The Company shall use its reasonable best efforts to cause
each Person who is identified as a Rule 145 Affiliate in such list to deliver to
Parent within 30 days of the date hereof a written agreement in substantially
the form of Exhibit A hereto (the "Company Affiliate Letter"), executed by each
of such Persons identified in the foregoing list. Prior to the Effective Time,
the Company shall amend and supplement Section 5.4 of the Company Letter so as
to identify all of the Company's Rule 145 Affiliates as of immediately prior to
the Effective Time and use its reasonable best efforts to cause each additional
Person who is identified as a Rule 145 Affiliate of the Company to execute the
Company Affiliate Letter. Parent shall be entitled to place appropriate legends
on the certificates evidencing any Parent Common Stock to be received by
affiliates of the Company pursuant to this Agreement and to issue appropriate
stop transfer instructions to the transfer agent for the Parent Common Stock,
consistent with the terms of the Company Affiliate Letter.
Section 5.5 Current Nasdaq Quotation. Each of Parent and
the Company shall use its reasonable best efforts to continue the quotation of
the Parent Common Stock and the Company Common Stock on Nasdaq, respectively,
during the term of this Agreement.
Section 5.6 Fees and Expenses. (a) Except as provided in
this Section 5.6, whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement, the Merger, the Subsequent
Merger and the other transactions contemplated hereby, including the fees and
disbursements of counsel, financial advisors and accountants, shall be paid by
the party incurring such costs and expenses, provided that all printing expenses
and all filing fees (including filing fees under the Securities Act, the
Exchange Act and the HSR Act) shall be divided equally between Parent and the
Company.
(b) Notwithstanding any provision in this Agreement to the
contrary, if this Agreement is terminated (i) by the Company or Parent pursuant
to Section 7.1(e) and a Takeover Proposal existed between the date hereof and
the date of the termination of this Agreement, (ii)
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by Parent pursuant to Section 7.1(g) or (iii) by the Company pursuant to Section
7.1(h), then, in each case, the Company shall (without prejudice to any other
rights Parent may have against the Company for breach of this Agreement)
reimburse Parent upon demand by wire transfer of immediately available funds to
an account specified in writing by Parent for all reasonable out-of-pocket fees
and expenses incurred or paid by or on behalf of Parent or any Affiliate of
Parent in connection with this Agreement, the Merger, the Subsequent Merger and
the other transactions contemplated herein (other than wages, salaries or
employee benefits paid or due to employees of Parent or any of its Affiliates),
including all fees and expenses of counsel, investment banking firms,
accountants and consultants; provided, however, that the Company shall not be
obligated to make payments pursuant to this Section 5.6(b) in excess of
$10,000,000 in the aggregate.
(c) Notwithstanding any provision in this Agreement to the
contrary, if (i) this Agreement is terminated by the Company or Parent pursuant
to Section 7.1(e) and a Takeover Proposal existed between the date hereof and
the date of the termination of this Agreement and, concurrently with or within
twelve months after any such termination a Company Acquisition Transaction
occurs or the Company or any of its Subsidiaries shall enter into any letter of
intent, agreement in principle, acquisition agreement or other similar agreement
with respect to a Company Acquisition Transaction, (ii) this Agreement is
terminated by Parent pursuant to Section 7.1(g) or (iii) this Agreement is
terminated by the Company pursuant to Section 7.1(h), then, in each case, the
Company shall (in addition to any obligation under Section 5.6(b) and without
prejudice to any other rights that Parent may have against the Company for a
breach of this Agreement) pay to Parent a fee (the "Termination Fee") of
$57,600,000 by wire transfer of immediately available funds to an account
specified in writing by Parent, such payment to be made promptly, but in no
event later than, in the case of clause (i), the earlier to occur of such
Company Acquisition Transaction and the entry into such letter of intent,
agreement in principle, acquisition agreement or similar agreement with respect
to a Company Acquisition Transaction , in the case of clause (ii), one business
day after such termination, or, in the case of clause (iii), on the date of such
termination.
(d) Notwithstanding any provision in this Agreement to the
contrary, if this Agreement is terminated by the Company pursuant to Section
7.1(i) or Section 7.1(j), then Parent shall (without prejudice to any other
rights the Company may have against Parent for breach of this Agreement)
reimburse the Company upon demand by wire transfer of immediately available
funds to an account specified in writing by the Company for all reasonable
out-of-pocket fees and expenses incurred or paid by or on behalf of the Company
or any Affiliate of the Company in connection with this Agreement, the Merger,
the Subsequent Merger and the other transactions contemplated herein (other than
wages, salaries or employee benefits paid or due to employees of the Company or
any of its Affiliates), including all fees and expenses of counsel, investment
banking firms, accountants and consultants; provided, however, that Parent shall
not be obligated to make payments pursuant to this Section 5.6(d) in excess of
$10,000,000 in the aggregate.
(e) (i) Notwithstanding any provision in this Agreement to the
contrary, if this Agreement is terminated by the Company pursuant to Section
7.1(i), then Parent shall (in addition to any obligation under Section 5.6(d)
and without prejudice to any other rights that the Company may have against
Parent for a breach of this Agreement) pay to the Company a fee of
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$57,600,000 upon demand by wire transfer of immediately available funds to an
account specified in writing by the Company.
(ii) Notwithstanding any provision in this Agreement to the
contrary, if this Agreement is terminated by the Company pursuant to Section
7.1(j), then Parent shall (in addition to any obligation under Section 5.6(d)
and without prejudice to any other rights the Company may have against Parent
for breach of this Agreement) pay to the Company a fee of $28,800,000 by wire
transfer of immediately available funds to an account specified in writing by
the Company, such payment to be made promptly, but in no event later than one
business day after such termination.
(f) Each of the parties hereto acknowledges that the
agreements contained in Sections 5.6(b), 5.6(c), 5.6(d) and 5.6(e) are an
integral part of the Merger, the Subsequent Merger and the other transactions
contemplated by this Agreement, and that, without these agreements the Company
or Parent, as the case may be, would not enter into this Agreement; accordingly,
if the Company or Parent, as the case may be, fails to promptly pay the amounts
due pursuant to Sections 5.6(b) and 5.6(c) or Sections 5.6(d) and 5.6(e), as the
case may be, and, in order to obtain such payment Parent or the Company, as the
case may be, commences a suit which results in a judgment against the other
party for any of the amounts set forth in Sections 5.6(b) and 5.6(c) or Sections
5.6(d) and 5.6(e), as the case may be, such other party shall pay to Parent or
the Company, as the case may be, its costs and expenses (including attorneys'
fees) in connection with such suit, together with interest on the amounts due
pursuant to Sections 5.6(b) and 5.6(c) or Sections 5.6(d) and 5.6(e), as the
case may be, at the prime rate of Citibank, N.A. in effect on the date such
payment was required to be made.
(g) For purposes of this Section 5.6, "Company Acquisition
Transaction" means any transaction or series of transactions involving: (i) a
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company pursuant to which the
stockholders of the Company immediately preceding such transaction hold less
than seventy percent (70%) of the aggregate equity interests in the surviving or
resulting entity of such transaction or any direct or indirect parent thereof,
(ii) a sale or other disposition by the Company or any of its Subsidiaries of
assets representing in excess of twenty percent (20%) of the aggregate fair
market value of the assets of the Company and its Subsidiaries, taken as a
whole, immediately prior to such sale or other disposition, or (iii) the
acquisition by any Third Party (including by way of a tender offer or an
exchange offer or issuance by the party or Third Party), directly or indirectly,
of beneficial ownership or a right to acquire beneficial ownership of shares
representing in excess of twenty percent (20%) of the voting power of the
then-outstanding shares of capital stock of the Company.
For purposes of this Section 5.6, each of the parties hereto
acknowledges that this Agreement may only be deemed to be terminated by a party
hereto pursuant to a single subsection of Section 7.1.
Section 5.7 Company Stock Plans and Company Stock
Purchase Plan.
(a) Not later than the Effective Time, each Company Stock
Option (and related stock appreciation right ("SAR")) which is outstanding
immediately prior to the Effective Time
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pursuant to the Company Stock Option Plans shall be assumed by Parent and become
and represent an option and related SAR to purchase the number of shares of
Parent Common Stock (a "Substitute Option") (decreased to the nearest full
share) determined by multiplying (i) the number of shares of Company Common
Stock subject to such Company Stock Option immediately prior to the Effective
Time by (ii) the Option Exchange Ratio (as hereinafter defined), at an exercise
price per share of Parent Common Stock (rounded up to the nearest cent) equal to
the exercise price per share of Company Common Stock under such Company Stock
Option immediately prior to the Effective Time divided by the Option Exchange
Ratio. After the Effective Time, except as provided above in this Section 5.7,
each Substitute Option shall be exercisable upon the same terms and conditions
as were applicable under the related Company Stock Option immediately prior to
the Effective Time, after giving effect to any acceleration, lapse or other
vesting occurring by operation of the Merger and the Subsequent Merger. The
Company shall take all necessary action to implement and make effective the
provisions of this Section 5.7. For purposes of this Agreement, the "Option
Exchange Ratio" means the sum of (A) the Exchange Ratio plus (B) a ratio, the
numerator of which is the Per Share Cash Consideration and the denominator of
which is the average of the last reported sale price per share of Parent Common
Stock on Nasdaq on each of the 10 trading days immediately preceding the
Effective Time. For purposes of this Section 5.7 and Section 5.17, "Company
Stock Options" shall include any options to acquire Company Common Stock granted
in accordance with Section 4.1(a)(ii)(C).
(b) As of the Effective Time, all Unvested Share Restrictions
(as hereinafter defined), including all repurchase and forfeiture rights held by
the Company, with respect to each Unvested Company Share (as hereinafter
defined) shall be and hereby are assigned to Parent, and the shares of Parent
Common Stock issued and the cash paid upon the conversion of the Unvested
Company Shares in the Merger shall continue to be unvested and subject to the
same Unvested Share Restrictions which applied to such Unvested Company Shares
immediately prior to the Effective Time, after giving effect to any
acceleration, lapse or other vesting occurring by operation of the Merger and
the Subsequent Merger. The certificates representing such shares of Parent
Common Stock shall accordingly be marked with appropriate legends noting such
Unvested Share Restrictions. The Company shall take all actions necessary to
ensure that, from and after the Effective Time, Parent (or its assignee) shall
be entitled to exercise the rights held by the Company immediately prior to the
Effective Time with respect to all Unvested Share Restrictions. For purposes of
this Agreement, (i) "Unvested Company Share" means each outstanding share of
Company Common Stock issued under a Company Stock Option Plan or otherwise which
is subject to any Unvested Share Restrictions and (ii) "Unvested Share
Restrictions" means all repurchase, cancellation, forfeiture, vesting and other
conditions or restrictions applicable to an Unvested Company Share.
(c) Within ten (10) business days after the Effective Time,
Parent shall file a registration statement on Form S-8 (or any successor or
other appropriate form) with respect to Parent Common Stock subject to
Substitute Options or shall cause Substitute Options to be deemed to be issued
pursuant to a Parent Stock Plan for which a sufficient number of shares of
Parent Common Stock have been previously registered pursuant to an appropriate
registration form.
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(d) Parent, in its sole discretion, upon at least 10 days
prior written notice to the Company, may require the Company to cause the
Company Stock Purchase Plan and all rights thereunder to be suspended
immediately following the close of any Purchase Interval (as such term is
defined in the Company Stock Purchase Plan) ending after the date hereof, with
the effect of such suspension being that no offering period and no Purchase
Interval shall commence or continue under such plan during the period of such
suspension.
Section 5.8 Reasonable Best Efforts. (a) Upon the terms
and subject to the conditions set forth in this Agreement, each of Parent and
the Company agrees to use its reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Merger, the Subsequent Merger and the other transactions contemplated by this
Agreement, including using reasonable best efforts to accomplish the following:
(i) causing the conditions precedent set forth in Article VI to be satisfied;
(ii) obtaining all necessary actions or nonactions, waivers, consents,
approvals, orders and authorizations from Governmental Entities and from Persons
other than Governmental Entities and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity; (iii) defending any suits, claims, actions, investigations
or proceedings, whether judicial or administrative, challenging this Agreement,
the consummation of the Merger, the Subsequent Merger or any of the other
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed; and (iv) the execution or delivery of any additional
instruments reasonably necessary to consummate the Merger, the Subsequent Merger
and the other transactions contemplated by, and to fully carry out the purposes
of, this Agreement.
(b) Each of Parent and the Company shall notify the other
promptly upon the receipt of: (i) any comments from any officials of any
Governmental Entity in connection with any filings made pursuant hereto and (ii)
any request by any officials of any Governmental Entity for amendments or
supplements to any filings made pursuant to, or information provided to comply
in all material respects with, any law. Whenever any event occurs that is
required to be set forth in an amendment or supplement to any filing made
pursuant hereto, Parent or the Company, as the case may be, will promptly inform
the other of such occurrence and cooperate in filing with the applicable
Governmental Entity such amendment or supplement.
(c) Each party shall use all reasonable best efforts to not
take any action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or result
in a breach of any covenant made by it in this Agreement.
(d) Notwithstanding anything to the contrary contained in this
Agreement, (i) neither Parent nor any of its Affiliates shall be required to
divest or hold separate or otherwise take or commit to take any action that
limits its freedom of action with respect to, or its ability to retain, the
Company or any of the businesses, product lines or assets of Parent, the Company
or any of their respective Subsidiaries or Affiliates, unless such action or
actions would not, individually or in the aggregate, reasonably be expected to
materially impair the benefits sought
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to be derived by Parent from the transactions contemplated by this Agreement,
including the Merger and the Subsequent Merger, or have a Material Adverse
Effect on Parent and (ii) the Company shall not, without Parent's prior written
consent, take or agree to take any such action.
(e) At or prior to the Effective Time, the Company shall
deliver to Parent all consents, waivers or approvals obtained by the Company
with respect to the consummation of the Merger, the Subsequent Merger and the
other transactions contemplated by this Agreement.
Section 5.9 Public Announcements. The initial press
release concerning the Merger shall be a joint press release of Parent and the
Company. Thereafter, Parent and the Company will not issue any press release
with respect to the Merger, the Subsequent Merger or any of the other
transactions contemplated by this Agreement or otherwise issue any written
public statements with respect to such transactions without prior consultation
with the other party, except as may be required by applicable law or by
obligations pursuant to any listing agreement with any national securities
exchange or the rules of Nasdaq.
Section 5.10 State Takeover Laws. If any "fair price,"
"business combination" or "control share acquisition" statute or other similar
statute or regulation shall become applicable to the Merger, the Subsequent
Merger or any of the other transactions contemplated hereby, Parent and the
Company and their respective Boards of Directors shall use their reasonable best
efforts to grant such approvals and take such actions as are necessary so that
the Merger, the Subsequent Merger and the other transactions contemplated hereby
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise act to minimize the effects of any such statute or regulation on
the Merger, the Subsequent Merger and the other transactions contemplated
hereby.
Section 5.11 Indemnification; Directors and Officers
Insurance.
(a) Subject to applicable law, for six years from and after
the Effective Time, Parent and the Surviving Corporation shall, jointly and
severally, (i) fulfill and honor in all respects the obligations of the Company
for indemnification and advancement of expenses in favor of each past and
present officer and director of the Company (each, an "Indemnified Party") under
the Company Charter, the Company Bylaws or any indemnification agreement set
forth in Section 5.11 of the Company Letter to which such Indemnified Party is a
party and (ii) shall indemnify and hold harmless each Indemnified Party against
any costs or expenses (including but not limited to reasonable attorneys' fees
and expenses), judgments, fines, losses, claims, settlements, damages or
liabilities (collectively, "Costs") incurred in connection with any threatened
or pending claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative (each, a "Proceeding"), whether
asserted or claimed prior to, at or after the Effective Time, if and whenever
such Indemnified Party is or was a party to or a subject of, or is threatened to
be made a party to or a subject of, such Proceeding arising out of or pertaining
to acts or omissions or alleged acts or omissions of the Indemnified Party
occurring at or prior to the Effective Time (including, without limitation, for
acts or omissions occurring in connection with the approval of this Agreement
and the consummation of the transactions contemplated hereby) in his or her
capacity as an officer or director of the Company or its wholly-owned
Subsidiaries, to the fullest extent permitted under the DGCL (and Parent shall
also advance expenses to each Indemnified Party as incurred to the fullest
extent permitted by the
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DGCL, provided that Indemnified Party to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
expenses can not be reimbursed or indemnified under the DGCL to the extent such
undertaking is required by the DGCL). The provisions of Section 5.11(a)(ii)
shall not require Parent to indemnify an Indemnified Party hereunder in
connection with a Proceeding commenced by such Indemnified Party.
(b) Parent shall provide and maintain in effect, or shall
cause the Surviving Corporation to provide and maintain in effect, for an
aggregate period of not less than six (6) years from the Effective Time, for the
benefit of those Persons who are covered by the Company's directors' and
officers' liability insurance policy as of the date hereof an insurance and
indemnification policy that provides coverage for acts or omissions occurring at
or prior to the Effective Time (including, without limitation, for acts or
omissions occurring in connection with the approval of this Agreement and the
consummation of the transactions contemplated hereby) (the "D&O Insurance") that
is at least as favorable (with respect to coverage, amounts, limits, deductibles
and conditions) to the Company's existing policy; provided, however, that Parent
and the Surviving Corporation shall not be required to pay an annual premium for
the D&O Insurance in excess of 200% of the annual premium currently paid by the
Company for such coverage (the "Company's Current Premium"). If such premiums
for such insurance would at any time exceed 200% of the Company's Current
Premium, then Parent shall maintain the maximum amount of coverage under a
policy having the same deductible as is available for such 200% of the Company's
Current Premium. The Company represents and warrants to Parent that the
Company's Current Premium is $1,240,000. Notwithstanding the foregoing, Parent
shall use its reasonable best efforts to cause coverage to be extended under the
Company's D&O Insurance by obtaining a six-year "tail" policy, provided that the
cost of such tail coverage does not exceed $3 million. If Parent is unable to
obtain such tail policy, Parent shall provide the Company with notice thereof at
least 5 business days prior to the Effective Time. If the Company receives such
notice from Parent, the Company may purchase such tail policy, provided that the
cost of such tail coverage does not exceed $3 million. Such tail policy shall
satisfy Parent's and the Surviving Corporation's obligations under the
provisions of this Section 5.11(b).
(c) The provisions of this Section 5.11 are intended to be for
the benefit of, and shall be enforceable by, each of the Indemnified Parties and
their heirs and estates and such provisions may not be terminated or amended in
any manner adverse to the interests of such Person without his or her prior
consent.
(d) Notwithstanding anything herein to the contrary, if any
claim, action, suit, proceeding or investigation is made against an Indemnified
Party, for which such Indemnified Party is entitled to indemnification
hereunder, on or prior to the sixth anniversary of the Effective Time, the
provisions of this Section 5.11 shall continue in effect, solely with respect to
such matters, until the final disposition of such claim, action, suit,
proceeding or investigation.
(e) In the event the Parent or the Surviving Corporation or
any of their respective successors or assigns (i) consolidates with or merges
into any other Person and shall not be the continuing or surviving corporation
of such consolidation or merger, or (ii) transfers all or substantially all of
its properties to any Person, then, and in each case, to the extent necessary to
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effect such assumption, proper provision shall be made so that the successors
and assigns of the Parent and the Surviving Corporation, as the case may be,
shall assume the obligations set forth in this Section 5.11.
Section 5.12 Notification of Certain Matters. Parent
shall use its reasonable best efforts to give prompt notice to the Company, and
the Company shall use its reasonable best efforts to give prompt notice to
Parent, of: (i) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which it has Knowledge and which would be reasonably
likely to cause (x) any representation or warranty of the notifying party
contained in this Agreement to be untrue or inaccurate in any material respect
or (y) any covenant, condition or agreement of the notifying party contained in
this Agreement not to be complied with or satisfied in all material respects,
(ii) any material failure of the notifying party to comply in a timely manner
with or satisfy any material covenant, condition or agreement to be complied
with or satisfied by it hereunder or (iii) any change, event or effect which
would, individually or in the aggregate, have a Material Adverse Effect on the
notifying party; provided, however, that the delivery of any notice pursuant to
this Section 5.12 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice; and provided, further, that a
failure to comply with this Section 5.12 shall not cause the failure of any
condition set forth in Article VI to be satisfied unless the underlying untruth,
inaccuracy, noncompliance, failure or Material Adverse Effect would
independently result in the failure of a condition set forth in Article VI to be
satisfied.
Section 5.13 Employee Benefit Plans and Agreements. (a)
Parent agrees that it will cause the Surviving Corporation from and after the
Effective Time to honor all Company Plans and all employment, severance and
change in control agreements entered into by the Company prior to the date
hereof and described in Section 3.12 of the Company Letter; provided, however,
that, except as provided in this Section 5.13, nothing in this Agreement shall
be interpreted as limiting the power of Parent or the Surviving Corporation to
amend or terminate any Company Plan or any other individual employee benefit
plan, program, Contract or policy (provided that such amendment or termination
is permitted by its terms) or as requiring Parent or the Surviving Corporation
to offer to continue (other than as required by its terms) any written
employment contract. Except as otherwise provided herein, following the
Effective Time and continuing at least until December 31, 2004, employees of the
Company and its Subsidiaries (i) shall continue to participate in all "welfare
plans" and "pension plans," as such terms are defined in Sections 3(1) and 3(2),
respectively, of ERISA, which are maintained by the Company and in effect
immediately prior to the Effective Time and (ii) shall be eligible for benefits
other than those described in clause (i) ("Non-ERISA Benefits") which in the
aggregate are substantially comparable to the Non-ERISA Benefits provided by the
Company immediately prior to the Effective Time; provided, however, that the
employee stock purchase plans maintained by Parent and the Company shall be
deemed comparable to each other for this purpose. After December 31, 2004,
employees of the Company and its Subsidiaries shall be eligible for the Parent
Plans on the same terms as such plans and arrangements are generally offered
from time to time to employees of Parent and its Subsidiaries in comparable
positions.
(b) Parent shall cause each Parent Plan covering employees of
the Company or its Subsidiaries to recognize prior service of such employees
with the Company and its Subsidiaries or their predecessors (to the extent
recognized under the analogous Company Plans) as service
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with Parent and its Subsidiaries for purposes of eligibility (including
eligibility for early retirement benefits) and vesting (but not benefit accrual)
under any Parent Plan that is a "pension plan" (as defined in Section 3(2) of
ERISA).
(c) To the extent any employee of the Company or its
Subsidiaries first becomes eligible to participate in a Parent Plan that is a
"welfare plan," as defined in Section 3(1) of ERISA, after January 1, 2005,
Parent shall take such action as is appropriate to effect the integration of
such employee into such Parent Plan, which shall include (i) waiving all
pre-existing conditions and waiting periods with respect to participation and
coverage requirements applicable to such employee and his or her eligible
dependents under such Parent Plan, except to the extent such pre-existing
conditions or waiting periods applied immediately prior thereto under the
analogous Company Plan and (ii) providing such employee and his or her eligible
dependents with credit for any co-payments and deductibles paid prior to
becoming eligible to participate in such Parent Plan under an analogous Company
Plan (to the same extent that such credit was given under such Company Plan) in
satisfying any applicable deductible or annual maximum out-of-pocket
requirements under such Parent Plan.
(d) Following the Effective Time, employees of the Company and
its Subsidiaries shall accrue vacation under a policy maintained by Parent for
employees in comparable positions; provided, however, that no such employee
shall accrue vacation at a rate less than the rate at which such employee was
accruing vacation for the calendar year in which the Effective Time occurs under
the policy maintained by the Company.
(e) The employee sabbatical program maintained by the Company
immediately prior to the Effective Time (the "Sabbatical Program") shall
terminate as of the Effective Time and, in lieu of the benefits otherwise
provided thereunder, and subject to the terms and conditions set forth in this
Section 5.13(e), Parent shall cause the Surviving Corporation to make cash
payments to employees who are eligible to participate in the Sabbatical Program
as of the date hereof, based on the years of eligibility service which they have
accrued under the terms and conditions of the Sabbatical Program immediately
prior to the Effective Time (including the method of crediting service
applicable to former employees of Marconi Communications, Inc. or its Affiliates
("Marconi") pursuant to the terms of the Asset Sale Agreement, dated January 5,
2004, as amended, between Parent and Marconi). If an eligible employee has
accrued five or more years of eligibility service as of the Effective Time, then
such employee shall receive a cash payment, not later than 30 days after the
Effective Time, in an amount equal to six times such employee's weekly rate of
base pay. If an eligible employee has accrued fewer than five years of
eligibility service as of the Effective Time, then such employee shall receive a
cash payment in an amount equal to the product of (i) six times the employee's
weekly rate of base pay and (ii) a fraction, the numerator of which is the
number of months of eligibility service credited to such employee under the
Sabbatical Program immediately prior to the Effective Time, rounded up to the
nearest whole month, and the denominator of which is 60; provided, however, that
such payment shall be subject to, and payable within 30 days after, such
employee's (x) continuous employment by Parent or any of its Affiliates through
the 12-month anniversary of the Effective Time or (y) the termination of such
employment prior to the 12-month anniversary of the Effective Time due to an
involuntary termination by Parent or any of its Affiliates (other than as a
result of death, disability or for cause) or a voluntary termination by such
employee for "good reason" or pursuant to a "qualifying resignation" (as defined
in the
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severance plan or agreement pursuant to which such employee is eligible for
severance benefits). No employee shall receive a cash payment pursuant to this
Section 5.13(e) in excess of six times such employee's weekly rate of base pay.
(f) Parent shall cause the Surviving Corporation (or any
successor thereto) (i) to maintain the Company's Change-in-Control Severance
Plan, as in effect on the date hereof, for a period not less than six months
after the Effective Time, and (ii) to maintain the severance plan and agreements
applicable to former employees of Marconi, as set forth in Section 5.13(f) of
the Company Letter, through December 31, 2004.
(g) Parent shall cause the Surviving Corporation (or any
successor thereto) to pay the cash bonuses under the terms of the Company's
Management Incentive Plan (the "MIP") for the year ending December 31, 2004, and
each of the quarters ending therein, to those persons employed by the Company or
its Subsidiaries immediately before the Effective Time and who are eligible
thereunder, equal to a percentage of base salary based upon actual performance
(provided, that Parent shall be entitled to make such adjustments in the
performance goals of the MIP as it shall deem appropriate in light of any
changes in circumstance following the Effective Time that do not materially
reduce either the amount as a percentage of base compensation or the likelihood
of achievement of the goals). Notwithstanding anything to the contrary contained
herein, any employee whose employment terminates prior to December 31, 2004 due
to an involuntary termination by Parent or any of its Affiliates (other than as
a result of death, disability or for cause) or a voluntary termination by such
employee for "good reason" or pursuant to a "qualifying resignation" (as defined
in the severance plan or agreement pursuant to which such employee is eligible
for severance benefits) shall be entitled to (i) a prorated bonus for the
quarter during which the employee's employment terminates, based on the
employee's period of employment during such quarter, (ii) the bonus earned for
any prior quarter during 2004 but not yet paid and (iii) a prorated bonus for
the "fifth quarter," within the meaning of the MIP, based on the employee's
period of employment during 2004, and in each case based on the employee's
annualized base salary and the achievement of actual performance goals. Bonus
payments pursuant to this Section 5.13 shall be in addition to any benefits to
which the employee is entitled under any applicable severance plan or agreement.
Section 5.14 Nasdaq. Parent shall use its reasonable best
efforts to cause the shares of Parent Common Stock to be issued in the Merger to
be approved for listing on Nasdaq, subject to official notice of issuance, prior
to the Effective Time. The Surviving Corporation shall use its reasonable best
efforts to cause its shares of Common Stock and associated Rights to no longer
be quoted on Nasdaq and to be de-registered under the Exchange Act as soon as
practicable following the Effective Time.
Section 5.15 Rights Agreement. Without the prior written
consent of Parent, the Company shall not redeem the Rights issued under the
Rights Agreement or amend or terminate the Rights Agreement prior to the
Effective Time unless required to do so by a court of competent jurisdiction.
Section 5.16 Board of Directors Representative.
Immediately after the Effective Time, Parent shall appoint Xxxx X. Xxxxxxxxx,
Xxxxxxx X. Xxxxxx and Xxxxx Xxxxx, or such other three persons to be agreed upon
by Parent and the Company prior to the Effective Time, to the
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Board of Directors of Parent, as a Class I director, a Class II director and a
Class III director, respectively. Prior to such appointment, the Board of
Directors of Parent shall take all necessary action to increase the size of the
Board of Directors of Parent as necessary to comply with the foregoing sentence.
Section 5.17 Section 16 Matters. The Board of Directors
of the Company and Parent shall, prior to the Effective Time, to the extent
permitted by law, take all such actions as may be necessary or appropriate
pursuant to Rule 16b-3(d) and Rule 16b-3(e) to exempt (i) the conversion of
Company Common Stock into cash or Parent Common Stock and the conversion of
Company Stock Options into Substitute Options and (ii) the acquisition of Parent
Common Stock and the right to receive Parent Common Stock (including pursuant to
Substitute Options) pursuant to the terms of this Agreement by officers and
directors of the Company subject to the reporting requirements of Section 16(a)
of the Exchange Act or by employees or directors of the Company who may become
an officer or director of Parent subject to the reporting requirements of
Section 16(a) of the Exchange Act. Parent and the Company shall provide to
counsel to the other party copies of the resolutions to be adopted by the
respective Boards of Directors to implement the foregoing.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to
Effect the Merger. The respective obligations of each party to effect the Merger
shall be subject to the fulfillment or waiver by Parent and the Company at or
prior to the Closing Date of the following conditions:
(a) Stockholder Approval. (i) The Company Stockholder Approval
shall have been obtained in accordance with applicable law and the Company
Charter and the Company Bylaws and (ii) the Parent Stockholder Approval shall
have been obtained in accordance with applicable rules of Nasdaq, applicable law
and the Parent Charter and the Parent Bylaws.
(b) Quotation of Stock. The Parent Common Stock issuable in
the Merger shall have been authorized for quotation on Nasdaq, subject to
official notice of issuance.
(c) Certain Approvals. (i) The waiting period (and any
extension thereof) applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated.
(ii) All other authorizations, consents, orders,
declarations or approvals of or filings with, or terminations or
expirations of waiting periods imposed by, any Governmental Entity,
which the failure to obtain, make or occur would have the effect of
making the Merger, the Subsequent Merger or any of the other
transactions contemplated hereby illegal or would, individually or in
the aggregate, have a Material Adverse Effect on Parent (assuming the
Merger and the Subsequent Merger had taken place), shall have been
obtained, shall have been made or shall have occurred.
(d) Registration Statement. The Registration Statement shall
have become effective in accordance with the provisions of the Securities Act.
No stop order suspending the
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effectiveness of the Registration Statement shall have been issued by the SEC,
and no proceedings for that purpose shall have been initiated or, to the
Knowledge of Parent or the Company, threatened by the SEC. All necessary state
securities or Blue Sky authorizations (including State Takeover Approvals) shall
have been received.
(e) No Order. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect
prohibiting or having the effect of making illegal the consummation of the
Merger or the Subsequent Merger (collectively, an "Order") and no Governmental
Entity shall have instituted any proceeding that is pending seeking such an
Order.
Section 6.2 Conditions to Obligation of the Company to
Effect the Merger. The obligation of the Company to effect the Merger shall be
subject to the fulfillment or waiver by the Company at or prior to the Closing
Date of the following additional conditions:
(a) Performance of Obligations; Representations and
Warranties. (i) Each of Parent and Sub shall have performed in all material
respects each of its agreements contained in this Agreement required to be
performed on or prior to the Closing Date; (ii) each of the representations and
warranties of Parent and Sub contained in Section 2.2 (Capital Structure),
Section 2.3 (Authority), Section 2.6 (Registration Statement and Joint Proxy
Statement), Section 2.17 (Required Vote of Parent Stockholders) and Section 2.20
(Operations of Sub) shall be true and correct in all material respects as of the
date of this Agreement and on and as of the Closing Date as if made on and as of
such date (other than, in each case, representations and warranties which
address matters only as of a certain date which shall be true and correct in all
material respects as of such certain date); and (iii) each of the
representations and warranties of Parent and Sub contained in this Agreement
(other than those contained in the preceding clause), when read without any
exception or qualification as to materiality or Material Adverse Effect, shall
be true and correct as of the date of this Agreement and on and as of the
Closing Date as if made on and as of such date (other than, in each case,
representations and warranties which address matters only as of a certain date
which shall be true and correct as of such certain date), except where the
failure to be so true and correct would not, individually or in the aggregate
with respect to all such failures, have a Material Adverse Effect on Parent or
reasonably be likely to materially adversely affect the ability of Parent to
effect the Merger in accordance with this Agreement, in the case of each of
clauses (ii) and (iii) of this Section 6.2(a) except as contemplated or
permitted by this Agreement, and the Company shall have received a certificate
signed on behalf of Parent by its Chief Executive Officer and its Chief
Financial Officer to such effect.
(b) Tax Opinion. The Company shall have received an opinion of
Pillsbury Winthrop LLP, in form and substance reasonably satisfactory to the
Company, dated the Closing Date, to the effect that on the basis of facts,
representations and assumptions set forth in such opinion which are consistent
with the state of facts existing as of the Closing Date, for federal income tax
purposes: (i) the Merger and the Subsequent Merger, taken together, will
constitute a "reorganization" within the meaning of Section 368(a) of the Code,
(ii) the Company and Parent will each be a party to that reorganization within
the meaning of Section 368(b) of the Code, and
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(iii) no gain or loss will be recognized by a holder of Company Common Stock
upon the exchange of a share of Company Common Stock (together with the
associated Rights) for the Per Share Merger Consideration received therefor
pursuant to the Merger, except that gain will be recognized to the extent of the
Per Share Cash Consideration received and except that gain or loss may be
recognized with respect to cash received in lieu of fractional shares of Parent
Common Stock. The parties to this Agreement agree to make reasonable
representations (and Parent shall cause Sister Subsidiary to make reasonable
representations) as may be requested by Pillsbury Winthrop LLP for purposes of
rendering such opinions, and in rendering such opinions, Pillsbury Winthrop LLP
may rely upon such representations.
(c) Material Adverse Effect. Since the date of this Agreement,
there shall not have been any Material Adverse Effect on Parent. The Company
shall have received a certificate signed on behalf of Parent by its Chief
Executive Officer and its Chief Financial Officer to such effect.
Section 6.3 Conditions to Obligations of Parent and Sub to
Effect the Merger. The obligations of Parent and Sub to effect the Merger shall
be subject to the fulfillment or waiver by Parent at or prior to the Closing
Date of the following additional conditions:
(a) Performance of Obligations; Representations and
Warranties. (i) The Company shall have performed in all material respects each
of its agreements contained in this Agreement required to be performed on or
prior to the Closing Date; (ii) each of the representations and warranties of
the Company contained in Section 3.2 (Capital Structure), Section 3.3
(Authority), Section 3.6 (Registration Statement and Joint Proxy Statement),
Section 3.11(a)(ii) (Certain Agreements) (only insofar as such representation
and warranty relates to contractual provisions that would be binding on Parent
and its Subsidiaries (other than the Company and its Subsidiaries) after the
Merger and the Subsequent Merger), Section 3.17 (State Takeover Statutes;
Certain Charter Provisions), Section 3.18 (Required Vote of Company
Stockholders) and Section 3.21 (Rights Agreement) shall be true and correct in
all material respects as of the date of this Agreement and on and as of the
Closing Date as if made on and as of such date (other than, in each case,
representations and warranties which address matters only as of a certain date
which shall be true and correct in all material respects as of such certain
date); and (iii) each of the representations and warranties of the Company
contained in this Agreement (other than those contained in the preceding
clause), when read without any exception or qualification as to materiality or
Material Adverse Effect, shall be true and correct as of the date of this
Agreement and on and as of the Closing Date as if made on and as of such date
(other than, in each case, representations and warranties which address matters
only as of a certain date which shall be true and correct as of such certain
date), except where the failure to be so true and correct would not,
individually or in the aggregate with respect to all such failures, have a
Material Adverse Effect on the Company or reasonably be likely to materially
adversely affect the ability of the Company to effect the Merger in accordance
with this Agreement, in the case of each of clauses (ii) and (iii) of this
Section 6.3(a) except as contemplated or permitted by this Agreement, and Parent
shall have received a certificate signed on behalf of the Company by its Chief
Executive Officer and its Chief Financial Officer to such effect.
(b) Tax Opinion. Parent shall have received an opinion of
Sidley Xxxxxx Xxxxx & Xxxx LLP, in form and substance reasonably satisfactory to
Parent, dated the Closing Date,
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substantially to the effect that on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts existing as of the Closing Date, for federal income tax purposes: (i) the
Merger and the Subsequent Merger, taken together, will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, (ii) the
Company and Parent will each be a party to that reorganization within the
meaning of Section 368(b) of the Code, and (iii) no gain or loss will be
recognized by a holder of Company Common Stock upon the exchange of a share of
Company Common Stock (together with the associated Rights) for the Per Share
Merger Consideration received therefor pursuant to the Merger, except that gain
will be recognized to the extent of the Per Share Cash Consideration received
and except that gain or loss may be recognized with respect to cash received in
lieu of fractional shares of Parent Common Stock. The parties to this Agreement
agree to make reasonable representations (and Parent shall cause Sister
Subsidiary to make reasonable representations ) as may be requested by Sidley
Xxxxxx Xxxxx & Xxxx LLP for purposes of rendering such opinions, and in
rendering such opinions, Sidley Xxxxxx Xxxxx & Xxxx LLP may rely upon such
representations.
(c) Material Adverse Effect. Since the date of this Agreement,
there shall not have been any Material Adverse Effect on the Company. Parent
shall have received a certificate signed on behalf of the Company by its Chief
Executive Officer and its Chief Financial Officer to such effect.
(d) Rights Agreement. The Rights shall not have become
nonredeemable, exercisable, distributed or triggered pursuant to the terms of
the Rights Agreement.
(e) Dissenting Stockholders. The Dissenting Shares shall
include no more than ten percent (10%) of the shares of Company Common Stock
outstanding immediately prior to the Effective Time. Parent shall have received
a certificate signed on behalf of the Company by its Chief Executive Officer and
its Chief Financial Officer to such effect.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be
terminated at any time prior to the Effective Time, whether before or after any
approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent:
(a) by mutual written consent of Parent and the Company;
(b) by Parent if there has been a breach of any
representation, warranty, covenant or other agreement made by the Company in
this Agreement, or any such representation and warranty shall have become untrue
after the date of this Agreement, in each case such that Section 6.3(a) would
not be satisfied and such breach or condition is not curable or, if curable, is
not cured within 30 days after written notice thereof is given by Parent to the
Company;
(c) by the Company if there has been a breach of any
representation, warranty, covenant or other agreement made by Parent or Sub in
this Agreement, or any such representation and warranty shall have become untrue
after the date of this Agreement, in each case such that Section 6.2(a) would
not be satisfied and such breach or condition is not curable
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or, if curable, is not cured within 30 days after written notice thereof is
given by the Company to Parent;
(d) by either Parent or the Company if: (i) the Merger has not
been effected on or prior to the close of business on November 19, 2004 (the
"End Date") (which date may be extended by Parent or the Company from time to
time by written notice to the other to a date not later than February 19, 2005
if the Merger shall not have been consummated as a result of the failure to
satisfy the condition set forth in Section 6.1(c)(i) so long as all other
conditions to closing shall have been satisfied or waived); provided, however,
that the right to terminate this Agreement pursuant to this Section 7.1(d)(i)
shall not be available to any party whose failure to fulfill any of its
obligations contained in this Agreement has been the cause of, or resulted in,
the failure of the Merger to have occurred on or prior to the aforesaid date; or
(ii) any court or other Governmental Entity having jurisdiction over a party
hereto shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting or having the effect
of making illegal the consummation of the Merger or the Subsequent Merger and
such order, decree, ruling or other action shall have become final and
nonappealable;
(e) by either Parent or the Company if the Company Stockholder
Approval is not obtained at the Company Stockholder Meeting or at any
adjournment or postponement thereof; provided, however, that the Company may not
terminate this Agreement pursuant to this Section 7.1(e) if the Company has not
complied with its obligations under Sections 4.2, 5.1 and 5.2 or has otherwise
breached in any material respect any of its obligations under this Agreement in
any manner that could reasonably have caused the failure to obtain the Company
Stockholder Approval at the Company Stockholder Meeting;
(f) by Parent or the Company if the Parent Stockholder
Approval is not obtained at the Parent Stockholder Meeting or at any adjournment
or postponement thereof; provided, however, that Parent may not terminate this
Agreement pursuant to this Section 7.1(f) if Parent has not complied with its
obligations under Sections 5.1 and 5.2 or has otherwise breached in any material
respect any of its obligations under this Agreement in any manner that could
reasonably have caused the failure to obtain the Parent Stockholder Approval at
the Parent Stockholder Meeting; or
(g) by Parent if at any time prior to the time when the
Company Stockholder Approval has been obtained, (i) the Board of Directors of
the Company shall not have recommended, or such Board of Directors or a
committee thereof shall have resolved not to recommend, or shall have qualified,
modified, amended or withdrawn such Board of Directors' recommendation of the
approval and adoption of this Agreement or the declaration that this Agreement
and the Merger are advisable and fair to and in the best interest of the Company
and its stockholders in a manner adverse to Parent or shall have taken any other
action or made any other statement in connection with the Company Stockholder
Meeting inconsistent with such recommendation or declaration or shall have
resolved or proposed to do any of the foregoing; (ii) the Board of Directors of
the Company or any committee thereof shall have recommended to the stockholders
of the Company any Takeover Proposal or shall have resolved to do so; or (iii) a
tender offer or exchange offer for 15% or more of the outstanding shares of
capital stock of the Company is commenced, and the Board of Directors of the
Company fails to recommend against acceptance of such tender offer or exchange
offer by its stockholders within 10 business days of
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such commencement (including by taking no position with respect to the
acceptance of such tender offer or exchange offer by its stockholders);
(h) by the Company if (A) the Board of Directors of the
Company authorizes the Company, subject to complying with the terms of this
Agreement, to enter into a definitive agreement concerning a transaction that
constitutes a Superior Proposal and the Company notifies Parent in writing that
it intends to enter into such an agreement, (B) Parent does not make, within
five days of receipt of the Company's written notification of its intention to
enter into a definitive agreement for a Superior Proposal, an offer that the
Board of Directors of the Company determines, in its reasonable good faith
judgment after consultation with its financial advisors, is at least as
favorable, from a financial point of view, to stockholders of the Company and
(C) the Company prior to or concurrently with such termination pays to Parent in
immediately available funds the Termination Fee provided for in Section 5.6(c).
The Company agrees (x) that it will not enter into a definitive agreement
referred to in clause (A) above earlier than the sixth day after it has provided
the notice to Parent required thereby and (y) to notify Parent promptly in
writing if its intention to enter into a definitive agreement referred to in its
notification shall change at any time after giving such notification;
(i) by the Company if a Parent Acquisition Transaction occurs
or Parent or any of its Subsidiaries shall enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement with
respect to a Parent Acquisition Transaction; provided, however, that the Company
shall only be entitled to terminate this Agreement pursuant to this Section
7.1(i) for a period of ten (10) days from the earlier to occur of such a Parent
Acquisition Transaction and the public announcement of the entry into such
letter of intent, agreement in principle, acquisition agreement or other similar
agreement with respect to such Parent Acquisition Transaction; for purposes of
this Section 7.1(i), "Parent Acquisition Transaction" means any transaction or
series of transactions involving: (i) a merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving Parent, pursuant to which the stockholders of Parent, immediately
preceding such transaction or series of transactions hold less than fifty
percent (50%) of the aggregate equity interests in the surviving or resulting
entity of such transaction or any direct or indirect parent thereof, (ii) a sale
or other disposition by Parent or any of its Subsidiaries of assets representing
in excess of fifty percent (50%) of the aggregate fair market value of the
assets of Parent and its Subsidiaries, taken as a whole, immediately prior to
such sale or other disposition, or (iii) the acquisition by any Third Party
(including by way of a tender offer or an exchange offer or issuance by the
party or such Third Party), directly or indirectly, of beneficial ownership or a
right to acquire beneficial ownership of shares representing in excess of fifty
percent (50%) of the voting power of the then-outstanding shares of capital
stock of Parent;
(j) by the Company if at any time prior to the time when the
Parent Stockholder Approval has been obtained, the Board of Directors of Parent
shall not have recommended, or such Board of Directors or a committee thereof
shall have resolved not to recommend, or shall have qualified, modified, amended
or withdrawn such Board of Directors' recommendation of the approval of the
Share Issuance or the declaration that this Agreement and the Merger are
advisable and fair to and in the best interest of Parent and its stockholders in
a manner adverse to the Company or shall have taken any other action or made any
other statement in connection
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with the Parent Stockholder Meeting inconsistent with such recommendation or
declaration or shall have resolved or proposed to do any of the foregoing;
The right of any party hereto to terminate this Agreement
pursuant to this Section 7.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
Person controlling any such party or any of their respective officers or
directors, whether prior to or after the execution of this Agreement.
Section 7.2 Effect of Termination. Any termination of
this Agreement under Section 7.1 will be effective immediately upon the delivery
of written notice of termination by the terminating party to the other parties
hereto (except in the case of a termination pursuant to Section 7.1(a) which
will be effective upon the written consent of both Parent and the Company). In
the event of termination of this Agreement by either Parent or the Company, as
provided in Section 7.1, this Agreement shall forthwith become void, and there
shall be no liability hereunder on the part of the Company, Parent, Sub or their
respective officers, directors, employees, agents, advisors or other
representatives (except for the last sentence of Section 5.3, the entirety of
Section 5.6 and the entirety of Article VIII which shall survive the
termination); provided, however, that nothing contained in this Section 7.2
shall relieve any party hereto from any liability for any willful breach of a
representation or warranty contained in this Agreement or the breach of any
covenant contained in this Agreement.
Section 7.3 Amendment. This Agreement may be amended by
the parties hereto, by or pursuant to action taken by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company, but, after any
such approval, no amendment shall be made which by law requires further approval
by such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 7.4 Waiver. At any time prior to the Closing
Date, the parties hereto may (i) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and/or (iii) waive compliance with any of the
covenants, agreements or conditions contained herein which may legally be
waived. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and
Warranties. The representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall terminate at the Effective
Time.
Section 8.2 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, one day after being delivered to a nationally recognized
overnight courier or on the business day received (or the next business
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day if received after 5 p.m. local time or on a weekend or day on which banks
are closed) when sent via facsimile (with a confirmatory copy sent by overnight
courier) to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Tellabs, Inc.
One Tellabs Center
0000 Xxxx Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
with a copy to:
Sidley Xxxxxx Xxxxx & Xxxx LLP
Bank One Plaza
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Facsimile No.: (000) 000-0000
(b) if to the Company, to
Advanced Fibre Communications, Inc.
0000 X. XxXxxxxx Xxxx.
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: 000-000-0000
with a copy to:
Pillsbury Winthrop LLP
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile No.:(000) 000-0000
Section 8.3 Interpretation. When a reference is made in
this Agreement to a Section, such reference shall be to a Section of this
Agreement unless otherwise indicated. The table of contents, table of defined
terms and headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 8.4 Counterparts. This Agreement may be executed
in counterparts, all of which shall be considered one and the same agreement,
and shall become effective when
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one or more counterparts have been signed by each of the parties and delivered
to the other parties.
Section 8.5 Entire Agreement; No Third-Party
Beneficiaries. This Agreement, except as provided in the last sentence of
Section 5.3, constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof. This Agreement, except for the provisions
of Section 5.11, is not intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
Section 8.6 Governing Law and Venue; Waiver of Jury
Trial.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL
RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH
THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF. The parties hereby irrevocably submit to the jurisdiction of
the courts of the State of Delaware and the federal courts of the United States
of America located in the State of Delaware solely in respect of the
interpretation and enforcement of the provisions of this Agreement and of the
documents referred to in this Agreement, and in respect of the Merger, the
Subsequent Merger and the other transactions contemplated hereby, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any such document may not be enforced in
or by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
Delaware state or federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
8.2 or in such other manner as may be permitted by law shall be valid and
sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE MERGER, THE SUBSEQUENT MERGER OR ANY OF THE OTHER
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
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INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.6.
Section 8.7 Assignment. Subject to Section 1.1, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties.
Section 8.8 Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other terms, conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic and legal substance of the Merger, the Subsequent Merger and the other
transactions contemplated hereby are not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable manner in order that
the Merger, the Subsequent Merger and the other transactions contemplated by
this Agreement may be consummated as originally contemplated to the fullest
extent possible.
Section 8.9 Enforcement of this Agreement. In addition
to any remedy to which any party hereto is specifically entitled by the terms
hereof, each party shall be entitled to pursue any other remedy available to it
at law or in equity (including damages, specific performance or other injunctive
relief) in the event that any of the provisions of this Agreement were not
performed in accordance with their terms or were otherwise breached.
* * * * *
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized all as of the date first written above.
TELLABS, INC.
By: /s/ Xxxxx X. Xxxxxx
_____________________________________
Name: Xxxxx X. Xxxxxx
Title: Chief Executive Officer and
President
CHARDONNAY MERGER CORP.
By: /s/ Xxxxx X. Xxxxxx
_____________________________________
Name: Xxxxx X. Xxxxxx
Title: President
ADVANCED FIBRE
COMMUNICATIONS, INC.
By: /s/ Xxxx X. Xxxxxxxxx
_____________________________________
Name: Xxxx X. Xxxxxxxxx
Title: Chief Executive Officer and
President
62
EXHIBIT A
FORM OF AFFILIATE LETTER FOR
AFFILIATES OF THE COMPANY
[________], 2004
Tellabs, Inc.
One Tellabs Center
0000 Xxxx Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of Advanced Fibre Communications, Inc., a
Delaware corporation (the "Company"), as the term "affiliate" is defined for
purposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations (the
"Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"). Pursuant
to the terms of the Agreement and Plan of Merger, dated as of May 19, 2004 (the
"Merger Agreement"), among Tellabs, Inc., a Delaware corporation ("Parent"),
Chardonnay Merger Corp., a Delaware corporation ("Sub"), and the Company, Sub
will be merged with and into the Company (the "Merger"). Capitalized terms used
in this letter without definition shall have the meanings assigned to them in
the Merger Agreement.
As a result of the Merger, I will receive shares of Common
Stock, $0.01 par value, of Parent (the "Parent Shares") and the Per Share Cash
Consideration in exchange for shares of Common Stock, $0.01 par value, of the
Company (the "Company Shares") owned by me or purchasable by me upon exercise of
stock options or stock purchase rights.
1. I represent, warrant and covenant to Parent that in the event I
receive any Parent Shares as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of
the Parent Shares in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Merger Agreement
and discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of the Parent
Shares, to the extent I felt necessary, with my counsel or counsel for the
Company.
C. I have been advised that the issuance of the Parent Shares
to me pursuant to the Merger has been or will be registered with the Commission
under the Act on a Registration Statement on Form S-4. However, I have also been
advised that, because at the time the Merger is submitted for a vote of the
stockholders of the Company, (a) I may be deemed to be an affiliate of the
Company and (b) the sale, transfer or other disposition by me of the Parent
Shares will not have been registered under the Act, I may not sell, transfer,
pledge or otherwise dispose of the Parent Shares issued to me in the Merger
unless (i) such sale, transfer, pledge or other disposition
1
is made in conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Act, (ii) such sale, transfer, pledge or
other disposition has been registered under the Act or (iii) in the opinion of
counsel reasonably acceptable to Parent, such sale, transfer or other
disposition is otherwise exempt from registration under the Act.
D. I understand that Parent is under no obligation to register
the sale, transfer or other disposition of the Parent Shares by me or on my
behalf under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
E. I also understand that there will be placed on the
certificates for the Parent Shares issued to me, or any substitutions therefor,
a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN ACCORDANCE WITH
THE TERMS OF AN AGREEMENT BETWEEN THE REGISTERED HOLDER HEREOF AND
TELLABS, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF TELLABS, INC."
F. I also understand that unless a sale or transfer is made in
conformity with the provisions of Rule 145, or pursuant to a registration
statement, Parent reserves the right to put the following legend on the
certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED
BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933."
G. Execution of this letter should not be considered an
admission on my part that I am an "affiliate" of the Company as described in the
first paragraph of this letter, nor as a waiver of any rights I may have to
object to any claim that I am such an affiliate on or after the date of this
letter.
2. By Parent's acceptance of this letter, Parent hereby agrees with me
that certificates with the legends set forth in paragraphs 1(E) and (F) above
will be substituted by delivery of certificates without such legend if (i) one
year (or such other period as may be required under Rule 145(d)(2) or any
successor thereto) shall have elapsed from the date the undersigned acquired the
Parent Shares received in the Merger and the provisions of Rule 145(d)(2) are
then
-2-
available to the undersigned, (ii) two years (or such other period as may be
required under Rule 145(d)(3) or any successor thereto) shall have elapsed from
the date the undersigned acquired the Parent Shares received in the Merger and
the provisions of Rule 145(d)(3) are then applicable to the undersigned or (iii)
the Parent has received a copy of a letter from the Staff of the Commission or
an opinion of counsel, which letter or opinion of counsel shall be reasonably
satisfactory to Parent, to the effect that the restrictions imposed by Rule 145
under the Act no longer apply to the undersigned.
It is agreed that this letter agreement shall terminate and be of no
further force or effect if the Merger Agreement is terminated in accordance with
its terms.
Very truly yours,
_____________________________________
Name:
Agreed and accepted this _________day
of ___________, 2004, by
TELLABS, INC.
By
Name:
Title:
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