EXHIBIT 10.33
EXECUTION COPY
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BACKSTOP AGREEMENT
BY AND AMONG
AVAYA INC.
AND
THE INVESTORS LISTED ON SCHEDULE 1
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Dated as of
DECEMBER 23, 2002
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
SECTION 1.01. Definitions........................................................3
SECTION 1.02. Other Definitions..................................................8
ARTICLE II
The Exchange Offer
SECTION 2.01. The Exchange Offer.................................................9
SECTION 2.02. Required Filings..................................................12
ARTICLE III
Warrant Grants; Adjustments; Exercise and Conversion
SECTION 3.01. Grants and Exercise Price Adjustments.............................13
SECTION 3.02. Agreement to Exercise.............................................14
SECTION 3.03. Agreement to Convert..............................................14
SECTION 3.04. Expiration Time Deliveries........................................15
SECTION 3.05. Closing...........................................................15
SECTION 3.06. Closing Deliveries................................................15
SECTION 3.07. Exercise and Conversion Mechanics.................................15
SECTION 3.08. Tax Treatment.....................................................17
ARTICLE IV
Representations and Warranties of the Company
SECTION 4.01. Organization and Standing.........................................17
SECTION 4.02. Capital Stock.....................................................18
SECTION 4.03. Authorization; Enforceability.....................................18
SECTION 4.04. No Violation; Consents............................................18
SECTION 4.05. Commission Filings; Financial Statements..........................19
SECTION 4.06. No Material Adverse Effect........................................20
SECTION 4.07. Contracts; Debt Instruments.......................................20
SECTION 4.08. Compliance with Laws..............................................20
SECTION 4.09. Compliance with Constituent Documents.............................20
SECTION 4.10. Opinion of Financial Advisor......................................21
SECTION 4.11. Section 355.......................................................21
SECTION 4.12. DGCL Section 203..................................................21
SECTION 4.13. Rights Agreement..................................................21
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ARTICLE V
Representations and Warranties of the Investors
SECTION 5.01. Organization; Authorization; Enforceability.......................21
SECTION 5.02. Private Placement.................................................22
SECTION 5.03. No Violation; Consents............................................23
SECTION 5.04. Financing.........................................................23
SECTION 5.05. Ownership of Securities...........................................23
SECTION 5.06. Future Acquisitions...............................................23
ARTICLE VI
Covenants of the Company
SECTION 6.01. Conduct of Business Pending the Expiration Date...................24
SECTION 6.02. Access to Books and Records.......................................24
SECTION 6.03. Compliance with Conditions; Commercially Reasonable Efforts.......24
SECTION 6.04. HSR Act Notification..............................................25
SECTION 6.05. Consents and Approvals............................................25
SECTION 6.06. Certain Actions...................................................25
SECTION 6.07. Listing and Reservation of Shares.................................25
SECTION 6.08. Use of Proceeds...................................................26
SECTION 6.09. Warburg Group Directors and Observer..............................26
SECTION 6.10. Registration Rights...............................................27
SECTION 6.11. Rights Agreement..................................................27
SECTION 6.12. No Intended Distributions.........................................27
SECTION 6.13. Director's Insurance..............................................27
SECTION 6.14. Relationship with Lucent..........................................28
ARTICLE VII
Covenants of the Investors
SECTION 7.01. Compliance with Conditions; Commercially Reasonable Efforts.......28
SECTION 7.02. HSR Act Notification..............................................28
SECTION 7.03. Consents and Approvals............................................28
SECTION 7.04. Standstill........................................................29
SECTION 7.05. Voting Limitation.................................................30
SECTION 7.06. Compliance with Section 355.......................................30
ARTICLE VIII
Conditions Precedent to the Consummation of the Exchange Offer
SECTION 8.01. Conditions to the Company's Obligations in Respect
of the Exchange Offer..........................................31
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SECTION 8.02. Conditions to Each Investor's Obligations in Respect
of the Exchange Offer..........................................31
SECTION 8.03. Conditions to Each Party's Obligations in Respect
of the Exchange Offer..........................................32
ARTICLE IX
Miscellaneous
SECTION 9.01. Survival..........................................................33
SECTION 9.02. Legends...........................................................33
SECTION 9.03. Notices...........................................................34
SECTION 9.04. Termination.......................................................35
SECTION 9.05. GOVERNING LAW.....................................................35
SECTION 9.06. WAIVER OF JURY TRIAL..............................................35
SECTION 9.07. Attorney Fees.....................................................36
SECTION 9.08. Entire Agreement..................................................36
SECTION 9.09. Modifications and Amendments......................................36
SECTION 9.10. Waivers and Extensions............................................36
SECTION 9.11. Titles and Headings; Rules of Construction........................36
SECTION 9.12. Exhibits and Schedules............................................37
SECTION 9.13. Expenses; Brokers.................................................37
SECTION 9.14. Press Releases and Public Announcements...........................38
SECTION 9.15. Assignment; No Third Party Beneficiaries..........................38
SECTION 9.16. Severability......................................................38
SECTION 9.17. Counterparts......................................................38
SECTION 9.18. Indemnification...................................................38
SECTION 9.19. Conversion Agreement and Stock Purchase Agreement.................40
SCHEDULES
SCHEDULE 1 Investors
SCHEDULE 4.04 No Violation; Consents
EXHIBITS
EXHIBIT A Form of Series C and Series D Warrants
EXHIBIT B Form of Exchange Offer Documents
EXHIBIT C Form of Resolutions of Board of Directors
EXHIBIT D Form of Opinion of Weil, Gotshal & ▇▇▇▇▇▇ LLP
EXHIBIT E Registration Rights Provisions
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BACKSTOP AGREEMENT, dated as of December 23, 2002 (this "AGREEMENT"), by
and among Avaya Inc., a Delaware corporation (the "COMPANY"), and the investors
listed on SCHEDULE 1 (individually, an "INVESTOR" and, collectively, the
"INVESTORS").
WHEREAS, on October 2, 2000, the Company issued and sold to the Investors
(a) 4,000,000 shares (the "PREFERRED SHARES") of its 6 1/2% Series B Convertible
Participating Preferred Stock, par value $1.00 per share ("SERIES B PREFERRED
STOCK"), having an initial liquidation preference equal to $100 per share, and
(b) the Warrants (as defined below);
WHEREAS, on March 10, 2002, the Company and the Investors entered into the
Conversion and Exercise Agreement (the "CONVERSION AGREEMENT") pursuant to the
terms of which, among other things, (a) the Company agreed to reduce the
conversion price of the Preferred Shares, and (b) the Investors agreed to (i)
convert all of the Preferred Shares into shares of Common Stock (as defined
below) and (ii) exercise for cash (A) a portion of the Series A Warrants (as
defined below) to purchase an aggregate of 159,268 Warrant Shares (as defined
below) at $34.73 per Warrant Share and (B) a portion of the Series B Warrants
(as defined below) to purchase an aggregate of 127,414 Warrant Shares at $34.73
per Warrant Share;
WHEREAS, also on March 10, 2002, the Company and the Investors entered
into the Stock Purchase Agreement (the "STOCK PURCHASE AGREEMENT") pursuant to
the terms of which, among other things, the Company agreed to sell to the
Investors, and the Investors agreed to purchase from the Company, an aggregate
of 14,383,953 shares of Common Stock;
WHEREAS, on March 21, 2002, the transactions contemplated by the
Conversion Agreement and the Stock Purchase Agreement were completed;
WHEREAS, the Company and the Investors desire to commence a
tender/exchange offer (the "EXCHANGE OFFER") to purchase and/or exchange up to
$660.542 million in aggregate principal amount at maturity of the ▇▇▇▇▇ (as
defined below) on the terms and subject to the conditions set forth in this
Agreement and in the Offer Documents (as defined below);
WHEREAS, in the Exchange Offer, each holder of ▇▇▇▇▇ will have the option
to receive, in exchange for each $1,000 of aggregate principal amount at
maturity of ▇▇▇▇▇ validly tendered, not validly withdrawn and accepted for
purchase and/or exchange in the Exchange Offer, either (a)(i) a number of shares
of Common Stock equal to the Exchange Ratio (as defined below) plus (ii) $203.87
in cash (the "MIXED Consideration"), or (b) $389.61 in cash (the "CASH
CONSIDERATION", and, together with the Mixed Consideration, the "OFFER
CONSIDERATION"), in each case, subject to proration as described below;
WHEREAS, in the Exchange Offer, ▇▇▇▇▇ validly tendered, not validly
withdrawn and accepted for purchase and/or exchange shall be purchased by and as
between the Company and the Investors in the following order: (a) first, all
▇▇▇▇▇ up to the Maximum Amount of ▇▇▇▇▇, validly tendered, not validly withdrawn
and accepted for purchase and exchange in exchange for the Mixed Consideration
shall be purchased; and (b) second, the number of ▇▇▇▇▇ purchasable, at a price
equal to the Cash Consideration, for an aggregate amount of cash equal to the
lesser of (1) $200 million minus the aggregate amount of cash paid for ▇▇▇▇▇
accepted for purchase pursuant to clause (a) above, and (2) the Maximum Amount
of ▇▇▇▇▇ minus the number of ▇▇▇▇▇ purchased pursuant to clause (a) above, (such
number of ▇▇▇▇▇, the "CASH MAXIMUM AMOUNT OF ▇▇▇▇▇"), validly tendered, not
validly withdrawn and accepted for purchase and exchange in exchange for the
Cash Consideration shall be purchased, with (i) the consideration for all such
purchases being provided as follows: (A) the Company shall provide all of the
Common Stock for such consideration (the "COMPANY COMMON STOCK CONSIDERATION"),
(B) the Company shall provide cash in an amount up to $100 million for such
consideration (the amount so provided by the Company being referred to as the
"COMPANY CASH AMOUNT") and (C) the Investors shall provide cash in an amount up
to $100 million for such consideration (the amount so provided by the Investors
being referred to as "INVESTOR CASH AMOUNT"), (ii) the aggregate principal
amount at maturity of such ▇▇▇▇▇ acquired by the Investors being equal to the
total principal amount at maturity of ▇▇▇▇▇ acquired in the Exchange Offer
multiplied by a fraction, the numerator of which is the Investor Cash Amount and
the denominator of which is the sum of the Investor Cash Amount, the Company
Cash Amount and the Company Common Stock Value (as defined below) and (iii) the
Company being deemed to have purchased the remainder of such ▇▇▇▇▇;
WHEREAS, in consideration of the Investors' willingness to participate in
the Exchange Offer and enter into this Agreement, the Company is issuing to the
Investors new Series C Warrants to purchase an aggregate of 7,355,824 shares of
Common Stock at a price per share equal to $3.50 with a four year term, in the
form set forth in EXHIBIT A (the "SERIES C WARRANTS");
WHEREAS, in consideration of the Investors' participation in the Exchange
Offer, the Company will issue to the Investors, following consummation of the
Exchange Offer, new Series D Warrants to purchase an aggregate number of shares
of Common Stock determined as set forth in Section 3.01(b), at a price per share
determined as set forth in Section 3.01(b), in the form set forth in EXHIBIT A
(the "SERIES D WARRANTS"); and
WHEREAS, in connection with the consummation of the Exchange Offer, (a)
the Company and the Investors desire that the Company (i) reduce, effective as
of the Closing (as defined below), the Exercise Price (as defined below) of the
Series A Warrants and the Series B Warrants in accordance with Section 3.01 (the
"EXERCISE PRICE ADJUSTMENT") and (ii) increase the number of Warrant Shares
purchasable upon exercise of the Series A Warrants and of the Series B Warrants
in accordance with Section 3.01 (the "WARRANT SHARES ADJUSTMENT"), (b) following
effectiveness of the Exercise Price Adjustment and the Warrant Shares Adjustment
and subject to the terms and conditions set forth in this Agreement, the Company
and the Investors desire that the Investors exercise, for cash, a portion of
Series A Warrants and Series B Warrants (the "EXERCISE") and purchase Warrant
Shares in accordance with Section 3.02, and (c) following the Closing and
subject to the terms and conditions set forth in this Agreement, the Company and
the Investors desire that the Investors convert all ▇▇▇▇▇ purchased by the
Investors in connection with the Exchange Offer into Conversion Shares (as
defined below) (the "CONVERSION").
NOW, THEREFORE, the parties to this Agreement, intending to be legally
bound, agree as follows.
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ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person, directly
or indirectly, controlling, controlled by, or under direct or indirect common
control with, such Person. For the purposes of this definition, "control" means,
when used with respect to any Person, the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AGGREGATE AGREED UPON NUMBER OF SHARES" means the product of (a) the
Agreed Upon Exercise Amount, times (b) the quotient of (i) the total principal
amount at maturity of ▇▇▇▇▇ deemed to be acquired by the Investors in connection
with the Exchange Offer, divided by (ii) $1,000.
"AGREED UPON EXERCISE AMOUNT" means a number of shares of Common Stock
equal to the difference of (a) the quotient of (i) the Warburg ▇▇▇▇▇▇ ▇▇▇▇▇
Purchase Price, divided by (ii) the product of (A) the Market Value of a share
of Common Stock, times (B) 0.90 (PROVIDED, HOWEVER, that, in the event that the
product referred to in this clause (ii) shall be less than $1.78, such product
shall be deemed to be $1.78, and, if such product shall be more than $2.68, such
product shall be deemed to be $2.68), minus (b) 37.4437.
"APPLICABLE LAW" means (a) any United States federal, state or local or
foreign law, statute, rule, regulation, order, writ, injunction, judgment,
decree or permit of any Governmental Authority, and (b) any rule or listing
requirement of any national stock exchange or Commission recognized trading
market on which securities issued by the Company or any of the Subsidiaries are
listed or quoted, including, as of the date of this Agreement, the NYSE.
"BOARD OF DIRECTORS" means the board of directors of the Company.
"BONY INDENTURE" means the Indenture, dated as of October 31, 2001, as
supplemented by the Second Supplemental Indenture thereto, dated as of March 28,
2002, by and between the Company and The Bank of New York, as trustee.
"BUSINESS DAY" means any day other than a Saturday, a Sunday, or a day
when the Commission or banks in The City of New York are authorized by
Applicable Law to be closed.
"CAPITAL STOCK" means (a) with respect to any Person that is a
corporation, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock, and (b) with respect to any
other Person, any and all partnership or other equity interests of such Person.
"COMMISSION" means the United States Securities and Exchange Commission.
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"COMMON STOCK" means the common stock of the Company, par value $0.01 per
share, and, unless the context otherwise requires, includes the associated
Series A Junior Participating Preferred Stock purchase rights issuable in
respect of such shares pursuant to the Rights Agreement.
"COMPANY COMMON STOCK VALUE" means the product of (a) the Market Value per
share of Common Stock (PROVIDED, HOWEVER, that (i) if the Market Value per share
of Common Stock shall be less than $1.98, the amount in this clause (a) shall be
deemed to be equal to $1.98, and (ii) if the Market Value per share of Common
Stock shall be greater than $2.68, the amount in this clause (a) shall be deemed
to be equal to $2.68), times (b) the number of shares of Common Stock issued by
the Company as the Company Common Stock Consideration for ▇▇▇▇▇ in the Exchange
Offer.
"CONTRACT" means any contract, lease, loan agreement, mortgage, security
agreement, trust indenture, note, bond, or other agreement (whether written or
oral) or instrument.
"CONVERSION SHARES" means those shares of Common Stock into which ▇▇▇▇▇
may be converted pursuant to Article V of the ▇▇▇▇▇ Indenture.
"DEALER MANAGER AGREEMENT" means the Dealer Manager Agreement, dated as of
the date of this Agreement, by and among the Company, the Investors and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated.
"DGCL" means the General Corporation Law of the State of Delaware, as from
time to time amended.
"DISTRIBUTION" means the distribution by Lucent to its stockholders of
Common Stock on September 30, 2000, and the related "Contribution" (as defined
in the Distribution Agreement).
"DISTRIBUTION AGREEMENT" means the Contribution and Distribution
Agreement, dated as of September 30, 2000, by and between the Company and
Lucent.
"EXCESS SHARES" means any shares of Common Stock beneficially owned by the
Warburg Group in excess of 29.9% of the outstanding shares of Common Stock (as
calculated in accordance with Rule 13d-3 under the Exchange Act).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as from time to
time amended, and the rules and regulations of the Commission promulgated
thereunder.
"EXCHANGE AGENT" means the bank or trust company retained by the Company
and the Investors to act as exchange agent in connection with the Exchange
Offer.
"EXCHANGE RATIO" means a number equal to $203.87 divided by the Market
Value of a share of Common Stock; PROVIDED, HOWEVER, that the Exchange Ratio
shall not be more than 102 or less than 76.
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"EXERCISE PRICE" (a) with respect to the Series A Warrants, has the
meaning set forth in Section 2(A) of the Series A Warrants, and (b) with respect
to the Series B Warrants, has the meaning set forth in Section 2(A) of the
Series B Warrants.
"EXERCISE PRICE SHARES" means the quotient of (a) the product of (i)
Aggregate Agreed Upon Number of Shares, times (ii) $0.01, divided by (b) the
product of (i) the Market Value of a share of Common Stock, times (ii) 0.90
(PROVIDED, HOWEVER, that, if the product referred to in this clause (b) shall be
(A) less than $1.78, such product shall be deemed to be $1.78, or (B) more than
$2.68, such product shall be deemed to be $2.68).
"GAAP" means United States generally accepted accounting principles,
consistently applied.
"GOVERNMENTAL AUTHORITY" means (a) any United States federal, state or
local or foreign court or governmental or regulatory agency or authority, (b)
any arbitration board, tribunal or mediator and (c) any national stock exchange
or Commission recognized trading market on which securities issued by the
Company or any of the Subsidiaries are listed or quoted.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as from time to time amended, and applicable rules and regulations promulgated
thereunder and any similar state acts.
"INTERIM EXCESS SHARES" means any shares of Common Stock beneficially
owned by the Warburg Group in excess of 25.0%, but less than 29.9%, of the
outstanding shares of Common Stock (as calculated in accordance with Rule 13d-3
under the Exchange Act).
"LETTER AGREEMENT" means the Letter Agreement, dated as of the date of
this Agreement, by and among the Company, the Investors and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated.
"LIEN" means any mortgage, pledge, lien, security interest, claim,
restriction, charge or encumbrance of any kind.
"LUCENT" means Lucent Technologies Inc., a Delaware corporation.
"▇▇▇▇▇" means the Company's Liquid Yield Option(TM) Notes due 2021, with
each $1,000 principal amount at maturity thereof being a "LYON".
"▇▇▇▇▇ INDENTURE" means the Indenture, dated as of October 31, 2001, as
supplemented by the First Supplemental Indenture, dated as of October 31, 2001,
by and between the Company and The Bank of New York, as trustee.
"MARKET VALUE" of a share of Common Stock means the volume-weighted
average trading price of a share of Common Stock on the NYSE for the five NYSE
trading days ending at the close of business two NYSE trading days prior to the
NYSE trading day on which the Exchange Offer expires (I.E., if the Exchange
Offer expires at midnight on the 20th NYSE trading day following its
commencement, the period would include the 14th, 15th, 16th, 17th and 18th NYSE
trading days).
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"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance or
properties of the Company and the Subsidiaries, taken as a whole, or (b) the
ability of the Company to timely perform any of its obligations under this
Agreement.
"MAXIMUM AMOUNT OF ▇▇▇▇▇" means a number of ▇▇▇▇▇ having an aggregate
principal amount at maturity of $660.542 million.
"NEW WARRANTS" means the Series C Warrants and the Series D Warrants.
"NYSE" means the New York Stock Exchange, Inc.
"ORIGINAL PURCHASE AGREEMENT" means the Preferred Stock and Warrant
Purchase Agreement, dated as of August 8, 2000, as amended by Amendment No. 1
thereto, dated as of September 29, 2000, by and among the Company and the
Investors.
"PERMITTED TRANSFEREE" means, with respect to any Investor or any
Permitted Transferee of any Investor, any member of the Warburg Group, Warburg
or any subsidiary of Warburg (but excluding any portfolio company of any member
of the Warburg Group); PROVIDED, HOWEVER, that each Permitted Transferee must
agree in writing to be bound by the terms of this Agreement to the same extent,
and in the same manner, as the transferring Investor prior to the transfer of
any Warrants, New Warrants or Common Stock to such Permitted Transferee; and
PROVIDED FURTHER, HOWEVER, that the transfer of Warrants, New Warrants or Common
Stock to such Permitted Transferee is in compliance with all applicable
securities laws.
"PERSON" means any individual, partnership, corporation, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or agency or political subdivision thereof, or other
entity.
"PRIVATE LETTER RULING" means the private letter ruling, dated August 3,
2000, from the Internal Revenue Service that the Distribution qualifies as a
tax-free distribution under Section 355.
A "QUALIFYING OWNERSHIP INTEREST" shall be deemed to exist at any time the
Investors and the Permitted Transferees beneficially own, in the aggregate, at
least 26 million shares of Common Stock (as such number is adjusted to reflect
any stock split, stock dividend, combination or similar transaction).
"REPRESENTATIVES" means, collectively, with respect to any Person, such
Person's directors, partners, officers, employees, financial advisors, lenders,
accountants, attorneys, agents, equity investors, controlled Affiliates and
controlling Persons of such Person or its controlled Affiliates.
"RIGHTS AGREEMENT" means the Rights Agreement dated as of September 29,
2000, as amended by Amendment No. 1 thereto dated as of February 28, 2002 by and
between the Company and The Bank of New York, as Rights Agent.
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"SECTION 355" means Section 355 of the Internal Revenue Code of 1986, as
from time to time amended.
"SECURITIES ACT" means the Securities Act of 1933, as from time to time
amended, and the rules and regulations of the Commission promulgated thereunder.
"SERIES A WARRANTS" means the four-year warrants to purchase 6,883,933
shares of Common Stock issued pursuant to the Original Purchase Agreement and
exercised in part pursuant to the terms of the Conversion Agreement (and thus
currently exercisable for 6,724,665 shares of Common Stock).
"SERIES B WARRANTS" means the five-year warrants to purchase 5,507,146
shares of Common Stock issued pursuant to the Original Purchase Agreement and
exercised in part pursuant to the terms of the Conversion Agreement (and thus
currently exercisable for 5,379,732 shares of Common Stock).
"SERIES D BLACK-SCHOLES VALUE" means the value, as of the date of the
Subsequent Closing, of the right to purchase one share of Common Stock pursuant
to the Series D Warrants (the terms of which shall be determined pursuant to
Section 3.01(b)), calculated using the Black-Scholes value of such right
(determined using the Bloomberg L.P. Standard Option Valuation page relating to
the Common Stock), assuming (a) 50% volatility, (b) a risk free rate of return
equal to the Treasury rate corresponding to the term of the Series D Warrants,
(c) a 0% dividend yield and (d) the current value per share of Common Stock to
be equal to the Market Value of a share of Common Stock.
"SUBSIDIARY" means, with respect to any Person (a) a corporation a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by a subsidiary of such Person, or by such Person and one or more subsidiaries
of such Person, (b) a partnership in which such Person or a subsidiary of such
Person is, at the date of determination, a general partner of such partnership
and has the power to direct the policies and management of such partnership, or
(c) any other Person (other than a corporation) in which such Person, a
subsidiary of such Person or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination thereof, has (i) at
least a majority ownership interest or (ii) the power to elect or direct the
election of a majority of the directors or other governing body of such Person.
"SUBSIDIARY" means a subsidiary of the Company.
"TRANSACTIONS" means the transactions contemplated by this Agreement,
including without limitation the Exchange Offer, the issuance of the Series C
Warrants, the issuance of the Series D Warrants, the Exercise Price Adjustment,
the Warrant Shares Adjustment, the Exercise and the Conversion.
"WARBURG" means the general partner of Warburg, ▇▇▇▇▇▇ Equity Partners,
L.P.
"WARBURG GROUP" means, collectively, any investment fund that is an
Affiliate of Warburg.
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"WARBURG ▇▇▇▇▇▇ ▇▇▇▇▇ PURCHASE PRICE" means the quotient of (a) the
Investor Cash Amount divided by (b) the quotient of (i) the total principal
amount at maturity of ▇▇▇▇▇ deemed to be acquired by the Investors in the
Exchange Offer, divided by (ii) $1,000.
"WARRANTS" means the Series A Warrants and the Series B Warrants.
"WARRANT SHARES" means the shares of Common Stock issuable upon the
exercise (in whole or in part) of the Warrants (including the Exercise Price
Shares), together with any shares of Common Stock issuable upon exercise (in
whole or in part) of the New Warrants.
SECTION 1.02. OTHER DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings given thereto in the Sections set forth opposite
such terms:
TERM SECTION
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Agreement Preamble
Cash Consideration Recitals
Claim 9.18
Closing 3.05
Closing Date 3.05
Company Preamble
Company Cash Amount Recitals
Company Commission Filings 4.05(a)
Company Common Stock Consideration Recitals
Conversion Recitals
Conversion Agreement Recitals
Exchange Offer Recitals
Exercise Recitals
Exercise Price Adjustment Recitals
Expiration Date 2.01(b)(i)
Expiration Time 2.01(b)(i)
Indemnified Party 9.18(c)
Indemnifying Party 9.18(c)
Investor Cash Amount Recitals
Investor; Investors Preamble
Material Contract 4.07
Maximum Number 7.06(b)
Mixed Consideration Recitals
Notices 9.03
Offer Consideration Recitals
Offer Documents 2.02
Offer Registration Statement 2.02
Preferred Shares Recitals
Prospectus 2.02
Qualifying Event 6.09(a)(ii)
Registrable Securities 6.10
Registration Rights Provisions 6.10
Registration Statement 6.10
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Schedule TO 2.02
Series B Preferred Stock Recitals
Series C Warrants Recitals
Series D Warrants Recitals
Stock Purchase Agreement Recitals
Subsequent Closing 3.07
Subsequent Closing Period 3.07
Termination Claims 2.01(a)
Unaffiliated Director 6.09(a)(ii)
Warburg Group Director 6.09(a)(i)
Warburg Group Observer 6.09(b)
Warrant Shares Adjustment Recitals
ARTICLE II
THE EXCHANGE OFFER
SECTION 2.01. THE EXCHANGE OFFER. (a) On, or as promptly as reasonably
practicable following, the date of this Agreement, the Company and the Investors
shall commence (within the meaning of Rule 14d-2 under the Exchange Act) the
Exchange Offer. Each $1,000 aggregate principal amount at maturity of ▇▇▇▇▇
accepted for purchase and/or exchange in the Exchange Offer on the terms and
subject to the conditions and limitations set forth in this Agreement and in the
Offer Documents shall be exchanged for the right to receive the Offer
Consideration. The obligation of the Company and the Investors to accept for
purchase and/or exchange, and to purchase and/or exchange (which obligation
shall be several and not joint), any ▇▇▇▇▇ validly tendered and not validly
withdrawn shall be subject only to the satisfaction or waiver (to the extent
permitted by this Agreement) of each of the conditions set forth in Article
VIII. Any condition may only be waived upon the mutual written agreement of the
Company and the Investor; PROVIDED, HOWEVER, that (i) the Company shall be
deemed to have waived each condition set forth in Section 8.02 if such condition
is waived by the Investors, and (ii) the Investors shall be deemed to have
waived any or all condition or conditions set forth in Section 8.01 if such
condition or conditions are waived by the Company. No changes in any of the
terms and conditions of the Exchange Offer shall be made, except upon the mutual
written agreement of the Company and Investors. Notwithstanding the foregoing,
the Company shall have the right to terminate the Exchange Offer at any time
prior to the Expiration Time without the consent of the Investors; PROVIDED,
that (A) prior to any such termination, the Company shall consult with the
Investors concerning such termination, (B) the Company shall indemnify and hold
harmless each Investor and its partners, members, officers, directors, employees
and controlling Persons, if any, against any Claims (as defined below) arising
as a result of any such termination (such Claims, "TERMINATION CLAIMS"), and (C)
such termination shall not affect the Series C Warrants or the issuance thereof.
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(b) (i) Subject to the terms and conditions of the Exchange Offer and this
Agreement, the Exchange Offer shall expire at midnight, New York City time, on
the date that is twenty Business Days after the date the Exchange Offer is
commenced (as extended in accordance with this Section 2.01(b)(i), the
"EXPIRATION DATE", with midnight, New York City Time, on the Expiration Date, or
if the Expiration Date is not the date that is twenty Business Days after the
date the Exchange Offer is commenced, such other time on the Expiration Date as
may be determined by the Company, being the "EXPIRATION TIME"); PROVIDED,
HOWEVER, that, upon mutual agreement of the Company and the Investors, the
Exchange Offer may from time to time be extended if at the Expiration Time any
of the conditions set forth in Article VIII shall not have been satisfied or
waived, until such time as such conditions are satisfied or waived; and
PROVIDED, FURTHER, that, if the Company makes any public announcement concerning
its financial condition or results of operations in the period beginning on the
first day of period during which the Market Value of a share of Common Stock
would have been determined (assuming the Expiration Date to be the Expiration
Date scheduled as of the date of such announcement) and ending on the Expiration
Date, the Company and the Investors shall, unless mutually agreed between the
Company and the Investors, extend the Exchange Offer for an additional number of
Business Days such that the Expiration Date shall occur on the 7th NYSE trading
day following such announcement (which date shall in no event be any later than
the 27th NYSE trading day after the date on which the Exchange Offer is
commenced). The Company may, in its sole discretion, extend the Exchange Offer
once for up to ten Business Days, if at the then scheduled Expiration Time the
condition set forth in either Section 8.03(a) or 8.03(e) shall not have been
satisfied or waived; PROVIDED, that in no event shall the Company be entitled,
pursuant to this sentence, to extend the Exchange Offer beyond the 30th NYSE
trading day after the date on which the Exchange Offer is commenced.
(ii) Subject to the terms and conditions of the Exchange Offer and
this Agreement and the satisfaction (or waiver to the extent permitted by
this Agreement) of the conditions set forth in Article VIII, the Company
and the Investors (in accordance with the provisions of Section
2.01(b)(iii)) shall accept for purchase and/or exchange all ▇▇▇▇▇, up to
the Maximum Amount of ▇▇▇▇▇ (or if less, the amount of ▇▇▇▇▇ described in
Section 2.01(b)(iii)), validly tendered and not validly withdrawn pursuant
to the Exchange Offer that the Company and the Investors become obligated
to accept pursuant to the Exchange Offer as soon as practicable after the
Expiration Date and shall pay for and/or exchange all such ▇▇▇▇▇ promptly
after such acceptance.
(iii) ▇▇▇▇▇ validly tendered, not validly withdrawn and accepted for
purchase and/or exchange shall be purchased by and as between the Company
and Investors in the following order: (A) first, all ▇▇▇▇▇ up to the
Maximum Amount of ▇▇▇▇▇, validly tendered, not validly withdrawn and
accepted for purchase and exchange in exchange for the Mixed Consideration
shall be purchased and (B) second, the number of ▇▇▇▇▇ purchasable, at a
price equal to the Cash Consideration, for an aggregate amount of cash
equal to the lesser of (x) $200 million minus the aggregate amount of
cash paid for ▇▇▇▇▇ accepted for purchase pursuant to clause (a) above,
and (y) the Maximum Amount of ▇▇▇▇▇ minus the number of ▇▇▇▇▇ purchased
pursuant to clause (a) above, validly tendered, not validly withdrawn and
accepted for purchase and exchange in exchange for the Cash Consideration
shall be purchased, with (I) the consideration for all such purchases
being provided as follows: (x) the Company shall
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provide all of the Company Common Stock Consideration, and (y) the Company
shall determine the proportionate amount of cash, if any, to be provided
by each of the Company and the Investors; PROVIDED that, (1) if necessary
to satisfy tenders, the Company will provide up to $100 million and (2)
the Investors shall not be required to provide in excess of $100 million,
and (II) the aggregate principal amount at maturity of ▇▇▇▇▇ acquired by
the Investors shall be equal to the total principal amount at maturity of
▇▇▇▇▇ acquired in the Exchange Offer multiplied by a fraction, the
numerator of which is the Investor Cash Amount and the denominator of
which is the sum of the Investor Cash Amount, the Company Cash Amount and
the Company Common Stock Value and (III) the Company shall be deemed to
have purchased the remainder of such ▇▇▇▇▇.
(c) (i) In connection with the Exchange Offer, each holder of
▇▇▇▇▇ validly tendered and not validly withdrawn pursuant to the Exchange Offer
shall be entitled to elect to receive the Offer Consideration in respect of such
tendered ▇▇▇▇▇ in the form of either the Mixed Consideration or the Cash
Consideration; PROVIDED, HOWEVER, that (A) elections to receive Mixed
Consideration shall be satisfied prior to any elections to receive the Cash
Consideration, and (B) elections to receive Cash Consideration shall be limited
such that the aggregate amount of cash that may be paid to holders of ▇▇▇▇▇
electing the Cash Consideration is equal to the difference of (I) $200 million,
minus (II) the amount of cash paid to holders of ▇▇▇▇▇ electing the Mixed
Consideration; and, PROVIDED, FURTHER, that the letter of transmittal in respect
of the Exchange Offer shall require that each holder of ▇▇▇▇▇ shall elect either
the Mixed Consideration or the Cash Consideration for all ▇▇▇▇▇ tendered by such
holder. To the extent that a holder of ▇▇▇▇▇ has validly tendered ▇▇▇▇▇ and not
validly withdrawn them but has not indicated in the letter of transmittal
whether such holder elects the Mixed Consideration or the Cash Consideration
with respect to such ▇▇▇▇▇ tendered, such holder shall be deemed to have elected
to receive the Mixed Consideration for all ▇▇▇▇▇ tendered by such holder.
Notwithstanding anything in this Agreement to the contrary: (x) the Company Cash
Amount shall not exceed $100 million, (y) the Investor Cash Amount shall not
exceed $100 million, and (z) the aggregate principal amount at maturity of ▇▇▇▇▇
that the Company and the Investors will be obligated to acquire in the Exchange
Offer shall not exceed, in the aggregate, the Maximum Amount of ▇▇▇▇▇.
(ii) The Mixed Consideration and any other applicable numbers or
amounts shall be adjusted to the extent necessary to reflect appropriately
the effect of any stock split, reverse stock split, stock dividend
(including any distribution or dividend of securities convertible into or
exchangeable for Common Stock), extraordinary cash dividend,
reorganization, reclassification, combination, exchange of shares or other
like change with respect to Common Stock (other than the Exchange Offer)
occurring or having a record date on or after the date of this Agreement
and prior to the completion of the Exchange Offer.
(iii) The Exchange Agent shall make all computations as to the
allocation and the proration contemplated by this Section 2.01(c), and any
such computation shall be conclusive and binding on each holder of ▇▇▇▇▇
tendering ▇▇▇▇▇ in the Exchange Offer. The Company and the Investors may
agree to make such rules as are consistent with the Exchange Offer and
this Section 2.01(c) for the implementation of
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the provisions of this Section 2.01(c) as shall be necessary or desirable
to fully effect such provisions.
SECTION 2.02. REQUIRED FILINGS. On or as soon as practicable after the
date of this Agreement, the Company shall prepare and file with the Commission a
registration statement on Form S-4 (in the form set forth in EXHIBIT B), to
register the offer and sale of Common Stock pursuant to the Exchange Offer
(together with all amendments and supplements thereto, and including all
exhibits thereto, the "OFFER REGISTRATION STATEMENT"). The Offer Registration
Statement, as declared effective by the Commission, will include a prospectus
containing the information required under Rule 14d-4(b) promulgated under the
Exchange Act (the "PROSPECTUS"). As soon as practicable on the date the Exchange
Offer is commenced, the Company and the Investors shall file with the Commission
a Exchange Offer Statement on Schedule TO (in the form included in EXHIBIT B)
(which shall include any information required by Rule 13e-4 under the Exchange
Act) with respect to the Exchange Offer (together with all amendments and
supplements thereto, and including all exhibits thereto, the "SCHEDULE TO") and
cause the Offer Documents, in form and substance reasonably acceptable to the
Company and the Investors, to be disseminated to the holders of the ▇▇▇▇▇ as and
to the extent required by the Securities Act, the Exchange Act and other
Applicable Law. The Schedule TO shall contain as an exhibit or incorporate by
reference a prospectus containing the information required under Rule 14d-4(b)
promulgated under the Exchange Act (or portions thereof) and forms of the
related letter of transmittal and summary advertisement, if any. Subject to the
obligations of the Investors set forth in this Section 2.02, the Company shall
cause the Schedule TO, the Prospectus, and all amendments or supplements thereto
(which, together, collectively constitute the "OFFER DOCUMENTS") to comply in
all material respects with the Securities Act, the Exchange Act and other
Applicable Law, and the Company further agrees that the Offer Documents, on the
date first published, sent or given to the holders of the ▇▇▇▇▇, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation or warranty is made by the Company
with respect to information supplied by the Investors in writing specifically
for inclusion or incorporation by reference in the Offer Documents, which
information consists solely of that information contained in the Letter
Agreement. The Investors agree to provide all information about the Investors
required to be disclosed in the Offer Documents by the Securities Act and the
Exchange Act and that the information provided by the Investors in writing
specifically for inclusion or incorporation by reference in the Offer Documents
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each of the Company and the Investors shall promptly correct any
information provided by it for use in the Offer Registration Statement or the
Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect, and the Company shall take all
steps necessary to cause the Offer Documents as so corrected to be filed with
the Commission and to be disseminated to the holders of the ▇▇▇▇▇, in each case,
as and to the extent required by the Securities Act, the Exchange Act and
Applicable Law. The Investors and their counsel shall be given reasonable
opportunity to review and comment on the Offer Registration Statement and the
Offer Documents prior to the filing thereof with the Commission. The Company
agrees to provide in writing to the Investors and their counsel any comments the
Company or its counsel may receive, and the Investors agree to
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provide in writing to the Company and its counsel any comments the Investors
receive, from the Commission or its staff with respect to the Offer Documents
promptly after receipt of such comments, and shall provide the Investors and
their counsel, or the Company and its counsel, as the case may be, with a
reasonable opportunity to participate in the response of the Company or the
Investors, as the case may be, to such comments.
ARTICLE III
WARRANT GRANTS; ADJUSTMENTS; EXERCISE AND CONVERSION
SECTION 3.01. GRANTS AND EXERCISE PRICE ADJUSTMENTS. (a) Concurrently with
the execution of this Agreement, the Company has granted to the Investors Series
C Warrants as set forth in SCHEDULE 1
(b) At the Subsequent Closing, the Company shall grant to the Investors
Series D Warrants having terms determined in accordance with this Section
3.01(b).
(i) Subject to the immediately following sentence, the exercise
price per Warrant Share that may be acquired pursuant to the Series D
Warrants and the term of the Series D Warrants shall be determined by the
Investors, in their sole discretion, and the Investors shall provide the
Company with written notice thereof at least five Business Days prior to
the Subsequent Closing. Notwithstanding the foregoing, (A) the exercise
price per Warrant Share of the Series D Warrants shall be not less than
125% and not more than 150% of the Market Value of a share of Common
Stock, and (B) the term of the Series D Warrants shall be not less than
three and not more than five years.
(ii) The number of shares of Common Stock that may be acquired, in
the aggregate, upon exercise for cash of the Series D Warrants shall be
equal to the quotient of (A) the product of (I) $5 million, times (II) the
quotient of (x) the lesser of (1) the Investor Cash Amount, and (2) $50
million, divided by (y) $50 million, divided by (B) the Series D
Black-Scholes Value. Notwithstanding the foregoing, in the event that any
circumstance or event occurs (following the date of this Agreement but
prior to the issuance of the Series D Warrants), that would (had such
circumstance or event occurred following issuance of the Series D
Warrants) require adjustment of the exercise price and/or the number of
Warrant Shares issuable upon exercise of the Series D Warrants in
accordance with Section 13 of the Series D Warrants, then the exercise
price and or number of Warrant Shares that may be issuable upon exercise
of the Series D Warrants shall be appropriately adjusted.
(c) (i) Effective as of the 11th Business Day following the Expiration
Date, pursuant to Section 13(J) of the Warrants and a resolution of the Board of
Directors adopted on or prior to the date of this Agreement (in the form set
forth in EXHIBIT C), the Board of Directors shall (A) reduce the Exercise Price
of all of the Series A and Series B Warrants so that all such Warrants may be
exercised for $0.01 per share of Common Stock, and (B) subject to the final
sentence of this Section 3.01(c)(i), increase the number of Warrant Shares that
may be purchased upon exercise of the Series A Warrants and increase the number
of Warrant Shares that may be purchasable upon exercise of the Series B
Warrants, to the extent necessary so that
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the Series A and the Series B Warrants can be exercised for an aggregate of (I)
the Aggregate Agreed Upon Number of Shares plus (II) the Exercise Price Shares
plus (III) 100,000 shares of Common Stock. Any such adjustment in the number of
shares of Common Stock that may be issuable upon exercise of such Warrants shall
be made PRO RATA to both the Series A Warrants and the Series B Warrants. The
number of shares of Common Stock issuable upon exercise of the Series A Warrants
and the Series B Warrants need not be increased pursuant to this Section
3.01(c)(i) if the sum of (w) Aggregate Agreed Upon Number of Shares plus (x) the
Exercise Price Shares is equal to or less than the difference of (y) the number
of shares of Common Stock issuable upon exercise of the Series A Warrants and
the Series B Warrants immediately prior to the consummation of the Exchange
Offer minus (z) 100,000, without giving regard to any such adjustment.
(ii) The Investors agree that, until the Exercise Price is
readjusted as contemplated by the next sentence of this Section
3.01(c)(ii), they shall not exercise Series A Warrants or Series B
Warrants to acquire more than the Aggregate Agreed Upon Number of Shares
plus the Exercise Price Shares. Following the time that the Investors
have, in the aggregate, been validly issued the Aggregate Agreed Upon
Number of Shares plus the Exercise Price Shares in connection with the
Exercise, the Exercise Price of any portion of the Series A Warrants and
the Series B Warrants that remains outstanding shall be adjusted so that
such Exercise Price is that price that would be in effect had this
Agreement never been entered into.
(iii) The Exercise Price, and the number of Warrant Shares that may
be purchased upon exercise of the Warrants, shall continue to be further
adjusted if, as and when required by the terms of Section 13 of the
Warrants.
SECTION 3.02. AGREEMENT TO EXERCISE. Not less than 11 and not more than 15
Business Days following the Expiration Date, and upon the terms and subject to
the conditions set forth in this Agreement, each Investor, severally and not
jointly, shall exercise, for cash, a portion of the Series A and the Series B
Warrants owned by it necessary to purchase, in the aggregate, the Aggregate
Agreed Upon Number of Shares plus the Exercise Price Shares, and the Company
shall issue such number of shares of Common Stock upon such exercise to each
such Investor. Such exercise shall first be made of the Series A Warrants and
then of the Series B Warrants.
SECTION 3.03. AGREEMENT TO CONVERT. Not less than 11 and not more than 15
Business Days following the Expiration Date, and upon the terms and subject to
the conditions set forth in this Agreement, each Investor, severally and not
jointly, shall convert, pursuant to the terms of Article V of the ▇▇▇▇▇
Indenture, all ▇▇▇▇▇ acquired by it in connection with the Exchange Offer into
shares of Common Stock, and the Company shall issue such shares of Common Stock
upon the Conversion to each such Investor.
SECTION 3.04. EXPIRATION TIME DELIVERIES. At or prior to the Expiration
Time, (a) each Investor shall deliver to the Company the officer's certificate
contemplated by Section 8.01(c) and (b) the Company shall deliver to each
Investor (i) an opinion of Weil, Gotshal & ▇▇▇▇▇▇ LLP, dated the Expiration
Date, in the form set forth in EXHIBIT D and (ii) the officer's certificate
contemplated by Section 8.02(d).
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SECTION 3.05. CLOSING. The Closing of the Exchange Offer shall occur as
promptly as practicable following the Expiration Date, subject to the
satisfaction, as of the Expiration Time, of the conditions set forth in Article
VIII (other than those conditions that by their nature are to be satisfied at
the Closing) (consummation of the Exchange Offer is referred to as the
"CLOSING", and such date and time is referred to as the "CLOSING DATE"), at the
offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other place as the parties to this Agreement shall
agree in writing.
SECTION 3.06. CLOSING DELIVERIES. At the Closing:
(a) The Company shall deliver to the Exchange Agent, to be distributed to
holders of ▇▇▇▇▇ validly tendered, not validly withdrawn and accepted for
exchange in the Exchange Offer:
(i) an amount equal to the Company Cash Amount via wire transfer of
immediately available funds to such bank account as the Exchange Agent
shall designate not later than two Business Days prior to the Closing
Date; and
(ii) the number of shares of Common Stock equal to the Company
Common Stock Consideration; and
(b) The Investors shall deliver to the Exchange Agent, to be distributed
to holders of ▇▇▇▇▇ validly tendered, not validly withdrawn and accepted for
purchase in the Exchange Offer, an amount equal to the Investor Cash Amount via
wire transfer of immediately available funds to such bank account as the
Exchange Agent shall designate not later than two Business Days prior to the
Closing Date.
SECTION 3.07. EXERCISE AND CONVERSION MECHANICS. (a) Not less than 11 or
more than 15 Business Days following the Expiration Date (the "SUBSEQUENT
CLOSING PERIOD"), at a subsequent closing (the "SUBSEQUENT CLOSING"), (i) the
▇▇▇▇▇ purchased by the Investors shall be converted into Conversion Shares in
accordance with the terms of Article V of the ▇▇▇▇▇ Indenture and Section 3.03,
(ii) the Series D Warrants shall be issued and (iii) the relevant portion of the
Series A Warrants and the Series B Warrants shall be exercised for Warrant
Shares in accordance with the terms of Sections 3(A)(i) and 4 of the Warrants
and Section 3.02. The Subsequent Closing shall occur on a date determined by the
Investors (upon at least two Business Days written notice to the Company and
subject to the previous sentence) at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP,
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or such other place as the
parties to this Agreement may agree in writing.
(b) At the Subsequent Closing, in connection with the exercise of the
Series A and the Series B Warrants and the Conversion,
(i) the Investors shall deliver to the Company:
(A) the Series A Warrants and the Series B Warrants to be
exercised by such Investor pursuant to Section 3.02, together with a
duly executed notice of exercise specifying the number of Warrant
Shares for which such Warrants are being exercised in accordance
with Section 3(A) of the Warrants.
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Unless the Warrant Shares issuable upon such exercise are to be
issued in the same name as the name in which that Warrant is being
exercised is registered, each Warrant being exercised shall be
accompanied by instruments of transfer, in form reasonably
satisfactory to the Company, duly executed by the holder or the
holder's duly authorized attorney and an amount sufficient to pay
any transfer or similar tax in accordance with Section 7 of the
Warrants;
(B) an amount equal to the aggregate Exercise Price of that
portion of the Series A Warrants and the Series B Warrants being
exercised by such Investor pursuant to Section 3.02 via wire
transfer of immediately available funds to such bank account as the
Company shall designate not later than two Business Days prior to
the date of the Subsequent Closing; and
(C) the ▇▇▇▇▇ to be converted by such Investor pursuant to
Section 3.03, together with a duly executed notice of conversion
specifying the number of Conversion Shares for which such ▇▇▇▇▇ are
being converted in accordance with Article V of the ▇▇▇▇▇ Indenture.
Each LYON being converted shall be accompanied by instruments of
transfer, in form reasonably satisfactory to the Company, duly
executed by the holder or the holder's duly authorized attorney; and
(ii) the Company shall deliver to the Investors:
(A) certificates representing the Series D Warrants issuable
pursuant to Section 3.01(b), which shall be in definitive form and
registered in the name of such Investor or its nominee or designee
and in such denominations as such Investor shall request not later
than two Business Days prior to the date of the Subsequent Closing;
(B) a certificate or certificates representing the Warrant
Shares for which portions of the Series A Warrants and the Series B
Warrants have been exercised by such Investor pursuant to Section
3.02, which shall be in definitive form and registered in the name
of such Investor or its nominee or designee and in such
denominations as such Investor shall request not later than two
Business Days prior to the date of the Subsequent Closing;
(C) certificates representing the portions of the Series A
Warrants and the Series B Warrants not exercised by such Investor
pursuant to Section 3.02, which shall be in definitive form and
registered in the name of such Investor or its nominee or designee
and in such denominations as such Investor shall request not later
than two Business Days prior to the date of the Subsequent Closing;
and
(D) a certificate or certificates representing the Conversion
Shares into which the ▇▇▇▇▇ are being converted by such Investor
pursuant to Section 3.03, which shall be in definitive form and
registered in the name of such Investor or its nominee or designee
and in such denominations as such Investor
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shall request not later than two Business Days prior to the date of
the Subsequent Closing.
(c) The Exercise and the Conversion shall be deemed to have been effected
at the close of business on the date during the Subsequent Closing Period on
which the Investors deliver to the Company the items described in Sections
3.07(b)(i)(A)-(C). As of such time, all Warrant Shares issuable in connection
with the Exercise and all Conversion Shares shall, upon delivery, be duly and
validly authorized and issued, fully paid and nonassessable, free from all
preemptive rights and free from all Liens (other than Liens or charges created
by or imposed upon the holder or taxes in respect of any transfer occurring
contemporaneously therewith), and shall not have been issued in violation of any
Applicable Law.
SECTION 3.08. TAX TREATMENT. The parties to this Agreement agree that for
all tax purposes, the Conversion Shares, the Series D Warrants and the Warrant
Shares are being acquired in exchange for the Investor Cash Amount, and the
parties to this Agreement further agree that the Investor Cash Amount shall be
allocated for tax purposes in the manner reasonably determined by the Investors.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Investor on the date of this
Agreement and on and as of the Expiration Time as follows:
SECTION 4.01. ORGANIZATION AND STANDING. (a) The Company is duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has all requisite corporate power and authority to own its
properties and assets and to carry on its business as it is now being conducted.
The Company has provided to the Investors true and correct copies of the
Company's certificate of incorporation and by-laws, each as amended through the
date of this Agreement.
(b) Each direct and indirect material Subsidiary is duly incorporated,
validly existing and, where applicable, in good standing under the laws of its
jurisdiction of incorporation and has all requisite power and authority to own
its properties and assets and to carry on its business as it is currently
conducted, and each such material Subsidiary is qualified to transact business,
and in good standing, in each jurisdiction in which the properties owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary, except, in all cases, as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 4.02. CAPITAL STOCK. (a) The authorized Capital Stock of the
Company consists solely of (i) 1.5 billion shares of Common Stock, of which, as
of November 29, 2002, 365,801,780 shares were issued and outstanding, and (ii)
200 million shares of preferred stock, par value $1.00 per share, of which 15
million shares have been designated as Series A Junior Participating Preferred
Stock. As of the date of this Agreement, no shares of Series A Junior
Participating Preferred Stock are issued or outstanding. Each share of Capital
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Stock of the Company that is issued and outstanding is duly authorized and
validly issued and fully paid and nonassessable, and the issuance thereof was
not subject to any preemptive rights or made in violation of any Applicable Law.
(b) Except pursuant to, or as addressed in, the Original Purchase
Agreement, the Conversion Agreement, the Stock Purchase Agreement or this
Agreement, there are (i) as of the date of this Agreement, no outstanding
options, warrants, agreements, conversion rights, exchange rights, preemptive
rights or other rights (whether contingent or not) to subscribe for, purchase or
acquire any issued or unissued shares of Capital Stock of the Company (other
than pursuant to employee benefit plans or the ▇▇▇▇▇), and (ii) no restrictions
upon, or Contracts or understandings of the Company with respect to, the voting
or transfer of any shares of Capital Stock of the Company. As of the date of
this Agreement, there are issued and outstanding ▇▇▇▇▇ with an aggregate
principal amount at maturity of $943.632 million, none of which ▇▇▇▇▇ are owned
by the Company or any of its Subsidiaries.
SECTION 4.03. AUTHORIZATION; ENFORCEABILITY. The Company has the power and
authority to execute, deliver and perform the terms and provisions of this
Agreement and has taken all action necessary to authorize the execution,
delivery and performance by it of this Agreement and to consummate the
Transactions. No other corporate proceeding on the part of the Company or any of
its stockholders is necessary for such authorization, execution and delivery of
this Agreement or for the consummation of the Transactions under any provision
of the certificate of incorporation or by-laws or other governing documents of
the Company or under any Applicable Law. The Company has duly executed and
delivered this Agreement. This Agreement constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
SECTION 4.04. NO VIOLATION; CONSENTS. (a) Subject to the governmental
filings and other matters referred to in Section 4.04(b), the execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the Transactions do not and will not contravene any Applicable
Law, except for any such contravention that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Except as
set forth in Schedule 4.04, the execution, delivery and performance by the
Company of this Agreement and the consummation of the Transactions (i) will not
(A) violate, result in a breach of or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under any Contract, or (B) result in the creation
or imposition of any Lien upon any of the assets of the Company or any
Subsidiary, except for any such violations, breaches, defaults or Liens that
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and (ii) will not conflict with or violate any
provision of the certificate of incorporation or by-laws or other governing
documents of the Company or any Subsidiary. The Company has provided to the
Investors true and complete copies of all correspondence with the NYSE relating
to the Transactions.
(b) Except for (i) the filings by the Company, if any, required by the
HSR Act and any other applicable foreign antitrust law, regulation or rule
and the expiration or termination of the applicable waiting period with
respect thereto, (ii) the filings contemplated by Section 2.02, (iii)
applicable filings, if any, with the Commission under the Exchange Act and
the NYSE in connection with the listing of the Warrant Shares and the
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Conversion Shares, (iv) filings under state securities or "blue sky" laws, and
(v) such customary items as may be required in connection with the registration
of securities for public offer and sale pursuant to the Registration Rights
Provisions, no consent, authorization or order of, or filing or registration
with, any Governmental Authority or other Person is required to be obtained or
made by the Company or any Subsidiary for the execution, delivery and
performance of this Agreement or the consummation of the Transactions, except
where the failure to obtain such consents, authorizations or orders, or to make
such filings or registrations, would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 4.05. COMMISSION FILINGS; FINANCIAL STATEMENTS. (a) The Company
has timely filed all registration statements, prospectuses, forms, reports and
documents required to be filed by it under the Securities Act or the Exchange
Act, as the case may be, since September 30, 2001 (those filings that have been
made on or prior to the date of this Agreement, collectively, the "COMPANY
COMMISSION FILINGS"). The Company Commission Filings (i) as of their respective
dates, were prepared in accordance with the requirements of the Securities Act
or the Exchange Act, as the case may be, and (ii) did not, at the time they were
filed, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. As of the date of this Agreement, no Subsidiary is subject
to the periodic reporting requirements of the Exchange Act.
(b) Each of the historical financial statements of the Company and its
Subsidiaries (including, in each case, any related notes or schedules) contained
in the Company Commission Filings was prepared in accordance with GAAP (except
in the case of unaudited quarterly financial statements as permitted by Form
10-Q under the Exchange Act) on a consistent basis throughout the periods
indicated, and each fairly presented the consolidated financial position of the
Company and its consolidated subsidiaries as of the respective dates thereof and
the results of operations, cash flows and changes in invested equity of the
Company and its consolidated subsidiaries for the respective periods indicated
therein (subject, in the case of unaudited statements, to normal year-end
adjustments that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect).
SECTION 4.06. NO MATERIAL ADVERSE EFFECT. Since September 30, 2002, except
as specifically contemplated or permitted by this Agreement or as set forth in
the Company Commission Filings, there has not been any Material Adverse Effect
or an event or development that would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, other than to the
extent such effect results from (a) changes in general economic conditions, (b)
changes in the industry of providing communications systems and software for
enterprises, including businesses, government agencies and other organizations,
and (c) accounting charges resulting from the execution of this Agreement and
the consummation of the transactions contemplated hereby, except, in the cases
of clauses (a) and (b), for such changes as have a materially disproportionate
effect on the Company.
SECTION 4.07. CONTRACTS; DEBT INSTRUMENTS. Except for this Agreement or as
set forth in the Company Commission Filings, neither the Company nor any of the
Subsidiaries is a party to or bound by any contract, arrangement, commitment or
understanding (whether written or oral) that is a "material contract" (as
defined in Item 601(b)(10) of
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Regulation S-K of the Commission). Each contract, arrangement, commitment or
understanding of the type described in this Section 4.07 is referred to in this
Agreement as a "MATERIAL Contract." Each Material Contract is valid and binding
on the Company or a Subsidiary, as applicable, and is in full force and effect,
and the Company and any Subsidiary that is a party thereto have in all material
respects performed all obligations required to be performed by them to the date
of this Agreement under each Material Contract, except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any Subsidiary knows of, or has received
notice of, any violation or default under (or any condition that with the
passage of time or the giving of notice would cause such a violation of or
default under) any Material Contract or any other loan or credit agreement,
note, bond, mortgage or indenture to which it is a party or by which it or any
of its properties or assets is bound, except for violations or defaults that
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect.
SECTION 4.08. COMPLIANCE WITH LAWS. The Company and the Subsidiaries are
in compliance in all material respects with all Applicable Laws, except for
instances of noncompliance that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
SECTION 4.09. COMPLIANCE WITH CONSTITUENT DOCUMENTS. None of the Company
or any material Subsidiary is in breach or violation of or in default in the
performance or observance of any term or provision of, and no event has occurred
that, with lapse of time or action by a third party, would result in a default
under the respective articles or certificate of incorporation, by-laws or
similar organizational instruments of such entities.
SECTION 4.10. OPINION OF FINANCIAL ADVISOR. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated has delivered to the Board of Directors its written opinion that,
as of December 19, 2002, the consideration to be provided to the Investors for
their participation in the Exchange Offer pursuant to this Agreement, consisting
of (a) the adjustments to the exercise price and number of shares issuable upon
exercise of the Series A and Series B Warrants as contemplated by Section
3.01(c), (b) the New Warrants and (c) the Conversion Shares, is fair from a
financial point of view to the Company.
SECTION 4.11. SECTION 355. Neither the execution and delivery of this
Agreement nor the consummation of the Transactions are reasonably likely to have
the effect of causing (a) the Distribution to be taxable in any respect to
Lucent or its stockholders, or (b) the Private Letter Ruling to be inapplicable
in any respect.
SECTION 4.12. DGCL SECTION 203. The Company has taken all necessary
actions such that the provisions of DGCL Section 203 do not and will not apply
to this Agreement or to any of the Transactions.
SECTION 4.13. RIGHTS AGREEMENT. The Company has taken all necessary action
to ensure that none of (a) the entering into of this Agreement, (b) the
consummation of the Transactions, or (c) the exercise by the Investors (in whole
or in part) of any of the Series C Warrants or the Series D Warrants does or
will result in the ability of any Person to exercise any rights under the Rights
Agreement or enable or require the rights to separate from the shares of
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Common Stock to which they are attached or to become triggered or exercisable.
No "Distribution Date" or "Shares Acquisition Date" (as such terms are defined
in the Rights Agreement) has occurred as a result of entering into this
Agreement, or will occur as a result of the consummation of the Transactions,
the exercise by the Investors (in whole or in part) of any of the Series C
Warrants or the Series D Warrants.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor severally as to itself only, and not jointly, represents and
warrants to the Company on the date of this Agreement and as of the Expiration
Time, as follows:
SECTION 5.01. ORGANIZATION; AUTHORIZATION; ENFORCEABILITY. Such Investor
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and has all requisite power and authority to
own its properties and assets and to carry on its business as it is now being
conducted and as currently proposed to be conducted. Such Investor has the power
to execute, deliver and perform its obligations under this Agreement, and has
taken all necessary action to authorize the execution, delivery and performance
by it of this Agreement and to consummate the Transactions. No other proceedings
on the part of such Investor are necessary for such authorization, execution,
delivery and consummation. Such Investor has duly executed and delivered this
Agreement. This Agreement constitutes a legal, valid and binding obligation of
such Investor, enforceable against such Investor in accordance with its terms.
SECTION 5.02. PRIVATE PLACEMENT. (a) Such Investor understands that the
issuance of the Warrant Shares, the Series C Warrants and the Series D Warrants
by the Company is intended to be exempt from registration under the Securities
Act pursuant to Section 4(2) thereof.
(b) Such Investor (i) is a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) or (ii) is an institutional "accredited
investor" (as such term is defined in Rule 501(a) of Regulation D under the
Securities Act).
(c) Such Investor is acquiring the Warrant Shares, the Series C Warrants
and the Series D Warrants for its own account (or for accounts over which it
exercises investment authority), for investment and not with a view to the
resale or distribution thereof in violation of any securities law.
(d) Such Investor understands that the Warrant Shares, the Series C
Warrants and the Series D Warrants will be issued in Transactions exempt from
the registration or qualification requirements of the Securities Act and
applicable state securities laws, and that such securities must be held
indefinitely unless a subsequent disposition thereof is registered or qualified
under the Securities Act and such state securities laws or is exempt from such
registration or qualification.
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(e) Such Investor (i) has been furnished with or has had full access to
all the information that it considers necessary or appropriate to make an
informed investment decision with respect to the Warrant Shares, the Series C
Warrants and the Series D Warrants and that it has requested from the Company,
(ii) has had an opportunity to discuss with management of the Company the
intended business and financial affairs of the Company and to obtain information
(to the extent the Company possessed such information or could acquire it
without unreasonable effort or expense) necessary to verify any information
furnished to it or to which it had access, and (iii) can bear the economic risk
of (A) an investment in the Warrant Shares, the Series C Warrants and the Series
D Warrants indefinitely and (B) a total loss in respect of such investment, and
(iv) has such knowledge and experience in business and financial matters so as
to enable it to understand and evaluate the risks of and form an investment
decision with respect to its investment in the Warrant Shares, the Series C
Warrants and the Series D Warrants and to protect its own interest in connection
with such investment. Such Investor has made the decision to make such
investment based on its review of all information it deems relevant and has not
relied on any advice, recommendation or information provided by the Company's
financial advisor.
SECTION 5.03. NO VIOLATION; CONSENTS. (a) Subject to the governmental
filings and other matters referred to in Section 5.03(b), the execution,
delivery and performance by such Investor of this Agreement and the consummation
by such Investor of the Transactions do not and will not contravene any
Applicable Law, except for any such contravention that would not, individually
or in the aggregate, reasonably be expected to have a material adverse effect on
the ability of such Investor to timely perform its obligations under this
Agreement. The execution, delivery and performance by such Investor of this
Agreement and the consummation of the Transactions (i) will not (A) violate,
result in a breach of or constitute (with or without due notice or lapse of time
or both) a default (or give rise to any right of termination, cancellation or
acceleration) under any Contract to which such Investor is party or by which
such Investor is bound or to which any of its assets is subject, or (B) result
in the creation or imposition of any Lien upon any of the assets of such
Investor, except for any such violations, breaches, defaults or Liens that would
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Investor to timely perform its obligations
under this Agreement; and (ii) will not conflict with or violate any provision
of the certificate of incorporation or by-laws or other governing documents of
such Investor.
(b) Except for (i) the filings by such Investor, if any, required by the
HSR Act and any other applicable foreign antitrust law, regulation or rule and
the expiration or termination of the applicable waiting period with respect
thereto, (ii) those filings described in Section 2.02, and (iii) applicable
filings, if any, with the Commission pursuant to the Exchange Act, no consent,
authorization or order of, or filing or registration with, any Governmental
Authority or other Person is required to be obtained or made by such Investor
for the execution, delivery and performance of this Agreement or the
consummation of any of the Transactions, except where the failure to obtain such
consents, authorizations or orders, or make such filings or registrations, would
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Investor to timely perform its obligations
under this Agreement.
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SECTION 5.04. FINANCING. Such Investor will have (a) on the Closing Date
available funds to deliver the Investor Cash Amount to the Exchange Agent and
(b) on the date of the Subsequent Closing available funds to consummate the
Exercise.
SECTION 5.05. OWNERSHIP OF SECURITIES. Such Investor does not own,
directly or indirectly, or have any option or right to acquire, any securities
of the Company (including the ▇▇▇▇▇) other than (a) the Warrants and the New
Warrants, (b) shares of Common Stock issuable upon exercise of such Warrants and
New Warrants, (c) an aggregate of 53,050,000 additional shares of Common Stock
owned by the Warburg Group, and (d) any options to purchase Common Stock issued
to any "Warburg Group Director" (as defined in Section 5.09(a) of the Original
Purchase Agreement).
SECTION 5.06. FUTURE ACQUISITIONS. Such Investor has no present plan or
intention to acquire, directly or indirectly, 50% or more of the "total voting
power" or "total fair market value" (as such terms are interpreted for purposes
of Section 355) of all shares of outstanding Capital Stock of the Company.
ARTICLE VI
COVENANTS OF THE COMPANY
SECTION 6.01. CONDUCT OF BUSINESS PENDING THE EXPIRATION DATE. The Company
agrees that, between the date of this Agreement and the Expiration Time (or
earlier termination of this Agreement), except as specifically permitted or
contemplated by any other provision of this Agreement, unless the Investors
shall otherwise agree in writing, the business of the Company and the
Subsidiaries shall be conducted in the ordinary course of business. Except as
specifically permitted or contemplated by any other provision of this Agreement,
the Company shall not, between the date of this Agreement and the Expiration
Time, directly or indirectly, do, or agree to do, any of the following without
the prior written consent of the Investors: (a) amend or otherwise change its
certificate of incorporation or by-laws; (b) except as may be required by the
Rights Agreement, declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock (other than dividends paid by wholly-owned Subsidiaries to
the Company or to other wholly-owned Subsidiaries); (c) reclassify, combine,
split, subdivide or redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock; (d) take any action that is intended or
would reasonably be expected to result in any of the conditions set forth in
Article VIII not being satisfied; or (e) authorize or enter into any agreement
or otherwise make any commitment to do any of the foregoing.
SECTION 6.02. ACCESS TO BOOKS AND RECORDS. The Company shall afford to
each of the Investors and the Investors' Representatives full access during
normal business hours throughout the period prior to the Expiration Time (or the
earlier termination of this Agreement pursuant to Section 9.04) to all
properties, books, Contracts, commitments and records of the Company, and,
during such period, shall, upon request, furnish promptly to each of the
Investors all other information concerning the Company or the Subsidiaries as
the Investors may reasonably request; PROVIDED, that no investigation or receipt
of information pursuant to this Section 6.02 shall affect any representation or
warranty of the Company or the
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conditions to the obligations of the Investors. All requests pursuant to this
Section 6.02 shall be made to the Persons designated from time to time by the
Company for this purpose.
SECTION 6.03. COMPLIANCE WITH CONDITIONS; COMMERCIALLY REASONABLE EFFORTS.
Subject to the last sentence of Section 2.01(a), the Company shall use all
commercially reasonable efforts to cause all conditions precedent to the
obligations of the Company and the Investors to be satisfied. Upon the terms and
subject to the conditions of this Agreement, the Company will use all
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary, proper or advisable consistent
with Applicable Law to consummate and make effective in the most expeditious
manner practicable the Transactions in accordance with the terms of this
Agreement.
SECTION 6.04. HSR ACT NOTIFICATION. To the extent required by the HSR Act,
the Company shall (a) use all commercially reasonable efforts to file or cause
to be filed, as promptly as practicable after the execution and delivery of this
Agreement (and, in any event, within two Business Days of such execution and
delivery), with the United States Federal Trade Commission and the Antitrust
Division of the United States Department of Justice, all reports and other
documents required to be filed by it under the HSR Act concerning the
Transactions, and (b) use all commercially reasonable efforts to promptly comply
with or cause to be complied with any requests by the United States Federal
Trade Commission or the Antitrust Division of the United States Department of
Justice for additional information concerning the Transactions, in each case, so
that the waiting period applicable to this Agreement and the Transactions under
the HSR Act shall expire as soon as practicable after the execution and delivery
of this Agreement. The Company agrees to request, and to cooperate with the
Investors in requesting, early termination of any applicable waiting period
under the HSR Act. The Company shall pay all fees required in connection with
any filings to be made by the Company or any Investor under the HSR Act required
to be made in connection with this Agreement or the Transactions (regardless of
whether such fees are otherwise required to be paid by the Company or any
Investor).
SECTION 6.05. CONSENTS AND APPROVALS. The Company (a) shall use all
commercially reasonable efforts to obtain all necessary consents, waivers,
authorizations and approvals of all Governmental Authorities (other than as
expressly set forth in Section 6.04 regarding the HSR Act) and of all other
Persons required in connection with the execution, delivery and performance of
this Agreement or the consummation of the Transactions, and (b) shall diligently
assist and cooperate with the Investors in preparing and filing all documents
required to be submitted by the Investors to any Governmental Authority in
connection with the Transactions (which assistance and cooperation shall
include, without limitation, timely furnishing to the Investors all information
concerning the Company and its Subsidiaries that counsel to the Investors
reasonably determines is required to be included in such documents or would be
helpful in obtaining any such required consent, waiver, authorization or
approval).
SECTION 6.06. CERTAIN ACTIONS. As soon as practicable following execution
of this Agreement, and, in any event, prior to the 11th Business Day following
the Closing, the Company shall take such actions as may be required under the
Warrants to effect the Exercise Price Adjustment and the Warrant Shares
Adjustment. The Investors waive any notice
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required under the Warrants with respect to the Exercise Price Adjustment and
the Warrant Shares Adjustment.
SECTION 6.07. LISTING AND RESERVATION OF SHARES. The Company shall use all
commercially reasonable efforts to cause the Warrant Shares to be reserved for
issuance and listed or otherwise eligible for trading on the NYSE prior to the
time that such shares of Common Stock are to be issued.
SECTION 6.08. USE OF PROCEEDS. The Company shall use the proceeds from the
Exercise for general corporate purposes, including repayment of bank debt.
SECTION 6.09. WARBURG GROUP DIRECTORS AND OBSERVER. (a) (i) From and after
the date of this Agreement, the Warburg Group shall be entitled to designate for
election to the Board of Directors an individual reasonably acceptable to the
Board of Directors (a "WARBURG GROUP DIRECTOR") for so long as the Investors and
the Permitted Transferees own a Qualifying Ownership Interest. It is understood
and agreed that ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ is reasonably acceptable to the Board of
Directors, and that ▇▇. ▇▇▇▇▇ shall be appointed to the Board of Directors as
soon as reasonably practicable following the date of this Agreement, but in any
event prior to the beginning of the next regular or special meeting of the Board
of Directors (or any committee thereof). The Warburg Group Director shall be
appointed to the class of directors whose terms expires in 2004.
(ii) In the event that $25 million or more of the Investor Cash
Amount is used to acquire ▇▇▇▇▇ in the Exchange Offer (such event, a
"QUALIFYING EVENT"), and for so long thereafter as the Investors and the
Permitted Transferees own a Qualifying Ownership Interest, the Warburg
Group shall be entitled to designate for election to the Board of
Directors an additional individual reasonably acceptable to the Board of
Directors, provided that such individual shall not be an affiliate of the
Warburg Group (an "UNAFFILIATED DIRECTOR").
(b) Immediately following the Closing, if there has been a Qualifying
Event, the Unaffiliated Director shall be appointed to the Board of Directors to
a class of directors whose term expires not earlier than 2005. If a vacancy
shall exist in the office of Warburg Group Director or Unaffiliated Director,
the Warburg Group shall be entitled to designate a successor to fill such
office, reasonably acceptable to the Board of Directors, and the Board of
Directors shall elect such successor, and, in connection with the meeting of
shareholders of the Company next following such election, nominate such
successor for election as director by the shareholders and use its commercially
reasonable efforts to cause the successor to be elected. Each Investor agrees
that Warburg shall identify the individuals proposed to serve as a Warburg Group
Director and Unaffiliated Director, and that the Company shall be entitled to
rely solely and exclusively on information provided by Warburg in connection
with the exercise of the Investors' rights pursuant to this Section 6.09.
(c) At any time the Investors and the Permitted Transferees cease to own a
Qualifying Ownership Interest, the Warburg Group shall use its reasonable best
efforts to cause each of the Warburg Group Director and the Unaffiliated
Director then on the Board of Directors to resign promptly.
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(d) Each of the Warburg Group Director and the Unaffiliated Director shall
be entitled to such compensation as is customarily paid by the Company to the
Company's outside directors.
SECTION 6.10. REGISTRATION RIGHTS. The Company shall use all commercially
reasonable efforts to file a registration statement covering, or cause an
existing effective registration statement to cover (such new or amended
registration statement, the "REGISTRATION STATEMENT"), any transfers of the
Registrable Securities (including by means of any distribution to the limited or
general partners in any Investor) on behalf of the Investors and any Permitted
Transferees and limited or general partners thereof that received Registrable
Securities in a distribution from the Investors or any Permitted Transferee with
the Commission as soon as reasonably practicable after the date of this
Agreement, but, in no event, later than February 28, 2003. The expenses of the
preparation and filing of such Registration Statement shall be borne by the
Company. Upon filing the Registration Statement, the Company will use its
commercially reasonable efforts to cause the Registration Statement to be
declared effective by the Commission and to keep the Registration Statement
effective with the Commission so long as any Registrable Securities remain
outstanding. Provisions relating to the registration rights set forth in this
Section 6.10 are set forth in EXHIBIT E (the "REGISTRATION RIGHTS PROVISIONS").
"REGISTRABLE SECURITIES" means all shares of Common Stock owned by the
Investors, together with the Series C Warrants, the Series D Warrants, the
Warrant Shares, the Conversion Shares and any securities that may be issued in
respect thereof. As to any particular Registrable Securities, such Registrable
Securities shall cease to be Registrable Securities as soon as they (a) have
been sold or otherwise disposed of pursuant to the Registration Statement or any
other registration statement that was filed with the Commission and declared
effective under the Securities Act, (b) are eligible for sale pursuant to Rule
144 under the Securities Act without being subject to the volume and manner of
sale limitations thereunder, (c) have been otherwise sold, transferred or
disposed of by an Investor to any Person that is not a Permitted Transferee
(other than through a distribution by an Investor or any Permitted Transferee to
its limited or general partners), or (d) have ceased to be outstanding. All
communications with the Company by the Investors and the Permitted Transferees
and any distributees thereof with respect to the registration rights granted
pursuant to this Section 6.10 shall be made by and through Warburg.
SECTION 6.11. RIGHTS AGREEMENT. The Company shall cooperate with the
Investors to segregate the shares of Common Stock acquired by the Investors upon
exercise of the Series A Warrants and the Series B Warrants from any other
shares of Common Stock beneficially owned by the Warburg Group, and shall take
all actions as may be necessary to ensure that such shares of Common Stock are
not deemed to be beneficially owned by the Investors for purposes of the Rights
Agreement.
SECTION 6.12. NO INTENDED DISTRIBUTIONS. The Company has no present plan
or intention to make any distribution to its stockholders in cash or property
within the meaning of Section 1.305-3(b)(4) of the Treasury Regulations
promulgated under the Internal Revenue Code of 1986, as from time to time
amended. As of the date of this Agreement, the Company is prohibited from paying
cash dividends pursuant to the Company's existing credit facility.
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SECTION 6.13. DIRECTOR'S INSURANCE. Each individual that serves as a
Warburg Group Director or as an Unaffiliated Director will be covered by any
directors' and officers' liability insurance policy maintained by the Company to
the same extent as any other director of the Company serving on the Board of
Directors at the same time as such individual.
SECTION 6.14. RELATIONSHIP WITH LUCENT. Prior to the Expiration Date, the
Company shall take all actions required to be taken by it under the Distribution
Agreement to obtain the opinion of counsel contemplated by Section
10.3(a)(ii)(2) of the Distribution Agreement, and provide to the Investors a
copy thereof.
ARTICLE VII
COVENANTS OF THE INVESTORS
SECTION 7.01. COMPLIANCE WITH CONDITIONS; COMMERCIALLY REASONABLE EFFORTS.
Each Investor will use all commercially reasonable efforts to cause all
conditions precedent to the obligations of the Company and the Investors to be
satisfied. Upon the terms and subject to the conditions of this Agreement, each
Investor will use all commercially reasonable efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable consistent with Applicable Law to consummate and make effective in
the most expeditious manner practicable the Transactions of such Investor in
accordance with the terms of this Agreement.
SECTION 7.02. HSR ACT NOTIFICATION. To the extent required by the HSR Act,
each Investor shall, (a) use all commercially reasonable efforts to file or
cause to be filed, as promptly as practicable after the execution and delivery
of this Agreement (and, in any event, within two Business Days of such execution
and delivery), with the United States Federal Trade Commission and the Antitrust
Division of the United States Department of Justice, all reports and other
documents required to be filed by it under the HSR Act concerning the
Transactions, and (b) use all commercially reasonable efforts to promptly comply
with or cause to be complied with any requests by the United States Federal
Trade Commission or the Antitrust Division of the United States Department of
Justice for additional information concerning the Transactions, in each case, so
that the waiting period applicable to this Agreement and the Transactions under
the HSR Act shall expire as soon as practicable after the execution and delivery
of this Agreement. Each Investor agrees to request, and to cooperate with the
Company in requesting, early termination of any applicable waiting period under
the HSR Act.
SECTION 7.03. CONSENTS AND APPROVALS. Each Investor (a) shall use all
commercially reasonable efforts to promptly obtain all necessary consents,
waivers, authorizations and approvals of all Governmental Authorities (other
than as expressly set forth in Section 7.02 regarding the HSR Act) and of all
other Persons required in connection with the execution, delivery and
performance of this Agreement or the consummation of the Transactions, and (b)
shall diligently assist and cooperate with the Company in preparing and filing
all documents required to be submitted by the Company to any Governmental
Authority in connection with the Transactions (which assistance and cooperation
shall include, without limitation, timely furnishing to the Company all
information concerning such Investor that
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counsel to the Company reasonably determines is required to be included in such
documents or would be helpful in obtaining any such required consent, waiver,
authorization or approval).
SECTION 7.04. STANDSTILL. (a) Effective as of the date of this Agreement,
other than as contemplated by this Agreement, each Investor agrees that, prior
to August 8, 2005, it will not and will not permit any member of the Warburg
Group or any other controlled Affiliate to, in any manner, whether publicly or
otherwise, directly or indirectly, without the prior written consent of the
Company, (i) acquire, agree to acquire or make any public proposal to acquire,
directly or indirectly, beneficial ownership of any voting securities or assets
of the Company or any Subsidiary, (ii) enter into or publicly propose to enter
into, directly or indirectly, any merger or other business combination or
similar transaction or change of control involving the Company or any
Subsidiary, (iii) make, or in any way participate, directly or indirectly, in
any "solicitation" of "proxies" (as such terms are used in the proxy rules of
the Commission) to vote, or seek to advise or influence any Person with respect
to the voting of, any securities of the Company or any Subsidiary, (iv) call, or
seek to call, a meeting of the Company's stockholders or initiate any
stockholder proposal for action by stockholders of the Company, (v) bring any
action or otherwise act to contest the validity of this Section 7.04 or seek a
release of the restrictions contained in this Section 7.04, (vi) form, join or
in any way participate in a "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) with respect to any securities of the Company or any
Subsidiary, (vii) other than any seat on the Board of Directors expressly
granted to the Warburg Group by Section 6.09, seek representation on the Board
of Directors, the removal of any directors from the Board of Directors or a
change in the size or composition of the Board of Directors (including, without
limitation, voting for any directors not nominated by the Board of Directors),
(viii) enter into any discussions, negotiations, arrangements, understandings or
agreements (whether written or oral) with any other Person regarding any
possible purchase or sale of any securities or assets of the Company or any
Subsidiary, (ix) disclose any intention, plan or arrangement inconsistent with
the foregoing, (x) take, or solicit, propose to or agree with any other Person
to take, any similar actions designed to influence the management or control of
the Company or (xi) advise, assist or encourage any other Persons in connection
with any of the foregoing.
(b) Nothing in this Section 7.04 shall (i) limit any action taken by a
Warburg Group Director or an Unaffiliated Director in his or her capacity as a
member of the Board of Directors, (ii) prohibit or restrict any Investor, any
member of the Warburg Group or any other controlled Affiliate of any Investor
from responding to any inquiries from any stockholders of the Company as to such
Person's intention with respect to the voting of shares of Common Stock or any
other voting securities of the Company beneficially owned by such Investor, any
member of the Warburg Group or any other controlled Affiliate of any Investor so
long as such response is consistent with the terms of this Agreement, (iii)
prohibit or restrict a purchase, sale, merger, consolidation or other business
combination transaction involving any portfolio company of any Investor, any
member of the Warburg Group or any controlled Affiliate of any Investor so long
as the purpose of such transaction is not the acquisition of voting securities
or assets of the Company or any Subsidiary, (iv) prohibit the ownership,
purchase or other acquisition of beneficial ownership of (A) any of the Warrant
Shares or the Conversion Shares, or (B) any other securities in an amount that,
when taken together with the number of shares of Common Stock beneficially owned
by the Investors, the Warburg Group and the controlled Affiliates of any
Investor would not exceed the greater of (I) 29.9% of the outstanding Common
Stock
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(calculated in accordance with Rule 13d-3 under the Exchange Act), and (II) the
number of shares of Common Stock that are beneficially owned by such Persons
immediately following the consummation of the Transactions, (v) prohibit or
restrict any agreement, arrangement, understanding, negotiation, discussion,
disclosure or other action exclusively involving Warburg, its controlled
Affiliates (other than any portfolio companies), the Investors, any member of
the Warburg Group, and any employee, officer or director thereof, (vi) prohibit
any notice to limited partners of a Warburg Group member in respect of a
proposed distribution of securities of the Company to such limited partners,
(vii) prohibit or restrain any sale or other disposition by the Investors or any
Permitted Transferees of any securities owned by them, including any discussions
or negotiations concerning such sale or disposition between Warburg, any of its
Affiliates, the Investors, any member of the Warburg Group, and any employee,
officer or director thereof, on the one hand and any Person or group, on the
other hand, or (viii) prohibit or restrain any discussions or negotiations
between Warburg and the Company that were initiated or invited by the Company
(until the Company requests termination thereof), or the effectuation of any
transaction resulting from such discussions or negotiations (unless the Company
had previously requested termination of such discussions or negotiations).
SECTION 7.05. VOTING LIMITATION. The Investors agree that (a) any Interim
Excess Shares, and following the occurrence of any event specified in clause (b)
of this Section 7.05, any Excess Shares, shall be voted by the Investors on a
particular matter being acted upon by holders of shares of Common Stock in a
manner that is proportionate to the manner in which all shares of Common Stock
have been voted with respect to such matter, and (b) that until (i) the earliest
of (A) a "Change of Control" (as defined in the BONY Indenture) of the Company
(other than as a result of a breach by the Investors of this Section 7.05), (B)
repayment of the indebtedness of the Company under the BONY Indenture, or (C)
the provisions in the BONY Indenture relating to a Change of Control no longer
being in effect, and (ii) the earliest to occur of (A) the occurrence of any
event specified in Section l(i) of Article VI of the Company's Amended and
Restated Five Year Competitive Advance and Revolving Credit Facility Agreement,
dated as of September 3, 2002 (the "CREDIT Facility") (other than as a result of
a breach by the Investors of this Section 7.05), or (B) the provisions of
Section l(i) of Article VI of the Credit Facility no longer being in effect, the
Investors shall not be entitled to vote any Excess Shares.
SECTION 7.06. COMPLIANCE WITH SECTION 355. No Investor shall take any
action (other than as contemplated under this Agreement) or omit to take any
action reasonably available to it and not materially burdensome to it (it being
understood that no Investor shall be required to divest any of its holdings)
that could reasonably be expected to materially contribute to a determination
that the Distribution would result in the recognition of gain to Lucent or the
Company by virtue of the Distribution failing to qualify under Section 355.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE CONSUMMATION OF THE EXCHANGE OFFER
SECTION 8.01. CONDITIONS TO THE COMPANY'S OBLIGATIONS IN RESPECT OF THE
EXCHANGE OFFER. The obligations of the Company to accept for purchase and/or
exchange ▇▇▇▇▇ validly tendered and not validly withdrawn in the Exchange Offer
shall be subject, at the
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election of the Company, to the satisfaction or waiver, as of the Expiration
Time, of the following conditions:
(a) The representations and warranties of each Investor contained in this
Agreement shall have been true and correct when made, and, in addition, shall be
repeated and true and correct in all material respects on and as of the
Expiration Time with the same force and effect as though made on and as of the
Expiration Time.
(b) Each Investor shall have performed in all material respects all
obligations and agreements, and complied in all material respects with all
covenants contained in this Agreement to be performed and complied with by such
Investor on or prior to the Expiration Time, prior to the Expiration Time.
(c) Each Investor shall have delivered to the Company a certificate
executed by it or on its behalf by a duly authorized representative, dated the
Expiration Date, to the effect that each of the conditions specified in Sections
8.01(a) and (b) has been satisfied.
SECTION 8.02. CONDITIONS TO EACH INVESTOR'S OBLIGATIONS IN RESPECT OF THE
EXCHANGE OFFER. The obligations of each Investor to accept for purchase ▇▇▇▇▇
validly tendered and not validly withdrawn in the Exchange Offer shall be
subject, at the election of the Investors acting jointly, to the satisfaction or
waiver, as of the Expiration Time, of the following conditions:
(a) The representations and warranties of the Company contained in this
Agreement (i) shall have been true and correct when made and (ii) shall be (A)
in the case of representations and warranties that are qualified as to
materiality or Material Adverse Effect, true and correct and (B) in all other
cases, true and correct in all material respects, in the case of clauses (A) and
(B) above, as of the Expiration Time with the same force and effect as though
made on and as of the Expiration Time (except with respect to representations or
warranties that speak as of a specific date, which representations and
warranties shall be, subject to the qualifications set forth above, true and
correct on and as of such specific date).
(b) The Company shall have performed in all material respects all of its
obligations, agreements and covenants contained in this Agreement to be
performed and complied with at or prior to the Expiration Time prior to the
Expiration Time.
(c) The Company shall have granted the Series C Warrants in accordance
with Section 3.01(a) and such Series C Warrants shall remain outstanding.
(d) The Company shall have delivered to the Investors a certificate
executed by it or on its behalf by a duly authorized representative, dated the
Expiration Date, to the effect that each of the conditions specified in Sections
8.02(a) through (c) has been satisfied.
(e) The Investors shall have received the opinion of counsel to the
Company, dated as of the Expiration Date, and addressed to the Investors,
substantially in the form set forth in EXHIBIT E.
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SECTION 8.03. CONDITIONS TO EACH PARTY'S OBLIGATIONS IN RESPECT OF THE
EXCHANGE OFFER. The respective obligations of the Company and each Investor to
accept for purchase and/or exchange ▇▇▇▇▇ validly tendered and not validly
withdrawn in the Exchange Offer shall be subject to the satisfaction or waiver,
as of the Expiration Time, of the following additional conditions:
(a) Any waiting period under the HSR Act applicable to either the Exchange
Offer, the Conversion or the Exercise shall have expired or been terminated.
(b) No provision of any Applicable Law, injunction, order or decree of any
Governmental Entity shall be in effect that has the effect of making any of the
Transactions or the ownership by any Investor (other than as a result of such
Investor not being a U.S. person) of the Series C Warrants, the Series D
Warrants, the Warrant Shares or the Conversion Shares illegal, shall otherwise
prohibit the consummation of the Transactions or shall have any of the effects
referred to in clauses of Section 8.03(d)(i), (ii) or (iii).
(c) There shall not have occurred any revocation or material modification
of the Private Letter Ruling.
(d) There shall not be pending any suit, action, arbitration or proceeding
(i) challenging or seeking to restrain or prohibit the Closing or any of the
Transactions, (ii) seeking to prohibit or limit the ownership by any Investor or
any of its Affiliates of any Common Stock or other securities of the Company, or
to compel any Investor or any of its Affiliates to dispose of any Common Stock
or other securities of the Company, (iii) seeking to impose limitations on the
ability of the Investor to acquire or hold, or exercise full rights of ownership
of, the Common Stock or other securities of the Company, including the right to
vote the Common Stock on all matters properly presented to the stockholders of
the Company, or (iv) relating to the relationship, or any proposed or pending
transactions, between the Company and any Investor.
(e) The Offer Registration Statement shall have become effective and the
Warrant Shares and the Company Common Stock Consideration shall have been
approved for listing on the NYSE, subject to official notice of issuance.
(f) The Company shall have obtained and provided to the Investors a copy
of the opinion contemplated by Section 6.14.
(g) This Agreement shall not have been terminated in accordance with its
terms.
(h) There shall not have occurred (i) any general suspension of trading in
securities on the NYSE, (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States (whether or not
mandatory), (iii) a commencement of war, armed hostilities or other national or
international calamity involving the United States that would reasonably be
expected to have a material adverse effect on the capital markets of the United
States, (iv) any limitation (whether or not mandatory) by any United States
Government Authority on the extension of credit generally by banks or other
lending institutions, (v) a change in general financial, bank or other capital
market conditions that materially and
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adversely affects the ability of financial institutions in the United States to
extend credit or syndicate loans, (vi) a decline of at least 20% in the Standard
& Poor's 500 Index from the close of business on the date of this Agreement, or
(vii) in the case of any of the foregoing existing at the date of this
Agreement, a material acceleration or worsening thereof.
(i) There shall not have occurred a Material Adverse Effect from and after
the date of this Agreement.
(j) To the extent required under Section 10(b) of the Dealer Manager
Agreement, the representations and warranties made by the Company and the
Investors in Sections 7 and 8 in the Dealer Manager Agreement shall be true and
correct at and as of the Expiration Time with the same force and effect as
though expressly made at and as of the Expiration Time, and the Company and the
Investors shall have made the deliveries required by Section 10(b) of the Dealer
Manager Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. SURVIVAL. Only those representations, warranties, agreements
and covenants of the parties to this Agreement contained in Section 3.07 and
Articles VI, VII and IX and requiring performance after the date of the
Subsequent Closing shall survive such date. All other representations,
warranties, agreements and covenants of the parties to this Agreement shall not
survive the date of the Subsequent Closing.
SECTION 9.02. LEGENDS. So long as applicable, each certificate
representing any portion of the Warrant Shares or the Conversion Shares shall be
stamped or otherwise imprinted with a legend in the following form (in addition
to any legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN A
TRANSACTION THAT WAS NOT REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. SUCH SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION,
EXCEPT PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS AND
DELIVERY TO THE ISSUER OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
IT TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER
THOSE LAWS.
SECTION 9.03. NOTICES. All notices, demands, requests, consents, approvals
or other communications (collectively, "NOTICES") required or permitted to be
given hereunder, or that are given with respect to this Agreement, shall be in
writing, and shall be personally served, delivered by reputable air courier
service with charges prepaid, or transmitted by hand delivery, telegram, telex
or facsimile, addressed as set forth below, or to such other address as such
party shall have specified most recently by written notice. Notice shall be
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deemed given on the date of service or transmission if personally served or
transmitted by telegram, telex or facsimile. Notice otherwise sent as provided
in this Section 9.03 shall be deemed given on the next Business Day following
delivery of such notice to a reputable air courier service.
To the Company:
Avaya Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Avaya Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To the Investors:
To the address specified on SCHEDULE 1, with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. Silk
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.04. TERMINATION. (a) This Agreement may be terminated: (i) at
any time prior to the Expiration Time, by mutual written agreement of the
Company and the Investors, (ii) by the Investors, if as of the Expiration Time
any condition set forth in Article
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VIII shall not have been satisfied or waived, (iii) by either the Investors or
the Company, if the Exchange Offer shall have been terminated prior to the
purchase/exchange of ▇▇▇▇▇ pursuant thereto, or (iv) by either the Investors or
the Company, if any Governmental Authority shall have issued a nonappealable
final order, decree or ruling or taken any other action having the effect of
permanently restraining, enjoining or otherwise prohibiting the Transactions,
PROVIDED that the right to terminate this Agreement pursuant to this Section
9.04(a)(iv) shall not be available to any party to this Agreement whose failure
to fulfill any obligation under this Agreement was the cause of, or resulted in,
such final order, decree or ruling.
(b) In the event of termination of this Agreement, the terminating party
shall give written notice to the other parties to this Agreement specifying the
provision of this Agreement pursuant to which such termination is made, and this
Agreement (except for the provisions of this Section 9.04, the last sentence of
Section 6.04 and Sections 6.09, 6.10, 7.04, 7.05, 9.03, 9.05, 9.06, 9.07, 9.08,
9.13, 9.14, 9.15 and 9.18, which shall survive such termination) shall become
null and void. The parties to this Agreement agree that following any
termination of this Agreement pursuant to this Section 9.04, the Exercise Price
and the number of shares that may be acquired upon exercise of the Series A and
the Series B Warrants shall automatically be adjusted to that level that would
be in effect had this Agreement never been entered into.
SECTION 9.05. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
INTERPRETED UNDER AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE AND FULLY PERFORMED WITHIN SUCH
STATE, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
SECTION 9.06. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT (A) CERTIFIES THAT NO
REPRESENTATIVE OF ANY OTHER PARTY TO THIS AGREEMENT HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES TO THIS AGREEMENT HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.06.
SECTION 9.07. ATTORNEY FEES. A party in breach of this Agreement shall, on
demand, indemnify and hold harmless each other party to this Agreement for and
against all reasonable out-of-pocket expenses, including legal fees, incurred by
each such other party by reason of the enforcement and protection of its rights
under this Agreement. The payment of such expenses is in addition to any other
relief to which such other party may be entitled.
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SECTION 9.08. ENTIRE AGREEMENT. This Agreement (including all agreements
entered into pursuant to this Agreement and all certificates and instruments
delivered pursuant to this Agreement) constitute the entire agreement of the
parties to this Agreement with respect to the subject matter of this Agreement
and supersede all prior and contemporaneous agreements, representations,
understandings, negotiations and discussions between the parties to this
Agreement, whether oral or written, with respect to the subject matter of this
Agreement.
SECTION 9.09. MODIFICATIONS AND AMENDMENTS. No amendment, modification or
termination of this Agreement shall be binding upon any party unless executed in
writing by the parties to this Agreement intending to be bound thereby.
SECTION 9.10. WAIVERS AND EXTENSIONS. Except as expressly provided in this
Agreement, any party to this Agreement may waive any condition, right, breach or
default that such party has the right to waive; PROVIDED that such waiver will
not be effective against the waiving party unless it is in writing, is signed by
such party, and specifically refers to this Agreement. Waivers may be made in
advance or after the right waived has arisen or the breach or default waived has
occurred. Any waiver may be conditional. No waiver of any breach of any
agreement or provision in this Agreement contained shall be deemed a waiver of
any preceding or succeeding breach thereof nor of any other agreement or
provision contained in this Agreement. No waiver or extension of time for
performance of any obligations or acts shall be deemed a waiver or extension of
the time for performance of any other obligations or acts.
SECTION 9.11. TITLES AND HEADINGS; RULES OF CONSTRUCTION. Titles and
headings of Sections of this Agreement are for convenience only and shall not
affect the construction of any provision of this Agreement. Unless the context
otherwise requires:
(a) a term has the meaning assigned to it;
(b) "or" is not exclusive;
(c) "including" means including without limitation; and
(d) words in the singular include the plural and words in the plural
include the singular.
SECTION 9.12. EXHIBITS AND SCHEDULES. Each of the exhibits and schedules
referred to in this Agreement and attached to this Agreement is an integral part
of this Agreement and is incorporated into this Agreement by reference.
SECTION 9.13. EXPENSES; BROKERS. (a) Except as otherwise set forth in this
Agreement, all costs and expenses incurred in connection with this Agreement
shall be paid by the party incurring such cost or expense; PROVIDED, HOWEVER,
that (i) the Company agrees to reimburse the Investors for any and all
out-of-pocket fees and expenses incurred by the Investors or any of their
Affiliates in connection with the Transactions up to a maximum amount of
$300,000, and (ii) and all printing, mailing and filing fees and expenses
incurred in connection with the Exchange Offer shall be borne by the Company.
Other than the use of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated by the Company, each of
the parties represents to the others that neither it nor any of its Affiliates
has used a broker or other financial intermediary in connection with the
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Transactions for whose fees or expenses any other party will be liable. Each
party agrees to indemnify and hold the other parties to this Agreement harmless
from and against any and all Claims with respect to any such fees or expenses
asserted by any Person on the basis of any act or statement alleged to have been
made by such party or any of its Affiliates.
(b) In addition to, and without limiting the provisions of, Section 9.18,
the Company agrees to reimburse the Investors for the reasonable attorney's fees
and expenses incurred by the Investors or any of their Affiliates in connection
with any Claim brought or asserted by any third party (whether filed in the name
of a stockholder of the Company or other third party or derivatively in the name
of the Company, and including any Claim in which the Investors or any of their
Affiliates is made a witness by subpoena or otherwise) challenging, or otherwise
arising out of or relating to, the Transactions whether or not the Investors or
any of their Affiliates are made party to such claim, suit, arbitration or
proceeding; PROVIDED that the Investors shall notify the Company promptly upon
becoming aware of, keep the Company reasonably apprised of all material
developments relating to, and cooperate reasonably with the Company in
connection with the defense or any proposed settlement of, any such Claim; and
PROVIDED, FURTHER, that unless in the reasonable judgment of the Investors there
exists an actual or potential conflict of interest between the Investors and any
of their Affiliates, this Section 9.13(b) shall apply only to one counsel in
each applicable jurisdiction (if more than one jurisdiction is involved). This
Section 9.13(b) shall not apply to any expenses incurred in connection with any
Claim brought or asserted by any Person in such Person's capacity as a limited
partner or other investor in any investment fund controlled or managed by the
Warburg Group.
SECTION 9.14. PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. All public
announcements or public disclosures relating to the Transactions shall be made
only if mutually agreed upon by the Company and the Investors, except to the
extent such disclosure is, in the opinion of counsel, required by law or by
stock exchange regulation; PROVIDED, that (a) any such required disclosure shall
only be made, to the extent consistent with law and stock exchange regulation,
after consultation with the Investors, (b) no such announcement or disclosure
(except as required by law or by stock exchange regulation) shall identify any
Investor without such Investor's prior consent, and (c) the Company consents to
the publication by Warburg, on one occasion following the Transactions but in as
many periodicals as Warburg may elect, of a customary "tombstone" advertisement
announcing the Transactions; PROVIDED, that Warburg shall provide the Company
with a copy of such advertisement prior to submitting such advertisement for
publication.
SECTION 9.15. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This Agreement and
the rights, duties and obligations hereunder may not be assigned or delegated by
the Company without the prior written consent of the Investors, and may not be
assigned or delegated by any Investor without the Company's prior written
consent. Any assignment or delegation of rights, duties or obligations under
this Agreement made without such prior written consent shall be void and of no
effect. This Agreement and the provisions of this Agreement shall be binding
upon and shall inure to the benefit of each of the parties and their respective
successors and permitted assigns. This Agreement is not intended to confer any
rights or benefits on any Persons other than as expressly set forth in this
Section 9.15.
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SECTION 9.16. SEVERABILITY. This Agreement shall be deemed severable, and
the invalidity or unenforceability of any term or provision of this Agreement
shall not affect the validity or enforceability of this Agreement or of any
other term or provision of this Agreement. Furthermore, in lieu of any such
invalid or unenforceable term or provision, the parties to this Agreement intend
that there shall be added, as a part of this Agreement, a provision as similar
in terms to such invalid or unenforceable provision as may be possible and be
valid and enforceable.
SECTION 9.17. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
SECTION 9.18. INDEMNIFICATION. (a) The Company shall indemnify and hold
harmless each Investor and its partners, members, officers, directors, employees
and controlling Persons (within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act), if any, from and against any
and all any losses, claims, damages or liabilities to which each such
indemnified party may become subject, insofar as such losses, claims, damages or
liabilities, or actions or proceedings in respect thereof, including any amounts
paid in settlement as provided herein (including, without limitation, any legal
or other expenses reasonably incurred by such indemnified party in connection
with defending or investigating any such action or claim) (collectively,
"CLAIMS") arise out of or are based (i) upon an untrue statement or alleged
untrue statement of a material fact contained in, or incorporated by reference
into, the Offer Documents, or arise out of or are based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading; PROVIDED, HOWEVER, that the Company shall
not be liable to any such indemnified party to the extent that any such Claims
arise out of or are based upon an untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in conformity with
the information supplied by the Investors in writing specifically for inclusion
or incorporation by reference into the Offer Documents, which information
consists solely of that information described in the Letter Agreement, or (ii)
any Termination Claims.
(b) Each Investor shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, employees and controlling Persons
(within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act), if any, to the same extent as the foregoing indemnity from
the Company, but only with reference to information supplied by the Investors in
writing specifically for inclusion or incorporation by reference into the Offer
Documents, which information consists solely of that information described in
the Letter Agreement.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 9.18(a) or 9.18(b), such Person (the "INDEMNIFIED
PARTY") shall promptly notify the Person against whom such indemnity may be
sought (the "INDEMNIFYING PARTY") in writing, and the Indemnifying Party, upon
the request of the Indemnified Party, shall retain counsel reasonably
satisfactory to such Indemnified Party to represent such Indemnified Party and
any others the Indemnifying Party may designate in such proceeding and shall pay
the fees and
-37-
disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own counsel
(which counsel shall be reasonably accountable to the Indemnifying Party), but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party
shall have mutually agreed in writing to the retention of such counsel or (ii)
the named parties to any such proceeding (including any impleaded parties)
include both the Indemnified Party and the Indemnifying Party and, in the
written opinion of counsel for the Indemnified Party, representation of both
parties by the same counsel would be inappropriate due to actual or potential
conflicts of interests between them. It is understood that the Indemnifying
Party shall not, in connection with any proceeding or related proceedings
involving one or more Indemnified Parties in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel required under the circumstances) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are submitted in writing for payment. In the case of any such
separate firm of attorneys for the Indemnified Parties, such firm of attorneys
shall be designated in writing by the Indemnified Parties or, if the Indemnified
Parties include the Investors, by the Investors. The Indemnifying Party shall
not be liable for any settlement of any proceeding effected without its written
consent, but, if settled with such consent, or if there be a final judgment for
the plaintiff, the Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 9.18 is
unavailable to an Indemnified Party in respect of any Claims, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Claims (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and such Indemnified Party in the Transactions,
or (ii) if the allocation provided by clause (i) above is not permitted by
Applicable Law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and such Indemnified Party in connection with the statements or
omissions that resulted in such Claims, as well as any other relevant equitable
considerations. The relative benefits received by the Company and such
Indemnified Party shall be deemed to be in the same respective proportions as
the value of the consideration provided by such party for purchase of ▇▇▇▇▇ in
the Exchange Offer. The relative fault of the Company and such Indemnified Party
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and each Indemnified
Party agree that it would not be just and equitable if contribution pursuant to
this Section 9.18(d) were determined by PRO RATA allocation or by any other
method of allocation that does not take account of the equitable considerations
referred to in this Section 9.18(d). The amount paid or payable by an
Indemnified Party as a result of the Claims referred to in this Section 9.18(d)
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
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SECTION 9.19. CONVERSION AGREEMENT AND STOCK PURCHASE AGREEMENT. Effective
(a) as of the date of this Agreement, Sections 5.09, 5.10, 5.11 and 6.04 of the
Conversion Agreement and Sections 5.08, 5.10, 6.04 and 6.05 of the Stock
Purchase Agreement, and (b) as of the Expiration Date, Sections 5.13, 6.06 and
6.07 of the Conversion Agreement and Sections 5.11 and 6.06 of the Stock
Purchase Agreement, shall be terminated and without further force and effect,
with the other provisions of the Conversion Agreement and the Stock Purchase
Agreement to survive in accordance with their terms. Clause (b) of this Section
9.19 shall be without force or effect if this Agreement is terminated pursuant
to Section 9.04.
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IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the date first above written.
AVAYA INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
WARBURG, ▇▇▇▇▇▇ NETHERLANDS EQUITY
PARTNERS I, C.V.
by: WARBURG, ▇▇▇▇▇▇ & CO.,
its General Partner
by: /s/ ▇▇▇▇▇▇▇ ▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇
Title: Partner
WARBURG, ▇▇▇▇▇▇ NETHERLANDS EQUITY
PARTNERS II, C.V.
by: WARBURG, ▇▇▇▇▇▇ & CO.,
its General Partner
by: /s/ ▇▇▇▇▇▇▇ ▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇
Title: Partner
WARBURG, ▇▇▇▇▇▇ NETHERLANDS EQUITY
PARTNERS III, C.V.
by: WARBURG, ▇▇▇▇▇▇ & CO.,
its General Partner
by: /s/ ▇▇▇▇▇▇▇ ▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇
Title: Partner
-▇▇-
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ EQUITY PARTNERS, L.P.
by: WARBURG, ▇▇▇▇▇▇ & CO.,
its General Partner
by: /s/ ▇▇▇▇▇▇▇ ▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇
Title: Partner
-41-
SCHEDULE 1
INVESTORS
WARBURG, ▇▇▇▇▇▇ EQUITY PARTNERS, L.P.
Series C Warrants: 6,951,254
Address for Notice:
Warburg, ▇▇▇▇▇▇ & Co.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
WARBURG, ▇▇▇▇▇▇ NETHERLANDS EQUITY PARTNERS I, C.V.
Series C Warrants: 220,675
Address for Notice:
Warburg, ▇▇▇▇▇▇ & Co.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
WARBURG, ▇▇▇▇▇▇ NETHERLANDS EQUITY PARTNERS II, C.V.
Series C Warrants: 147,116
Address for Notice:
Warburg, ▇▇▇▇▇▇ & Co.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
WARBURG, ▇▇▇▇▇▇ NETHERLANDS EQUITY PARTNERS III, C.V.
Series C Warrants: 36,779
Address for Notice:
Warburg, ▇▇▇▇▇▇ & Co.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT E
REGISTRATION RIGHTS PROVISIONS
1. SUSPENSION OF REGISTRATION STATEMENT. Anything in the Agreement to the
contrary notwithstanding, it is understood and agreed that the Company shall not
be required to keep any shelf registration effective or useable for offers and
sales of the Registrable Securities, file a post-effective amendment to a shelf
registration statement or prospectus supplement or to supplement or amend any
registration statement, if: (A) the Registration Statement, any prospectus or
prospectus supplement constituting a part thereof, or any document incorporated
by reference in any of the foregoing contains an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, in the light of the
circumstances under which they are made; (B) the Company is in possession of
material information that it deems advisable not to disclose in a Registration
Statement; (C) the Company has determined to proceed with a public offering of
its equity securities, and, in the judgment of the managing underwriter thereof
or the Company (if such offering is not underwritten), sales under the
Registration Statement would have a material adverse effect on such offering; or
(D) the Company is engaged in any program for the purchase of shares of Common
Stock unless such repurchase program and the requested sale may proceed
concurrently pursuant to an exemption under the Commission's Regulation M or any
other applicable exemption (it being understood that, to the extent consistent
with any such program, the Company will use commercially reasonable efforts to
make an exemption available to the beneficiaries of these registration rights
(the "BENEFICIARIES") or to otherwise open up a sufficient window period under
the Commission's Regulation M to enable each Beneficiary to obtain the liquidity
it desires hereunder). The Company shall provide notice of any such suspension
to the Warburg Group Director and Unaffiliated Director, or, if there is then no
Warburg Group Director or Unaffiliated Director, to Warburg in accordance
with Section 9.03 of this Agreement. Upon receipt by a Beneficiary of notice
of an event of the kind described in this Section 1, such Beneficiary shall
forthwith discontinue such Beneficiary's disposition of Registrable
Securities until the Company has provided notice that such disposition may
continue and of any supplemented or amended prospectus indicated in such
notice. The Company agrees that any period in which sales, transfers or
dispositions must be discontinued as a result of a given occurrence of a
circumstance referred to in the preceding sentence shall not exceed 60 days,
and shall not exceed 120 days in the aggregate over any 12-month period.
2. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless each Beneficiary, its officers and directors, and each person, if
any, that controls such Beneficiary (within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act) from and against any and
all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by such Beneficiary, any of its
officers or directors or any such controlling person in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any prospectus relating to Registrable Securities (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were
E-1
made, not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information furnished by such
Beneficiary or the plan of distribution furnished in writing to the Company by
or on behalf of such Beneficiary expressly for use therein; PROVIDED, HOWEVER,
that the foregoing indemnity agreement with respect to any prospectus shall not
inure to the benefit of such Beneficiary if a copy of the most current
prospectus at the time of the delivery of the securities was made available to
such Beneficiary but was not provided by the Beneficiary or any Underwriter to
the buyer of such securities and such current prospectus would have cured the
defect giving rise to such loss, claim, damage or liability. The Company also
agrees to indemnify any Underwriters of any Registrable Securities, their
officers and directors and each Person who controls such Underwriters on
substantially the same basis as that of the indemnification of Beneficiary
provided in this Section 2. As used throughout this EXHIBIT E, "UNDERWRITER"
means a securities dealer that purchases any Registrable Securities as principal
and not as part of such dealer's market-making activities.
3. INDEMNIFICATION BY EACH BENEFICIARY. Each Beneficiary agrees, severally
and not jointly, to indemnify and hold harmless the Company, its officers and
directors, and each Person, if any, that controls the Company (within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act) to the same extent as the foregoing indemnity from the Company to such
Beneficiary, but only with reference to information furnished by such
Beneficiary or the plan of distribution furnished in writing by or on behalf of
such Beneficiary expressly for use in the Registration Statement or any
prospectus relating to the Registrable Securities, or any amendment or
supplement thereto or any preliminary prospectus. Each Beneficiary also agrees,
severally and not jointly, to indemnify and hold harmless any Underwriters of
the Registrable Securities, their officers and directors and each Person who
controls such Underwriters on substantially the same basis as that of the
indemnification of the Company provided in this Section 3. Notwithstanding
anything to the contrary contained in this EXHIBIT E, the obligations of any
Beneficiary pursuant to this Section 3 shall not exceed the amount of proceeds
received by such Beneficiary for the relevant Registrable Securities.
4. CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to Section 2 or 3,
such person (the "INDEMNIFIED PARTY") shall promptly notify the Person against
whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing, and the
Indemnifying Party, upon the request of the Indemnified Party, shall retain
counsel reasonably satisfactory to such Indemnified Party to represent such
Indemnified Party and any others the Indemnifying Party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any Indemnified Party shall have the
right to retain its own counsel (which counsel shall be reasonably accountable
to the Indemnifying Party), but the fees and expenses of such counsel shall be
at the expense of such Indemnified Party unless (a) the Indemnifying Party and
the Indemnified Party shall have mutually agreed in writing to the retention of
such counsel or (b) the named parties to any such proceeding (including any
impleaded parties) include both the Indemnified Party and the Indemnifying Party
and, in the written opinion of counsel for the Indemnified Party, representation
of both parties by the same counsel would be inappropriate due to actual or
potential conflicts of interests between them. It is understood that the
Indemnifying Party shall not, in connection with any proceeding or related
E-2
proceedings involving one or more Indemnified Parties in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel required under the circumstances) at any time
for all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are submitted in writing for payment. In the case of any such
separate firm of attorneys for the Indemnified Parties, such firm of attorneys
shall be designated in writing by the Indemnified Parties or, if the Indemnified
Parties are exclusively Beneficiaries, by Warburg. The Indemnifying Party shall
not be liable for any settlement of any proceeding effected without its written
consent, but, if settled with such consent, or if there be a final judgment for
the plaintiff, the Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment.
5. CONTRIBUTION. If the indemnification provided for in this EXHIBIT E is
unavailable to an Indemnified Party in respect of any losses, claims, damages or
liabilities referred to herein, then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities (a) in such proportion as is appropriate to reflect the relative
benefits received by the Company, Beneficiary and the Underwriters from the
offering of the securities, or (b) if the allocation provided by clause (a)
above is not permitted by Applicable Law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (a) above but
also the relative fault of the Company, such Beneficiary and the Underwriters in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company, such Beneficiary
and the Underwriters shall be deemed to be in the same respective proportions as
the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by each of the Company and
such Beneficiary and the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page of
the prospectus, bear to the aggregate public offering price of the securities.
The relative fault of the Company, such Beneficiary and the Underwriters shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and each Beneficiary agrees that it would not be just and
equitable if contribution pursuant to this Section 5 were determined by PRO RATA
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 5, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of
E-3
such untrue or alleged untrue statement or omission or alleged omission, and
each Beneficiary shall not be required to contribute any amount in excess of the
amount by which the net proceeds of the offering (before deducting expenses)
received by such Beneficiary exceeds the amount of any damages that such
Beneficiary has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
6. SURVIVAL. The indemnity and contribution agreements contained in this
EXHIBIT E shall remain operative and in full force and effect regardless of (a)
any termination of the Agreement or any underwriting agreement, (b) any
investigation made by or on behalf of any Indemnified Person or by or on behalf
of the Company and (c) the consummation of the sale or successive resales of the
Registrable Securities.
7. REGISTRATION EXPENSES. In connection with the Registrable Securities,
the Company shall pay the following reasonable expenses incurred in connection
with such registration: (a) registration and filing fees with the Commission,
(b) fees and expenses of compliance with state securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Registrable Securities), (c) printing expenses, (d)
fees and expenses incurred in connection with the listing of the Registrable
Securities on the stock exchanges, if any, on which the applicable class of
Registrable Securities is then listed, or, if such class of Registrable
Securities is not then listed, on the principal national stock exchange on which
the Common Stock is then listed, (e) fees and expenses of counsel and
independent certified public accountants for the Company (including the expenses
of any comfort letters reasonably required by any Underwriters), (f) the fees
and expenses of any additional experts retained by the Company in connection
with such registration, and (g) fees and expenses in connection with any review
of underwriting arrangements by the National Association of Securities Dealers,
Inc. Each Beneficiary shall pay any underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities by it, and any out-of-pocket
expenses of such Beneficiary, including its counsel fees, accountant fees and
expenses. The Company shall pay internal Company expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties).
E-4