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EXHIBIT (C)(1)
CONFORMED COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of April 27, 1998
Among
LUCENT TECHNOLOGIES INC.
REINDEER ACQUISITION, INC.
And
YURIE SYSTEMS, INC.
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TABLE OF CONTENTS
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ARTICLE I
The Offer
SECTION 1.01. The Offer.................................................. 2
SECTION 1.02. Company Actions ........................................... 4
ARTICLE II
The Merger
SECTION 2.01. The Merger ................................................ 5
SECTION 2.02. Closing ................................................... 6
SECTION 2.03. Effective Time ............................................ 6
SECTION 2.04. Effects of the Merger ..................................... 6
SECTION 2.05. Certificate of Incorporation and By-laws................... 6
SECTION 2.06. Directors ................................................. 7
SECTION 2.07. Officers................................................... 7
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock.................................... 7
SECTION 3.02. Exchange of Certificates .................................. 8
SECTION 3.03. Adjustment of the Merger Consideration .................... 11
ARTICLE IV
Representations and Warranties of the Company
SECTION 4.01. Organization, Standing and Corporate Power................. 11
SECTION 4.02. Subsidiaries; Equity Interests............................. 12
SECTION 4.03. Capital Structure ......................................... 12
SECTION 4.04. Authority; Noncontravention................................ 13
SECTION 4.05. SEC Documents; Financial Statements ....................... 15
SECTION 4.06. Information Supplied ...................................... 16
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Contents, p. 2
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SECTION 4.07. Absence of Certain Changes or Events ...................... 16
SECTION 4.08. Litigation ................................................ 17
SECTION 4.09. Contracts ................................................. 17
SECTION 4.10. Compliance with Laws ...................................... 18
SECTION 4.11. Absence of Changes in Benefit Plans; Labor Relations....... 19
SECTION 4.12. ERISA Compliance .......................................... 20
SECTION 4.13. Taxes ..................................................... 21
SECTION 4.14. No Excess Parachute Payments .............................. 22
SECTION 4.15. Intellectual Property ..................................... 22
SECTION 4.16. State Takeover Statutes ................................... 23
SECTION 4.17. Brokers; Schedule of Fees and Expenses..................... 23
SECTION 4.18. Opinion of Financial Advisor .............................. 23
ARTICLE V
Representations and Warranties
of Parent and Sub
SECTION 5.01. Organization, Standing and Corporate Power ................ 24
SECTION 5.02. Authority; Noncontravention................................ 24
SECTION 5.03. Information Supplied....................................... 25
SECTION 5.04. Interim Operations of Sub ................................. 26
SECTION 5.05. Brokers ................................................... 26
SECTION 5.06. Financing ................................................. 26
ARTICLE VI
Covenants
SECTION 6.01. Covenants of the Company................................... 26
SECTION 6.02. No Solicitation ........................................... 29
SECTION 6.03. Other Actions.............................................. 31
ARTICLE VII
Additional Agreements
SECTION 7.01. Company Stockholder Approval;
Preparation of Proxy Statement........................... 31
SECTION 7.02. Access to Information...................................... 32
SECTION 7.03. Reasonable Efforts......................................... 32
SECTION 7.04. Company Stock Options...................................... 34
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Contents, p. 3
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SECTION 7.05. Employee Matters........................................... 36
SECTION 7.06. Directors.................................................. 37
SECTION 7.07. Fees and Expenses.......................................... 38
SECTION 7.08. Indemnification............................................ 39
SECTION 7.09. Certain Litigation......................................... 39
ARTICLE VIII
Conditions
SECTION 8.01. Conditions to Each Party's Obligation
To Effect The Merger..................................... 40
ARTICLE IX
Termination and Amendment
SECTION 9.01. Termination................................................ 40
SECTION 9.02. Effect of Termination...................................... 41
SECTION 9.03. Amendment.................................................. 43
SECTION 9.04. Extension; Waiver.......................................... 43
ARTICLE X
Miscellaneous
SECTION 10.01. Nonsurvival of Representations,
Warranties and Agreements................................ 44
SECTION 10.02. Notices.................................................... 44
SECTION 10.03. Interpretation............................................. 45
SECTION 10.04. Counterparts............................................... 46
SECTION 10.05. Entire Agreement; Third Party Beneficiaries................ 46
SECTION 10.06. Governing Law.............................................. 46
SECTION 10.07. Publicity.................................................. 46
SECTION 10.08. Assignment................................................. 47
SECTION 10.09. Enforcement................................................ 47
SECTION 10.10. Severability............................................... 47
Exhibit A Conditions of the Offer
Exhibit B Certificate of Incorporation of the Surviving Corporation
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AGREEMENT AND PLAN OF MERGER dated as of April 27, 1998,
among LUCENT TECHNOLOGIES INC., a Delaware corporation
("Parent"), REINDEER ACQUISITION, INC., a Delaware corporation
and a wholly owned subsidiary of Parent ("Sub"), and YURIE
SYSTEMS, INC., a Delaware corporation (the "Company").
WHEREAS, in furtherance of the acquisition of the Company by Parent
on the terms and subject to the conditions set forth in this Agreement, Parent
proposes to cause Sub to make a tender offer (as it may be amended from time to
time as permitted under this Agreement, the "Offer") to purchase all the
outstanding shares of Common Stock, par value $.01 per share, of the Company,
the "Company Common Stock"; the shares of Company Common Stock being hereinafter
collectively referred to as the "Shares"), at a purchase price (the "Offer
Price") of $35.00 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the Offer and the merger of Sub with the Company (the
"Merger") upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding Share, other than Shares owned
directly or indirectly by Parent or the Company and Dissenting Shares (as
defined in Section 3.01(d)), will be converted into the right to receive the
price per Share paid in the Offer;
WHEREAS, concurrently with the execution of this Agreement and as a
condition to the willingness of Parent and Sub to enter into this Agreement,
Parent, Sub and certain principal stockholders of the Company (the "Principal
Stockholders") have entered into a stockholders agreement dated as of the date
hereof (the "Stockholders Agreement") pursuant to which, among other things, the
Principal Stockholders will agree to tender all their shares of Company Common
Stock into the Offer upon the terms and subject to the conditions set forth in
the Stockholders Agreement; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
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NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Sub and the Company hereby agree as follows:
ARTICLE I
The Offer
SECTION 1.01. The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than five business
days after the date of the public announcement by Parent and the Company of this
Agreement, Sub shall, and Parent shall cause Sub to, commence the Offer. The
initial expiration date for the Offer shall be the 20th business day following
the commencement of the Offer. The obligation of Sub to accept for payment, and
pay for, any Shares tendered pursuant to the Offer shall be subject only to the
conditions set forth in Exhibit A (the "Offer Conditions") (any of which may be
waived in whole or in part by Sub in its sole discretion, provided that, without
the prior written consent of the Company, Sub shall not waive the Minimum
Condition (as defined in Exhibit A)) and to the terms and conditions of this
Agreement. Sub expressly reserves the right to modify the terms of the Offer,
except that, without the consent of the Company, Sub shall not (i) reduce the
number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) amend
or add to the Offer Conditions, (iv) except as provided in the next sentence,
extend the Offer, (v) change the form of consideration payable in the Offer or
(vi) amend any other term of the Offer in any manner adverse to the holders of
the Shares. Notwithstanding the foregoing, Sub may, without the consent of the
Company, (A) extend the Offer, if at the scheduled or extended expiration date
of the Offer any of the Offer Conditions shall not be satisfied or waived, until
such time as such conditions are satisfied or waived, (B) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission (the "SEC") or the staff thereof applicable
to the Offer or any period required by applicable law and (C) extend the Offer
on one or more occasions for an aggregate period of not more than 10 business
days beyond the latest expiration date that would otherwise be permitted under
clause (A) or (B) of this sentence, if on such expiration date there shall not
have been tendered at least 90% of the outstanding Shares. Parent and Sub agree
that if all of the Offer Conditions are not satisfied on any scheduled
expiration date of the Offer
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then, provided that all such conditions are reasonably capable of being
satisfied, Sub shall extend the Offer from time to time until such conditions
are satisfied or waived, provided that Sub shall not be required to extend the
Offer beyond September 28, 1998. Subject to the terms and conditions of the
Offer and this Agreement, Sub shall, and Parent shall cause Sub to, accept for
payment, and pay for, all Shares validly tendered and not withdrawn pursuant to
the Offer that Sub becomes obligated to accept for payment, and pay for,
pursuant to the Offer as promptly as practicable after the expiration of the
Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule
14D-1") with respect to the Offer, which shall contain an offer to purchase and
a related letter of transmittal and summary advertisement (such Schedule 14D-1
and the documents included therein pursuant to which the Offer will be made,
together with any supplements or amendments thereto, the "Offer Documents").
Parent and Sub agree that the Offer Documents shall comply as to form in all
material respects with the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated thereunder and the
Offer Documents, on the date first published, sent or given to the Company's
stockholders, 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
Parent or Sub with respect to information supplied by the Company or any of its
stockholders specifically for inclusion or incorporation by reference in the
Offer Documents. Each of Parent, Sub and the Company agree promptly to correct
any information provided by it for use in the Offer Documents if and to the
extent that such information shall have become false or misleading in any
material respect, and Parent and Sub further agree to take all steps necessary
to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the
other Offer Documents as so corrected to be disseminated to the Company's
stockholders, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given reasonable
opportunity to review and comment upon the Offer Documents prior to their filing
with the SEC or dissemination to the stockholders of the Company. Parent and Sub
agree to provide the Company and its counsel any comments Parent, Sub or their
counsel may receive from the SEC or its staff with
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respect to the Offer Documents promptly after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Sub on a timely
basis the funds necessary to accept for payment, and pay for, any Shares that
Sub becomes obligated to accept for payment, and pay for, pursuant to the Offer.
SECTION 1.02. Company Actions. (a) The Company hereby approves of
and consents to the Offer and represents that the Board of Directors of the
Company, at a meeting duly called and held, duly adopted resolutions approving
this Agreement, the Stockholders Agreement, the Offer and the Merger,
determining, as of the date of such resolutions, that the terms of the Offer and
the Merger are fair to, and in the best interests of, the Company's
stockholders, recommending that the Company's stockholders accept the Offer,
tender their shares pursuant to the Offer and approve this Agreement (if
required) and approving the acquisition of Shares by Sub pursuant to the Offer
and the other transactions contemplated by this Agreement. The Company has been
advised by each of its directors and executive officers that each such person
currently intends to tender all Shares (other than Shares, if any, held by such
person that, if tendered, could cause such person to incur liability under the
provisions of Section 16(b) of the Exchange Act) owned by such persons pursuant
to the Offer.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as supplemented
or amended from time to time, the "Schedule 14D-9") containing, subject to the
terms of this Agreement, the recommendation described in paragraph (a) and shall
mail the Schedule 14D-9 to the stockholders of the Company. The Schedule 14D-9
shall comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations promulgated thereunder and, on the
date filed with the SEC and on the date first published, sent or given to the
Company's stockholders, 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 Parent
or Sub specifically for inclusion in the Schedule 14D-9. Each of the Company,
Parent and Sub agrees promptly to correct any information provided by it for use
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in the Schedule 14D-9 if and to the extent that such information shall have
become false or misleading in any material respect, and the Company further
agrees to take all steps necessary to amend or supplement the Schedule 14D-9 and
to cause the Schedule 14D-9 as so amended or supplemented to be filed with the
SEC and disseminated to the Company's stockholders, in each case as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given reasonable opportunity to review and comment upon the Schedule
14D-9 prior to its filing with the SEC or dissemination to stockholders of the
Company. The Company agrees to provide Parent and its counsel any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer and the Merger, the Company shall
cause its transfer agent to furnish Sub promptly with mailing labels containing
the names and addresses of the record holders of Shares as of a recent date and
of those persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings and computer
files and all other information in the Company's possession or control regarding
the beneficial owners of Shares, and shall furnish to Sub such information and
assistance (including updated lists of stockholders, security position listings
and computer files) as Parent may reasonably request in communicating the Offer
to the Company's stockholders. Subject to the requirements of applicable law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Merger, Parent and Sub and
each of their affiliates, associates and agents shall hold in confidence the
information contained in any such labels, listings and files, will use such
information only in connection with the Offer and the Merger and, if this
Agreement shall be terminated, will deliver, and will use their reasonable
efforts to cause their agents to deliver, to the Company all copies and any
extracts or summaries from such information then in their possession or control.
ARTICLE II
The Merger
SECTION 2.01. The Merger. Subject to the last two sentences of this
Section 2.01, upon the terms and subject to the conditions set forth in this
Agreement, and
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in accordance with the Delaware General Corporation Law (the "DGCL"), Sub shall
be merged with and into the Company at the Effective Time (as defined in Section
2.03). Following the Effective Time, the separate corporate existence of Sub
shall cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all the rights and
obligations of Sub in accordance with the DGCL. At the election of Parent, to
the extent that any such action would not cause a failure of a condition to the
Offer or the Merger, any direct or indirect wholly owned subsidiary (as defined
in Section 10.03) of Parent may be substituted for and assume all of the rights
and obligations of Sub as a constituent corporation in the Merger. In either
such event, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect the foregoing.
SECTION 2.02. Closing. The closing of the Merger will take place at
10:00 a.m. (New York City time) on a date to be specified by Parent or Sub,
which shall be no later than the second business day after satisfaction or
waiver of the conditions set forth in Article VIII (the "Closing Date"), at the
offices of Cravath, Swaine & ▇▇▇▇▇, Worldwide Plaza, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another date, time or place is agreed to in writing
by the parties hereto.
SECTION 2.03. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings or recordings required
under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Delaware Secretary of State, or at
such other time as Sub and the Company shall agree should be specified in the
Certificate of Merger (the time the Merger becomes effective being hereinafter
referred to as the "Effective Time").
SECTION 2.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 2.05. Certificate of Incorporation and Bylaws. (a) The
Certificate of Incorporation of the Surviving Corporation as in effect
immediately prior to the Effective Time shall be amended as of the Effective
Time so that such Certificate of Incorporation shall read in its entirety as set
forth in Exhibit B. As so amended, such
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certificate of incorporation shall be the certificate of incorporation of the
Surviving Corporation, until thereafter changed or amended, subject to Section
7.08, as provided therein or by applicable law.
(b) The By-laws of Sub as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation, until
thereafter changed or amended, subject to Section 7.08, as provided therein or
by applicable law.
SECTION 2.06. Directors. The directors of Sub immediately prior to
the Effective Time shall be the directors of the Surviving Corporation, until
the earlier of their resignation or removal or their respective successors are
duly elected and qualified, as the case may be.
SECTION 2.07. Officers. The officers of Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or their respective successors are duly
elected and qualified, as the case may be.
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
Shares or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the
Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent Owned Stock. Each Share
that is owned by the Company and each Share that is owned by Parent or Sub
shall automatically be canceled and retired and shall cease to exist, and
no consideration shall be delivered in exchange therefor. Each Share that
is owned by any subsidiary of the Company or Parent (other than Sub) shall
remain outstanding without change.
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(c) Conversion of Shares. Subject to Section 3.01(d), each issued
and outstanding Share (other than Shares to be canceled or to remain
outstanding in accordance with Section 3.01(b) and other than Dissenting
Shares (as defined in Section 3.01(d)) shall be converted into the right
to receive from the Surviving Corporation in cash, without interest, the
price per share paid in the Offer (the "Merger Consideration"). As of the
Effective Time, all such Shares shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such Shares shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration, without interest.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in
this Agreement to the contrary, any issued and outstanding Shares held by
a person (a "Dissenting Stockholder") who complies with all the provisions
of Delaware law concerning the right of holders of Shares to dissent from
the Merger and require appraisal of their Shares ("Dissenting Shares")
shall not be converted as described in Section 3.01(c), but shall be
converted into the right to receive such consideration as may be
determined to be due to such Dissenting Stockholder pursuant to Delaware
law. If, after the Effective Time, such Dissenting Stockholder withdraws
his demand for appraisal or fails to perfect or otherwise loses his right
to appraisal, in any case pursuant to the DGCL, his Shares shall be deemed
to be converted as of the Effective Time into the right to receive the
Merger Consideration. The Company shall give Parent (i) prompt notice of
any demands for appraisal of Shares received by the Company and (ii) the
opportunity to participate in and direct all negotiations and proceedings
with respect to any such demands. The Company shall not, without the prior
written consent of Parent, make any payment with respect to, or settle,
offer to settle or otherwise negotiate, any such demands.
SECTION 3.02. Exchange of Certificates. (a) Paying Agent. Prior to
the Effective Time, Parent shall designate The Bank of New York, or another bank
or trust company reasonably satisfactory to the Company, to act as paying agent
in the Merger (the "Paying Agent"), and, from time to time on, prior to or after
the Effective Time, Parent shall make available, or cause the Surviving
Corporation to make available, to the Paying Agent cash in
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amounts and at the times necessary for the prompt payment of the Merger
Consideration upon surrender of certificates representing Shares as part of the
Merger pursuant to Section 3.01, and such amounts as and when so made available
shall hereinafter be referred to as the "Exchange Fund" (it being understood
that any and all interest earned on funds made available to the Paying Agent
pursuant to this Agreement shall be turned over to Parent).
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented Shares (the "Certificates"), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in a form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancelation to the Paying Agent or to such other agent or agents
as may be appointed by Parent, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required by the Paying
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor the amount of cash into which the Shares theretofore represented by
such Certificate shall have been converted pursuant to Section 3.01, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, payment may be made to a person other than the person in whose
name the Certificate so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other taxes required by reason
of the payment to a person other than the registered holder of such Certificate
or establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered as contemplated by this
Section 3.02, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the amount of
cash, without interest, into which the Shares theretofore represented by such
Certificate shall have been converted pursuant to Section 3.01. No interest will
be paid or will accrue on the cash payable upon the surrender of any
Certificate.
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(c) No Further Ownership Rights in Shares. All cash paid upon the
surrender of Certificates in accordance with the terms of this Article III shall
be deemed to have been paid in full satisfaction of all rights pertaining to the
Shares theretofore represented by such Certificates. At the Effective Time, the
stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Paying Agent for any reason, they shall be canceled
and exchanged as provided in this Article III.
(d) No Liability. None of Parent, Sub, the Company or the Paying
Agent shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered immediately prior to such
date on which any payment pursuant to this Article III would otherwise escheat
to or become the property of any Governmental Entity (as defined in Section
4.04)), the cash payment in respect of such Certificate shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interests of any person previously entitled
thereto.
(e) Lost, Stolen or Destroyed Certificates. In the event any
Certificates evidencing Shares shall have been lost, stolen or destroyed, the
Paying Agent shall pay to such holder the Merger Consideration required pursuant
to Section 3.01, in exchange for such lost, stolen or destroyed certificates,
upon the making of an affidavit of that fact by the holder thereof with such
assurances as the Paying Agent, in its discretion and as a condition precedent
to the payment of the Merger Consideration, may reasonably require of the holder
of such lost, stolen or destroyed certificates.
(f) Unclaimed Portion of the Exchange Fund. Any portion of the
Exchange Fund (including the proceeds of any interest and other income received
by the Paying Agent in respect of all such funds) that remains unclaimed by the
former stockholders of the Company six months (or such later time as Parent may
elect) after the Effective Time shall be delivered to the Surviving Corporation.
Any former stockholders of the Company who have not therefore complied with this
Article III shall thereafter look only to Parent and the Surviving Corporation
for payment of any Merger
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Consideration that may be payable in respect of each Certificate such former
stockholder holds as determined pursuant to this Agreement, without any interest
thereon.
(g) Withholding. Parent or Sub, as the case may be, shall be
entitled to withhold from the consideration otherwise payable to any former
holder of Shares pursuant to this Agreement such amounts as are required to be
withheld with respect to the making of such payment under the applicable tax
withholding requirements of the Code (as defined in Section 4.12) or under any
provision of state, local or foreign tax law. Any amount so withheld shall be
delivered to the applicable taxing authority for the account of such former
holder of Shares from whom the amount was withheld.
(h) Payment of Expenses. Parent shall pay all charges and expenses,
including those of the Paying Agent, in connection with the exchange of the
Merger Consideration for the Certificates surrendered.
SECTION 3.03. Adjustment of the Merger Consideration. If, subsequent
to the date of this Agreement but prior to the Effective Time, the outstanding
shares of Company Common Stock shall have been changed into a different number
of shares or a different class as a result of a stock split, reverse stock
split, stock dividend, subdivision, reclassification, combination, exchange,
recapitalization or other similar transaction, the Merger Consideration shall be
appropriately adjusted.
ARTICLE IV
Representations and Warranties of the Company
Except as disclosed in the SEC Documents (as defined in Section
4.05) filed or publicly available prior to the date of this Agreement (the
"Filed SEC Documents") or set forth on the Disclosure Schedule delivered by the
Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule") and making reference to the particular subsection of this
Agreement to which exception is being taken, the Company represents and warrants
to Parent and Sub as follows:
SECTION 4.01. Organization, Standing and Corporate Power. Each of
the Company and its subsidiaries (as defined in Section 10.03) is a corporation
duly organized, validly existing and in good standing under the
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laws of the jurisdiction in which it is organized and has all requisite
corporate power and authority to carry on its business as now being conducted.
Each of the Company and its subsidiaries is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed individually or in the aggregate would
not have a material adverse effect (as defined in Section 10.03) on the Company.
The Company has delivered or made available to Parent complete and correct
copies of its Certificate of Incorporation and Amended and Restated By-Laws, in
each case as amended to the date hereof.
SECTION 4.02. Subsidiaries; Equity Interests. (a) Exhibit 21 to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997
includes all the subsidiaries of the Company. All the outstanding shares of
capital stock of, or other equity interests in, each such subsidiary have been
validly issued and are fully paid and nonassessable and are owned directly or
indirectly by the Company, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens") and free of any other restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). The outstanding capital stock of each
subsidiary was issued in compliance in all material respects with all applicable
Federal and state securities laws and regulations.
(b) Except for its interests in its subsidiaries, the Company does
not own, directly or indirectly, any capital stock, membership interest,
partnership interest, joint venture interest or other equity interest in any
person.
SECTION 4.03. Capital Structure. The authorized capital stock of the
Company consists of 50,000,000 shares of Company Common Stock and 10,000,000
shares of preferred stock, par value $.01 per share ("Preferred Stock"). At the
close of business on April 24, 1998, (i) 25,520,763 shares of Company Common
Stock and no shares of Preferred Stock were issued and outstanding, (ii) 18,845
shares of Company Common Stock were held by the Company in its treasury, (iii)
5,484,329 shares of Company Common Stock were reserved for issuance pursuant to
outstanding Stock Options under the Company Stock Plans (each as defined in
Section 7.04),
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(iv) 180,816 shares of Company Common Stock were reserved for issuance pursuant
to the Yurie Systems, Inc., Employee Stock Purchase Plan (the "ESPP") and (v)
191,374 shares of Company Common Stock were reserved for issuance pursuant to
the Yurie Systems, Inc. 401(k) Savings Plan (the "401(k) Plan"). Except as set
forth above, at the close of business on April 24, 1998, no shares of capital
stock or other voting securities of the Company were issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of the Company
are, and all shares which may be issued pursuant to the Company Stock Plans, the
ESPP and the 401(k) Plan will be, when issued in accordance with the terms
thereof, duly authorized, validly issued, fully paid and nonassessable and not
subject to or issued in violation of any purchase option, call option, right of
first refusal, preemptive right, subscription right or any similar right under
any provision of the DGCL, the Company's Certificate of Incorporation or By-laws
or any Contract (as defined in Section 4.04) to which the Company is a party or
otherwise bound. There are no bonds, debentures, notes or other indebtedness of
the Company having the right to vote (or convertible into securities having the
right to vote) on any matters on which stockholders of the Company may vote
("Voting Company Debt"). Except as set forth above, there are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements, or
undertakings of any kind to which the Company or any of its subsidiaries is a
party or by which any of them is bound (i) obligating the Company or any
subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other equity interests in, or any security
convertible into or exercisable for or exchangeable into any capital stock of or
other equity interest in, the Company or of any subsidiary or any Voting Company
Debt or (ii) obligating the Company or any subsidiary to issue, grant, extend or
enter into any such option, warrant, call, right, security, commitment,
Contract, arrangement or undertaking. The Company is not a party to any voting
agreement with respect to the voting of any of its securities. There are not any
outstanding contractual obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its subsidiaries. The outstanding capital stock of the Company
was issued in compliance with all applicable Federal and state securities laws
and regulations. The shares of Company Common Stock set forth in Exhibit A to
the Stockholders Agreement represent in excess of a majority of the outstanding
shares of Company Common Stock on a fully diluted basis.
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SECTION 4.04. Authority; Noncontravention. The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject only to, if required by law, approval of the Merger by an affirmative
vote of the holders of a majority of the Shares (the "Company Stockholder
Approval"), to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Company,
subject, in the case of this Agreement, only to the Company Stockholder Approval
if such approval is required by law. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms (except
insofar as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
The execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancelation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Liens in or
upon any of the properties or assets of the Company or any of its subsidiaries
under any provision of (i) the Certificate of Incorporation or the Amended and
Restated By-laws of the Company or the comparable organizational documents of
any of its subsidiaries, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, permit, concession, franchise,
license or other instrument (a "Contract") applicable to the Company or any of
its subsidiaries or any of their respective properties or assets that is
required to be filed as an exhibit to the SEC Documents or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any (A) statute, law, ordinance, rule or regulation or (B) judgment, order or
decree applicable to the Company or any of its subsidiaries or any of their
respective properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) have a material adverse effect on
the Company, (y) impair in any material respect the ability of the Company to
perform its obligations under this
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Agreement or (z) prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Federal,
state or local government or any court, administrative agency or commission or
other governmental authority or agency, domestic or foreign (a "Governmental
Entity"), is required by or with respect to the Company or any of its
subsidiaries in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the Merger or the transactions
contemplated by this Agreement, except for (1) the filing of a premerger
notification and report form by the Company under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (2) the filing
with the SEC and the Nasdaq Stock Market, Inc. of (A) the Schedule 14D-9, (B) a
proxy statement or information statement relating to the Company Stockholder
Approval, if such approval is required by law (as amended or supplemented from
time to time, the "Proxy Statement") and (C) such reports under Section 13(a) of
the Exchange Act as may be required in connection with this Agreement, the
Stockholders Agreement and the transactions contemplated by this Agreement and
the Stockholders Agreement, (3) the filing of the Certificate of Merger with the
Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business and
(4) such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a material adverse effect on the Company
or prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement.
SECTION 4.05. SEC Documents; Financial Statements. The Company has
filed all required reports, schedules, forms, statements and other documents
with the SEC since February 5, 1997 (the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933 (the "Securities Act"), or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none of the SEC
Documents at the time they were filed contained any untrue statement of a
material fact or omitted to state a 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 to the extent
that information contained in any SEC Document has been revised or superseded by
a
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later-filed SEC Document, none of the SEC Documents contains any untrue
statement of a material fact or omits 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. The financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles in the United States
("GAAP") (except, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC) applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly presented the financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments and the absence of footnotes). Except as set forth in the Filed SEC
Documents neither the Company nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
which individually or in the aggregate, would have a material adverse effect on
the Company.
SECTION 4.06. Information Supplied. None of the information supplied
or to be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9 or (iii) the
information to be filed by the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act (the "Information Statement")
will, in the case of the Offer Documents, the Schedule 14D-9 and the Information
Statement, at the respective times the Offer Documents, the Schedule 14D-9 and
the Information Statement are filed with the SEC or first published, sent or
given to the Company's stockholders, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Schedule 14D-9 and the
Information Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Sub specifically for inclusion or incorporation by
reference therein.
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SECTION 4.07. Absence of Certain Changes or Events. Since the date
of the most recent audited financial statements included in the Filed SEC
Documents, the Company and its subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice, and there
has not been (i) any material adverse change (as defined in Section 10.03) in
the Company, (ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
the Company's capital stock, (iii) any split, combination or reclassification of
any of its capital stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for shares of
its capital stock, (iv) (w) any granting by the Company or any of its
subsidiaries to any director or officer of the Company or its subsidiaries of
any increase in compensation, except in the ordinary course of business
consistent with prior practice or as was required under employment agreements or
stock option agreements in effect as of the date of the most recent audited
financial statements included in the Filed SEC Documents, (x) any granting by
the Company or any of its subsidiaries to any director or officer of any stock
options, except as was required under employment agreements in effect as of the
date of the most recent audited financial statements included in the Filed SEC
Documents, (y) any granting by the Company or any of its subsidiaries to any
officer of any increase in severance or termination pay, except as was required
under any employment, severance or termination agreements, plans or arrangements
in effect as of the date of the most recent audited financial statements
included in the Filed SEC Documents or (z) any entry by the Company or any of
its subsidiaries into any employment, severance or termination agreement with
any director or officer, (v) any damage, destruction or loss, whether or not
covered by insurance, that individually or in the aggregate would have a
material adverse effect on the Company, (vi) any material change in accounting
methods, principles or practices from those applied in the preparation of the
most recent audited financial statements included in the Filed SEC Documents,
except insofar as may have been required by a change in GAAP, or (vii) any tax
election that individually or in the aggregate would have a material adverse
effect on the Company.
SECTION 4.08. Litigation. There is no suit, action or proceeding
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its subsidiaries as to which there is a reasonable
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likelihood of an adverse determination that individually or in the aggregate
would have a material adverse effect on the Company, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against, or, to the knowledge of the Company, investigation by any
Governmental Entity involving, the Company or any of its subsidiaries that
individually or in the aggregate would have a material adverse effect on the
Company.
SECTION 4.09. Contracts. As of the date hereof, there are no
contracts or agreements that are of a nature required to be filed as an exhibit
under the Exchange Act and the rules and regulations promulgated thereunder.
Neither the Company nor any of its subsidiaries is in violation of nor in
default under (nor does there exist any condition which upon the passage of time
or the giving of notice or both would cause such a violation of or default
under) any lease, permit, concession, franchise, license or any other contract,
agreement, arrangement or understanding 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
individually or in the aggregate would not have a material adverse effect on the
Company. As of the date hereof, the Company is not bound by any contract,
agreement, arrangement or understanding with any affiliate of the Company that
is currently in effect other than (i) agreements that are disclosed in the Filed
SEC Documents or (ii) not of a nature required to be disclosed in the SEC
Documents. The Company is not a party to or otherwise bound by any agreement or
covenant not to compete or by any agreement or covenant restricting in any
material respect the development, marketing or distribution of the Company's
products and services.
SECTION 4.10. Compliance with Laws. (a) Each of the Company and its
subsidiaries is in compliance with all applicable statutes, laws, ordinances,
regulations, rules, judgments, decrees and orders of any Governmental Entity
(collectively, "Legal Provisions") applicable to its business or operations,
except for instances of possible noncompliance that individually or in the
aggregate would not have a material adverse effect on the Company or prevent or
materially delay the consummation of the Merger or the transactions contemplated
by this Agreement. Each of the Company and its subsidiaries has in effect all
applicable Federal, state, local and foreign governmental approvals,
authorizations, certificates, filings, franchises, licenses, notices, permits
and rights, including all authorizations required under Environmental Laws (as
hereinafter defined)
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("Permits"), required for each of the Company and its subsidiaries to own, lease
or operate its properties and assets and to carry on its business as now
conducted, and there has occurred no default under, or violation of, any such
Permit, except in each case for the lack of such Permits and for defaults under,
or violations of, such Permits, which lack, default or violation individually or
in the aggregate would not have a material adverse effect on the Company.
(b) The term "Environmental Laws" means any Federal, state or local
statute, ordinance, rule, regulation, permit, license, judgment, order, decree
or injunction relating to: (A) Releases (as defined in 42 U.S.C. ss. 9601(22))
or threatened Releases of Hazardous Material (as hereinafter defined) into the
environment, (B) the generation, treatment, storage, disposal, use, handling,
manufacturing, transportation or shipment of Hazardous Material or (C) the
health or safety of employees in the workplace environment. The term "Hazardous
Material" means (1) hazardous substances (as defined in 42 U.S.C. ss.9601(14)),
(2) petroleum, including crude oil and any fractions thereof, (3) natural gas,
synthetic gas and any mixtures thereof, (4) asbestos and/or asbestos containing
material, (5) PCBs or materials containing PCBs and (6) any material regulated
as a medical waste or infectious waste.
(c) To the knowledge of the Company, during the period of ownership
or operation by the Company and its subsidiaries of any of their current owned
or leased properties, there have been no Releases of Hazardous Material by the
Company or any of its subsidiaries in, on, under or affecting such properties or
any surrounding site, and, to the knowledge of the Company, neither the Company
nor any of its subsidiaries has disposed of any Hazardous Material in a manner
that has led, or could reasonably be anticipated to lead, to a Release, except
in each case for those which individually or in the aggregate would not have a
material adverse effect on the Company. The Company and its subsidiaries have
not received any written notice of, or entered into any order, settlement or
decree relating to: (A) any violation of any Environmental Laws or the institu
tion or pendency of any suit, action, claim, proceeding or, to the knowledge of
the Company, investigation by any Governmental Entity or any third party in
connection with any alleged violation of Environmental Laws, (B) the response to
or remediation of Hazardous Material at or arising from any of the Company's
properties or any subsidiary's properties or (C) payment for, response to or
remediation of Hazardous Material at or arising from any of
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the Company's properties or any subsidiary's properties, except in each case for
any such notices, orders, settlements or decrees which individually or in the
aggregate would not have a material adverse effect on the Company.
SECTION 4.11. Absence of Changes in Benefit Plans; Labor Relations.
Since the date of the most recent audited financial statements included in the
Filed SEC Documents, there has not been any adoption or amendment (or any
agreement to adopt or amend) in any material respect, other than as required by
law, by the Company or any of its subsidiaries of any employment contract,
collective bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or former
employee, officer or director of the Company or any subsidiary (collectively,
"Benefit Plans"). There exist no material employment, consulting, severance,
termination or indemnification agreements, arrangements or understandings
between the Company or any of its subsidiaries, and any current or former
employee, officer or director of the Company. There are no collective bargaining
or other labor union agreements to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound. Since
January 1, 1997, neither the Company nor any of its subsidiaries has encountered
any labor union organizing activity, nor had any actual or threatened employee
strikes, work stoppages, slowdowns or lockouts.
SECTION 4.12. ERISA Compliance. (a) Schedule 4.12(a) to the Company
Disclosure Schedule contains a list of all "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) (sometimes referred to herein as "Pension
Plans"),"employee welfare benefit plans" (as defined in Section 3(1) of ERISA)
and all other Benefit Plans maintained, or contributed to, by the Company or any
of its subsidiaries or any person or entity that, together with the Company and
its subsidiaries, is treated as a single employer under Section 414(b), (c), (m)
or (o) of the Internal Revenue Code of 1986, as amended (the "Code") (the
Company and each such other person or entity, a "Commonly Controlled Entity")
for the benefit of any current or former employees, officers or directors of the
Company or any of its subsidiaries. The Company has made available to
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Parent true, complete and correct copies of (1) each Benefit Plan (or, in the
case of any unwritten Benefit Plans, descriptions thereof), (2) the most recent
annual report on Form 5500 filed with the Internal Revenue Service with respect
to each Benefit Plan (if any such report was required), (3) the most recent
summary plan description for each Benefit Plan for which such summary plan
description is required and (4) each trust agreement and group annuity contract
relating to any Benefit Plan. Each Benefit Plan has been administered in
material compliance with its terms. The Company, each of its subsidiaries and
all the Benefit Plans are all in material compliance with applicable provisions
of ERISA and the Code.
(b) All Pension Plans have been the subject of determination letters
from the Internal Revenue Service to the effect that such Pension Plans are
qualified and exempt from Federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, and no such determination letter has been revoked nor
has any event occurred since the date of its most recent determination letter or
application therefor that would adversely affect its qualification.
(c) Neither the Company, nor any of its subsidiaries, nor any
Commonly Controlled Entity has maintained, contributed or been obligated to
contribute to any Benefit Plan that is subject to Title IV of ERISA.
(d) Schedule 4.12(d) to the Company Disclosure Schedule lists all
outstanding Stock Options as of April 24, 1998, showing for each such option:
(1) the number of shares issuable, (2) the number of vested and unvested shares,
(3) the date of grant and (4) the exercise price.
(e) Except as provided by this Agreement, no employee of the Company
or any of its subsidiaries will be entitled to any additional compensation or
benefits or any acceleration of the time of payment or vesting of any
compensation or benefits (other than the acceleration of vesting of Stock
Options in accordance with the terms of the Company Stock Plans as in existence
on the date hereof) under any Benefit Plan as a result of the transactions
contemplated by this Agreement.
(f) The deduction of any amount payable pursuant to the terms of the
Benefit Plans will not be subject to disallowance under Section 162(m) of the
Code.
SECTION 4.13. Taxes. Each of the Company and its subsidiaries has
filed all material tax returns and reports
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required to be filed by it and has paid, or established adequate reserves for,
all material taxes required to be paid by it. No deficiencies for any taxes have
been proposed, asserted or assessed against the Company, and no requests for
waivers of the time to assess any such taxes are pending. The Federal income tax
returns of the Company and each of its subsidiaries consolidated in such returns
have been examined by and settled with the United States Internal Revenue
Service for all years through the year ended December 31, 1992. The statute of
limitations on assessment or collection of any Federal income taxes due from the
Company or any of its subsidiaries has expired for all taxable years of the
Company or such subsidiaries through the year ended December 31, 1992. As used
in this Agreement, "taxes" shall include all Federal, state, local and foreign
income, property, sales, excise and other taxes, tariffs or governmental charges
of any nature whatsoever (including all interest, penalties and additions
imposed with respect to such amounts).
SECTION 4.14. No Excess Parachute Payments. No amount that could be
received (whether in cash or property or the vesting of property) as a result of
any of the transactions contemplated by this Agreement by any employee, officer
or director of the Company or any of its subsidiaries who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.28OG-1) under any employment, severance or termination agreement, other
compensation arrangement or Benefit Plan currently in effect would be an "excess
parachute payment" (as such term is defined in Section 28OG(b)(1) of the Code).
No such person is entitled to receive any additional payment from the Company or
any of its subsidiaries, the Surviving Corporation or any other person (a
"Parachute Gross-Up Payment") in the event that the excise tax of Section
4999(a) of the Code is imposed on such person. The Board of Directors of the
Company has not granted to any officer, director or employee of the Company any
right to receive any Parachute Gross-Up Payment.
SECTION 4.15. Intellectual Property. (a) The Company and its
subsidiaries own, or are validly licensed or otherwise have the right to use,
all patents, patent rights, trademarks, trade secrets, trade names, service
marks, copyrights and other proprietary intellectual property rights and
computer programs which are material to the conduct of the business of the
Company (collectively, the "Intellectual Property Rights"), and the Company will
continue to own or be validly licensed or otherwise have the right to use such
Intellectual Property Rights immediately
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after the Effective Time. No claim of infringement of any Intellectual Property
Rights of any third party has been brought or, to the Company's knowledge,
asserted against the Company or any of its subsidiaries in respect of the
operation of the Company's or any subsidiary's business. To the knowledge of the
Company, no person is infringing the rights of the Company or any subsidiary
with respect to any Intellectual Property Rights that, individually or in the
aggregate, would have a material adverse effect on the Company. Neither the
Company nor any subsidiary has licensed, or otherwise granted, to any third
party, any material rights in or to any Intellectual Property Rights.
(b) To the Company's knowledge, each employee, agent, consultant or
contractor who has materially contributed to or materially participated in the
creation or development of any copyrightable, patentable or trade secret
material on behalf of the Company, any of its subsidiaries or any predecessor in
interest thereto either: (i) is a party to a "work-for-hire" agreement under
which the Company or such subsidiary is deemed to be the original owner/author
of all property rights therein; or (ii) has executed an assignment or an
agreement to assign in favor of the Company, such subsidiary or such predecessor
in interest, as applicable, all right, title and interest in such material.
SECTION 4.16. State Takeover Statutes. The Board of Directors of the
Company has approved the Offer, the Merger, this Agreement and the Stockholders
Agreement and such approval is sufficient to render inapplicable to the Offer,
the Merger, this Agreement, the Stockholders Agreement and the transactions
contemplated by this Agreement and the Stockholders Agreement the provisions of
Section 203 of the DGCL to the extent, if any, such Section is applicable to the
Offer, the Merger, this Agreement, the Stockholders Agreement and the
transactions contemplated by this Agreement and the Stockholders Agreement. To
the Company's knowledge, no other state takeover statute or similar statute or
regulation applies to or purports to apply to the Offer, the Merger, this
Agreement, the Stockholders Agreement or the transactions contemplated by this
Agreement or the Stockholders Agreement.
SECTION 4.17. Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than BT Alex. ▇▇▇▇▇
Incorporated, the fees and expenses of which will be paid by the Company, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
and the
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Stockholders Agreement based upon arrangements made by or on behalf of the
Company. The Company has furnished to Parent true and complete copies of all
agreements under which any such fees or expenses are payable and all
indemnification and other agreements related to the engagement of the persons to
whom such fees are payable.
SECTION 4.18. Opinion of Financial Advisor. The Company has received
the opinion of BT Alex. ▇▇▇▇▇ Incorporated, dated the date hereof, to the effect
that, as of such date, the consideration to be received in the Offer and the
Merger by the Company's stockholders is fair to the Company's stockholders from
a financial point of view, a signed copy of which opinion will be promptly
delivered to Parent.
ARTICLE V
Representations and Warranties
of Parent and Sub
Parent and Sub represent and warrant to the Company as follows:
SECTION 5.01. Organization, Standing and Corporate Power. Each of
Parent and Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
all requisite corporate power and authority to carry on its business as now
being conducted. Each of Parent and Sub is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed individually or in the aggregate would
not have a material adverse effect on Parent. Parent has delivered to the
Company complete and correct copies of its Certificate of Incorporation and
By-Laws and the Certificate of Incorporation and By-Laws of Sub, in each case as
amended to the date hereof.
SECTION 5.02. Authority; Noncontravention. Parent and Sub have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate action on
the part of
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Parent and Sub. This Agreement has been duly executed and delivered by Parent
and Sub, and constitutes a valid and binding obligation of each such party,
enforceable against each such party in accordance with its terms (except insofar
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
The execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancelation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Lien upon any
of the properties or assets of Parent or Sub under, any provision of (i) the
Certificate of Incorporation or By-Laws of Parent or Sub, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Parent or Sub
or their respective properties or assets that is required to be filed as an
exhibit to Parent's filings with the SEC under the Exchange Act or (iii) subject
to the governmental filings and other matters referred to in the following
sentence, any (A) statute, law, ordinance, rule or regulation or (B) judgment,
order or decree applicable to Parent or Sub or their respective properties or
assets, other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights or Liens that individually or in the aggregate
would not (x) have a material adverse effect on Parent, (y) impair in any
material respect the ability of each of Parent and Sub to perform its
obligations under this Agreement, as the case may be, or (z) prevent or
materially delay the consummation of any of the transactions contemplated by
this Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Parent or Sub in connection with the execution and delivery
of this Agreement by Parent and Sub or the consummation by Parent and Sub of the
transactions contemplated by this Agreement, except for (1) the filing of a
premerger notification and report form under the HSR Act, (2) the filing with
the SEC of (A) the Offer Documents and (B) such reports under Sections 13(a),
13(d) and 16(a) of the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (3) the filing of
the Certificate of Merger with the Delaware Secretary of State and appropriate
documents
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with the relevant authorities of other states in which the Company is qualified
to do business and (4) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the "blue sky"
laws of various states, the failure of which to be obtained or made would not,
individually or in the aggregate, have a material adverse effect on Parent or
prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement.
SECTION 5.03. Information Supplied. None of the information supplied
or to be supplied by Parent or Sub specifically for inclusion or incorporation
by reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC or first published, sent or given to the Company's
stockholders, or, in the case of the Proxy Statement, at the time the Proxy
Statement is first mailed to the Company's stockholders or at the time of the
Stockholders Meeting (as defined in Section 7.01), contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Offer Documents
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that (other than
with respect to the Proxy Statement) no representation or warranty is made by
Parent or Sub with respect to statements made or incorporated by reference
therein based on information supplied by the Company specifically for inclusion
or incorporation by reference therein.
SECTION 5.04. Interim Operations of Sub. Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby, has engaged in
no other business activities and has conducted its operations only as
contemplated hereby.
SECTION 5.05. Brokers. No broker, investment banker, financial
advisor or other person, other than ▇▇▇▇▇▇▇, Sachs & Co., the fees and expenses
of which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Sub.
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SECTION 5.06. Financing. At the expiration of the Offer and the
Effective Time, Parent and Sub will have available all the funds necessary for
the acquisition of all Shares pursuant to the Offer and to perform their
respective obligations under this Agreement, including payment in full for all
shares of Company Common Stock validly tendered into the Offer or outstanding at
the Effective Time.
ARTICLE VI
Covenants
SECTION 6.01. Covenants of the Company. (a) Conduct of the Business
by the Company. Except for matters set forth in Schedule 6.01 of the Company
Disclosure Schedule or otherwise expressly permitted by this Agreement, until
the earlier of termination of this Agreement or the consummation of the Offer,
the Company shall, and shall cause its subsidiaries to, carry on their
respective businesses in the ordinary course consistent with the manner as
heretofore conducted and, to the extent consistent therewith, use commercially
reasonable efforts to (x) preserve intact their current business organization,
(y) keep available the services of their current officers and employees and (z)
preserve their relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them. In addition, and
without limiting the generality of the foregoing, except for matters set forth
in Schedule 6.01 of the Company Disclosure Schedule or otherwise expressly
permitted by this Agreement, until the earlier of termination of this Agreement
or the consummation of the Offer, the Company shall not, and shall not permit
any of its subsidiaries to, without Parent's prior written consent:
(i) other than dividends and distributions by a direct or indirect
wholly owned subsidiary of the Company to its parent, (x) declare, set
aside or pay any dividends on, or make any other distributions (whether in
cash, stock or property), in respect of, any of its capital stock, (y)
split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock (other than the
issuance of shares of Company Common Stock upon the exercise of Stock
Options outstanding on the date of this Agreement and in accordance with
their present terms) or (z) purchase, redeem or otherwise acquire any
shares of capital stock
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of the Company or any of its subsidiaries or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares
of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the
issuance of shares of Company Common Stock upon the exercise of Stock
Options outstanding on the date of this Agreement and in accordance with
their present terms and other than the issuance of shares of Company
Common Stock pursuant to the terms of the 401(k) Plan and the ESPP to the
extent of the share amounts set forth in Schedule 6.01(a)(ii) of the
Company Disclosure Schedule);
(iii) amend its Certificate of Incorporation, Amended and Restated
By-laws or other comparable charter or organizational documents;
(iv) acquire or agree to acquire (including, without limitation, by
merger, consolidation or acquisition of stock or assets) any business,
including through the acquisition of any interest in any corporation,
partnership, joint venture, association or other business organization or
division thereof;
(v) sell, lease, license, mortgage or otherwise encumber or
otherwise dispose of any of its properties or assets, other than in the
ordinary course of business consistent with past practice;
(vi) (y) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its subsidiaries, or guarantee any debt securities of another
person, other than short-term bank financing in the ordinary course of
business consistent with past practice or (z) make any loans, advances or
capital contributions to, or investments in, any other person, other than
in the ordinary course of business consistent with past practice;
(vii) except as disclosed on Schedule 6.01(a)(vii) to the Company
Disclosure Schedule, make or agree to make any new capital expenditure or
expenditures, other
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than in the ordinary course of business consistent with past practice;
(viii) except as required to comply with applicable law or
agreements, plans or arrangements existing on the date hereof, (A) adopt,
enter into, terminate or amend any employment contract, collective
bargaining agreement or Benefit Plan, (B) increase in any manner the
compensation or fringe benefits of, or pay any bonus to, any director,
officer or employee (except for normal increases of cash compensation or
cash bonuses to individuals (and not across-the-board actions) in the
ordinary course of business consistent with past practice), (C) pay any
benefit not provided for under any Benefit Plan or any other benefit plan
or arrangement of the Company or its subsidiaries, (D) increase in any
manner the severance or termination pay of any officer or employee, (E)
enter any employment, consulting, severance, termination or
indemnification agreement, arrangement or understanding with any current
or former employee, officer or director, (F) except as permitted in clause
(B), grant any awards under any bonus, incentive, performance or other
compensation plan or arrangement or Benefit Plan (including the grant of
stock options, stock appreciation rights, stock based or stock related
awards, performance units or restricted stock or the removal of existing
restrictions in any Benefit Plans or agreements or awards made
thereunder), (G) take any action to fund or in any other way secure the
payment of compensation or benefits under any employee plan, agreement,
contract or arrangement or Benefit Plan or (H) take any action to
accelerate the vesting of, or cash out rights associated with, any Stock
Options (except that appropriate action shall be taken to accelerate the
vesting of all Stock Options outstanding as of the date hereof under the
Data Labs, Inc. 1996 Stock Option Plan as of the consummation of the
Offer);
(ix) enter into any agreement of a nature that would be required to
be filed as an exhibit to Form 10-K under the Exchange Act, other than
contracts for the sale of the Company's products in the ordinary course of
business;
(x) except as required by GAAP, make any material change in
accounting methods, principles or practices;
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(xi) make any material tax election or enter into any settlement or
compromise with respect to any material income tax liability; or
(xii) authorize any of, or commit or agree to take any of, the
foregoing actions.
SECTION 6.02. No Solicitation. (a) The Company shall not, nor shall
it permit any of its subsidiaries to, nor shall it authorize or permit any of
its officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative or agent retained by it or
any subsidiary to, directly or indirectly, (i) solicit, initiate or knowingly
encourage the submission of any Takeover Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any nonpublic information with respect to, or take any other action
designed or reasonably likely to facilitate any inquiries or the making of any
proposal that constitutes any Takeover Proposal. For purposes of this Agreement,
"Takeover Proposal" means any inquiry, proposal or offer from any person
relating to any direct or indirect acquisition or purchase of a substantial
amount of assets of the Company and its subsidiaries, taken as a whole (other
than the purchase of the Company's products in the ordinary course of business),
or more than a 20% interest in the total voting securities of the Company or any
of its subsidiaries or any tender offer or exchange offer that if consummated
would result in any person beneficially owning 20% or more of any class of
equity securities of the Company or any of its subsidiaries or any merger,
consolidation, business combination, sale of all or substantially all of its
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its subsidiaries, other than the transactions
contemplated by this Agreement.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent, the approval or recommendation by such Board of
Directors or such committee of the Offer, the Merger, this Agreement or the
Stockholders Agreement, (ii) approve or recommend, or propose publicly to
approve or recommend, any Takeover Proposal or (iii) cause the Company to enter
into any letter of intent, agreement in principle, acquisition agreement or
other similar agreement related to any Takeover Proposal.
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(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.02, the Company shall promptly advise
Parent orally and in writing of any inquiry with respect to a Takeover Proposal,
request for nonpublic information (except in the ordinary course of business and
not in connection with a possible Takeover Proposal) or of any Takeover Proposal
known to it, the material terms and conditions of such inquiry, request or
Takeover Proposal and the identity of the person making such inquiry, request or
Takeover Proposal. The Company will promptly inform Parent of any change in the
status and details (including amendments or proposed amendments) of any such
inquiry, request or Takeover Proposal.
(d) Nothing contained in this Agreement shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14d-9 or Rule 14e-2(a) promulgated under the Exchange Act; provided however,
neither the Company nor its Board of Directors nor any committee thereof shall
withdraw or modify, or propose to withdraw or modify, its position with respect
to the Offer, the Merger, or this Agreement or approve or recommend, or propose
to approve or recommend, a Takeover Proposal.
SECTION 6.03. Other Actions. The Company shall not take any action
that would reasonably be expected to result in (i) any of the representations
and warranties of the Company set forth in this Agreement that are qualified as
to materiality becoming untrue, (ii) any of such representations and warranties
that are not so qualified becoming untrue in any material respect or (iii) any
of the Offer Conditions not being satisfied.
ARTICLE VII
Additional Agreements
SECTION 7.01. Company Stockholder Approval; Preparation of Proxy
Statement. (a) If the Company Stockholder Approval is required by law, the
Company shall, as soon as practicable following the expiration of the Offer,
duly call, give notice of, convene and hold a meeting of its stockholders (the
"Stockholders Meeting") for the purpose of obtaining the Company Stockholder
Approval. The Company shall, through its Board of Directors, recommend to its
stockholders that the Company Stockholder Approval be given. Notwithstanding the
foregoing, if Sub or any other
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subsidiary of Parent shall acquire at least 90% of the outstanding Shares, the
parties shall take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the expiration of the Offer
without a Stockholders Meeting in accordance with Section 253 of the DGCL.
(b) If the Company Stockholder Approval is required by law, the
Company shall, as soon as practicable following the expiration of the Offer,
prepare and file a preliminary Proxy Statement with the SEC and shall use its
best efforts to respond to any comments of the SEC or its staff and to cause the
Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable after responding to all such comments to the satisfaction of the
staff. No filing of, or amendment or supplement to, the Proxy Statement will be
made by the Company without providing Parent the opportunity to review and
comment thereon. The Company shall notify Parent promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and will supply Parent with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or the Merger. If
at any time prior to the Stockholders Meeting there shall occur any event or
information that should be set forth in an amendment or supplement to the Proxy
Statement, so that the Proxy Statement would not include any misstatement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, the Company shall promptly prepare and mail to its stockholders and
file with the SEC such an amendment or supplement. The Company shall not mail
any Proxy Statement or any amendment or supplement thereto, to which Parent
reasonably objects.
(c) Parent agrees to cause all Shares purchased pursuant to the
Offer and all other Shares owned by Parent or any subsidiary of Parent to be
voted in favor of the Company Stockholder Approval.
SECTION 7.02. Access to Information. The Company shall, and shall
cause each of its subsidiaries to, afford to Parent and to the officers,
employees, accountants, counsel and other representatives of Parent reasonable
access, during normal business hours during the period prior to the Effective
Time, to all their properties, books,
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contracts, commitments and records and, during such period, the Company shall,
and shall cause each of its subsidiaries to, make available promptly to Parent
upon request (a) a copy of each report, schedule, registration statement and
other document filed or received by it during such period pursuant to the
requirements of the federal or state securities laws or the federal tax laws, or
state, local or foreign tax laws and (b) all other information concerning its
business, properties and personnel as Parent may reasonably request (including
the Company's outside accountants' work papers). Except as otherwise agreed to
by the Company, and notwithstanding termination of this Agreement, the terms of
the Confidentiality Agreement dated April 2, 1998, between Parent and the
Company (the "Confidentiality Agreement") shall apply to all information about
the Company which has been furnished under this Agreement by the Company to
Parent or Sub.
SECTION 7.03. Reasonable Efforts. (a) Upon and subject to the terms
and subject to the conditions set forth in this Agreement, each of the parties
agrees to use all reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the Offer, the
Merger and the other transactions contemplated by this Agreement and the
Stockholders Agreement, including using reasonable efforts to take the following
actions: (i) the taking of all reasonable acts necessary to cause the Offer
Conditions to be satisfied, (ii) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to avoid an action or proceeding by any Governmental Entity, (iii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iv) the defending of any lawsuits or other legal proceedings, whether judicial
or administrative, challenging this Agreement or the Stockholders Agreement or
the consummation of the transactions contemplated hereby or thereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed and (v) the execution and delivery
of any additional instruments necessary to consum mate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement and the
Stockholders Agreement. In connection with and without limiting the foregoing,
but subject to the terms and conditions hereof,
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the Company and its Board of Directors shall, if any state takeover statute or
similar statute or regulation is or becomes applicable to the Offer, the Merger,
this Agreement, the Stockholders Agreement or any other transactions
contemplated by this Agreement or the Stockholders Agreement, use all reasonable
efforts to ensure that the Offer, the Merger and the other transactions
contemplated by this Agreement or the Stockholders Agreement may be consummated
as promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the Offer, the
Merger, this Agreement and the Stockholders Agreement and the other transactions
contemplated by this Agreement and the Stockholders Agreement.
(b) The Company shall give prompt notice to Parent, and Parent shall
give prompt notice to the Company, of (i) any representation or warranty made by
it contained in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or warranty that
is not so qualified becoming untrue or inaccurate in any material respect or
(ii) the failure by it to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
SECTION 7.04. Company Stock Options. (a) As soon as practicable
following the date of this Agreement, the Board of Directors of the Company (or,
if appropriate, any committee administering the Company Stock Plans, as defined
below) shall adopt such resolutions or take such other actions, if any, as may
reasonably be required to effect the following:
(i) adjust the terms of all outstanding options to purchase Company
Common Stock (the "Stock Options") granted under any plan or arrangement
providing for the grant of options to purchase Company Common Stock to
current or former directors, officers, employees or consultants of the
Company or its subsidiaries (the "Company Stock Plans"), whether vested
pursuant to Section 6.01(a)(viii)(H) or otherwise vested by their terms
(including as a result of the consummation of the transactions
contemplated hereby), as necessary to provide that, at the consummation of
the Offer, each Stock Option outstanding immediately prior to the
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consummation of the Offer shall be amended and converted into an option to
acquire, on the same terms and conditions as were applicable under the
Stock Option, the number of shares of common stock of Parent ("Parent
Common Stock") determined by multiplying the number of shares of Company
Common Stock subject to such Stock Option by a fraction (the "Conversion
Fraction"), the numerator of which is $35.00 and the denominator of which
is the average of the high and low sales prices of Parent Common Stock as
reported by the New York Stock Exchange for three (3) trading days
immediately preceding (but not including) the date of the consummation of
the Offer, rounded down to the nearest whole share, at a price per share
of Parent Common Stock equal to (A) the exercise price per share of
Company Common Stock subject to such Stock Option immediately prior to the
consummation of the Offer divided by (B) the Conversion Fraction (each, as
so adjusted, an "Adjusted Option"), rounded up to the nearest
one-hundredth of a cent; and
(ii) make such other changes to the Company Stock Plans as Parent
and the Company may agree are appropriate to give effect to the foregoing
and the Merger.
(b) The adjustments provided herein with respect to any Stock
Options that are "incentive stock options" as defined in Section 422 of the Code
shall be and are intended to be effected in a manner which is consistent with
Section 424(a) of the Code.
(c) Upon the consummation of the Offer, by virtue of the
transactions contemplated hereby and without the need of any further corporate
action, Parent shall assume the Company Stock Plans, with the result that all
obligations of the Company under the Company Stock Plans, including with respect
to Stock Options outstanding at the consummation of the Offer shall be
obligations of Parent following the consummation of the Offer.
(d) As soon as practicable following the consummation of the Offer,
Parent shall prepare and file with the SEC a registration statement on Form S-8
(or another appropriate form) registering a number of shares of Parent Common
Stock equal to the number of shares subject to the Adjusted Options. Such
registration statement shall be kept effective (and the current status of the
prospectus or prospectuses required thereby shall be maintained) at least for so
long as any Adjusted Options may remain outstanding.
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(e) As soon as practicable following the consummation of the Offer,
Parent shall deliver to the holders of Stock Options appropriate notices setting
forth such holders' rights pursuant to the respective Company Stock Plans and
the agreements evidencing the grants of such Stock Options and that such Stock
Options and agreements shall be assumed by Parent and shall continue in effect
on the same terms and conditions currently applicable to such Stock Options
(subject to the adjustments required by this Section 7.04). From and after the
consummation of the Offer, and for a period no less than three months following
the Merger, Parent and the Company shall take any necessary actions to provide
that holders of Adjusted Options may elect, in accordance with reasonable
procedures established by Parent from time to time, to transact a "cashless
exercise procedure" in respect of their Adjusted Options.
(f) A holder of an Adjusted Option may exercise such Adjusted Option
in whole or in part in accordance with its terms by delivering a properly
executed notice of exercise to Parent, together with the consideration therefor
and the Federal withholding tax information, if any, required in accordance with
the related Company Stock Plan.
(g) Except as otherwise contemplated by this Section 7.04 or Section
6.01(a)(viii)(H) and except to the extent required under the respective terms of
the Stock Options, all terms and conditions with respect to Stock Options
awarded under the Company Stock Plans or any other plan, program or arrangement
of the Company or any of its subsidiaries, to the extent that such terms and
conditions shall not have already lapsed, shall remain in full force and effect
with respect to such options after giving effect to the Merger and the
assumption by Parent as set forth above.
(h) Upon consummation of the Offer, in accordance with the terms of
the ESPP, the ESPP and all options outstanding thereunder shall automatically
terminate and each participant thereunder will be paid the outstanding balance
of payroll deductions that are in his or her account thereunder at such time.
SECTION 7.05. Employee Matters. (a) General. Upon the consummation
of the Offer, Parent (and the Company) shall, or Parent shall cause Sub to, (i)
employ each person who is an employee of the Company and its subsidiaries
immediately prior to the consummation of the Offer, other than those individuals
who are covered by retention agreements being entered into as of the date hereof
with
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Parent and the Company (the "Company Employees"), at the same base pay as in
effect immediately prior to the consummation of the Offer, and (ii) provide
benefits substantially similar in the aggregate to current Company benefits, or
provide Company Employees who continue to be employed by the Company or Sub with
the employee benefit plans and compensation provided by Parent to similarly
situated employees in the Data Networking Systems division. Parent shall, or
shall cause the Surviving Corporation to, grant to the Company Employees
(including those individuals covered by the retention agreements referred to
above) credit for purposes of determining eligibility to participate and vesting
in Parent's or the Surviving Corporation's employee benefit plans for service
with the Company and its subsidiaries. Parent shall waive any and all
pre-existing condition limitations and exclusions and waiting periods that may
otherwise apply to the Company Employees (including those individuals covered by
the retention agreements referred to above) under the benefit plans of Parent
and its affiliates, and Parent shall cause such Company Employees to receive
full credit for amounts paid or accrued towards any deductible or copayment
requirements incurred during the current plan year.
(b) Gross-Up Payments. (i) In the event it shall be determined that
in connection with the transactions contemplated by this Agreement, any payment,
acceleration of vesting or distribution of any type to or for the benefit of any
Company Employee listed on Schedule 7.05(b) to the Company Disclosure Schedule,
whether paid or payable or distributed or distributable pursuant to any Benefit
Plan or otherwise (the "Total Payments"), would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties with respect to
such excise tax (such excise tax, together with any such interest and penalties,
are collectively referred to as the "Excise Tax"), then such Company Employee
shall be entitled to receive from Parent an additional payment (a "Gross-Up
Payment") in an amount such that after payment by such Company Employee of all
taxes (including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, such Company
Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Total Payments.
(ii) As a result of uncertainty in the application of Section 4999
of the Code at the time of the initial determination of the Gross-Up Payment
hereunder, it is possible that Gross-Up Payments not made by Parent should have
been made (an "Underpayment"), or that Gross-Up
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Payments will have been made by Parent which should not have been made (an
"Overpayment"). In either such event, the amount of the Underpayment or
Overpayment that has occurred shall be determined as soon as practicable. In the
case of an Underpayment, the amount of such Underpayment shall be promptly paid
by Parent to or for the benefit of the applicable Company Employee. In the case
of an Overpayment, the applicable Company Employee shall, at the direction and
expense of Parent, take such steps as are reasonably necessary (including the
filing of returns and claims for refund), follow reasonable instructions from,
and procedures established by, Parent, and otherwise reasonably cooperate with
Parent to correct such Overpayment; provided, however, that (A) a Company
Employee shall not in any event be obligated to return to Parent an amount
greater than the net after-tax portion of the Overpayment that he has retained
or has recovered as a refund from the applicable taxing authorities and (B) this
provision shall be interpreted in a manner consistent with the intent of the
foregoing provisions, which is to make the Company Employee whole, on an
after-tax basis, from the application of the Excise Tax, it being understood
that the correction of an Overpayment may result in the Company Employee
repaying to Parent an amount which is less than the Overpayment.
SECTION 7.06. Directors. Promptly upon the acceptance for payment
of, and payment for, Shares by Sub pursuant to the Offer, Sub shall be entitled
to designate such number of directors on the Board of Directors of the Company
as will give Sub, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Company's Board of Directors equal to the product of (i)
the total number of directors on the Company's Board of Directors and (ii) the
percentage that the number of Shares purchased by Sub in the Offer bears to the
number of Shares outstanding, and the Company shall, at such time, cause Sub's
designees to be so elected by its existing Board of Directors; provided,
however, that in the event that Sub's designees are elected to the Board of
Directors of the Company, until the Effective Time such Board of Directors shall
have at least two directors who are directors of the Company on the date of this
Agreement and who are not officers of the Company or any of its subsidiaries
(the "Independent Directors") and; provided further that, in such event, if the
number of Independent Directors shall be reduced below two for any reason
whatsoever, the remaining Independent Director shall designate a person to fill
such vacancy who shall be deemed to be an Independent Director for purposes of
this Agreement or, if no Independent Directors then remain, the other directors
of the Company on
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the date hereof shall designate two persons to fill such vacancies who shall not
be officers or affiliates of the Company or any of its subsidiaries, or officers
or affiliates of Parent or any of its subsidiaries, and such persons shall be
deemed to be Independent Directors for purposes of this Agreement. Subject to
applicable law, the Company shall take all action requested by Parent necessary
to effect any such election, including mailing to its stockholders the
Information Statement containing the information required by Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, and the Company agrees
to make such mailing with the mailing of the Schedule 14D-9 (provided that Sub
shall have provided to the Company on a timely basis all information required to
be included in the Information Statement with respect to Sub's designees). In
connection with the foregoing, the Company will promptly, at the option of
Parent, either increase the size of the Company's Board of Directors and/or
obtain the resignation of such number of its current directors as is necessary
to enable Sub's designees to be elected or appointed to, and to constitute a
majority of the Company's Board of Directors as provided above.
SECTION 7.07. Fees and Expenses. All fees and expenses incurred in
connection with the Offer, the Merger, this Agreement, the Stockholders
Agreement and the transactions contemplated by this Agreement and the
Stockholders Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Offer or the Merger is consummated.
SECTION 7.08. Indemnification. (a) From and after the consummation
of the Offer, Parent will, and will cause the Surviving Corporation to, fulfill
and honor in all respects the obligations of the Company pursuant to (i) each
indemnification agreement in effect at such time between the Company and each
person who is or was a director or officer of the Company at or prior to the
Effective Time and (ii) any indemnification provisions under the Company's
Certificate of Incorporation or Amended and Restated By-laws as each is in
effect on the date hereof (the persons to be indemnified pursuant to the
agreements or provisions referred to in clauses (i) and (ii) of this Section
7.08(a) shall be referred to as, collectively, the "Indemnified Parties"). The
Certificate of Incorporation and By-laws of the Surviving Corporation shall
contain the provisions with respect to indemnification and exculpation from
liability set forth in the Company's Certificate of Incorporation and By-laws on
the date of this Agreement, which provisions shall not be amended, repealed or
otherwise modified for a
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period of six years after the Effective Time in any manner that would adversely
affect the rights thereunder of any Indemnified Party.
(b) This Section 7.08 shall survive the consummation of the Merger,
is intended to be for the benefit of, and enforceable by, the Company, Parent,
the Surviving Corporation and each Indemnified Party and such Indemnified
Party's heirs and representatives, and shall be binding on all successors and
assigns of Parent and the Surviving Corporation.
SECTION 7.09. Certain Litigation. The Company agrees that it shall
not settle any litigation commenced after the date hereof against the Company or
any of its directors by any stockholder of the Company relating to the Offer,
the Merger, this Agreement or the Stockholders Agreement without the prior
written consent of Parent, which consent shall not be unreasonably withheld. The
Company shall give Parent the opportunity to participate in the defense or
settlement of any Stockholder litigation against the Company and its directors
relating to the transactions contemplated by this Agreement and the Option
Agreement. In addition, the Company shall not voluntarily cooperate with any
third party that may hereafter seek to restrain or prohibit or otherwise oppose
the Offer, the Merger or the transactions contemplated by the Stockholders
Agreement and shall cooperate with Parent and Sub to resist any such effort to
restrain or prohibit or otherwise oppose the Offer, the Merger or the
transactions contemplated by the Stockholders Agreement.
ARTICLE VIII
Conditions
SECTION 8.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction or waiver prior to the Closing Date of the following
conditions:
(a) Company Stockholder Approval. If required by applicable law, the
Company Stockholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or
permanent injunction
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or other order issued by any court of competent jurisdiction or other
Governmental Entity or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that
each of the parties shall have used reasonable efforts to prevent the
entry of any such injunction or other order and to appeal as promptly as
possible any injunction or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for
payment and paid for Shares pursuant to the Offer.
ARTICLE IX
Termination and Amendment
SECTION 9.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the terms
of this Agreement by the stockholders of the Company (provided, however, that if
the Shares are purchased pursuant to the Offer, neither Parent nor Sub may in
any event terminate this Agreement):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if Sub shall not have accepted for payment any Shares
pursuant to the Offer prior to October 9, 1998; provided, however,
that the right to terminate this Agreement pursuant to this Section
9.01(b)(i) shall not be available to (1) Parent, if Sub shall have
breached its obligations under the second to the last sentence of
Section 1.01(a) or (2) any party whose failure to perform any of its
obligations under this Agreement results in the failure of any such
condition or if the failure of such condition results from facts or
circumstances that constitute a willful breach of representation or
warranty under this Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment
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of, or payment for, Shares pursuant to the Offer or the Merger and
such order, decree or ruling or other action shall have become final
and nonappealable;
(c) by Parent or Sub prior to the purchase of Shares pursuant to the
Offer in the event of a breach or failure to perform by the Company of any
representation, warranty, covenant or other agreement contained in this
Agreement which (i) would give rise to the failure of a condition set
forth in paragraph (e) or (f) of Exhibit A and (ii) cannot be cured, or
has not been cured within 30 days after the Company receives written
notice from Parent of such breach or failure to perform; or
(d) by the Company in the event of a material breach or failure to
perform in any material respect by Parent or Sub of any representation,
warranty, covenant or other agreement contained in this Agreement which
cannot be cured, or has not been cured within 30 days after Parent or Sub
receives written notice from the Company of such breach or failure to
perform.
SECTION 9.02. Effect of Termination. (a) In the event of a
termination of this Agreement by either the Company or Parent or Sub as provided
in Section 9.01, this Agreement shall forthwith become void and there shall be
no liability or obligation on the part of Parent, Sub or the Company or their
respective officers or directors, except with respect to the last sentence of
Section 1.02(c), Section 4.18, Section 5.05, the last sentence of Section 7.02,
Section 7.07, this Section 9.02 and Article X; provided, however, that nothing
herein shall relieve any party for liability for any wilful breach hereof.
(b) In the event of a termination pursuant to Section 9.01(a) or (b)
of this Agreement or the failure otherwise to consummate the Offer by October 9,
1998, Parent shall, or shall cause an affiliate to, purchase available products
of the Company in the aggregate amount of at least (i) $50 million during the
first 12 month period from the earlier of (x) October 9, 1998 or (y) the date of
such termination and (ii) $100 million during the succeeding 12 month period, in
each case, on an approximately level order basis throughout the period pursuant
to the Company's standard form of purchase agreement and subject to the terms
(including price and applicable discounts) and conditions contained in the
Agreement No. LFM017D between Parent and the Company (the "Purchase
Commitment"). Each of the
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Company and the Parent shall use their best efforts to agree upon the type of
available products and to schedule their delivery consistent with the Company's
operations in the ordinary course but the failure to agree upon the products to
be purchased and sold pursuant to this proviso shall not change Parent's
obligation to purchase products of the Company in such amounts in such periods.
Notwithstanding the foregoing, Parent shall have the right to terminate the
Purchase Commitment at any time upon delivery of written notice to the Company
following a Change of Control (as defined below) of the Company. Such
termination shall not affect issued and open purchase orders. A "Change of
Control" of the Company shall mean: (1) the acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3) and 14(d)(2) of the
Exchange Act) (a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 30% or more of the then outstanding
shares of Company Common Stock; (2) individuals who, as of the date hereof,
constitute the board of directors (or any successor body performing similar
functions) of the Company (the "Board", and as constituted on the date hereof
the "Incumbent Board") cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for election by such party's
shareholders, was approved by a vote of at least two-thirds of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board; (3) consummation of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (each, a "Business Combination"),
unless, following such Business Combination, the individuals and entities who
were the beneficial owners of the Company Common Stock outstanding immediately
prior to such Business Combination beneficially own, immediately after
consummation of such Business Combination, more than 75% of the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities of the corporation resulting from such Business Combination;
or (4) consummation of the acquisition of a company or the assets and
liabilities of a company if the individuals and entities who were beneficial
owners of the Company Common Stock immediately prior to such acquisition would
fail to own, directly or indirectly, more than 75% of the Company Common Stock
after the acquisition.
SECTION 9.03. Amendment. This Agreement may be amended by the
parties hereto, by duly authorized action taken, at any time before or after
obtaining the Company
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Stockholder Approval, but, after the purchase of Shares pursuant to the Offer,
no amendment shall be made which decreases the Merger Consideration and, after
the Company Stockholder Approval, no amendment shall be made which by law
requires further approval by such stockholders without obtaining such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. Following the election or
appointment of Sub's designees pursuant to Section 7.06 and prior to the
Effective Time, the affirmative vote of a majority of the Independent Directors
then in office shall be required by the Company to (i) amend or terminate this
Agreement by the Company, (ii) exercise or waive any of the Company's rights or
remedies under this Agreement, (iii) extend the time for performance of Parent
and Sub's respective obligations under this Agreement or (iv) take any action to
amend or otherwise modify the Company's Certificate of Incorporation or Amended
and Restated By-laws (or similar governing instruments of the Company's
subsidiaries) in violation of Section 7.08.
SECTION 9.04. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, subject to Section
9.03, (i) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
ARTICLE X
Miscellaneous
SECTION 10.01. Nonsurvival of Representations, Warranties and
Agreements. None of the representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time or, in the case of the Company, shall survive the acceptance for payment
of, and payment for, Shares by Sub pursuant to the Offer. This Section 10.01
shall not limit any covenant
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or agreement of the parties which by its terms contemplates performance after
the Effective Time, including Section 7.08.
SECTION 10.02. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed), sent by overnight courier (providing proof of
delivery) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent or Sub, to
Lucent Technologies Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Room 6A ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President--Law
Telecopy No.: Separately supplied
with a copy to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III, Esq.
Telecopy No.: Separately supplied
and
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(b) if to the Company, to
Yurie Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Secretary
Telecopy No.: Separately supplied
with copies to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: Separately supplied
and
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: Separately supplied
SECTION 10.03. Interpretation. When a reference is made in this
Agreement to an Article or a Section, such reference shall be to an Article or a
Section of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The phrase
"made available" in this Agreement shall mean that the information referred to
has been made available if requested by the party to whom such information is to
be made available. As used in this Agreement, the term "subsidiary" of any
person means another person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient to elect at
least a majority of its Board of Directors or other governing body (or, if there
are no such voting interests, 50% or more of the equity interests of which) is
owned directly or indirectly by such first person. As used in this Agreement,
"material adverse change" or
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47
"material adverse effect" means, when used in connection with the Company or
Parent, as the case may be, any change or effect that is materially adverse to
the business, properties, assets, liabilities, financial condition or results of
operations of either the Company and its subsidiaries or Parent and its
subsidiaries, as the case may be, in each case taken as a whole, other than
changes or effects to (i) occurrences relating to the economy in general or such
entity's industry in general and not specifically relating to such entity, (ii)
the loss of personnel, customers or suppliers or the delay or cancellation of
orders for the Company's products or similar occurrences caused by or arising
out of the announcement of this Agreement and the transactions contemplated
hereby or (iii) in the case of the Company, litigation brought or threatened
against the Company or any member of its Board of Directors in respect of this
Agreement, the Offer or the Merger (other than litigation brought or threatened
by a Governmental Entity).
SECTION 10.04. Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
SECTION 10.05. Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the other agreements, contracts, documents and instruments
referred to herein) and the Confidentiality Agreement (a) constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Sections 7.04 and 7.08 hereof, are not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.
SECTION 10.06. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware without
regard to any applicable conflicts of law principles.
SECTION 10.07. Publicity. Except as otherwise required by law
(including Rule 14d-9 promulgated under the Exchange Act), court process or the
rules of the NYSE (with respect to Parent or Sub) or the Nasdaq National Market
(with respect to the Company) or as contemplated or provided elsewhere herein,
for so long as this Agreement is in
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effect, neither the Company nor Parent shall, or shall permit any of its
subsidiaries to, issue or cause the publication of any press release or other
public announcement with respect to the transactions contemplated by this
Agreement without the consent of the other party, which consent shall not be
unreasonably withheld.
SECTION 10.08. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned subsidiary of Parent. Subject
to the preceding sentence but without relieving any party hereof of any
obligation hereunder, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns.
SECTION 10.09. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the partes shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in any Delaware state court,
this being in addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of any court of the United States located in the
State of Delaware or of any Delaware state court in the event any dispute arises
out of this Agreement or the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court and (c) agrees that it
will not bring any action relating to this Agreement or the transactions
contemplated by this Agreement in any court other than a court of the United
States located in the State of Delaware or a Delaware state court.
SECTION 10.10. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and
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effect. Upon such determination that any term other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by applicable law
in an acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
LUCENT TECHNOLOGIES INC.
by /s/ ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇
Title: Vice President
REINDEER ACQUISITION, INC.,
by /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
YURIE SYSTEMS, INC.
by /s/ ▇▇▇▇▇ ▇. ▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇
Title: CEO and Chairman
55
EXHIBIT A
Conditions of the Offer
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered pursuant
to the Offer unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer such number of Shares that would constitute
at least a majority of the outstanding Shares (determined on a fully diluted
basis for all outstanding stock options and any other rights to acquire Shares
on the date of purchase) (the "Minimum Condition") and (ii) any waiting period
under the HSR Act applicable to the purchase of Shares pursuant to the Offer
shall have expired or been terminated. Furthermore, Sub shall not be required to
accept for payment or, subject as aforesaid, to pay for any Shares not
theretofore accepted for payment or paid for, and may, in accordance with
Section 9.01, terminate this Agreement or amend the Offer with the consent of
the Company, if, upon the scheduled expiration date of the Offer (as extended,
if required, pursuant to the second to the last sentence of Section 1.01(a)) and
before the acceptance of such Shares for payment or the payment therefor, any of
the following conditions exists and is continuing and does not result
principally from the breach by Parent or Sub of any of their obligations under
this Agreement:
(a) there shall be instituted or pending by any Governmental Entity
any suit, action or proceeding (i) challenging the acquisition by Parent
or Sub of any Shares under the Offer, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or the performance of
any of the other transactions contemplated by this Agreement or the
Stockholders Agreement or seeking to obtain from the Company, Parent or
Sub any damages that are material in relation to the Company and its
subsidiaries taken as a whole, (ii) seeking to prohibit or materially
limit the ownership or operation by the Company, Parent or any of Parent's
subsidiaries of a material portion of the business or assets of the
Company or Parent and its subsidiaries, taken as a whole, or to compel the
Company or Parent to dispose of or hold separate any material portion of
the business or assets of the Company or Parent and its subsidiaries,
taken as a
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2
whole, in each case as a direct result of the Offer or any of the other
transactions contemplated by this Agreement or the Stockholders Agreement
or (iii) seeking to impose material limitations on the ability of Parent
or Sub to acquire or hold, or exercise full rights of ownership of, any
Shares to be accepted for payment pursuant to the Offer including, without
limitation, the right to vote such Shares on all matters properly
presented to the stockholders of the Company or (iv) seeking to prohibit
Parent or any of its subsidiaries from effectively controlling in any
material respect any material portion of the business or operations of the
Company;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, by any Governmental Entity or court, other than
the application to the Offer or the Merger of applicable waiting periods
under the HSR Act, that would result in any of the consequences referred
to in clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred any material adverse change with
respect to the Company since the date of this Agreement;
(d) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall not be
true and correct or any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in
each case at the date of this Agreement and at the scheduled or extended
expiration of the Offer;
(e) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed or
complied with by it under this Agreement, which failure to perform or
comply cannot be cured, or has not been cured within 30 business days
after the Company receives written notice from Parent of such breach or
failure to perform; or
(f) this Agreement shall have been terminated in accordance with its
terms;
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which, in the good faith judgment of Parent or Sub, in its sole discretion, make
it inadvisable to proceed with such acceptance of Shares for payment or the
payment therefor.
The foregoing conditions are for the sole benefit of Parent and Sub
and (except for the Minimum Condition) may, subject to the terms of this
Agreement, be waived by Parent and Sub in whole or in part at any time and from
time to time in their sole discretion. The failure by Parent or Sub at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time. Terms used but not defined herein
shall have the meanings assigned to such terms in the Agreement to which this
Exhibit A is a part.
58
EXHIBIT B
Certificate of Incorporation
of the Surviving Corporation
As of the Effective Time, the Certificate of Incorporation of the
Surviving Corporation shall be amended by deleting Articles FIRST through TENTH
thereof in their entirety and replacing them with the following:
FIRST: The name of the corporation (hereinafter called the
"corporation") is Yurie Systems, Inc.
SECOND: The address, including street, number, city, and county, of
the registered office of the corporation in the State of Delaware is ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of New Castle; and the name of the registered
agent of the corporation in the State of Delaware at such address is Corporation
Service Company.
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is one thousand, with a par value of $.01 per
share. All such shares are of one class and are shares of Common Stock.
FIFTH: The name and the mailing address of the
incorporator are as follows:
NAME MAILING ADDRESS
▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between
this corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of ss. 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for this
corporation under
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the provisions of ss. 279 of Title 8 of the Delaware Code order a meeting of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing three
fourths in value of the creditors or class of creditors and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.
EIGHTH: For the management of the business and for the conduct of
the affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be
fixed by, or in the manner provided in, the Bylaws. The phrase "whole
Board" and the phrase "total number of directors" shall be deemed to have
the same meaning, to wit, the total number of directors which the
corporation would have if there were no vacancies. No election of
directors need be by written ballot.
2. After the original or other Bylaws of the corporation have been
adopted, amended, or repealed, as the case may be, in accordance with the
provisions of ss. 109 of the General Corporation Law of the State of
Delaware, and, after the corporation has received any payment for any of
its stock, the power to adopt, amend, or repeal the Bylaws of the
corporation may be exercised by the Board of Directors of the corporation;
provided, however, that any provision for the classification of directors
of the corporation for staggered terms pursuant to the provisions of
subsection (d) of ss. 141 of the General Corporation Law of the State of
Delaware shall be set forth in an initial Bylaw or in a Bylaw adopted by
the stockholders
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entitled to vote of the corporation unless provisions for such
classification shall be set forth in this certificate of incorporation.
3. Whenever the corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder thereof to
notice of, and the right to vote at, any meeting of stockholders. Whenever
the corporation shall be authorized to issue more than one class of stock,
no outstanding share of any class of stock which is denied voting power
under the provisions of the certificate of incorporation shall entitle the
holder thereof to the right to vote at any meeting of stockholders except
as the provisions of paragraph (2) of subsection (b) of ss. 242 of the
General Corporation Law of the State of Delaware shall otherwise require;
provided, that no share of any such class which is otherwise denied voting
power shall entitle the holder thereof to vote upon the increase or
decrease in the number of authorized shares of said class.
NINTH: The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the provisions of
paragraph (7) of subsection (b) of ss. 102 of the General Corporation Law
of the State of Delaware, as the same may be amended and supplemented.
TENTH: The corporation shall, to the fullest extent permitted by the
provisions of ss. 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and
all persons whom it shall have power to indemnify under said section from
and against any and all of the expenses, liabilities, or other matters
referred to in or covered by said section, and the indemnification
provided for herein shall not be deemed exclusive of any other rights to
which those indemnified may be entitled under any Bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in an official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a
director, officer, employee, or agent and shall inure to the benefit of
the heirs, executors, and administrators of such a person.
ELEVENTH: From time to time any of the provisions of this
certificate of incorporation may be amended,
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altered, or repealed, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted in the
manner and at the time prescribed by said laws, and all rights at any time
conferred upon the stockholders of the corporation by this certificate of
incorporation are granted subject to the provisions of this Article
ELEVENTH.