Exhibit 2.2
AGREEMENT AND PLAN OF MERGER
AMONG
TELLABS, INC.,
WHITE OAK MERGER CORP.
AND
CIENA CORPORATION
Dated as of June 2, 1998
AGREEMENT OF PLAN AND MERGER
TABLE OF CONTENTS
ARTICLE I THE MERGER
Section 1.1 The Merger 2
Section 1.2 Effective Time 2
Section 1.3 Effects of the Merger; Directors and Officers 2
Section 1.4 Charter and Bylaws; Directors and Officers 2
Section 1.5 Conversion of Securities 3
Section 1.6 Parent to Make Certificates Available 4
Section 1.7 Dividends; Transfer Taxes; Withholding 4
Section 1.8 No Fractional Securities 5
Section 1.9 Return of Exchange Fund 6
Section 1.10 Adjustment of Exchange Ratio 6
Section 1.11 No Further Ownership Rights in Company
Common Stock 6
Section 1.12 Closing of Company Transfer Books 6
Section 1.13 Lost Certificates 7
Section 1.14 Further Assurances 7
Section 1.15 Closing 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 2.1 Organization, Standing and Power 8
Section 2.2 Capital Structure 9
Section 2.3 Authority 10
Section 2.4 Consents and Approvals; No Violation 11
Section 2.5 SEC Documents and Other Reports 12
Section 2.6 Registration Statement and Joint Proxy
Statement 13
Section 2.7 Absence of Certain Changes or Events 13
Section 2.8 Permits and Compliance 14
Section 2.9 Tax Matters 15
Section 2.10 Actions and Proceedings 16
Section 2.11 Certain Agreements 16
Section 2.12 ERISA 16
Section 2.13 Compliance with Worker Safety and
Environmental Laws 17
Section 2.14 Labor Matters 18
Section 2.15 Intellectual Property 18
Section 2.16 Opinion of Financial Advisor 19
Section 2.17 Required Vote of Parent Stockholders 19
Section 2.18 Pooling of Interests; Reorganization 19
Section 2.19 Brokers 19
Section 2.20 Operations of Sub 19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Standing and Power 20
Section 3.2 Capital Structure 20
Section 3.3 Authority 21
Section 3.4 Consents and Approvals; No Violation 22
Section 3.5 SEC Documents and Other Reports 23
Section 3.6 Registration Statement and Joint Proxy
Statement 24
Section 3.7 Absence of Certain Changes or Events 24
Section 3.8 Permits and Compliance 25
Section 3.9 Tax Matters 26
Section 3.10 Actions and Proceedings 27
Section 3.11 Certain Agreements 27
Section 3.12 ERISA 28
Section 3.13 Compliance with Worker Safety and
Environmental Laws 29
Section 3.14 Labor Matters 30
Section 3.15 Intellectual Property 30
Section 3.16 Opinion of Financial Advisor 31
Section 3.17 State Takeover Statutes; Certain Charter
Provisions 31
Section 3.18 Required Vote of Company Stockholders 31
Section 3.19 Pooling of Interests; Reorganization 31
Section 3.20 Brokers 31
Section 3.21 Rights Agreement 32
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger 32
Section 4.2 No Solicitation 36
Section 4.3 Third Party Standstill Agreements 37
Section 4.4 Pooling of Interests; Reorganization 37
ARTICLE V ADDITIONAL AGREEMENTS
Section 5.1 Stockholder Meetings 38
Section 5.2 Preparation of the Registration Statement
and the Joint Proxy Statement 39
Section 5.3 Intentionally Omitted 39
Section 5.4 Access to Information 39
Section 5.5 Compliance with the Securities Act 40
Section 5.6 Current Nasdaq Quotation 40
Section 5.7 Fees and Expenses 40
Section 5.8 Company Stock Plans. 44
Section 5.9 Reasonable Best Efforts; Pooling of
Interests 44
Section 5.10 Public Announcements 46
Section 5.11 Real Estate Transfer and Gains Tax 46
Section 5.12 State Takeover Laws 46
Section 5.13 Indemnification; Directors and Officers
Insurance 46
Section 5.14 Notification of Certain Matters 47
Section 5.15 Employee Benefit Plans and Agreements 47
Section 5.16 Rights Agreement 48
Section 5.17 Directorships. 48
ARTICLE VI CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation
to Effect the Merger 49
Section 6.2 Conditions to Obligation of the Company
to Effect the Merger 50
Section 6.3 Conditions to Obligations of Parent and
Sub to Effect the Merger 52
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination 54
Section 7.2 Effect of Termination 56
Section 7.3 Amendment 57
Section 7.4 Waiver 57
ARTICLE VIII GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and
Warranties 57
Section 8.2 Notices 57
Section 8.3 Interpretation 58
Section 8.4 Counterparts 58
Section 8.5 Entire Agreement; No Third-Party
Beneficiaries 58
Section 8.6 Governing Law 58
Section 8.7 Assignment 59
Section 8.8 Severability 59
Section 8.9 Enforcement of this Agreement 59
TABLE OF DEFINED TERMS
Defined Term Section
Affiliate 5.7(b)(i)
Agreement Forepart
Blue Sky Laws 2.4
Certificate of Merger 1.2
Certificates 1.6(b)
Closing 1.15
Code Recitals
Company Forepart
Company Affiliate Letter 5.5(a)
Company Annual Report 3.2(b)
Company Business Personnel 3.14
Company Bylaws 1.4(a)
Company Charter 1.4(a)
Company Common Stock Recitals
Company Letter 3.2(c)
Company Multiemployer Plan 3.12(c)
Company Permits 3.8(a)
Company Plan 3.12(c)
Company Preferred Stock 3.2(a)
Company SEC Documents 3.5
Company Stock Option Plans 3.2(a)
Company Stock Options 3.2(a)
Company Stock Purchase Plan 3.2(a)
Company Stockholder Meeting 5.1
Confidentiality Agreement 5.4
Constituent Corporations Forepart
D&O Insurance 5.13
DGCL 1.1
Effective Time 1.2
Environmental Laws 2.13
ERISA 2.12(a)
ERISA Affiliate 2.12(c)
Exchange Act 2.4
Exchange Agent 1.6(a)
Exchange Fund 1.6(a)
Exchange Ratio 1.5(c)
Gains Taxes 5.11
Governmental Entity 2.4
HSR Act 2.4
Intellectual Property Rights 2.15(a)
IRS 2.9
Joint Proxy Statement 2.6
Joint Venture 2.2(c)
Knowledge of Parent 2.8(b)
Knowledge of the Company 3.8(b)
Material Adverse Change 2.1
Material Adverse Effect 2.1
Merger Recitals
NASDAQ 1.8
Noncompetition Agreements 3.12(d)
Parent Forepart
Parent Acquisition Event 5.7(d)
Parent Affiliate Letter 5.5(b)
Parent Annual Report 2.2(b)
Parent Business Personnel 2.14
Parent Bylaws 2.4
Parent Charter 2.4
Parent Common Stock Recitals
Parent Letter 2.2(c)
Parent Multiemployer Plan 2.12(c)
Parent Permits 2.8(a)
Parent Plan 2.12(c)
Parent Preferred Stock 2.2(a)
Parent SEC Documents 2.5
Parent Stock Plans 2.2(a)
Parent Stockholder Meeting 5.1
Parent Takeover Proposal 5.7(b)(ii)
Registration Statement 2.3
Rights 3.2(a)
Rights Agreement 3.2(a)
Rule 145 Affiliates 5.5(a)
SEC 2.2(b)
Securities Act 2.3
Share Issuance 2.3
State Takeover Approvals 2.4
Stock Option Agreement Recitals
Stockholder Agreements Recitals
Stockholder Meetings 5.1
Sub Forepart
Subsidiary 2.1
Substitute Option 5.8
Superior Proposal 4.2(a)
Surviving Corporation 1.1
Takeover Proposal 4.2(a)
Tax Return 2.9
Taxes 2.9
Termination Fee 5.7(c)
Third Party 5.7(c)
Third Party Acquisition Event 5.7(c)
Worker Safety Laws 2.13
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 2, 1998 (this
"Agreement"), among Tellabs, Inc., a Delaware corporation ("Parent"),
White Oak Merger Corp., a Delaware corporation and a direct wholly owned
subsidiary of Parent ("Sub"), and CIENA Corporation, a Delaware
corporation (the "Company") (Sub and the Company being hereinafter
collectively referred to as the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved and declared advisable the merger of Sub with
and into the Company (the "Merger"), upon the terms and subject to the
conditions set forth herein, whereby each issued and outstanding share
of common stock, par value $.01 per share, of the Company ("Company
Common Stock") not owned directly or indirectly by Parent or the Company
will be converted into shares of Common Stock, par value $.01 per share,
of Parent ("Parent Common Stock");
WHEREAS, the respective Boards of Directors of Parent and the
Company have determined that the Merger is in furtherance of and
consistent with their respective long-term business strategies and is in
the best interest of their respective stockholders;
WHEREAS, in order to induce Parent and Sub to enter into this
Agreement, concurrently herewith Parent and the Company are entering
into the Stock Option Agreement dated as of the date hereof (the "Stock
Option Agreement") in the form of the attached Exhibit A;
WHEREAS, in order to induce Parent and Sub to enter into this
Agreement, concurrently herewith certain stockholders and each of the
directors of the Company are entering into stockholder agreements with
Parent (the "Stockholder Agreements"), pursuant to which, among other
things, each such stockholder and director (in such director's capacity
as a stockholder) agrees to vote in favor of this Agreement and the
Merger and against any competing proposals;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a pooling of interests.
NOW, THEREFORE, in consideration of the premises,
representations, warranties and agreements herein contained, the
parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject
to the conditions hereof, and in accordance with the Delaware General
Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time (as hereinafter defined). Following the
Merger, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and
obligations of Sub in accordance with the DGCL. Notwithstanding anything
to the contrary herein, at the election of Parent, any direct wholly
owned Subsidiary (as hereinafter defined) of Parent may be substituted
for Sub as a constituent corporation in the Merger; provided that such
substituted corporation is a Delaware corporation which is formed solely
for the purpose of engaging in the transactions contemplated by this
Agreement and has engaged in no other business activities. In such
event, the parties agree to execute an appropriate amendment to this
Agreement, in form and substance reasonably satisfactory to Parent and
the Company, in order to reflect such substitution.
Section 1.2 Effective Time. The Merger shall become
effective when a Certificate of Merger (the "Certificate of Merger"),
executed in accordance with the relevant provisions of the DGCL, is
filed with the Secretary of State of the State of Delaware; provided,
however, that, upon mutual consent of the Constituent Corporations, the
Certificate of Merger may provide for a later date of effectiveness of
the Merger not more than 30 days after the date the Certificate of
Merger is filed. When used in this Agreement, the term "Effective Time"
shall mean the date and time at which the Certificate of Merger is
accepted for recording or such later time established by the Certificate
of Merger. The filing of the Certificate of Merger shall be made on the
date of the Closing (as hereinafter defined).
Section 1.3 Effects of the Merger; Directors and Officers.
The Merger shall have the effects set forth in this Agreement and in
Section 259 of the DGCL.
Section 1.4 Charter and Bylaws; Directors and Officers.
(a) At the Effective Time, the Third Restated Certificate of
Incorporation, as amended, of the Company (the "Company Charter"), as in
effect immediately prior to the Effective Time, shall be amended so that
(i) Article FOURTH of the Company Charter reads in its entirety as
follows: "The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is 1,000 shares of
Common Stock, par value $.01 per share". As so amended, the Company
Charter shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or
by applicable law. At the Effective Time, the Amended and Restated
laws of the Company (the "Company Bylaws"), as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter changed or amended as provided therein or
by the Company Charter.
(b) The directors of Sub at the Effective Time of the
Merger shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be. The
officers of the Company at the Effective Time of the Merger shall be the
officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
Section 1.5 Conversion of Securities. As of the Effective
Time, by virtue of the Merger and without any action on the part of Sub,
the Company or the holders of any securities of the Constituent
Corporations:
(a) Each issued and outstanding share of common stock, par
value $.01 per share, of Sub shall be converted into one validly issued,
fully paid and nonassessable share of common stock of the Surviving
Corporation.
(b) All shares of Company Common Stock, together with
associated Rights (as hereinafter defined), that are held in the
treasury of the Company or by any wholly owned Subsidiary of the Company
and any shares of Company Common Stock, together with the associated
Rights, owned by Parent shall be cancelled and no capital stock of
Parent or other consideration shall be delivered in exchange therefor.
(c) Subject to the provisions of Sections 1.8 and 1.10 hereof,
each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares to be cancelled in
accordance with Section 1.5(b)), together with the associated Rights,
shall be converted into one (such number being the "Exchange Ratio")
validly issued, fully paid and nonassessable share of Parent Common
Stock. All such shares of Company Common Stock and the associated
Rights, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive any dividends and other
distributions in accordance with Section 1.7, certificates representing
the shares of Parent Common Stock into which such shares are converted
and any cash, without interest, in lieu of fractional shares to be
issued or paid in consideration therefor upon the surrender of such
certificate in accordance with Section 1.6.
Section 1.6 Parent to Make Certificates Available. (a)
Exchange of Certificates. Parent shall authorize a commercial bank (or
such other person or persons as shall be reasonably acceptable to Parent
and the Company) to act as Exchange Agent hereunder (the "Exchange
Agent"). As soon as practicable after the Effective Time, Parent shall
deposit with the Exchange Agent certificates representing the shares of
Parent Common Stock issuable pursuant to Section 1.5(c) for exchange
with outstanding shares of Company Common Stock and cash, as required to
make payments in lieu of any fractional shares pursuant to Section 1.8
(such cash and shares of Parent Common Stock, together with any
dividends or distributions with respect thereto, being hereinafter
referred to as the "Exchange Fund"). The Exchange Agent shall deliver
the Parent Common Stock contemplated to be issued pursuant to Section
1.5(c) out of the Exchange Fund.
(b) Exchange Procedures. Parent shall instruct the Exchange
Agent, as soon as practicable after the Effective Time, to mail to each
record holder of a certificate or certificates which immediately prior
to the Effective Time represented outstanding shares of Company Common
Stock converted in the Merger (the "Certificates") a letter of
transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon actual
delivery of the Certificates to the Exchange Agent, and shall contain
instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock and
cash in lieu of fractional shares). Upon surrender for cancellation to
the Exchange Agent of all Certificates held by any record holder of a
Certificate, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares of
Parent Common Stock into which the shares represented by the surrendered
Certificate shall have been converted at the Effective Time pursuant to
this Article I, cash in lieu of any fractional share in accordance with
Section 1.8 and certain dividends and other distributions in accordance
with Section 1.7, and any Certificate so surrendered shall forthwith be
cancelled.
Section 1.7 Dividends; Transfer Taxes; Withholding. No
dividends or other distributions that are declared on or after the
Effective Time on Parent Common Stock, or are payable to the holders of
record thereof on or after the Effective Time, will be paid to any
person entitled by reason of the Merger to receive a certificate
representing Parent Common Stock until such person surrenders the
related Certificate or Certificates, as provided in Section 1.6, and no
cash payment in lieu of fractional shares will be paid to any such
person pursuant to Section 1.8 until such person shall so surrender the
related Certificate or Certificates. Subject to the effect of
applicable law, there shall be paid to each record holder of a new
certificate representing such Parent Common Stock: (i) at the time of
such surrender or as promptly as practicable thereafter, the amount of
any dividends or other distributions theretofore paid with respect to
the shares of Parent Common Stock represented by such new certificate
and having a record date on or after the Effective Time and a payment
date prior to such surrender; (ii) at the appropriate payment date or as
promptly as practicable thereafter, the amount of any dividends or other
distributions payable with respect to such shares of Parent Common Stock
and having a record date on or after the Effective Time but prior to
such surrender and a payment date on or subsequent to such surrender;
and (iii) at the time of such surrender or as promptly as practicable
thereafter, the amount of any cash payable with respect to a fractional
share of Parent Common Stock to which such holder is entitled pursuant
to Section 1.8. In no event shall the person entitled to receive such
dividends or other distributions or cash in lieu of fractional shares be
entitled to receive interest on such dividends or other distributions or
cash in lieu of fractional shares. If any cash or certificate
representing shares of Parent Common Stock is to be paid to or issued in
a name other than that in which the Certificate surrendered in exchange
therefor is registered, it shall be a condition of such exchange that
the Certificate so surrendered shall be properly endorsed and otherwise
in proper form for transfer and that the person requesting such exchange
shall pay to the Exchange Agent any transfer or other taxes required by
reason of the issuance of certificates for such shares of Parent Common
Stock in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable. Parent
or the Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder
of shares of Company Common Stock such amounts as Parent or the Exchange
Agent is required to deduct and withhold with respect to the making of
such payment under the Code or under any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Parent
or the Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the
shares of Company Common Stock in respect of which such deduction and
withholding was made by Parent or the Exchange Agent.
Section 1.8 No Fractional Securities. No certificates
or scrip representing fractional shares of Parent Common Stock shall be
issued upon the surrender for exchange of Certificates pursuant to this
Article I, and no Parent dividend or other distribution or stock split
shall relate to any fractional share, and no fractional share shall
entitle the owner thereof to vote or to any other rights of a security
holder of Parent. In lieu of any such fractional share, each holder of
Company Common Stock who would otherwise have been entitled to a
fraction of a share of Parent Common Stock upon surrender of
Certificates for exchange pursuant to this Article I will be paid an
amount in cash (without interest), rounded to the nearest cent,
determined by multiplying (i) the last reported sale price per share of
Parent Common Stock on The Nasdaq Stock Market ("NASDAQ") on the date of
the Effective Time (or, if the shares of Parent Common Stock do not
trade on NASDAQ on such date, the first date of trading of shares of
Parent Common Stock on NASDAQ after the Effective Time) by (ii) the
fractional interest to which such holder would otherwise be entitled.
As promptly as practicable after the determination of the amount of
cash, if any, to be paid to holders of fractional share interests, the
Exchange Agent shall so notify Parent, and Parent shall deposit such
amount with the Exchange Agent and shall cause the Exchange Agent to
forward payments to such holders of fractional share interests subject
to and in accordance with the terms of Section 1.7 and this Section 1.8.
Section 1.9 Return of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the former stockholders of
the Company for six months after the Effective Time shall be delivered
to Parent, upon demand of Parent, and any such former stockholders who
have not theretofore complied with this Article I shall thereafter look
only to Parent for payment of their claim for Parent Common Stock, any
cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to Parent Common Stock. Neither
Parent nor the Surviving Corporation shall be liable to any former
holder of Company Common Stock for any such shares of Parent Common
Stock, cash and dividends and distributions held in the Exchange Fund
which is delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
Section 1.10 Adjustment of Exchange Ratio. In the event of
any reclassification, stock split or stock dividend with respect to
Parent Common Stock or any change or conversion of Parent Common Stock
into other securities (or if a record date with respect to any of the
foregoing should occur) prior to the Effective Time, appropriate and
proportionate adjustments, if any, shall be made to the Exchange Ratio,
and all references to the Exchange Ratio in this Agreement shall be
deemed to be to the Exchange Ratio as so adjusted.
Section 1.11 No Further Ownership Rights in Company Common
Stock. All shares of Parent Common Stock issued upon the surrender for
exchange of Certificates in accordance with the terms hereof (including
any cash paid pursuant to Section 1.8) shall be deemed to have been
issued in full satisfaction of all rights pertaining to the shares of
Company Common Stock represented by such Certificates.
Section 1.12 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed
and no transfer of shares of Company Common Stock shall thereafter be
made on the records of the Company. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, the Exchange
Agent or the Parent, such Certificates shall be cancelled and exchanged
as provided in this Article I.
Section 1.13 Lost Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by Parent or the Exchange Agent, the posting
by such person of a bond, in such reasonable amount as Parent or the
Exchange Agent may direct as indemnity against any claim that may be
made against them with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate
the shares of Parent Common Stock, any cash in lieu of fractional shares
of Parent Common Stock to which the holders thereof are entitled
pursuant to Section 1.8 and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 1.7.
Section 1.14 Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised
that any deeds, bills of sale, assignments or assurances or any other
acts or things are necessary, desirable or proper (a) to vest, perfect
or confirm, of record or otherwise, in the Surviving Corporation its
right, title or interest in, to or under any of the rights, privileges,
powers, franchises, properties or assets of either of the Constituent
Corporations, or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and
directors or their designees shall be authorized to execute and deliver,
in the name and on behalf of either of the Constituent Corporations, all
such deeds, bills of sale, assignments and assurances and to do, in the
name and on behalf of either Constituent Corporation, all such other
acts and things as may be necessary, desirable or proper to vest,
perfect or confirm the Surviving Corporation's right, title or interest
in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to
carry out the purposes of this Agreement.
Section 1.15 Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") and all actions specified
in this Agreement to occur at the Closing shall take place at the
offices of Sidley & Austin, One First National Plaza, Chicago, Illinois,
at 10:00 a.m., local time, no later than the second business day
following the day on which the last of the conditions set forth in
Article VI shall have been fulfilled or waived (if permissible) or at
such other time and place as Parent and the Company shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as
follows:
Section 2.1 Organization, Standing and Power. Each of
Parent and Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the
requisite corporate power and authority to carry on its business as now
being conducted. Each Subsidiary (as hereinafter defined) of Parent is
duly organized, validly existing and in good standing under the laws of
the jurisdiction in which it is organized and has the requisite
corporate (in the case of a Subsidiary that is a corporation) or other
power and authority to carry on its business as now being conducted,
except where the failure to be so organized, existing or in good
standing or to have such power or authority would not, individually or
in the aggregate, have a Material Adverse Effect (as hereinafter
defined) on Parent. Parent and each of its Subsidiaries are duly
qualified to do business, and are in good standing, in each jurisdiction
where the character of their properties owned or held under lease or the
nature of their activities makes such qualification necessary, except
where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. For purposes of
this Agreement (a) "Material Adverse Change" or "Material Adverse
Effect" means, when used with respect to Parent or the Company, as the
case may be, any event, change or effect that individually or when taken
together with all other such events, changes or effects is or could
reasonably be expected (as far as can be foreseen at the time) to be
materially adverse to the business, assets, liabilities, financial
condition or results of operations of Parent and its Subsidiaries, taken
as a whole, or the Company and its Subsidiaries, taken as a whole, as
the case may be; provided, however, that in determining whether a
Material Adverse Change or Material Adverse Effect has occurred with
respect to either referenced party, any change or effect, to the extent
it is attributable (i) to any change in general economic conditions
affecting companies in industries similar to the industries in which the
Company and its Subsidiaries or Parent and its Subsidiaries, as the case
may be, operate or (ii) to the closing or the failure to close the
merger contemplated in that certain Agreement of Plan of Merger dated as
of February 16, 1998 among Parent, Cardinal Merger Co. and Coherent
Communications Systems Corporation substantially on the terms set forth
therein (so long as such closing or failure to close does not result in
any material liability to Parent), shall not be considered when
determining if a Material Adverse Change or Material Adverse Effect has
occurred; and (b) "Subsidiary" means any corporation, partnership,
limited liability company, joint venture or other legal entity of which
Parent or the Company, as the case may be (either alone or through or
together with any other Subsidiary), owns, directly or indirectly, 50%
or more of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or
other governing body of such corporation, partnership, limited liability
company, joint venture or other legal entity.
Section 2.2 Capital Structure. (a) As of the date hereof,
the authorized capital stock of Parent consists of 500,000,000 shares of
Parent Common Stock and 5,000,000 shares of Preferred Stock, par value
$.01 per share (the "Parent Preferred Stock"). At the close of business
on May 28, 1998, (i) 182,425,765 shares of Parent Common Stock were
issued and outstanding, all of which were validly issued, fully paid and
nonassessable and free of preemptive rights, (ii) no shares of Parent
Common Stock were held in treasury of Parent or by Subsidiaries of
Parent, (iii) no shares of Parent Preferred Stock were issued or
outstanding, (iv) 10,194,606 shares of Parent Common Stock were reserved
for issuance pursuant to outstanding options or other rights to purchase
or otherwise acquire shares of Parent Common Stock under Parent's
benefit plans or arrangements or pursuant to any plans assumed by Parent
in connection with any acquisition, business combination or similar
transaction (collectively, the "Parent Stock Plans"), (v) 149,370 stock
appreciation rights granted pursuant to the Parent Stock Plans and (vi)
11,772,949 shares of Parent Common Stock were reserved for issuance in
connection with that certain Agreement and Plan of Merger dated as of
February 16, 1998 among Parent, Cardinal Merger Co. and Coherent
Communications Systems Corporation. As of the date of this Agreement,
except as set forth above and except for the issuance of shares of
Parent Common Stock pursuant to the Parent Stock Plans, no shares of
capital stock or other voting securities of Parent were issued, reserved
for issuance or outstanding. All of the shares of Parent Common Stock
issuable in exchange for Company Common Stock at the Effective Time in
accordance with this Agreement will be, when so issued, duly authorized,
validly issued, fully paid and nonassessable and free of preemptive
rights. As of the date of this Agreement, except for (i) this Agreement
and (ii) as set forth above, there are no options, warrants, calls,
rights, puts or agreements to which Parent or any of its Subsidiaries is
a party or by which any of them is bound obligating Parent or any of its
Subsidiaries to issue, deliver, sell or redeem, or cause to be issued,
delivered, sold or redeemed, any additional shares of capital stock (or
other voting securities or equity equivalents) of Parent or any of its
Subsidiaries or obligating Parent or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, right, put or
agreement.
(b) As of the date of this Agreement, each outstanding share
of capital stock (or other voting security or equity equivalent) of each
material Subsidiary of Parent is duly authorized, validly issued, fully
paid and nonassessable and, except for director or qualifying shares,
each such share (or other voting security or equity equivalent) is owned
by Parent or another Subsidiary of Parent, free and clear of all
security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on voting rights, charges and other
encumbrances of any nature whatsoever. Except as set forth above,
Parent does not have any outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or convertible
into or exercisable for securities having the right to vote) with the
stockholders of Parent on any matter. Exhibit 21 to Parent's Annual
Report on Form 10-K for the year ended January 2, 1998, as filed with
the Securities and Exchange Commission (the "SEC") (the "Parent Annual
Report"), is a true, accurate and correct statement in all material
respects of all of the information required to be set forth therein by
the regulations of the SEC.
(c) Section 2.2 of the letter dated the date hereof and
delivered on the date hereof by Parent to the Company, which letter
relates to this Agreement and is designated the Parent Letter (the
"Parent Letter"), sets forth a list as of the date hereof of all
Subsidiaries and Joint Ventures (as defined below) of Parent and the
jurisdiction in which such Subsidiary or Joint Venture is organized.
Section 2.2 of the Parent Letter also sets forth as of the date hereof
the nature and extent of the ownership and voting interests held by
Parent in each such Joint Venture. As of the date hereof, Parent has no
obligation to make any capital contributions, or otherwise provide
assets or cash, to any Joint Venture. As used in this Agreement, "Joint
Venture" means, with respect to a party, any corporation, limited
liability company, partnership, joint venture or other entity which is
not a Subsidiary of such party and in which (i) such party, directly or
indirectly, owns or controls any shares of any class of the outstanding
voting securities or other equity interests (other than the ownership of
securities primarily for investment purposes as part of routine cash
management or investments of 1% or less in publicly traded companies),
or (ii) such party or a Subsidiary of such party is a general partner.
Section 2.3 Authority. On or prior to the date of this
Agreement, the Boards of Directors of Parent and Sub have declared the
Merger advisable and fair to and in the best interest of Parent and Sub,
respectively, and their respective stockholders, approved and adopted
this Agreement in accordance with the DGCL, and the Board of Directors
of Parent has resolved to recommend the approval by Parent's
stockholders of the issuance of Parent Common Stock in connection with
the Merger (the "Share Issuance"). Each of Parent and Sub has all
requisite corporate power and authority to enter into this Agreement,
Parent has all requisite corporate power and authority to enter into the
Stock Option Agreement, and, subject to approval by the stockholders of
Parent of the Share Issuance, to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement by Parent and Sub, the execution and delivery of the Stock
Option Agreement by Parent and the consummation by Parent and Sub of the
transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action on the part of Parent and Sub, subject
to (x) approval by the stockholders of Parent of the Share Issuance and
(y) the filing of appropriate Merger documents as required by the DGCL.
This Agreement and the consummation of the transactions contemplated
hereby have been approved by the sole stockholder of Sub. This
Agreement has been duly executed and delivered by Parent and Sub, the
Stock Option Agreement has been duly executed and delivered by Parent,
and (assuming the valid authorization, execution and delivery of this
Agreement and the Stock Option Agreement by the Company and the validity
and binding effect hereof and thereof on the Company) this Agreement
constitutes the valid and binding obligation of Parent and Sub
enforceable against each of them in accordance with its terms and the
Stock Option Agreement constitutes the valid and binding obligation of
Parent enforceable against Parent in accordance with its terms. The
Share Issuance and the filing of a registration statement on Form S-4
with the SEC by Parent under the Securities Act of 1933, as amended
(together with the rules and regulations promulgated thereunder, the
"Securities Act"), for the purpose of registering the shares of Parent
Common Stock to be issued in the Merger (together with any amendments or
supplements thereto, whether prior to or after the effective date
thereof, the "Registration Statement") have been duly authorized by
Parent's Board of Directors.
Section 2.4 Consents and Approvals; No Violation. Assuming
that all consents, approvals, authorizations and other actions described
in this Section 2.4 have been obtained and all filings and obligations
described in this Section 2.4 have been made, and except as set forth in
Section 2.4 of the Parent Letter, the execution and delivery of this
Agreement and the Stock Option Agreement do not, and the consummation of
the transactions contemplated hereby and thereby and compliance with the
provisions hereof and thereof will not, result in any violation of, or
default (with or without notice or lapse of time, or both) under, or
give to others a right of termination, cancellation or acceleration of
any obligation or the loss of a material benefit under, or result in the
creation of any lien, security interest, charge or encumbrance upon any
of the properties or assets of Parent or any of its Subsidiaries under,
any provision of (i) the Restated Certificate of Incorporation, as
amended, of Parent (the "Parent Charter") or the Amended and Restated
By-laws of Parent (the "Parent Bylaws") or the Certificate of
Incorporation or Bylaws of Sub, (ii) any provision of the comparable
charter or organization documents of any of Parent's Subsidiaries, (iii)
any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise or license
applicable to Parent or any of its Subsidiaries or (iv) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Parent or any of its Subsidiaries or any of their respective properties
or assets, other than, in the case of clauses (ii), (iii) or (iv), any
such violations, defaults, rights, liens, security interests, charges or
encumbrances that, individually or in the aggregate, would not have a
Material Adverse Effect on Parent, materially impair the ability of
Parent or Sub to perform their respective obligations hereunder or under
the Stock Option Agreement or prevent the consummation of any of the
transactions contemplated hereby or thereby. No filing or registration
with, or authorization, consent or approval of, any domestic (federal
and state), foreign or supranational court, commission, governmental
body, regulatory agency, authority or tribunal (a "Governmental Entity")
is required by or with respect to Parent or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or the
Stock Option Agreement by Parent or Sub or is necessary for the
consummation of the Merger and the other transactions contemplated by
this Agreement or the Stock Option Agreement, except for (i) in
connection, or in compliance, with the provisions of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), the Securities Act and the Securities Exchange Act of 1934,
as amended (together with the rules and regulations promulgated
thereunder, the "Exchange Act"), (ii) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in
which the Company or any of its Subsidiaries is qualified to do
business, (iii) such filings, authorizations, orders and approvals as
may be required by state takeover laws (the "State Takeover Approvals"),
(iv) such filings as may be required in connection with the taxes
described in Section 5.11, (v) applicable requirements, if any, of state
securities or "blue sky" laws ("Blue Sky Laws") and NASDAQ, (vi) as may
be required under foreign laws and (vii) such other consents, orders,
authorizations, registrations, declarations and filings the failure of
which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on Parent, materially impair
the ability of Parent or Sub to perform its obligations hereunder or
under the Stock Option Agreement or prevent the consummation of any of
the transactions contemplated hereby or thereby.
Section 2.5 SEC Documents and Other Reports. Parent has
timely filed all required documents with the SEC since January 1, 1997
(the "Parent SEC Documents"). As of their respective dates, the Parent
SEC Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and, at the
respective times they were filed, none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements (including,
in each case, any notes thereto) of Parent included in the Parent SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
SEC with respect thereto, were prepared in accordance with generally
accepted accounting principles (except, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly presented in all material
respects the consolidated financial position of Parent and its
consolidated Subsidiaries as at the respective dates thereof and the
consolidated results of their operations and their consolidated cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and to any other
adjustments described therein). Except as disclosed in the Parent SEC
Documents or as required by generally accepted accounting principles,
Parent has not, since January 2, 1998, made any change in the accounting
practices or policies applied in the preparation of financial
statements.
Section 2.6 Registration Statement and Joint Proxy
Statement. None of the information to be supplied by Parent or Sub for
inclusion or incorporation by reference in the Registration Statement or
the joint proxy statement/prospectus included therein relating to the
Stockholder Meetings (as defined in Section 5.1) (together with any
amendments or supplements thereto, the "Joint Proxy Statement") will (i)
in the case of the Registration Statement, at the time it becomes
effective, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading or (ii) in the case
of the Joint Proxy Statement, at the time of the mailing of the Joint
Proxy Statement, at the time of each of the Stockholder Meetings and at
the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event with respect to Parent, its
officers and directors or any of its Subsidiaries shall occur which is
required to be described in the Joint Proxy Statement or the
Registration Statement, such event shall be so described, and an
appropriate amendment or supplement shall be promptly filed with the SEC
and, as required by law, disseminated to the stockholders of Parent and
the Company. The Registration Statement will comply (with respect to
Parent) as to form in all material respects with the provisions of the
Securities Act, and the Joint Proxy Statement will comply (with respect
to Parent) as to form in all material respects with the provisions of
the Exchange Act.
Section 2.7 Absence of Certain Changes or Events. Except
as disclosed in Parent SEC Documents filed with the SEC prior to the
date of this Agreement or as disclosed in Section 2.7 of the Parent
Letter, since January 2, 1998 (A) Parent and its Subsidiaries have not
incurred any liability or obligation (indirect, direct or contingent)
that would result in a Material Adverse Effect on Parent or, through the
date hereof, entered into any material oral or written agreement or
other transaction that is not in the ordinary course of business or that
would result in a Material Adverse Effect on Parent, (B) Parent and its
Subsidiaries have not sustained any loss or interference with their
business or properties from fire, flood, windstorm, accident or other
calamity (whether or not covered by insurance) that has had a Material
Adverse Effect on Parent, (C) through the date hereof, there has been no
change in the capital stock of Parent except for the issuance of shares
of Parent Common Stock pursuant to Parent Stock Plans and no dividend or
distribution of any kind declared, paid or made by Parent on any class
of its stock, and (D) there has been no event causing a Material Adverse
Effect on Parent, nor any development that would, individually or in the
aggregate, result in a Material Adverse Effect on Parent.
Section 2.8 Permits and Compliance. (a) Each of Parent
and its Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, charters, easements, variances,
exceptions, consents, certificates, approvals and orders of any
Governmental Entity necessary for Parent or any of its Subsidiaries to
own, lease and operate its properties or to carry on its business as it
is now being conducted (the "Parent Permits"), except where the failure
to have any of the Parent Permits would not, individually or in the
aggregate, have a Material Adverse Effect on Parent, and, as of the date
of this Agreement, no suspension or cancellation of any of the Parent
Permits is pending or, to the Knowledge of Parent (as hereinafter
defined), threatened, except where the suspension or cancellation of any
of the Parent Permits would not, individually or in the aggregate, have
a Material Adverse Effect on Parent. Neither Parent nor any of its
Subsidiaries is in violation of (A) its charter, by-laws or other
organizational documents, (B) any applicable law, ordinance,
administrative or governmental rule or regulation or (C) any order,
decree or judgment of any Governmental Entity having jurisdiction over
Parent or any of its Subsidiaries, except, in the case of clauses (A),
(B) and (C), for any violations that, individually or in the aggregate,
would not have a Material Adverse Effect on Parent.
(b) Except as disclosed in the Parent SEC Documents filed
prior to the date of this Agreement or as disclosed in Section 2.8 of
the Parent Letter, as of the date hereof there is no contract or
agreement that is or was required to be filed by Parent as a material
contract pursuant to Item 601 of Regulation S-K under the Securities
Act. Except as set forth in Section 2.8 of the Parent Letter, as of the
date hereof neither Parent nor any or its Subsidiaries is a party to or
bound by any agreements evidencing, or guarantees relating to,
indebtedness for borrowed money to the extent the aggregate principal
amount outstanding thereunder exceeds $10,000,000. Except as set forth
in the Parent SEC Documents filed prior to the date of this Agreement or
Section 2.8 of the Parent Letter, no event of default or event that, but
for the giving of notice or the lapse of time or both, would constitute
an event of default exists or, upon the consummation by Parent or Sub of
the transactions contemplated by this Agreement or the Stock Option
Agreement, will exist under any indenture, mortgage, loan agreement,
note or other agreement or instrument for borrowed money, any guarantee
of any agreement or instrument for borrowed money or any lease,
contractual license or other agreement or instrument to which Parent or
any of its Subsidiaries is a party or by which Parent or any such
Subsidiary is bound or to which any of the properties, assets or
operations of Parent or any such Subsidiary is subject, other than any
defaults that, individually or in the aggregate, would not have a
Material Adverse Effect on Parent. For purposes of this Agreement,
"Knowledge of Parent" means the actual knowledge of the individuals
identified in Section 2.8 of the Parent Letter.
Section 2.9 Tax Matters. Except as otherwise set forth in
Section 2.9 of the Parent Letter, (i) Parent and each of its
Subsidiaries have filed all federal, and all material state, local,
foreign and provincial, Tax Returns (as hereinafter defined) required to
have been filed or appropriate extensions therefor have been properly
obtained, and such Tax Returns are correct and complete, except to the
extent that any failure to so file or any failure to be correct and
complete would not, individually or in the aggregate, have a Material
Adverse Effect on Parent; (ii) all Taxes (as hereinafter defined) shown
to be due on such Tax Returns have been timely paid or extensions for
payment have been properly obtained, except to the extent that any
failure to so pay or so obtain such an extension would not, individually
or in the aggregate, have a Material Adverse Effect on Parent, (iii)
Parent and each of its Subsidiaries have complied in all material
respects with all rules and regulations relating to the withholding of
Taxes except to the extent that any failure to comply with such rules
and regulations would not, individually or in the aggregate, have a
Material Adverse Effect on Parent; (iv) any Tax Returns referred to in
clause (i) relating to federal income Taxes have been examined by the
Internal Revenue Service (the "IRS") or the period for assessment of the
Taxes in respect of which such Tax Returns were required to be filed has
expired; (v) no issues that have been raised in writing by the relevant
taxing authority in connection with the examination of the Tax Returns
referred to in clause (i) are currently pending; and (vi) all
deficiencies asserted or assessments made as a result of any examination
of such Tax Returns by any taxing authority have been paid in full or
are being timely and properly contested. For purposes of this
Agreement: (i) "Taxes" means any federal, state, local, foreign or
provincial income, gross receipts, property, sales, use, license,
excise, franchise, employment, payroll, withholding, alternative or
added minimum, ad valorem, value-added, transfer or excise tax, or other
tax, custom, duty, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or penalty imposed by
any Governmental Entity, and (ii) "Tax Return" means any return, report
or similar statement (including the attached schedules) required to be
filed with respect to any Tax, including, without limitation, any
information return, claim for refund, amended return or declaration of
estimated Tax.
Section 2.10 Actions and Proceedings. Except as set forth
in the Parent SEC Documents filed prior to the date of this Agreement
and except as set forth in Section 2.10 of the Parent Letter, there are
no outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against or involving Parent or any of its
Subsidiaries, or against or involving any of the present or former
directors, officers, employees or, to the Knowledge of Parent,
consultants, agents or stockholders of Parent or any of its
Subsidiaries, as such, or any of its or their properties, assets or
business that, individually or in the aggregate, would have a Material
Adverse Effect on Parent or materially impair the ability of Parent to
perform its obligations hereunder. Except as set forth in Section 2.10
of the Parent Letter, there are no actions, suits or claims or legal,
administrative or arbitration proceedings or investigations pending or,
to the Knowledge of Parent, threatened against or involving Parent or
any of its Subsidiaries or any of its or their present or former
directors, officers, employees or, to the Knowledge of Parent,
consultants, agents or stockholders, as such, or any of its or their
properties, assets or business that, individually or in the aggregate,
would have a Material Adverse Effect on Parent or materially impair the
ability of Parent to perform its obligations hereunder. As of the date
hereof, there are no actions, suits, labor disputes or other litigation,
legal or administrative proceedings or governmental investigations
pending or, to the Knowledge of Parent, threatened against or affecting
Parent or any of its Subsidiaries or any of its or their present or
former officers, directors, employees or, to the Knowledge of Parent,
consultants, agents or stockholders, as such, or any of its or their
properties, assets or business relating to the transactions contemplated
by this Agreement and the Stock Option Agreement.
Section 2.11 Certain Agreements. Except as set forth in
Section 2.11 of the Parent Letter, neither Parent nor any of its
Subsidiaries is a party to any material oral or written agreement or
plan, including any employment agreement, severance agreement, stock
option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or
the Stock Option Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated
by this Agreement or the Stock Option Agreement.
Section 2.12 ERISA. (a) Except as would not have a
Material Adverse Effect on Parent, (i) each Parent Plan complies in all
respects with Title IV of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), the Code and all other applicable statutes
and governmental rules and regulations, and (ii) no "reportable event"
(within the meaning of Section 4043 of ERISA) has occurred with respect
to any Parent Plan. Neither Parent nor any of its ERISA Affiliates (as
hereinafter defined) has withdrawn from any Parent Plan or Parent
Multiemployer Plan (as hereinafter defined) or instituted, or is
currently considering taking, any action to do so. Except as would not
have a Material Adverse Effect on Parent, no Parent Plan, nor any trust
created thereunder, has incurred any "accumulated funding deficiency"
(as defined in Section 302 of ERISA), whether or not waived.
(b) With respect to the Parent Plans, no event has occurred
and, to the Knowledge of Parent, there exists no condition or set of
circumstances in connection with which Parent or any ERISA Affiliate or
Parent Plan fiduciary could be subject to any liability under the terms
of such Parent Plans, ERISA, the Code or any other applicable law, other
than liabilities for benefits payable in the normal course, which would
have a Material Adverse Effect on Parent.
(c) As used herein, (i) "Parent Plan" means a "pension
plan" (as defined in Section 3(2) of ERISA (other than a Parent
Multiemployer Plan)), a "welfare plan" (as defined in Section 3(1) of
ERISA), or any bonus, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom
stock, holiday pay, vacation, severance, death benefit, sick leave,
fringe benefit, insurance or other plan, arrangement or understanding,
in each case established or maintained by Parent or any of its ERISA
Affiliates or as to which Parent or any of its ERISA Affiliates has
contributed or otherwise may have any liability, (ii) "Parent
Multiemployer Plan" means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which Parent or any of its ERISA Affiliates is
or has been obligated to contribute or otherwise may have any liability,
and (iii) with respect to any person, "ERISA Affiliate" means any trade
or business (whether or not incorporated) which is under common control
or would be considered a single employer with such person pursuant to
Section 414(b), (c), (m) or (o) of the Code and the regulations
promulgated under those sections or pursuant to Section 4001(b) of ERISA
and the regulations promulgated thereunder.
Section 2.13 Compliance with Worker Safety and Environmental
Laws. The properties, assets and operations of Parent and its
Subsidiaries are in compliance with all applicable federal, state, local
and foreign laws, rules and regulations, orders, decrees, judgments,
permits and licenses relating to public and worker health and safety
(collectively, "Worker Safety Laws") and the protection and clean-up of
the environment and activities or conditions related thereto, including,
without limitation, those relating to the generation, handling,
disposal, transportation or release of hazardous materials
(collectively, "Environmental Laws"), except for any violations that,
individually or in the aggregate, would not have a Material Adverse
Effect on Parent. With respect to such properties, assets and
operations, including any previously owned, leased or operated
properties, assets or operations, there are no events, conditions,
circumstances, activities, practices, incidents, actions or plans of
Parent or any of its Subsidiaries that may interfere with or prevent
compliance or continued compliance with applicable Worker Safety Laws
and Environmental Laws, other than any such interference or prevention
as would not, individually or in the aggregate with any such other
interference or prevention, have a Material Adverse Effect on Parent.
Section 2.14 Labor Matters. As of the date hereof, neither
Parent nor any of its Subsidiaries is a party to any collective
bargaining agreement or labor contract. Neither Parent nor any of its
Subsidiaries has engaged in any unfair labor practice with respect to
any persons employed by or otherwise performing services primarily for
Parent or any of its Subsidiaries (the "Parent Business Personnel"), and
there is no unfair labor practice complaint or grievance against Parent
or any of its Subsidiaries by the National Labor Relations Board or any
comparable state agency pending or threatened in writing with respect to
Parent Business Personnel, except where such unfair labor practice,
complaint or grievance would not have a Material Adverse Effect on
Parent. There is no labor strike, dispute, slowdown or stoppage pending
or, to the Knowledge of Parent, threatened against or affecting Parent
or any of its Subsidiaries which may interfere with the respective
business activities of Parent or any of its Subsidiaries, except where
such dispute, strike or work stoppage would not have a Material Adverse
Effect on Parent.
Section 2.15 Intellectual Property. (a) Except as set forth
in Section 2.15 of the Parent Letter, Parent and its Subsidiaries have
through ownership or licensing all patents, trademarks, trade names,
service marks, trade secrets, copyrights and other proprietary
intellectual property rights (collectively, "Intellectual Property
Rights") as are necessary to conduct the business of the Parent and its
Subsidiaries as currently conducted or planned to be conducted by the
Parent and its Subsidiaries, taken as a whole, except where the failure
to have such Intellectual Property Rights would not have a Material
Adverse Effect on Parent. Except as set forth in Section 2.15 of the
Parent Letter, neither Parent nor any of its Subsidiaries has infringed
any Intellectual Property Rights of any third party other than any
infringements that, individually or in the aggregate, would not have a
Material Adverse Effect on Parent.
(b) Except as set forth in the Parent SEC Documents filed
prior to the date of this Agreement or in Section 2.15 of the Parent
Letter, there are no actions, suits or claims or administrative
proceedings or investigations pending or, to the Knowledge of Parent,
threatened that challenge or question Parent's Intellectual Property
Rights and that, individually or in the aggregate, would have a Material
Adverse Effect on Parent.
(c) Except as set forth in Section 2.15 of the Parent Letter,
all patents, registered trademarks, service marks and copyrights which
are held by Parent or any of its Subsidiaries, and which are material to
the business of Parent and its Subsidiaries, taken as a whole, are to
the Knowledge of Parent valid and subsisting. Section 2.15 of the
Parent Letter contains a list as of the date hereof of (i) all material
registered United States, state and foreign trademarks, service marks,
logos, trade dress and trade names and pending applications to register
the foregoing, (ii) all United States and material foreign patents and
patent applications and (iii) all material registered United States and
foreign copyrights and pending applications to register the same, in
each case owned by Parent and its Subsidiaries.
Section 2.16 Opinion of Financial Advisor. Parent has
received the written opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., dated the date
hereof, to the effect that, as of the date hereof, the Exchange Ratio is
fair to Parent from a financial point of view.
Section 2.17 Required Vote of Parent Stockholders. The
affirmative vote of a majority of the shares present in person or by
proxy at the Parent Stockholder Meeting (as hereinafter defined) and
entitled to vote on the Share Issuance is required to approve the Share
Issuance. No other vote of the securityholders of Parent is required by
law, the Parent Charter or the Parent Bylaws or otherwise in order for
Parent to consummate the Merger and the transactions contemplated
hereby.
Section 2.18 Pooling of Interests; Reorganization. To the
Knowledge of Parent, neither Parent nor any of its Subsidiaries has (i)
taken any action or failed to take any action which action or failure
would jeopardize the treatment of the Merger as a pooling of interests
for accounting purposes or (ii) taken any action or failed to take any
action which action or failure would jeopardize the qualification of the
Merger as a reorganization within the meaning of Section 368(a) of the
Code.
Section 2.19 Brokers. No broker, investment banker or other
person, other than ▇▇▇▇▇▇▇, Sachs & Co., the fees and expenses of which
will be paid by Parent (as reflected in the agreement between ▇▇▇▇▇▇▇,
▇▇▇▇▇ & Co. and Parent, a copy of which has been furnished to the
Company), is entitled to any broker's, finder'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.
Section 2.20 Operations of Sub. Sub is a direct, wholly
owned subsidiary of Parent, was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as
contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
Section 3.1 Organization, Standing and Power. The Company
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate
power and authority to carry on its business as now being conducted.
Each Subsidiary of the Company is duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is
organized and has the requisite corporate (in the case of a Subsidiary
that is a corporation) or other power and authority to carry on its
business as now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power or
authority would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. The Company and each of its Subsidiaries
are duly qualified to do business, and are in good standing, in each
jurisdiction where the character of their properties owned or held under
lease or the nature of their activities makes such qualification
necessary, except where the failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company.
Section 3.2 Capital Structure. (a) As of the date hereof,
the authorized capital stock of the Company consists of 360,000,000
shares of Company Common Stock and 20,000,000 shares of preferred stock,
par value $.01 per share ("Company Preferred Stock"). At the close of
business on May 28, 1998, (i) 101,628,989 shares of Company Common Stock
were issued and outstanding, all of which were validly issued, fully
paid and nonassessable and free of preemptive rights, (ii) no shares of
Company Common Stock were held in the treasury of the Company or by
Subsidiaries of the Company and (iii) 9,239,457 shares of Company Common
Stock were reserved for issuance pursuant to outstanding options (the
"Company Stock Options") to purchase shares of Company Common Stock
issued pursuant to the Company's Amended and Restated 1994 Stock Option
Plan and 1996 Outside Directors Stock Option Plan (collectively, the
"Company Stock Option Plans"). There are no shares issuable pursuant to
the Company's Employee Stock Purchase Plan (the "Company Stock Purchase
Plan"). The Company Stock Option Plans and the Company Stock Purchase
Plan are the only benefit plans of the Company or its Subsidiaries under
which any securities of the Company or any of its Subsidiaries are
issuable. No shares of Company Preferred Stock are issued or
outstanding. As of the date of this Agreement, except as set forth
above and except for the issuance of shares of Company Common Stock upon
the exercise of Company Stock Options outstanding on May 28, 1998 in
accordance with the terms thereof, no shares of capital stock or other
voting securities of the Company were issued, reserved for issuance or
outstanding. As of the date of this Agreement, except for (i) as set
forth above, (ii) the Stock Option Agreement and (iii) rights to
purchase one-one-thousandth of a share of Series A Junior Participating
Preferred Stock (the "Rights") pursuant to a Rights Agreement dated as
of December 29, 1997 (the "Rights Agreement") between the Company and
BankBoston, N.A., as Rights Agent, there are no options, warrants,
calls, rights, puts or agreements to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the
Company or any of its Subsidiaries to issue, deliver, sell or redeem, or
cause to be issued, delivered, sold or redeemed, any additional shares
of capital stock (or other voting securities or equity equivalents) of
the Company or any of its Subsidiaries or obligating the Company or any
of its Subsidiaries to grant, extend or enter into any such option,
warrant, call, right, put or agreement.
(b) Each outstanding share of capital stock (or other voting
security or equity equivalent) of each material Subsidiary of the
Company is duly authorized, validly issued, fully paid and
nonassessable, and each such share (or other voting security or equity
equivalent) is owned by the Company or another Subsidiary of the
Company, free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on
voting rights, charges and other encumbrances of any nature whatsoever.
The Company does not have any outstanding bonds, debentures, notes or
other obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to vote)
with the stockholders of the Company on any matter. Exhibit 21 to the
Company's Annual Report on Form 10-K for the year ended October 31,
1997, as filed with the SEC (the "Company Annual Report"), is a true,
accurate and correct statement in all material respects of all of the
information required to be set forth therein by the regulations of the
SEC.
(c) Section 3.2 of the letter dated the date hereof and
delivered on the date hereof by the Company to Parent, which letter
relates to this Agreement and is designated the Company Letter (the
"Company Letter"), sets forth a list of all Subsidiaries and Joint
Ventures of the Company and the jurisdiction in which such Subsidiary or
Joint Venture is organized. Section 3.2 of the Company Letter also sets
forth the nature and extent of the ownership and voting interests held
by the Company in each such Joint Venture. As of the date hereof, the
Company has no obligation to make any capital contributions, or
otherwise provide assets or cash, to any Joint Venture.
Section 3.3 Authority. On or prior to the date of this
Agreement, the Board of Directors of the Company has declared the Merger
advisable and fair to and in the best interest of the Company and its
stockholders, approved and adopted this Agreement in accordance with the
DGCL, approved the Stockholder Agreements and the Stock Option
Agreement, resolved to recommend the approval and adoption of this
Agreement by the Company's stockholders and directed that this Agreement
be submitted to the Company's stockholders for approval and adoption.
The Company has all requisite corporate power and authority to enter
into this Agreement and the Stock Option Agreement, to consummate the
transactions contemplated by the Stock Option Agreement and, subject to
approval by the stockholders of the Company of this Agreement, to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the Stock Option Agreement by the Company
and the consummation by the Company of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate
action on the part of the Company, subject, in the case of this
Agreement, to (x) approval of this Agreement by the stockholders of the
Company and (y) the filing of appropriate Merger documents as required
by the DGCL. This Agreement and the Stock Option Agreement have been
duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent and
Sub and the Stock Option Agreement by Parent and the validity and
binding effect of the Agreement on Parent and Sub and the Stock Option
Agreement on Parent) constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.
The filing of the Joint Proxy Statement with the SEC and the issuance of
the shares of Company Common Stock pursuant to the Stock Option
Agreement have been duly authorized by the Company's Board of Directors.
Section 3.4 Consents and Approvals; No Violation. Assuming
that all consents, approvals, authorizations and other actions described
in this Section 3.4 have been obtained and all filings and obligations
described in this Section 3.4 have been made, except as set forth in
Section 3.4 of the Company Letter, the execution and delivery of this
Agreement and the Stock Option Agreement do not, and the consummation of
the transactions contemplated hereby and thereby and compliance with the
provisions hereof and thereof will not, result in any violation of, or
default (with or without notice or lapse of time, or both) under, or
give to others a right of termination, cancellation or acceleration of
any obligation or the loss of a material benefit under, or result in the
creation of any lien, security interest, charge or encumbrance upon any
of the properties or assets of the Company or any of its Subsidiaries
under, any provision of (i) the Company Charter or the Company Bylaws,
(ii) any provision of the comparable charter or organization documents
of any of the Company's Subsidiaries, (iii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to the
Company or any of its Subsidiaries or (iv) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or
any of its Subsidiaries or any of their respective properties or assets,
other than, in the case of clauses (ii), (iii) or (iv), any such
violations, defaults, rights, liens, security interests, charges or
encumbrances that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company, materially impair the ability of
the Company to perform its obligations hereunder or under the Stock
Option Agreement or prevent the consummation of any of the transactions
contemplated hereby or thereby. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is
required by or with respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or the
Stock Option Agreement by the Company or is necessary for the
consummation of the Merger and the other transactions contemplated by
this Agreement or the Stock Option Agreement, except for (i) in
connection, or in compliance, with the provisions of the HSR Act, the
Securities Act and the Exchange Act, (ii) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in
which the Company or any of its Subsidiaries is qualified to do
business, (iii) such filings, authorizations, orders and approvals as
may be required to obtain the State Takeover Approvals, (iv) such
filings as may be required in connection with the taxes described in
Section 5.11, (v) applicable requirements, if any, of Blue Sky Laws and
NASDAQ, (vi) as may be required under foreign laws and (vii) such other
consents, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company, materially impair the ability of the Company to perform its
obligations hereunder or under the Stock Option Agreement or prevent the
consummation of any of the transactions contemplated hereby or thereby.
Section 3.5 SEC Documents and Other Reports. The Company
has timely filed all required documents with the SEC since February 7,
1997 (the "Company SEC Documents"). As of their respective dates, the
Company SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may
be, and, at the respective times they were filed, none of the Company
SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated financial
statements (including, in each case, any notes thereto) of the Company
included in the Company SEC Documents complied as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, were
prepared in accordance with generally accepted accounting principles
(except, in the case of the unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto)
and fairly presented in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as at the
respective dates thereof and the consolidated results of their
operations and their consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein). Except as
disclosed in the Company SEC Documents or as required by generally
accepted accounting principles, the Company has not, since October 31,
1997, made any change in the accounting practices or policies applied in
the preparation of financial statements.
Section 3.6 Registration Statement and Joint Proxy
Statement. None of the information to be supplied by the Company for
inclusion or incorporation by reference in the Registration Statement or
the Joint Proxy Statement will (i) in the case of the Registration
Statement, at the time it becomes effective, contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements
therein not misleading or (ii) in the case of the Joint Proxy Statement,
at the time of the mailing of the Joint Proxy Statement, at the time of
each of the Stockholder Meetings and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the Effective Time any
event with respect to the Company, its officers and directors or any of
its Subsidiaries shall occur which is required at that time to be
described in the Joint Proxy Statement or the Registration Statement,
such event shall be so described, and an appropriate amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of Parent and the Company. The
Registration Statement will comply (with respect to the Company) as to
form in all material respects with the provisions of the Securities Act,
and the Joint Proxy Statement will comply (with respect to the Company)
as to form in all material respects with the provisions of the Exchange
Act.
Section 3.7 Absence of Certain Changes or Events. Except
as disclosed in the Company SEC Documents filed with the SEC prior to
the date of this Agreement or as disclosed in Section 3.7 of the Company
Letter, since October 31, 1997 (A) the Company and its Subsidiaries have
not incurred any material liability or obligation (indirect, direct or
contingent) or, through the date hereof, entered into any material oral
or written agreement or other transaction that is not in the ordinary
course of business or that would result in a Material Adverse Effect on
the Company, (B) the Company and its Subsidiaries have not sustained any
loss or interference with their business or properties from fire, flood,
windstorm, accident or other calamity (whether or not covered by
insurance) that has had a Material Adverse Effect on the Company, (C)
through the date hereof, there has been no change in the capital stock
of the Company except for the issuance of shares of the Company Common
Stock pursuant to Company Stock Options and no dividend or distribution
of any kind declared, paid or made by the Company on any class of its
stock, (D) there has not been (x) any granting by the Company or any of
its Subsidiaries to any officer of the Company or any of its
Subsidiaries of any increase in compensation, except in the ordinary
course of business consistent with prior practice or as was required
under employment agreements in effect as of the date of the most recent
audited financial statements included in the Company SEC Documents, (y)
any granting by the Company or any of its Subsidiaries to any such
officer of any increase in severance or termination agreements in effect
as of the date of the most recent audited financial statements included
in the Company SEC Documents or (z) any entry by the Company or any of
its Subsidiaries into any employment, severance or termination agreement
with any such officer and (E) there has been no event causing a Material
Adverse Effect on the Company, nor any development that would,
individually or in the aggregate, result in a Material Adverse Effect on
the Company.
Section 3.8 Permits and Compliance. (a) Each of the
Company and its Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions,
consents, certificates, approvals and orders of any Governmental Entity
necessary for the Company or any of its Subsidiaries to own, lease and
operate its properties or to carry on its business as it is now being
conducted (the "Company Permits"), except where the failure to have any
of the Company Permits would not, individually or in the aggregate, have
a Material Adverse Effect on the Company, and, as of the date of this
Agreement, no suspension or cancellation of any of the Company Permits
is pending or, to the Knowledge of the Company (as hereinafter defined),
threatened, except where the suspension or cancellation of any of the
Company Permits would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. Neither the Company nor any of
its Subsidiaries is in violation of (A) its charter, by-laws or other
organizational documents, (B) any applicable law, ordinance,
administrative or governmental rule or regulation or (C) any order,
decree or judgment of any Governmental Entity having jurisdiction over
the Company or any of its Subsidiaries, except, in the case of clauses
(A), (B) and (C), for any violations that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company.
(b) Except as disclosed in the Company SEC Documents filed
prior to the date of this Agreement or as disclosed in Section 3.8 of
the Company Letter, as of the date hereof there is no contract or
agreement that is or was required to be filed by the Company as a
material contract pursuant to Item 601 of Regulation S-K under the
Securities Act. Except as set forth in Section 3.8 of the Company
Letter, as of the date hereof neither the Company nor any of its
Subsidiaries is a party to or bound by (i) any distribution, marketing
or non-competition agreement or any other agreement or obligation which
purports to materially limit the manner in which, or the localities in
which, the Company or any of its Subsidiaries is entitled to conduct its
business or (ii) any agreement evidencing, or guarantee relating to,
indebtedness for borrowed money to the extent the aggregate principal
amount outstanding thereunder exceeds $10,000,000. Except as set forth
in the Company SEC Documents filed prior to the date of this Agreement
or as disclosed in Section 3.8 of the Company Letter, no event of
default or event that, but for the giving of notice or the lapse of time
or both, would constitute an event of default exists or, upon the
consummation by the Company of the transactions contemplated by this
Agreement or the Stock Option Agreement, will exist under any indenture,
mortgage, loan agreement, note or other agreement or instrument for
borrowed money, any guarantee of any agreement or instrument for
borrowed money or any lease, contractual license or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or
by which the Company or any such Subsidiary is bound or to which any of
the properties, assets or operations of the Company or any such
Subsidiary is subject, other than any defaults that, individually or in
the aggregate, would not have a Material Adverse Effect on the Company.
For purposes of this Agreement, "Knowledge of the Company" means the
actual knowledge of the individuals identified on Section 3.8 of the
Company Letter.
Section 3.9 Tax Matters. Except as otherwise set forth in
Section 3.9 of the Company Letter, (i) the Company and each of its
Subsidiaries have filed all federal, and all material state, local,
foreign and provincial, Tax Returns required to have been filed or
appropriate extensions therefor have been properly obtained, and such
Tax Returns are correct and complete, except to the extent that any
failure to so file or any failure to be correct and complete would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company; (ii) all Taxes shown to be due on such Tax Returns have been
timely paid or extensions for payment have been properly obtained,
except to the extent that any failure to so pay or so obtain such an
extension would not, individually or in the aggregate, have a Material
Adverse Effect on the Company; (iii) the Company and each of its
Subsidiaries have complied in all material respects with all rules and
regulations relating to the withholding of Taxes except to the extent
that any failure to comply with such rules and regulations would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company; (iv) any Tax Returns referred to in clause (i) relating to
federal income Taxes have been examined by the IRS or the period for
assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired; (v) no issues that have been raised in
writing by the relevant taxing authority in connection with any
examination of the Tax Returns referred to in clause (i) are currently
pending; (vi) all deficiencies asserted or assessments made as a result
of any examination of such Tax Returns by any taxing authority have been
paid in full or are being timely and properly contested; and (vii) no
withholding is required under Section 1445 of the Code in connection
with the Merger.
Section 3.10 Actions and Proceedings. Except as set forth
in the Company SEC Documents filed prior to the date of this Agreement
and except as set forth in Section 3.10 of the Company Letter, there are
no outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against or involving the Company or any of its
Subsidiaries, or against or involving any of the present or former
directors, officers, employees or, to the Knowledge of the Company,
consultants, agents or stockholders of the Company or any of its
Subsidiaries, as such, or any of its or their properties, assets or
business or any Company Plan (as hereinafter defined) that, individually
or in the aggregate, would have a Material Adverse Effect on the Company
or materially impair the ability of the Company to perform its
obligations hereunder or under the Stock Option Agreement. Except as
set forth in the Company SEC Documents filed prior to the date of this
Agreement or in Section 3.10 of the Company Letter, there are no
actions, suits or claims or legal, administrative or arbitration
proceedings or investigations pending or, to the Knowledge of the
Company, threatened against or involving the Company or any of its
Subsidiaries or any of its or their present or former directors,
officers, employees or, to the Knowledge of the Company, consultants,
agents or stockholders, as such, or any of its or their properties,
assets or business or any Company Plan that, individually or in the
aggregate, would have a Material Adverse Effect on the Company or
materially impair the ability of the Company to perform its obligations
hereunder or under the Stock Option Agreement. As of the date hereof,
there are no actions, suits, labor disputes or other litigation, legal
or administrative proceedings or governmental investigations pending or,
to the Knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries or any of its or their present or
former officers, directors, employees or, to the Knowledge of the
Company, consultants, agents or stockholders, as such, or any of its or
their properties, assets or business relating to the transactions
contemplated by this Agreement and the Stock Option Agreement.
Section 3.11 Certain Agreements. Except as set forth in
Section 3.11 of the Company Letter, neither the Company nor any of its
Subsidiaries is a party to any oral or written agreement or plan,
including any employment agreement, severance agreement, stock option
plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence
of any of the transactions contemplated by this Agreement or the Stock
Option Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement or the Stock Option Agreement. No holder of any option to
purchase shares of Company Common Stock, or shares of Company Common
Stock granted in connection with the performance of services for the
Company or its Subsidiaries, is or will be entitled to receive cash from
the Company or any Subsidiary in lieu of or in exchange for such option
or shares under this Agreement or the Stock Option Agreement. Section
3.11 of the Company Letter sets forth (i) for each officer, director,
employee or consultant who is a party to, or will receive benefits
under, this Agreement or the Stock Option Agreement, the total amount
that each such person may receive, or is eligible to receive, assuming
that the transactions contemplated by this Agreement are consummated on
the date hereof, and (ii) the total amount of indebtedness owed to the
Company or its Subsidiaries from each officer or director of the Company
and its Subsidiaries. Except to the extent set forth in Section 3.11 of
the Company Letter, no "excess parachute payments" (as such term is
defined in Section 280G(b) of the Code) will be payable as a result of
the transactions contemplated by this Agreement to any employee of the
Company or its Subsidiaries who is a "disqualified individual" under
Section 280G of the Code.
Section 3.12 ERISA. (a) Each Company Plan is listed in
Section 3.12(a) of the Company Letter, true and complete copies of which
have heretofore been delivered to Parent. Except as would not have a
Material Adverse Effect on the Company, (i) each Company Plan complies
in all respects with ERISA, the Code and all other applicable statutes
and governmental rules and regulations, and (ii) no "reportable event"
(within the meaning of Section 4043 of ERISA) has occurred with respect
to any Company Plan. Neither the Company nor any of its ERISA
Affiliates (as defined in Section 2.12(c)) has withdrawn from any
Company Plan or Company Multiemployer Plan (as hereinafter defined) or
instituted, or is currently considering taking, any action to do so. No
action has been taken, or is currently being considered, to terminate
any Company Plan subject to Title IV of ERISA. No Company Plan, nor any
trust created thereunder, has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not waived.
(b) Except as listed in Section 3.12(b) of the Company
Letter, with respect to the Company Plans, no event has occurred and, to
the Knowledge of the Company, there exists no condition or set of
circumstances in connection with which the Company or any ERISA
Affiliate or Company Plan fiduciary could be subject to any liability
under the terms of such Company Plans, ERISA, the Code or any other
applicable law, other than liabilities for benefits payable in the
normal course, which would have a Material Adverse Effect on the
Company. All Company Plans that are intended to be qualified under
Section 401(a) of the Code have been determined by the IRS to be so
qualified, or a timely application for such determination is now
pending, and the Company is not aware of any reason why any such Company
Plan is not so qualified in operation. Neither the Company nor any of
its ERISA Affiliates has been notified by any Company Multiemployer Plan
that such Company Multiemployer Plan is currently in reorganization or
insolvency under and within the meaning of Section 4241 or 4245 of ERISA
or that such Company Multiemployer Plan intends to terminate or has been
terminated under Section 4041A of ERISA. Except as disclosed in Section
3.12(b) of the Company Letter, neither the Company nor any of its ERISA
Affiliates has any liability or obligation under any welfare plan to
provide benefits after termination of employment to any employee or
dependent other than as required by Section 4980B of the Code.
(c) As used herein, (i) "Company Plan" means a "pension plan"
(as defined in Section 3(2) of ERISA (other than a Company Multiemployer
Plan)), a "welfare plan" (as defined in Section 3(1) of ERISA), or any
bonus, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, holiday
pay, vacation, severance, death benefit, sick leave, fringe benefit,
insurance or other plan, arrangement or understanding, in each case
established or maintained by the Company or any of its ERISA Affiliates
or as to which the Company or any of its ERISA Affiliates has
contributed or otherwise may have any liability, and (ii) "Company
Multiemployer Plan" means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which the Company or any of its ERISA Affiliates
is or has been obligated to contribute or otherwise may have any
liability.
(d) Section 3.12(d) of the Company Letter contains a list,
and the Company has heretofore provided to Parent a true and complete
copy, of all (i) severance, employment and material consulting
agreements with employees and consultants of the Company and each of its
ERISA Affiliates and (ii) severance programs and policies of the Company
and each of its ERISA Affiliates with or relating to its employees. The
Company has entered into a Proprietary Information Agreement with each
of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "Noncompetition
Agreements"), true and complete copies of which (including all
amendments thereto) are attached to Section 3.12(d) of the Company
Letter.
Section 3.13 Compliance with Worker Safety and Environmental
Laws. The properties, assets and operations of the Company and its
Subsidiaries are in compliance with all applicable Worker Safety Laws
and Environmental Laws, except for any violations that, individually or
in the aggregate, would not have a Material Adverse Effect on the
Company. With respect to such properties, assets and operations,
including any previously owned, leased or operated properties, assets or
operations, there are no events, conditions, circumstances, activities,
practices, incidents, actions or plans of the Company or any of its
Subsidiaries that may interfere with or prevent compliance or continued
compliance with applicable Worker Safety Laws and Environmental Laws,
other than any such interference or prevention as would not,
individually or in the aggregate with any such other interference or
prevention, have a Material Adverse Effect on the Company.
Section 3.14 Labor Matters. Neither the Company nor any of
its Subsidiaries is a party to any collective bargaining agreement or,
except as set forth in Section 3.14 of the Company Letter, any labor
contract. Neither the Company nor any of its Subsidiaries has engaged
in any unfair labor practice with respect to any persons employed by or
otherwise performing services primarily for the Company or any of its
Subsidiaries (the "Company Business Personnel"), and there is no unfair
labor practice complaint or grievance against the Company or any of its
Subsidiaries by the National Labor Relations Board or any comparable
state agency pending or threatened in writing with respect to the
Company Business Personnel, except where such unfair labor practice,
complaint or grievance would not have a Material Adverse Effect on the
Company. There is no labor strike, dispute, slowdown or stoppage
pending or, to the Knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries which may interfere
with the respective business activities of the Company or any of its
Subsidiaries, except where such dispute, strike or work stoppage would
not have a Material Adverse Effect on the Company.
Section 3.15 Intellectual Property. (a) Except as set forth
in Section 3.15 of the Company Letter, the Company and its Subsidiaries
have through ownership or licensing all Intellectual Property Rights as
are necessary to conduct the business of the Company and its
Subsidiaries as currently conducted or planned to be conducted by the
Company and its Subsidiaries, taken as a whole, except where the failure
to have such Intellectual Property Rights would not have a Material
Adverse Effect on the Company. Except as set forth in Section 3.15 of
the Company Letter, neither the Company nor any of its Subsidiaries has
infringed any Intellectual Property Rights of any third party other than
any infringements that, individually and in the aggregate, would not
have a Material Adverse Effect on the Company.
(b) Except as set forth in the Company SEC Documents filed
prior to the date of this Agreement or in Section 3.15 of the Company
Letter, there are no actions, suits or claims or administrative
proceedings or investigations pending or, to the Knowledge of the
Company, threatened that challenge or question the Company's
Intellectual Property Rights and that, individually or in the aggregate,
would have a Material Adverse Effect on the Company.
(c) All patents, registered trademarks, service marks and
copyrights which are held by the Company or any of its Subsidiaries, and
which are material to the business of the Company and its Subsidiaries,
taken as a whole, are to the Knowledge of the Company valid and
subsisting. Section 3.15 of the Company Letter contains a list as of
the date hereof of (i) all material registered United States, state and
foreign trademarks, service marks, logos, trade dress and trade names
and pending applications to register the foregoing, (ii) all United
States and material foreign patents and patent applications and (iii)
all material registered United States and foreign copyrights and pending
applications to register the same, in each case owned by the Company and
its Subsidiaries. The statements set forth in Section 3.15(c) of the
Company Letter are true and correct.
Section 3.16 Opinion of Financial Advisor. The Company has
received the written opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated,
dated the date hereof, to the effect that, as of the date hereof, the
Exchange Ratio is fair to the Company's stockholders from a financial
point of view, a copy of which opinion has been delivered to Parent.
Section 3.17 State Takeover Statutes; Certain Charter
Provisions. The Board of Directors of the Company has, to the extent
such statutes are applicable, taken all action (including appropriate
approvals of the Board of Directors of the Company) necessary to exempt
Parent, its Subsidiaries and affiliates, the Merger, this Agreement, the
Stock Option Agreement, the Stockholder Agreements and the transactions
contemplated hereby and thereby from Section 203 of the DGCL. To the
Knowledge of the Company, no other state takeover statutes or charter or
bylaw provisions are applicable to the Merger, this Agreement, the Stock
Option Agreement, the Stockholder Agreements and the transactions
contemplated hereby and thereby.
Section 3.18 Required Vote of Company Stockholders. The
affirmative vote of the holders of a majority of the outstanding shares
of Company Common Stock is required to adopt this Agreement. No other
vote of the securityholders of the Company is required by law, the
Company Charter or the Company Bylaws or otherwise in order for the
Company to consummate the Merger and the transactions contemplated
hereby and in the Stock Option Agreement.
Section 3.19 Pooling of Interests; Reorganization. To the
knowledge of the Company, neither it nor any of its Subsidiaries has
(i) taken any action or failed to take any action which action or
failure would jeopardize the treatment of the Merger as a pooling of
interests for accounting purposes or (ii) taken any action or failed to
take any action which action or failure would jeopardize the
qualification of the Merger as a reorganization within the meaning of
Section 368(a) of the Code.
Section 3.20 Brokers. No broker, investment banker or other
person, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, the fees and
expenses of which will be paid by the Company (as reflected in an
agreement between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and the Company, a
copy of which has been furnished to Parent), is entitled to any
broker's, finder's or other similar fee or commission in connection with
the transactions contemplated by this Agreement and by the Stock Option
Agreement based upon arrangements made by or on behalf of the Company.
Section 3.21 Rights Agreement. The Company has amended the
Rights Agreement to (i) render the Rights Agreement inapplicable to the
Merger, the Stock Option Agreement, the Stockholder Agreements and the
transactions contemplated hereby and thereby, (ii) provide that Parent
shall not be deemed an Acquiring Person (as defined in the Rights
Agreement), the Distribution Date (as defined in the Rights Agreement)
shall not be deemed to occur and the Rights will not separate from the
shares of Company Common Stock as a result of entering into this
Agreement, the Stock Option Agreement, the Stockholder Agreements or
consummating the transactions contemplated hereby or thereby and (iii)
provide that the Rights shall cease to be exercisable immediately prior
to the Effective Time.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger. (a)
Except as expressly permitted by clauses (i) through (xvii) of this
Section 4.1(a), during the period from the date of this Agreement
through the Effective Time, the Company shall, and shall cause each of
its Subsidiaries to, in all material respects carry on its business in
the ordinary course of its business as currently conducted and, to the
extent consistent therewith, use reasonable best efforts to preserve
intact its current business organizations, keep available the services
of its current officers and employees and preserve its relationships
with customers, suppliers and others having business dealings with it to
the end that its goodwill and ongoing business shall be unimpaired at
the Effective Time. Without limiting the generality of the foregoing,
and except as otherwise expressly contemplated by this Agreement or as
set forth in Section 4.1 of the Company Letter (with specific reference
to the applicable subsection below), the Company shall not, and shall
not permit any of its Subsidiaries to, without the prior written consent
of Parent:
(i) (A) declare, set aside or pay any dividends on, or make
any other actual, constructive or deemed distributions in respect of,
any of its capital stock, or otherwise make any payments to its
stockholders in their capacity as such, (B) split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock, (C) purchase, redeem or otherwise acquire any shares
of capital stock of the Company or any other securities thereof or any
rights, warrants or options to acquire any such shares or other
securities or (D) amend the Rights Agreement;
(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock, any other voting securities or
equity equivalent or any securities convertible into, or any rights,
warrants or options to acquire any such shares, voting securities,
equity equivalent or convertible securities, other than (A) the issuance
of shares of Company Common Stock upon the exercise of Company Stock
Options outstanding on the date of this Agreement in accordance with
their current terms, (B) the issuance of shares of Company Common Stock
pursuant to the Stock Option Agreement and (C) the issuance of Company
Stock Options to purchase up to 800,000 shares of Company Common Stock
in the ordinary course of business consistent with past practice to
newly hired employees who are not officers of the Company or any of its
Subsidiaries (provided that no individual receives Company Stock Options
to purchase in excess of 12,500 shares of Company Common Stock);
(iii) amend its charter or by-laws or other comparable charter
or organizational documents;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of or equity
in, or by any other manner, any business or any corporation, limited
liability company, partnership, association or other business
organization or division thereof or otherwise acquire or agree to
acquire any assets, other than assets acquired in the ordinary course of
business and not material to the Company and its Subsidiaries taken as a
whole;
(v) sell, lease, license (as licensor of Intellectual Property
Rights of the Company), mortgage, encumber or otherwise dispose any of
its properties or assets, other than sales, leases or licenses of
products or services in the ordinary course of business and not material
to the Company and its Subsidiaries taken as a whole;
(vi) incur any indebtedness for borrowed money, guarantee any
such indebtedness or make any loans, advances or capital contributions
to, or other investments in, any other person, other than indebtedness,
loans, advances, capital contributions and investments between the
Company and any of its wholly owned Subsidiaries or between any of such
wholly owned Subsidiaries or cash management activities carried on in
the ordinary course of business consistent with past practice;
(vii) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or
ownership of the Company (other than as provided in Sections
4.1(a)(ii)(A), (B) and (C)) or any Subsidiary;
(viii) enter into, adopt or amend any severance plan,
agreement or arrangement, Company Plan or employment or consulting
agreement, except as required by applicable law and except for entering
into any consulting agreements in the ordinary course of business
consistent with past practice;
(ix) increase the compensation payable or to become payable to
its directors, officers or employees (except for increases in the
ordinary course of business consistent with past practice in salaries or
wages of employees of the Company or any of its Subsidiaries who are not
officers of the Company or any of its Subsidiaries) or grant any
severance or termination pay to, or enter into or amend any employment
or severance agreement with, any current or former director or officer
of the Company or any of its Subsidiaries, or establish, adopt, enter
into, or, except as may be required to comply with applicable law, amend
or take action to enhance or accelerate any rights or benefits under,
any labor, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any current or former
director, officer or employee;
(x) knowingly violate or knowingly fail to perform any
obligation or duty imposed upon it or any Subsidiary by any applicable
material federal, state or local law, rule, regulation, guideline or
ordinance;
(xi) make any change to accounting policies or procedures
(other than actions required to be taken by generally accepted
accounting principles);
(xii) prepare or file any Tax Return inconsistent with past
practice or, on any such Tax Return, take any position, make any
election, or adopt any method that is inconsistent with positions taken,
elections made or methods used in preparing or filing similar Tax
Returns in prior periods;
(xiii) make any tax election or settle or compromise any
material federal, state, local or foreign income tax liability;
(xiv) enter into, amend or terminate any noncompetition
agreement or any agreement or contract pursuant to which any third party
is granted marketing, distribution, material manufacturing or any
exclusive rights with respect to any Company product, process or
technology; amend the Noncompetition Agreements or make or agree to make
any new capital expenditure or expenditures which, individually, is in
excess of $10,000,000 or, in the aggregate, are in excess of $60,000,000
at any time prior to October 31, 1998 (or in excess of $80,000,000 at
any time);
(xv) waive or release any material right or claim, or pay,
discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with
their terms, of liabilities reflected or reserved against in the most
recent Company SEC Documents filed prior to the date hereof, or incurred
in the ordinary course of business consistent with past practice;
(xvi) initiate any litigation or arbitration proceeding or
settle or compromise any material litigation or arbitration proceeding;
or
(xvii) authorize, recommend, propose or announce an intention
to do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
(b) During the period from the date of this Agreement to the
Effective Time of the Merger, Parent shall not, and shall not permit any
of its Subsidiaries to, without the prior written consent of the
Company:
(i) declare, set aside, or pay any cash dividends on, or make
any other cash distributions in respect of, any capital stock of Parent;
(ii) amend the Parent Charter or the Parent Bylaws;
(iii) alter (through liquidation, reorganization or
restructuring) the corporate structure of Parent; or
(iv) authorize, recommend, propose or announce an intention
to do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
Notwithstanding the foregoing, nothing contained in this
Agreement shall prohibit Parent from adopting a stockholder rights plan
and issuing securities pursuant thereto or amending the Parent Charter
to increase the number of shares authorized thereby or amending the
Parent Bylaws to change the number of directors of Parent.
Section 4.2 No Solicitation. (a) From the date hereof
until the earlier of the Effective Time or the date on which this
Agreement is terminated in accordance with the terms hereof, the Company
shall not, nor shall it permit any of its Subsidiaries to, nor shall it
authorize or permit any officer, director or employee of or any
financial advisor, attorney or other advisor or representative of, the
Company or any of its Subsidiaries to, (i) solicit, initiate or
knowingly encourage the submission of, any Takeover Proposal (as
hereafter defined), (ii) enter into any agreement with respect to any
Takeover Proposal or (iii) participate in any discussions or
negotiations regarding, or furnish to any person any information with
respect to, or take any other action to knowingly facilitate any
inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Takeover Proposal; provided,
however, that prior to the Company Stockholder Meeting, nothing
contained in this Agreement (including, without limitation Section
4.1(a)) shall prevent the Company or its Board of Directors from (i)
complying with Rules 14d-9 and 14e-2 under the Exchange Act or publicly
disclosing the existence of a Takeover Proposal to the extent required
by applicable law or (ii) furnishing non-public information to, or
entering into discussions or negotiations with, any person or entity in
connection with an unsolicited bona fide written Takeover Proposal by
such person or entity, if and only to the extent that, with respect to
clause (ii) above, (w) such Takeover Proposal would, if consummated,
result in a transaction that would, in the reasonable good faith
judgment of the Board of Directors of the Company, after consultation
with its financial advisors, result in a transaction more favorable to
the Company's stockholders from a financial point of view than the
Merger (any such more favorable Takeover Proposal being referred to in
this Agreement as a "Superior Proposal") and, in the reasonable good
faith judgment of the Board of Directors of the Company, after
consultation with its financial advisors, the person or entity making
such Superior Proposal has the financial means to conclude such
transaction, (x) the failure to take such action would in the reasonable
good faith judgment of the Board of Directors of the Company, on the
basis of the advice of the outside corporate counsel of the Company,
violate the fiduciary duties of the Board of Directors of the Company to
the Company's stockholders under applicable law, (y) prior to furnishing
such non-public information to, or entering into discussions or
negotiations with, such person or entity, such Board of Directors
receives from such person or entity an executed confidentiality
agreement with provisions not less favorable to the Company than those
contained in the Confidentiality Agreement (as defined below) and (z)
the Company shall have fully complied with this Section 4.2. For
purposes of this Agreement, "Takeover Proposal" means any proposal or
offer, or any expression of interest, by any third party relating to the
Company's willingness or ability to receive or discuss a proposal or
offer for a merger, consolidation or other business combination
involving the Company or any of its Subsidiaries or any proposal or
offer to acquire in any manner, directly or indirectly, a substantial
equity interest in, a substantial portion of the voting securities of,
or a substantial portion of the assets of the Company or any of its
Subsidiaries, other than the transactions contemplated by this Agreement
and the Stock Option Agreement.
(b) The Company shall advise Parent orally (within one
business day) and in writing (as promptly as practicable) of (i) any
Takeover Proposal or any inquiry with respect to or which could lead to
any Takeover Proposal, (ii) the material terms of such Takeover Proposal
and (iii) the identity of the person making any such Takeover Proposal
or inquiry. The Company will keep Parent fully informed of the status
and details of any such Takeover Proposal or inquiry.
Section 4.3 Third Party Standstill Agreements. During the
period from the date of this Agreement through the Effective Time, the
Company shall not terminate, amend, modify or waive any provision of any
confidentiality agreement relating to a Takeover Proposal or standstill
agreement to which the Company or any of its Subsidiaries is a party
(other than any involving Parent). During such period, the Company
agrees to enforce, to the fullest extent permitted under applicable law,
the provisions of any such agreements, including, but not limited to,
obtaining injunctions to prevent any breaches of such agreements and to
enforce specifically the terms and provisions thereof in any court of
the United States or any state thereof having jurisdiction.
Section 4.4 Pooling of Interests; Reorganization. During
the period from the date of this Agreement through the Effective Time,
unless the other party shall otherwise agree in writing, none of Parent,
the Company or any of their respective Subsidiaries shall (a) knowingly
take or fail to take any action which action or failure would jeopardize
the treatment of the Merger as a pooling of interests for accounting
purposes or (b) knowingly take or fail to take any action which action
or failure would jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code.
Between the date of this Agreement and the Effective Time, Parent and
the Company each shall take, or cause to be taken, all actions
reasonably necessary in order for the Merger to be treated as a pooling
of interests for accounting purposes.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Stockholder Meetings. The Company and Parent
will each, as soon as practicable following the date of this Agreement,
duly call, give notice of, convene and hold a meeting of stockholders
(respectively, the "Company Stockholder Meeting" and the "Parent
Stockholder Meeting" and, collectively, the "Stockholder Meetings") for
the purpose of considering the approval of this Agreement (in the case
of the Company) and the Share Issuance (in the case of Parent). The
Company and Parent shall coordinate and cooperate with respect to the
timing of such meetings and shall use their reasonable best efforts to
hold such meetings on the same day. Parent will, through its Board of
Directors, recommend to its stockholders approval of the Share Issuance,
shall use all reasonable efforts to solicit such approval by its
stockholders and shall not withdraw or modify, or propose to withdraw or
modify in a manner adverse to the Company, such recommendation, except
if in the reasonable good faith judgment of Parent's Board of Directors,
on the basis of the advice of outside corporate counsel of Parent, the
making of, or the failure to withdraw or modify, such recommendation
would violate the fiduciary duties of such Board of Directors to
Parent's stockholders under applicable law. Parent agrees to submit the
Share Issuance to its stockholders for approval whether or not the Board
of Directors of Parent determines at any time subsequent to the date
hereof and in accordance with the preceding sentence that the Share
Issuance is no longer advisable and recommends that the stockholders of
Parent reject it. The Company will, through its Board of Directors,
recommend to its stockholders approval of this Agreement, shall use all
reasonable efforts to solicit such approval by its stockholders and
shall not withdraw or modify, or propose to withdraw or modify in a
manner adverse to Parent, such recommendation, except if (i) the Company
has complied with Section 4.2 and (ii) (A) in the reasonable good faith
judgment of the Company's Board of Directors, on the basis of the advice
of outside corporate counsel of the Company, the making of, or the
failure to withdraw or modify, such recommendation would violate the
fiduciary duties of such Board of Directors to the Company's
stockholders under applicable law or (B) (x) the Board of Directors of
the Company, after due deliberation and in the good faith exercise of
its fiduciary duties under applicable law (as advised by outside
corporate counsel of the Company), determines (1) to withdraw or modify
such recommendation solely because Parent notifies the Company that it
intends to enter into or has entered into a definitive written agreement
to effect a Parent Acquisition Event (as defined herein) and (2) that,
solely as a result of such Parent Acquisition Event, the Merger is no
longer in the best interests of the Company and its stockholders and (y)
the Board of Directors of the Company notifies Parent that it has
resolved to withdraw or modify its recommendation in favor of the
approval of this Agreement within five business days of the receipt of
Parent's notice. In the event Parent subsequently notifies the Company
that it has elected not to enter into such definitive written agreement
to effect the Parent Acquisition Event, the Board of Directors of the
Company shall rescind any resolution to withdraw or modify its
recommendation in favor of approval of this Agreement. The Company
agrees to submit the Merger Agreement to its stockholders for approval
whether or not the Board of Directors of the Company determines at any
time subsequent to the date hereof and in accordance with the terms of
this Section 5.1 that the Merger Agreement is no longer advisable and
recommends that the stockholders of the Company reject it.
Section 5.2 Preparation of the Registration Statement and
the Joint Proxy Statement. The Company and Parent shall promptly
prepare and file with the SEC the Joint Proxy Statement and Parent shall
prepare and file with the SEC the Registration Statement, in which the
Joint Proxy Statement will be included as a prospectus. Each of Parent
and the Company shall use its reasonable best efforts to have the
Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing. As promptly as practicable
after the Registration Statement shall have become effective, each of
Parent and the Company shall mail the Joint Proxy Statement to its
respective stockholders. Parent shall also take any action reasonably
required to be taken under any applicable state securities laws in
connection with the issuance of Parent Common Stock in the Merger, and
the Company shall furnish all information concerning the Company and the
holders of Company Common Stock as may be reasonably requested in
connection with any such action.
Section 5.3 Intentionally Omitted.
Section 5.4 Access to Information. Subject to currently
existing contractual and legal restrictions applicable to Parent or to
the Company or any of their respective Subsidiaries, as the case may be,
each of Parent and the Company shall, and shall cause each of its
Subsidiaries to, afford to the accountants, counsel, financial advisors
and other representatives of the other reasonable access to, and permit
them to make such inspections as they may reasonably require of, during
normal business hours during the period from the date of this Agreement
through the Effective Time, all of its properties, books, contracts,
commitments and records (including, without limitation, the work papers
of independent accountants, if available and subject to the consent of
such independent accountants) and, during such period, each of Parent
and the Company shall, and shall cause each of its Subsidiaries to,
furnish promptly to the other (i) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of federal or state securities laws and
(ii) all other information concerning its business, properties and
personnel as the other may reasonably request. No investigation
pursuant to this Section 5.4 shall affect any representation or warranty
in this Agreement of any party hereto or any condition to the
obligations of the parties hereto. All information obtained pursuant to
this Section 5.4 shall be kept confidential in accordance with the
Confidentiality Agreement, dated May 14, 1998 between Parent and the
Company (the "Confidentiality Agreement").
Section 5.5 Compliance with the Securities Act. (a)
Section 5.5(a) of the Company Letter contains a list identifying all
persons who, at the time of the Company Stockholder Meeting, may be
deemed to be "affiliates" of the Company as that term is used in
paragraphs (c) and (d) of Rule 145 under the Securities Act (the "Rule
145 Affiliates"). The Company shall use its reasonable best efforts to
cause each person who is identified as a Rule 145 Affiliate in such list
to deliver to Parent within 30 days of the date hereof a written
agreement in substantially the form of Exhibit 5.5(a) hereto (the
"Company Affiliate Letter"), executed by each of such persons identified
in the foregoing list. Prior to the Effective Time, the Company shall
amend and supplement Section 5.5(a) of the Company Letter and use its
reasonable best efforts to cause each additional person who is
identified as a Rule 145 Affiliate of the Company to execute the Company
Affiliate Letter. Parent shall be entitled to place appropriate legends
on the certificates evidencing any Parent Common Stock to be received by
affiliates of the Company pursuant to this Agreement and to issue
appropriate stop transfer instructions to the transfer agent for the
Parent Common Stock, consistent with the terms of the Company Affiliate
Letter.
(b) Section 5.5(b) of the Parent Letter contains a list
identifying those persons who may be, at the time of the Parent
Stockholder Meeting, affiliates of Parent under applicable SEC
accounting releases with respect to pooling of interests accounting
treatment. Parent shall use its reasonable best efforts to enter into a
written agreement in substantially the form of Exhibit 5.5(b) hereto
(the "Parent Affiliate Letter") within 30 days of the date hereof with
each of such persons identified in the foregoing list. Prior to the
Effective Time, Parent shall amend and supplement Section 5.5(b) of the
Parent Letter and use its reasonable best efforts to cause each
additional person who is identified as an affiliate of Parent to execute
the Parent Affiliate Letter.
Section 5.6 Current Nasdaq Quotation. Each of Parent and
the Company shall use its reasonable best efforts to continue the
quotation of the Parent Common Stock and the Company Common Stock,
respectively, on NASDAQ during the term of this Agreement to the extent
necessary so that appraisal rights will not be available to stockholders
of the Company under Section 262 of the DGCL.
Section 5.7 Fees and Expenses. (a) Except as provided in
this Section 5.7 and Section 5.11, whether or not the Merger is
consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby including, without
limitation, the fees and disbursements of counsel, financial advisors
and accountants, shall be paid by the party incurring such costs and
expenses, provided that all printing expenses and all filing fees
(including, without limitation, filing fees under the Securities Act,
the Exchange Act and the HSR Act) shall be divided equally between
Parent and the Company.
(b) (i) Notwithstanding any provision in this Agreement to
the contrary, if this Agreement is terminated (A) by the Company or
Parent pursuant to Section 7.1(e) and a Takeover Proposal existed
between the date hereof and the date of the Company Stockholder Meeting,
(B) by the Company or Parent pursuant to Section 7.1(g) or (C) by Parent
pursuant to Section 7.1(h)(except, in the case of Section 7.1(h)(i), as
provided in Section 5.7(d)), then, in each case, the Company shall
(without prejudice to any other rights Parent may have against the
Company for breach of this Agreement) reimburse Parent upon demand for
all reasonable out-of-pocket fees and expenses incurred or paid by or on
behalf of Parent or any Affiliate (as hereinafter defined) of Parent in
connection with this Agreement, the Stock Option Agreement and the
transactions contemplated herein or therein, including all fees and
expenses of counsel, investment banking firms, accountants and
consultants; provided, however, that the Company shall not be obligated
to make payments pursuant to this Section 5.7(b)(i) in excess of
$10,000,000 in the aggregate. As used herein, "Affiliate" shall have
the meaning set forth in Rule 405 under the Securities Act.
(ii) Notwithstanding any provision in this Agreement to the
contrary, if this Agreement is terminated (A) by the Company or Parent
pursuant to Section 7.1(f) and a Parent Takeover Proposal (as defined
below) existed between the date hereof and the date of the Parent
Stockholder Meeting or (B) by the Company pursuant to Section 7.1(i)
(except in circumstances in which the event described in Section 7.1(i)
causing such termination occurred solely as a result of a Material
Adverse Effect on the Company (provided that, for purposes of this
Section 5.7(b)(ii)(B), a Material Adverse Effect on the results of
operations of the Company and its Subsidiaries shall only be deemed to
be such to the extent it relates to the long-term prospects of the
results of operations of the Company and its Subsidiaries taken as a
whole) after the Board of Directors of Parent determined, in its
reasonable good faith judgment, on the basis of the advice of outside
corporate counsel of Parent, that the making of its recommendation to
the stockholders of Parent in favor of the Share Issuance, or the
failure to withdraw or modify such recommendation, would violate its
fiduciary duties under applicable law in light of such Material Adverse
Effect on the Company), then, in each case, Parent shall (without
prejudice to any other rights the Company may have against Parent for
breach of this Agreement) reimburse the Company upon demand for all
reasonable out-of-pocket fees and expenses incurred or paid by or on
behalf of the Company or any Affiliate of the Company in connection with
this Agreement, the Stock Option Agreement and the transactions
contemplated herein or therein, including all fees and expenses of
counsel, investment banking firms, accountants and consultants;
provided, however, that Parent shall not be obligated to make payments
pursuant to this Section 5.7(b)(ii) in excess of $10,000,000 in the
aggregate. As used herein, "Parent Takeover Proposal" means any
proposal or offer, or any expression of interest, by any third party
relating to Parent's willingness or ability to receive or discuss a
proposal or offer for a merger, consolidation or other business
combination, in each case pursuant to which Parent is acquired by a
third party.
(c) Notwithstanding any provision in this Agreement to the
contrary, if (i) this Agreement is terminated by the Company or Parent
pursuant to Section 7.1(e) and a Takeover Proposal existed between the
date hereof and the date of the Company Stockholder Meeting and,
concurrently with or within twelve months after any such termination a
Third Party Acquisition Event (as defined below) occurs or the Company
shall enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement with respect to a Third
Party Acquisition Event, (ii) this Agreement is terminated by Parent or
the Company pursuant to Section 7.1(g) or (iii) this Agreement is
terminated by Parent pursuant to Section 7.1(h) (except, in the case of
Section 7.1(h)(i), as provided in Section 5.7(d)), then, in each case,
the Company shall (in addition to any obligation under Section 5.7(b)
and without prejudice to any other rights that Parent may have against
the Company for a breach of this Agreement) pay to Parent a fee (the
"Termination Fee") of $200,000,000 in cash, such payment to be made
promptly, but in no event later than, in the case of clause (i), the
later to occur of such termination and such Third Party Acquisition
Event or, in the case of clauses (ii) or (iii), such termination.
As used in this Agreement, a "Third Party Acquisition Event"
involving the Company means (i) a transaction or series of transactions
pursuant to which any person or group (as such term is defined under the
Exchange Act), other than Parent or Sub, or any affiliate thereof
("Third Party"), acquires (or would acquire upon completion of such
transaction or series of transactions) more than twenty percent (20%) of
the equity securities or voting power of the Company or any of its
Subsidiaries, pursuant to a tender offer or exchange offer or otherwise,
(ii) a merger, consolidation, share exchange or other business
combination involving the Company or any of its Subsidiaries pursuant to
which any person other than Parent or Sub acquires ownership (or would
acquire ownership upon consummation of such merger, consolidation, share
exchange or other business combination) of more than twenty percent
(20%) of the outstanding equity securities or voting power of the
Company or any of its Subsidiaries or of the entity surviving such
merger or business combination or resulting from such consolidation,
(iii) any other transaction or series of transactions pursuant to which
any Third Party acquires (or would acquire upon completion of such
transaction or series of transactions) control of assets of the Company
or any of its Subsidiaries (including, for this purpose, outstanding
equity securities of Subsidiaries of such party) having a fair market
value equal to more than twenty percent (20%) of the fair market value
of all the consolidated assets of the Company immediately prior to such
transaction or series of transactions, or (iv) any transaction or series
of transactions pursuant to which any Third Party acquires (or would
acquire upon completion of such transaction or series of transactions)
control of the Board of Directors of the Company or by which nominees of
any Third Party are (or would be) elected or appointed to a majority of
the seats on the Board of Directors of the Company.
(d) No payment shall be required to be made by the Company
pursuant to Section 5.7(b)(i)(C) or 5.7(c)(iii) (in each case, with
respect to a termination of this Agreement pursuant to Section
7.1(h)(i)) if the following conditions are satisfied: (i) no Takeover
Proposal existed between the date hereof and the date of the Company
Stockholder Meeting; (ii) the event described in Section 7.1(h)(i)
causing the termination of this Agreement occurred solely as a result of
(A) the occurrence of a Material Adverse Effect on Parent (provided
that, for purposes of this Section 5.7(d)(ii)(A), a Material Adverse
Effect on the results of operations of Parent and its Subsidiaries shall
only be deemed to be such to the extent it relates to the long-term
prospects of the results of operations of Parent and its Subsidiaries
taken as a whole) or (B) Parent entering into a definitive written
agreement pursuant to which (x) Parent acquires, or one of Parent's
Subsidiaries merges with, another entity and (y) in consideration
therefor Parent agrees to issue Parent Common Stock or other voting
securities representing, in the aggregate, 20% or more of the then
outstanding shares of Parent Common Stock and other Parent voting
securities (a "Parent Acquisition Event"); (iii) prior to the occurrence
of the event described in Section 7.1(h)(i) causing the termination of
this Agreement (if resulting from such Material Adverse Effect on Parent
as stated above), the Board of Directors of the Company determined in
its reasonable good faith judgment, on the basis of the advice of
outside corporate counsel of the Company, that the making of its
recommendation to the stockholders of the Company in favor of approval
of this Agreement, or the failure to withdraw or modify such
recommendation, would violate its fiduciary duties under applicable law
solely in light of the Material Adverse Effect on Parent; and (iv) prior
to the occurrence of the event described in Section 7.1(h)(i) causing
such termination (if resulting from Parent entering into a definitive
written agreement to effect a Parent Acquisition Event as stated above),
(A) the Board of Directors of the Company, after due deliberation and in
the good faith exercise of its fiduciary duties under applicable law (as
advised by outside corporate counsel of the Company), determined (1) to
withdraw or modify such recommendation solely because Parent notified
the Company that it intended to enter into or had entered into a
definitive written agreement to effect a Parent Acquisition Event and
(2) that, solely as a result of such Parent Acquisition Event, the
Merger was no longer in the best interests of the Company and its
stockholders and (B) the Board of Directors of the Company notified
Parent that it had resolved to withdraw or modify its recommendation in
favor of the approval of this Agreement within five business days of the
receipt of Parent's notice.
Section 5.8 Company Stock Plans. (a) Not later than the
Effective Time, each Company Stock Option which is outstanding
immediately prior to the Effective Time pursuant to the Company Stock
Option Plans shall become and represent an option to purchase the number
of shares of Parent Common Stock (a "Substitute Option") (decreased to
the nearest full share) determined by multiplying (i) the number of
shares of Company Common Stock subject to such Company Stock Option
immediately prior to the Effective Time by (ii) the Exchange Ratio, at
an exercise price per share of Parent Common Stock (rounded up to the
nearest tenth of a cent) equal to the exercise price per share of
Company Common Stock immediately prior to the Effective Time divided by
the Exchange Ratio. Parent shall pay cash to holders of Company Stock
Options in lieu of issuing fractional shares of Parent Common Stock upon
the exercise of Substitute Options for shares of Parent Common Stock,
unless in the judgment of Parent such payment would adversely affect the
ability to account for the Merger under the pooling of interests method.
After the Effective Time, except as provided above in this Section 5.8,
each Substitute Option shall be exercisable upon the same terms and
conditions as were applicable under the related Company Stock Option
immediately prior to or at the Effective Time. The Company shall take
all necessary action to implement the provisions of this Section 5.8.
As soon as reasonably practicable, and in no event later than twenty
days after the Effective Time, Parent shall file a registration
statement on Form S-8 (or any successor or other appropriate form) with
respect to Parent Common Stock subject to such Substitute Options, or
shall cause such Substitute Options to be deemed to be issued pursuant
to a Parent Stock Plan for which shares of Parent Common Stock have been
previously registered pursuant to an appropriate registration form.
(b) The Company shall cause the Company Stock Purchase Plan
and all rights thereunder to terminate, with the effect of such
termination being that no offering period and no purchase period shall
commence under such plan.
Section 5.9 Reasonable Best Efforts; Pooling of Interests.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including, but not limited
to: (i) the obtaining of all necessary actions or non-actions, waivers,
consents and approvals from all Governmental Entities and the making of
all necessary registrations and filings (including filings with
Governmental Entities) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity (including those in connection
with the HSR Act and State Takeover Approvals), (ii) the obtaining of
all necessary consents, approvals or waivers from third parties, (iii)
the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement, the Stock Option
Agreement or the consummation of the transactions contemplated hereby
and thereby, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or
reversed, (iv) each of Parent and the Company agreeing to take, together
with their respective accountants, all actions reasonably necessary in
order to obtain a favorable determination (if required) from the SEC
that the Merger may be accounted for as a pooling of interests in
accordance with generally accepted accounting principles and (v) the
execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by this Agreement. No party to
this Agreement shall consent to any voluntary delay of the consummation
of the Merger at the behest of any Governmental Entity without the
consent of the other parties to this Agreement, which consent shall not
be unreasonably withheld.
(b) Each party shall use all reasonable best efforts to not
take any action, or enter into any transaction, which would cause any of
its representations or warranties contained in this Agreement to be
untrue or result in a breach of any covenant made by it in this
Agreement.
(c) Notwithstanding anything to the contrary contained in
this Agreement, in connection with any filing or submission required or
action to be taken by either Parent or the Company to effect the Merger
and to consummate the other transactions contemplated hereby, the
Company shall not, without Parent's prior written consent, and Parent
shall not, without the Company's prior written consent, commit to any
divestiture transaction, and neither Parent or any of its Affiliates nor
the Company or any of its Affiliates shall be required to divest or hold
separate or otherwise take or commit to take any action that limits its
freedom of action with respect to, or its ability to retain, the Company
or any of the businesses, product lines or assets of Parent, the Company
or any of their respective Subsidiaries or that otherwise would have a
Material Adverse Effect on Parent or the Company.
(d) Nothing contained in this Agreement, including without
limitation this Section 5.9, shall limit or restrict Parent's ability to
enter into any Parent Takeover Proposal, any Parent Acquisition Event or
any other business combination or Parent's activities in connection with
any of the foregoing; provided, however, that this Section 5.9(d) shall
not affect the right of the Board of Directors of the Company to
withdraw or modify its recommendation to the stockholders of the Company
in favor of approval of this Agreement in accordance with the terms of
Section 5.1.
Section 5.10 Public Announcements. Parent and the Company
will not issue any press release with respect to the transactions
contemplated by this Agreement or otherwise issue any written public
statements with respect to such transactions without prior consultation
with the other party, except as may be required by applicable law or by
obligations pursuant to any listing agreement with any national
securities exchange or the rules of NASDAQ.
Section 5.11 Real Estate Transfer and Gains Tax. Parent and
the Company agree that either the Company or the Surviving Corporation
will pay any state or local tax which is attributable to the transfer of
the beneficial ownership of the Company's or its Subsidiaries' real
property, if any (collectively, the "Gains Taxes"), and any penalties or
interest with respect to the Gains Taxes, payable in connection with the
consummation of the Merger. The Company and Parent agree to cooperate
with the other in the filing of any returns with respect to the Gains
Taxes, including supplying in a timely manner a complete list of all
real property interests held by the Company and its Subsidiaries and any
information with respect to such property that is reasonably necessary
to complete such returns. The portion of the consideration allocable to
the real property of the Company and its Subsidiaries shall be
determined by Parent in its reasonable discretion.
Section 5.12 State Takeover Laws. If any "fair price,"
"business combination" or "control share acquisition" statute or other
similar statute or regulation shall become applicable to the
transactions contemplated hereby or in the Stock Option Agreement,
Parent and the Company and their respective Boards of Directors shall
use their reasonable best efforts to grant such approvals and take such
actions as are necessary so that the transactions contemplated hereby
and thereby may be consummated as promptly as practicable on the terms
contemplated hereby and thereby and otherwise act to minimize the
effects of any such statute or regulation on the transactions
contemplated hereby and thereby.
Section 5.13 Indemnification; Directors and Officers
Insurance. For six years from and after the Effective Time, Parent
agrees to cause the Surviving Corporation to indemnify and hold harmless
all past and present officers and directors of the Company and of its
Subsidiaries to the same extent such persons are indemnified as of the
date of this Agreement by the Company for acts or omissions occurring at
or prior to the Effective Time pursuant to the Company Charter, the
Company Bylaws and the indemnification agreements in the form filed as
an exhibit to the Company SEC Documents which were entered into prior to
the date hereof between the Company and persons identified in Section
5.13 of the Company Letter. Parent shall provide, or shall cause the
Surviving Corporation to provide, for an aggregate period of not less
than six years from the Effective Time, the Company's current directors
and officers an insurance and indemnification policy that provides
coverage for events occurring prior to the Effective Time (the "D&O
Insurance") that is substantially similar (with respect to limits and
deductibles) to the Company's existing policy or, if substantially
equivalent insurance coverage is unavailable, the best available
coverage; provided, however, that the Surviving Corporation shall not be
required to pay an annual premium for the D&O Insurance in excess of
$1,425,000, but shall, in such event, maintain all coverage that can be
purchased for such amount. The Company represents and warrants to
Parent that a true and complete copy of the Company's existing insurance
and indemnification policy has been provided to Parent.
Section 5.14 Notification of Certain Matters. Parent shall
use its reasonable best efforts to give prompt notice to the Company,
and the Company shall use its reasonable best efforts to give prompt
notice to Parent, of: (i) the occurrence, or non-occurrence, of any
event the occurrence, or non-occurrence, of which it is aware and which
would be reasonably likely to cause (x) any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material
respect or (y) any covenant, condition or agreement contained in this
Agreement not to be complied with or satisfied in all material respects,
(ii) any failure of Parent or the Company, as the case may be, to comply
in a timely manner with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder or (iii) any change or
event which would be reasonably likely to have a Material Adverse Effect
on Parent or the Company, as the case may be; provided, however, that
the delivery of any notice pursuant to this Section 5.14 shall not limit
or otherwise affect the remedies available hereunder to the party
receiving such notice.
Section 5.15 Employee Benefit Plans and Agreements. (a)
Parent agrees that it will cause the Surviving Corporation from and
after the Effective Time to honor all Company Plans and all employment
agreements entered into by the Company prior to the date hereof;
provided, however, that nothing in this Agreement shall be interpreted
as limiting the power of Parent or the Surviving Corporation to amend or
terminate any Company Plan or any other individual employee benefit
plan, program, agreement or policy or as requiring Parent or the
Surviving Corporation to offer to continue (other than as required by
its terms) any written employment contract.
(b) Subject to this Section 5.15(b), Parent agrees that
all employees of the Company and its Subsidiaries who are covered under
any of the Company Plans immediately prior to the Effective Time shall
continue to be covered under such Company Plans after the Effective Time
other than the Company Stock Purchase Plan and the Company Stock Option
Plans. Notwithstanding the foregoing, Parent may terminate all of the
Company Plans provided that: (1) each Company employee and each employee
of the Company's Subsidiaries is provided coverage under the Parent
Plans on the same terms and conditions as similarly situated Parent
employees; (2) Parent causes each Parent Plan covering employees of the
Company or its Subsidiaries to recognize prior service of such employees
with the Company and its Subsidiaries as service with Parent and its
Subsidiaries (i) for purposes of any waiting period and eligibility
requirements under any Parent Plan that is not a "pension plan" (as
defined in Section 3(2) of ERISA), and (ii) for purposes of eligibility
(including eligibility for early retirement benefits) and vesting (but
not benefit accrual) under any Parent Plan that is a "pension plan" (as
defined in Section 3(2) of ERISA); (3) Parent causes coverage to be
immediately available for employees of the Company and its Subsidiaries
under the comparable Parent Plan, if any, at the time coverage ceases
under any Company Plan sought to be terminated; and (4) to the extent
Parent elects to terminate any Company Plan, it will terminate the other
Company Plans in accordance herewith as soon as practicable after the
termination of such Company Plan. Notwithstanding the foregoing,
nothing herein shall require Parent to offer benefits under the Parent
Plans comparable to those offered under the Company Plans.
(c) After the Effective Time, Parent shall cause employees of
the Company to be eligible to participate in stock purchase plans
maintained by Parent from time to time and to receive grants of options
to purchase Parent Common Stock under the stock option plans maintained
by Parent from time to time, in each case in accordance with the terms
of such plans.
Section 5.16 Rights Agreement. Without the prior written
consent of Parent, the Company shall not redeem the Rights issued under
the Rights Agreement or terminate the Rights Agreement prior to the
Effective Time unless required to do so by a court of competent
jurisdiction.
Section 5.17 Directorships. Promptly following the
Effective Time, Parent's Board of Directors shall elect ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to be
directors of Parent so that immediately thereafter, the Board of
Directors of Parent shall consist of twelve directors.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the
Merger shall be subject to the fulfillment at or prior to the Effective
Time of the following conditions:
(a) Stockholder Approval. This Agreement shall have been dul
approved by the requisite vote of stockholders of the Company in
accordance with applicable law and the Company Charter and the Company
Bylaws, and the Share Issuance shall have been approved by the requisite
vote of the stockholders of Parent in accordance with applicable rules
of NASDAQ, applicable law and the Parent Charter and the Parent Bylaws.
(b) Quotation of Stock. The Parent Common Stock issuable in
the Merger shall have been authorized for quotation on NASDAQ, subject
to official notice of issuance.
(c) HSR and Other Approvals. (i) The waiting period (and any
extension thereof) applicable to the consummation of the Merger under
the HSR Act shall have expired or been terminated.
(ii) All authorizations, consents, orders, declarations or
approvals of, or filings with, or terminations or expirations of waiting
periods imposed by, any Governmental Entity, which the failure to
obtain, make or occur would have the effect of making the Merger or any
of the transactions contemplated hereby illegal or would have,
individually or in the aggregate, a Material Adverse Effect on Parent
(assuming the Merger had taken place), shall have been obtained, shall
have been made or shall have occurred.
(d) Registration Statement. The Registration Statement shall
have become effective in accordance with the provisions of the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no
proceedings for that purpose shall have been initiated or, to the
Knowledge of Parent or the Company, threatened by the SEC. All
necessary state securities or Blue Sky authorizations (including State
Takeover Approvals) shall have been received.
(e) No Order. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction
or other order (whether temporary, preliminary or permanent) which is
then in effect and has the effect of making the Merger or any of the
transactions contemplated hereby illegal.
Section 6.2 Conditions to Obligation of the Company to
Effect the Merger. The obligation of the Company to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Time of
the following additional conditions:
(a) Performance of Obligations; Representations and
Warranties. Each of Parent and Sub shall have performed in all material
respects each of its agreements contained in this Agreement required to
be performed on or prior to the Effective Time, each of the
representations and warranties of Parent and Sub contained in this
Agreement that is qualified by materiality shall be true and correct on
and as of the Effective Time as if made on and as of such date (other
than representations and warranties which address matters only as of a
certain date which shall be true and correct as of such certain date)
and each of the representations and warranties that is not so qualified
shall be true and correct in all material respects on and as of the
Effective Time as if made on and as of such date (other than
representations and warranties which address matters only as of a
certain date which shall be true and correct in all material respects as
of such certain date), in each case except as contemplated or permitted
by this Agreement, and the Company shall have received a certificate
signed on behalf of Parent by its Chief Executive Officer and its Chief
Financial Officer to such effect.
(b) Tax Opinion. The Company shall have received an opinion
of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., in form and substance reasonably satisfactory
to the Company, dated the Effective Time, substantially to the effect
that on the basis of facts, representations and assumptions set forth in
such opinion which are consistent with the state of facts existing as of
the Effective Time, for federal income tax purposes:
(i) the Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and the Company, Sub and Parent
will each be a party to that reorganization within the meaning of
Section 368(b) of the Code;
(ii) no gain or loss will be recognized by Parent, Sub or the
Company as a result of the Merger;
(iii) no gain or loss will be recognized by the stockholders
of the Company upon the conversion of their shares of Company Common
Stock into shares of Parent Common Stock pursuant to the Merger, except
with respect to cash, if any, received in lieu of fractional shares of
Parent Common Stock;
(iv) the aggregate tax basis of the shares of Parent Common
Stock received in exchange for shares of Company Common Stock pursuant
to the Merger (including a fractional share of Parent Common Stock for
which cash is received) will be the same as the aggregate tax basis of
such shares of Company Common Stock;
(v) the holding period for shares of Parent Common Stock
received in exchange for shares of Company Common Stock pursuant to the
Merger will include the holder's holding period for such shares of
Company Common Stock, provided such shares of Company Common Stock were
held as capital assets by the holder at the Effective Time; and
(vi) a stockholder of the Company who receives cash in lieu
of a fractional share of Parent Common Stock will recognize gain or loss
equal to the difference, if any, between such stockholder's basis in the
fractional share (determined under clause (iv) above) and the amount of
cash received.
In rendering such opinion, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P. may rely upon the
representations contained herein and may receive and rely upon
representations from Parent, the Company, and others, including
representations from Parent substantially similar to the representations
in the Parent Tax Certificate attached to the Parent Letter and
representations from the Company substantially similar to the
representations in the Company Tax Certificate attached to the Company
Letter.
(c) Material Adverse Effect. Since the date of this
Agreement, there shall not have been any events, changes or developments
that, individually or in the aggregate, would have a Material Adverse
Effect on Parent; provided, that, for purposes of this Section 6.2(c), a
Material Adverse Effect on the results of operations of Parent shall
only be deemed to be such to the extent it relates to the long-term
prospects of the results of operations of Parent and its Subsidiaries
taken as a whole. The Company shall have received a certificate signed
on behalf of Parent by its Chief Executive Officer and its Chief
Financial Officer to such effect.
(d) Consents. Parent shall have obtained the consent or
approval of each person that is not a Governmental Entity whose consent
or approval shall be required in connection with the transactions
contemplated hereby under any loan or credit agreement, note, mortgage,
indenture, lease or other agreement by which Parent or any of its
Subsidiaries is bound, except as to which the failure to obtain such
consents and approvals would not, individually or in the aggregate, have
a Material Adverse Effect on Parent.
(e) Litigation. There shall not be instituted or pending any
suit, action or proceeding by any Governmental Entity relating to this
Agreement, the Stock Option Agreement or any of the transactions
contemplated herein or therein which would have a Material Adverse
Effect on the Company or Parent.
Section 6.3 Conditions to Obligations of Parent and Sub to
Effect the Merger. The obligations of Parent and Sub to effect the
Merger shall be subject to the fulfillment at or prior to the Effective
Time of the following additional conditions:
(a) Performance of Obligations; Representations and
Warranties. The Company shall have performed in all material respects
each of its agreements contained in this Agreement required to be
performed on or prior to the Effective Time, each of the representations
and warranties of the Company contained in this Agreement that is
qualified by materiality shall be true and correct on and as of the
Effective Time as if made on and as of such date (other than
representations and warranties which address matters only as of a
certain date which shall be true and correct as of such certain date)
and each of the representations and warranties that is not so qualified
shall be true and correct in all material respects on and as of the
Effective Time as if made on and as of such date (other than
representations and warranties which address matters only as of a
certain date which shall be true and correct in all material respects as
of such certain date), in each case except as contemplated or permitted
by this Agreement, and Parent shall have received a certificate signed
on behalf of the Company by its Chief Executive Officer and its Chief
Financial Officer to such effect.
(b) Tax Opinion. Parent shall have received an opinion of
Sidley & Austin, in form and substance reasonably satisfactory to
Parent, dated the Effective Time, substantially to the effect that on
the basis of facts, representations and assumptions set forth in such
opinion which are consistent with the state of facts existing as of the
Effective Time, for federal income tax purposes:
(i) the Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and the Company, Sub and Parent
will each be a party to that reorganization within the meaning of
Section 368(b) of the Code;
(ii) no gain or loss will be recognized by Parent, Sub or the
Company as a result of the Merger;
(iii) no gain or loss will be recognized by the stockholders
of the Company upon the conversion of their shares of Company Common
Stock into shares of Parent Common Stock pursuant to the Merger, except
with respect to cash, if any, received in lieu of fractional shares of
Parent Common Stock;
(iv) the aggregate tax basis of the shares of Parent Common
Stock received in exchange for shares of Company Common Stock pursuant
to the Merger (including a fractional share of Parent Common Stock for
which cash is received) will be the same as the aggregate tax basis of
such shares of Company Common Stock;
(v) the holding period for shares of Parent Common Stock
received in exchange for shares of Company Common Stock pursuant to the
Merger will include the holder's holding period for such shares of
Company Common Stock, provided such shares of Company Common Stock were
held as capital assets by the holder at the Effective Time; and
(vi) a stockholder of the Company who receives cash in lieu
of a fractional share of Parent Common Stock will recognize gain or loss
equal to the difference, if any, between such stockholder's basis in the
fractional share (determined under clause (iv) above) and the amount of
cash received.
In rendering such opinion, Sidley & Austin may rely upon representations
contained herein and may receive and rely upon representations from
Parent, the Company, and others, including representations from Parent
substantially similar to the representations in the Parent Tax
Certificate attached to the Parent Letter and representations from the
Company substantially similar to the representations in the Company Tax
Certificate attached to the Company Letter.
(c) Material Adverse Effect. Since the date of this
Agreement, there shall not have been any events, changes or developments
that, individually or in the aggregate, would have (i) a Material
Adverse Effect on the Company; provided, that, for purposes of this
Section 6.3(c), a Material Adverse Effect on the results of operations
of the Company and its Subsidiaries shall only be deemed to be such to
the extent it relates to the long-term prospects of the results of
operations of the Company and its Subsidiaries taken as a whole. Parent
shall have received a certificate signed on behalf of the Company by its
Chief Executive Officer and its Chief Financial Officer to such effect.
(d) Accounting. Parent shall have received an opinion of
Ernst & Young LLP (or any successor thereto), in form and substance
reasonably satisfactory to Parent, that the Merger will qualify for
pooling of interests accounting treatment under Accounting Principles
Board Opinion No. 16 if closed and consummated in accordance with this
Agreement (which opinion shall be based, as to the financial statements
of the Company, on a customary "pooling" letter of Price Waterhouse
LLP); and
(e) Consents. The Company shall have obtained the consent or
approval of each person that is not a Governmental Entity whose consent
or approval shall be required in connection with the transactions
contemplated hereby under any loan or credit agreement, note, mortgage,
indenture, lease or other agreement or instrument by which the Company
or any of its Subsidiaries is bound, except as to which the failure to
obtain such consents and approvals would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
(f) Litigation. There shall not be instituted or pending any
suit, action or proceeding by any Governmental Entity relating to this
Agreement, the Stock Option Agreement or any of the transactions
contemplated herein or therein which would have a Material Adverse
Effect on the Company or Parent.
(g) Rights Agreement. The Rights shall not have become
nonredeemable, exercisable, distributed or triggered pursuant to the
terms of the Rights Agreement.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated
at any time prior to the Effective Time, whether before or after any
approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the other party shall
have failed to comply in any material respect with any of its covenants
or agreements contained in this Agreement required to be complied with
prior to the date of such termination, which failure to comply has not
been cured within thirty business days following receipt by such other
party of written notice from the non-breaching party of such failure to
comply;
(c) by either Parent or the Company if there has been (i) a
breach by the other party (in the case of Parent, including any material
breach by Sub) of any representation or warranty that is not qualified
as to materiality which has the effect of making such representation or
warranty not true and correct in all material respects or (ii) a breach
by the other party (in the case of Parent, including any material breach
by Sub) of any representation or warranty that is qualified as to
materiality, in each case which breach has not been cured within thirty
business days following receipt by the breaching party from the
non-breaching party of written notice of the breach;
(d) by Parent or the Company if: (i) the Merger has not been
effected on or prior to the close of business on December 31, 1998;
provided, however, that the right to terminate this Agreement pursuant
to this Section 7.1(d)(i) shall not be available to any party whose
failure to fulfill any of its obligations contained in this Agreement
has been the cause of, or resulted in, the failure of the Merger to have
occurred on or prior to the aforesaid date; or (ii) any court or other
Governmental Entity having jurisdiction over a party hereto shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the consummation of the
Merger and such order, decree, ruling or other action shall have become
final and nonappealable;
(e) by Parent or the Company if the stockholders of the
Company do not approve this Agreement at the Company Stockholder Meeting
or at any adjournment or postponement thereof; provided, however, that
the Company may not terminate this Agreement pursuant to this Section
7.1(e) if the Company has not complied with its obligations under
Sections 4.2, 5.1 and 5.2 or has otherwise breached in any material
respect its obligations under this Agreement in any manner that could
reasonably have caused the failure of the stockholder approval to be
obtained at the Company Stockholder Meeting;
(f) by Parent or the Company if the stockholders of Parent do
not approve the Share Issuance at the Parent Stockholder Meeting or at
any adjournment or postponement thereof; provided, however, that Parent
may not terminate this Agreement pursuant to this Section 7.1(f) if
Parent has not complied with its obligations under Sections 5.1 and 5.2
or has otherwise breached in any material respect its obligations under
this Agreement in any manner that could reasonably have caused the
failure of the vote in favor of the Share Issuance to be obtained at the
Parent Stockholder Meeting;
(g) by Parent or the Company if (i) the Board of Directors of
the Company reasonably determines that a Takeover Proposal constitutes a
Superior Proposal and (ii) the Board of Directors of the Company
determines in its reasonable good faith judgment, on the basis of the
advice of the outside corporate counsel of the Company, that the failure
to accept such Superior Proposal would violate its fiduciary duties to
its stockholders under applicable law; provided, however, that the
Company may not terminate this Agreement pursuant to this Section 7.1(g)
unless (i) the Company has delivered to Parent a written notice of the
Company's intent to enter into such an agreement to effect the Superior
Proposal, (ii) five business days have elapsed following delivery to
Parent of such written notice by the Company and (iii) during such five
business day period the Company has fully cooperated with Parent,
including, without limitation, informing Parent of the terms and
conditions of the Takeover Proposal and the identity of the person
making the Takeover Proposal, with the intent of enabling Parent to
agree to a modification of the terms and conditions of this Agreement so
that the transactions contemplated hereby, as so modified, may be
effected; provided, further, that the Company may not terminate this
Agreement pursuant to this Section 7.1(g) unless at the end of such five
business day period (i) the Board of Directors of the Company continues
reasonably to believe that the Takeover Proposal constitutes a Superior
Proposal, (ii) the Board of Directors of the Company continues to reach
a determination in its reasonable good faith judgment, on the basis of
the advice of the outside corporate counsel of the Company, that the
failure to accept such Superior Proposal would violate its fiduciary
duties to its stockholders under applicable law and (iii) prior to such
termination the Company pays to Parent the amounts specified under
Sections 5.7(a), (b) and (c); and provided, further, that this Agreement
shall not terminate pursuant to this Section 7.1(g) unless
simultaneously with such termination the Company enters into a
definitive acquisition, merger or similar agreement to effect the
Superior Proposal.
(h) by Parent if (i) the Board of Directors of the Company
shall not have recommended, or shall have resolved not to recommend, or
shall have qualified, modified or withdrawn its recommendation of the
Merger or declaration that the Merger is advisable and fair to and in
the best interest of the Company and its stockholders, or shall have
resolved to do so, (ii) any person (other than Parent or its Affiliates)
acquires or becomes the beneficial owner of 20% or more of the
outstanding shares of Company Common Stock, (iii) the Board of Directors
of the Company shall have recommended to the stockholders of the Company
any Takeover Proposal or shall have resolved to do so or (iv) a tender
offer or exchange offer for 20% or more of the outstanding shares of
capital stock of the Company is commenced, and the Board of Directors of
the Company fails to recommend against acceptance of such tender offer
or exchange offer by its stockholders (including by taking no position
with respect to the acceptance of such tender offer or exchange offer by
its stockholders); or
(i) by the Company if the Board of Directors of Parent shall
not have recommended, or shall have resolved not to recommend, or shall
have qualified or modified or withdrawn its recommendation of the Share
Issuance or declaration that the Share Issuance is advisable and fair to
and in the best interest of Parent and its stockholders, or shall have
resolved to do so.
The right of any party hereto to terminate this Agreement
pursuant to this Section 7.1 shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
party hereto, any person controlling any such party or any of their
respective officers or directors, whether prior to or after the
execution of this Agreement.
Section 7.2 Effect of Termination. In the event of
termination of this Agreement by either Parent or the Company, as
provided in Section 7.1, this Agreement shall forthwith become void and
there shall be no liability hereunder on the part of the Company,
Parent, Sub or their respective officers or directors (except for the
last sentence of Section 5.4 and the entirety of Section 5.7, which
shall survive the termination); provided, however, that nothing
contained in this Section 7.2 shall relieve any party hereto from any
liability for any willful breach of a representation or warranty
contained in this Agreement or the breach of any covenant contained in
this Agreement.
Section 7.3 Amendment. This Agreement may be amended by
the parties hereto, by or pursuant to action taken by their respective
Boards of Directors, at any time before or after approval of the matters
presented in connection with the Merger by the stockholders of Parent
and the Company, but, after any such approval, no amendment shall be
made which by law requires further approval by such stockholders without
such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 7.4 Waiver. At any time prior to the Effective
Time, the parties hereto may (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii)
waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein
which may legally be waived. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties.
The representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall terminate at the
Effective Time.
Section 8.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, one day after being delivered to an overnight courier or
when telecopied (with a confirmatory copy sent by overnight courier) to
the parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(a) if to Parent or Sub, to
Tellabs, Inc.
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Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Sidley & Austin
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
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(b) if to the Company, to
CIENA Corporation
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Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
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Attention: ▇▇▇▇▇▇▇ ▇. Silver, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.3 Interpretation. When a reference is made in
this Agreement to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated. The table of contents, list
of defined terms and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
Section 8.4 Counterparts. This Agreement may be executed
in counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
Section 8.5 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, except for the Stock Option Agreement and as provided in
the last sentence of Section 5.4, constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof. This
Agreement, except for the provisions of Section 5.13, is not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 8.6 Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Delaware, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
Section 8.7 Assignment. Subject to Section 1.1, neither
this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the other
parties.
Section 8.8 Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being enforced by
any rule of law, or public policy, all other terms, conditions and
provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic and legal substance of the transactions
contemplated hereby are not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this
Agreement may be consummated as originally contemplated to the fullest
extent possible.
Section 8.9 Enforcement of this Agreement. The parties
hereto 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 wording or were otherwise breached. It is
accordingly agreed that the parties hereto shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, such remedy being in
addition to any other remedy to which any party is entitled at law or in
equity.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized all as of the date first written above.
TELLABS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. Birck______
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President and Chief Executive
Officer
WHITE OAK MERGER CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. Birck_______
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
CIENA CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. Nettles_____
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive
Officer
Exhibit 5.5(a)
FORM OF AFFILIATE LETTER FOR AFFILIATES OF THE COMPANY
Tellabs, Inc.
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Ladies and Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of CIENA Corporation, a Delaware
corporation (the "Company"), as the term "affiliate" is (i) defined for
purposes of paragraphs (c) and (d) of Rule 145 of the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), and/or (ii) used in and for purposes of Accounting
Series Releases 130 and 135, as amended, of the Commission. Pursuant to
the terms of the Agreement and Plan of Merger dated as of June 2, 1998
(the "Merger Agreement") among Tellabs, Inc., a Delaware corporation
("Parent"), White Oak Merger Corp., a Delaware corporation ("Sub"), and
the Company, Sub will be merged with and into the Company (the
"Merger"). Capitalized terms used in this letter without definition
shall have the meanings assigned to them in the Merger Agreement.
As a result of the Merger, I will receive shares of Common
Stock, no par value, of Parent (the "Parent Shares") in exchange for
shares of common stock, par value $.01 per share, of the Company (the
"Company Shares") owned by me or purchasable upon exercise of stock
options.
1. I represent, warrant and covenant to Parent that in the event I
receive any Parent Shares as a result of the Merger:
A. I shall not make any sale, transfer or other disposition
of the Parent Shares in violation of the Act or the Rules and
Regulations.
B. I have carefully read this letter and the Merger Agreement
and discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of
the Parent Shares, to the extent I felt necessary, with my counsel or
counsel for the Company.
C. I have been advised that the issuance of the Parent Shares
to me pursuant to the Merger has been or will be registered with the
Commission under the Act on a Registration Statement on Form S-4.
However, I have also been advised that, because at the time the Merger
is submitted for a vote of the stockholders of the Company, (a) I may be
deemed to be an affiliate of the Company and (b) the sale, transfer or
other disposition by me of the Parent Shares will not have been
registered under the Act, I may not sell, transfer or otherwise dispose
of the Parent Shares issued to me in the Merger unless (i) such sale,
transfer or other disposition is made in conformity with the volume and
other limitations of Rule 145 promulgated by the Commission under the
Act, (ii) such sale, transfer or other disposition has been registered
under the Act or (iii) in the opinion of counsel reasonably acceptable
to Parent, such sale, transfer or other disposition is otherwise exempt
from registration under the Act.
D. I understand that Parent is under no obligation to register
the sale, transfer or other disposition of the Parent Shares by me or on
my behalf under the Act or to take any other action necessary in order
to make compliance with an exemption from such registration available.
E. I also understand that there will be placed on the
certificates for the Parent Shares issued to me, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT
OF 1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY
ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT
BETWEEN THE REGISTERED HOLDER HEREOF AND TELLABS, INC., A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF TELLABS,
INC."
F. I also understand that unless a sale or transfer is made
in conformity with the provisions of Rule 145, or pursuant to a
registration statement, Parent reserves the right to put the following
legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM
A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE
145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THE
SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR
RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE
MEANING OF THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933."
G. I further represent to, and covenant with, Parent that I
will not, during the 30 days prior to the Effective Time (as defined in
the Merger Agreement), sell, transfer or otherwise dispose of or reduce
my risk (as contemplated by SEC Accounting Series Release No. 135) with
respect to the Company Shares or shares of the capital stock of Parent
that I may hold and, furthermore, that I will not sell, transfer or
otherwise dispose of or reduce my risk (as contemplated by SEC
Accounting Series Release No. 135) with respect to the Parent Shares
received by me in the Merger or any other shares of the capital stock of
Parent until after such time as results covering at least 30 days of
combined operations of the Company and Parent have been published by
Parent, in the form of a quarterly earnings report, an effective
registration statement filed with the Commission, a report to the
Commission on Form 10-K, 10-Q, or 8-K, or any other public filing or
announcement which includes the combined results of operations.
Notwithstanding the foregoing provisions of this paragraph 1(G), but
subject to the other provisions of this letter, I understand that during
the aforementioned period, subject to providing written notice to and
obtaining the consent of Parent, which consent shall not be unreasonably
withheld, I will not be prohibited from de minimis dispositions and
charitable contributions or bona fide gifts of the Parent Shares which,
in each case, will not disqualify the accounting for the Merger as a
pooling of interests.
H. Execution of this letter should not be considered an
admission on my part that I am an "affiliate" of the Company as
described in the first paragraph of this letter, nor as a waiver of any
rights I may have to object to any claim that I am such an affiliate on
or after the date of this letter.
2. By Parent's acceptance of this letter, Parent hereby agrees
with me that certificates with the legends set forth in paragraphs 1(E)
and (F) above will be substituted by delivery of certificates without
such legend if (i) one year shall have elapsed from the date the
undersigned acquired the Parent Shares received in the Merger and the
provisions of Rule 145(d)(2) are then available to the undersigned, (ii)
two years shall have elapsed from the date the undersigned acquired the
Parent Shares received in the Merger and the provisions of Rule
145(d)(3) are then applicable to the undersigned, or (iii) the Parent
has received an opinion of counsel, which opinion and counsel shall be
reasonably satisfactory to Parent to the effect that the restrictions
imposed by Rule 145 under the Act no longer apply to the undersigned.
Very truly yours,
______________________________
Name:
Agreed and accepted this [______] day
of [_____________ ], 1998, by
TELLABS, INC.
By ________________________
Name: ________________________
Title: _______________________
Exhibit 5.5(b)
FORM OF AFFILIATE LETTER FOR AFFILIATES OF PARENT
Tellabs, Inc.
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Ladies and Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of Tellabs, Inc., a Delaware corporation
("Parent"), as the term "affiliate" is defined for purposes of
Accounting Series Releases 130 and 135, as amended, of the Securities
and Exchange Commission ("Commission"). Pursuant to the terms of the
Agreement and Plan of Merger dated as of June 2, 1998 (the "Merger
Agreement") among Parent, White Oak Merger Corp., a Delaware corporation
("Sub"), and CIENA Corporation, a Delaware corporation (the "Company"),
Sub will be merged with and into the Company (the "Merger").
I represent to, and covenant with, Parent that I will not,
during the period beginning 30 days prior to the Effective Time (as
defined in the Merger Agreement) until after such time as results
covering at least 30 days of combined operations of the Company and
Parent have been published by Parent, in the form of a quarterly
earnings report, an effective registration statement filed with the
Commission, a report to the Commission on Form 10-K, 10-Q, or 8-K, or
any other public filing or announcement which includes the combined
results of operations, sell, transfer or otherwise dispose of or reduce
my risk with respect to any shares of the capital stock of Parent
("Parent Stock") or the Company that I may hold. Notwithstanding the
foregoing, I understand that during the aforementioned period, subject
to providing written notice to and obtaining the consent of Parent,
which consent shall not be unreasonably withheld, I will not be
prohibited from de minimis dispositions and charitable contributions or
bona fide gifts of the Parent Stock which, in each case, will not
disqualify the accounting for the Merger as a pooling of interests.
Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of Parent as described in the first
paragraph of this letter, nor as a waiver of any rights I may have to
object to any claim that I am such an affiliate on or after the date of
this letter.
Very truly yours,
______________________________
Name:
Accepted this [______] day
of [___________], 1998, by
TELLABS, INC.
By ______________________
Name: ____________________