Exhibit 10.22
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Agreement and Plan of Merger
by and among
Tellium, Inc.
Astarte Acquisition Corporation,
Astarte Fiber Networks, Inc.,
AFN LLC
and
▇▇▇▇ ▇. ▇▇▇▇
Dated as of August 29, 2000
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Table of Contents
Article I Definitions; Construction................................... 1
1.1. Definitions...................................................... 1
1.2. Construction..................................................... 12
Article II The Merger................................................. 12
2.1. The Merger....................................................... 12
2.2. Effective Time................................................... 13
2.3. Certain Effects of the Merger.................................... 13
2.4. Articles of Incorporation........................................ 13
2.5. Bylaws........................................................... 13
2.6. Directors and Officers........................................... 13
2.7. Pre-Merger Transactions.......................................... 13
Article III Conversion and Exchange of Securities..................... 14
3.1. Shares of the Surviving Corporation.............................. 14
3.2. Conversion of Company Common Stock............................... 14
3.3. Conversion of Astarte Securities................................. 14
3.4. No Fractional Tellium Common Stock............................... 16
3.5. Exchange of Certificates; Distribution of Tellium Common Stock... 16
3.6. Closing of Stock Transfer Books.................................. 18
3.7. Dissenting Shares................................................ 18
3.8. Escrow Shares.................................................... 19
Article IV Representations and Warranties of Astarte.................. 19
4.1. Corporate Existence and Power.................................... 19
4.2. Corporate Authorization.......................................... 20
4.3. Consents and Approvals........................................... 20
4.4. Non-Contravention................................................ 20
4.5. Capitalization................................................... 21
4.6. Subsidiaries..................................................... 22
4.7. Financial Statements............................................. 22
4.8. Absence of Undisclosed Liabilities............................... 22
4.9. Assets and Properties............................................ 23
4.10. Real Property.................................................... 23
4.11. Condition of Tangible Assets..................................... 23
4.12. Intellectual Property............................................ 24
4.13. Absence of Certain Changes....................................... 27
4.14. Litigation....................................................... 29
4.15. Material Contracts............................................... 30
4.16. Taxes............................................................ 32
4.17. Transactions With Affiliates..................................... 34
4.18. Insurance Coverage............................................... 34
4.19. Compliance With Laws; No Defaults................................ 34
4.20. Permits.......................................................... 35
4.21. Environmental Matters............................................ 35
4.22. Employees and Employee Plans..................................... ▇▇
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▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇▇.)
4.23. Finders' Fees.................................................... 40
4.24. Disclosure....................................................... 40
4.25. Investment Representations....................................... 40
4.26. Government Contracts............................................. 41
4.27. Customers and Suppliers.......................................... 41
4.28. Indebtedness..................................................... 41
4.29. No Other Representations and Warranties.......................... 42
Article V Representations and Warranties of Tellium and the Company... 42
5.1. Corporate Existence and Power.................................... 42
5.2. Corporate Authorization.......................................... 42
5.3. Consents and Approvals........................................... 43
5.4. Non-Contravention................................................ 43
5.5. Capitalization................................................... 43
5.6. Tellium Common Stock............................................. 44
5.7. Absence of Material Adverse Effects.............................. 44
5.8. Compliance With Laws; No Defaults................................ 44
5.9. Finders' Fees.................................................... 45
5.10. Taxes............................................................ 45
5.11. Financial Statements............................................. 45
5.12. Subsidiaries..................................................... 46
5.13. Continuity of Business Enterprise................................ 46
5.14. Absence of Undisclosed Liabilities and Decrease in Assets........ 46
5.15. Litigation....................................................... 46
5.16. Disclosure....................................................... 46
5.17. The Company...................................................... 47
5.18. No Other Representations or Warranties........................... 47
Article VI Covenants.................................................. 47
6.1. Mutual Covenants and Agreements.................................. 47
6.2. Certain Covenants of Astarte..................................... 48
6.3. Covenants of Tellium and the Company............................. 56
6.4. Certain Tax Matters.............................................. 57
6.5. Covenants relating to Astarte Pending Orders..................... 60
Article VII Closing Matters........................................... 60
7.1. The Closing...................................................... 60
7.2. Documents and Certificates....................................... 60
Article VIII Conditions of Closing.................................... 61
8.1. Conditions to Obligations of Tellium, the Company and Astarte.... 61
8.2. Conditions Applicable to Tellium and the Company................. 61
8.3. Conditions Applicable to Astarte................................. 64
Article IX Termination................................................ 65
9.1. Termination...................................................... 65
9.2. Notice of Termination; Effect of Termination..................... 66
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Table of Contents (Cont.)
9.3. Procedure Upon Termination...................................... 66
Article X Indemnification............................................. 67
10.1. Survival........................................................ 67
10.2. Indemnification by Astarte Stockholders and ▇▇▇▇ ▇. ▇▇▇▇........ 67
10.3. Escrow.......................................................... 69
10.4. Indemnification by Tellium...................................... 70
Article XI Miscellaneous.............................................. 70
11.1. Expenses........................................................ 70
11.2. Further Assurances.............................................. 71
11.3. Parties in Interest; Third Party Beneficiaries.................. 71
11.4. Survival of Representations and Warranties and Covenants........ 71
11.5. Entire Agreement................................................ 71
11.6. Amendment....................................................... 72
11.7. Waiver.......................................................... 72
11.8. Notices......................................................... 72
11.9. Governing Law................................................... 73
11.10. Consent to Jurisdiction......................................... 73
11.11. Invalidity of Provisions........................................ 74
11.12. Mutual Contribution............................................. 74
11.13. Counterparts.................................................... 74
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Exhibits
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Exhibit A: Form of Supplemental Stockholders' Agreement
Exhibit B: Form of Amended and Restated Articles of Incorporation of Astarte
Fiber Networks, Inc.
Exhibit C: Form of Amended and Restated Bylaws of Astarte Fiber Networks, Inc.
Exhibit D: Form of Escrow Agreement
Exhibit E-1: Form of Legal Opinion of Proskauer Rose LLP
Exhibit E-2: Form of Legal Opinion of ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
Exhibit F: Form of Voting Agreement
Exhibit G: Form of Noncompetition Agreements
Exhibit H-1: Forms of Option Agreements
H-2 and H-3
Exhibit I: Patent Assignment
Exhibit J-1: Form of Legal Opinion of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Exhibit J-2: Form of Legal Opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.
Exhibit K: Form of Investor Questionnaire
Exhibit L: Astarte Restructuring Documents
Exhibit M: Form of Articles of Merger
Exhibit N: Section 6501 Disclosure Statement
Exhibit O: Form of Redemption Agreements
Exhibit P: Form of Licensing Agreement
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Schedules
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Schedule 4.1 Jurisdiction in which Astarte is Qualified to do Business
Schedule 4.3 Required Consents and Approvals
Schedule 4.4 Contraventions as a Consequence of the Merger
Schedule 4.5 Outstanding Equity Interests in Astarte
Schedule 4.6 Subsidiaries
Schedule 4.8 Liabilities and Obligations
Schedule 4.9 Properties and Assets
Schedule 4.10 Real Property
Schedule 4.12(a) Intellectual Property
Schedule 4.12(b) Licenses
Schedule 4.12(c) Intellectual Property Litigation
Schedule 4.12(f) Employee Non-Disclosure and Assignment Agreements
Schedule 4.12(h) Exclusive Rights to Astarte Products and Astarte
Intellectual Property Rights
Schedule 4.12(i) Astarte Products Licenses
Schedule 4.12(j) License Transactions
Schedule 4.13 Certain Changes and Events
Schedule 4.14 Litigation
Schedule 4.15 Material Contracts
Schedule 4.16 Taxes and Excessive Parachute Payments
Schedule 4.17 Transactions with Affiliates
Schedule 4.18 Insurance
Schedule 4.20 Permits
Schedule 4.21 Environmental Claims, Notices and Liabilities
Schedule 4.22 Employees and Employee Plans
Schedule 4.23 Finder's Fees
Schedule 4.25 Domicile and Principal Office of Stockholders
Schedule 4.26 Government Contracts
Schedule 4.27 Customers and Suppliers
Schedule 4.28 Indebtedness
Schedule 5.4 Tellium Contraventions as a Consequence of the Merger
Schedule 5.5 Tellium Capitalization
Schedule 5.9 Tellium Finder's Fees
Schedule 5.10 Tellium Tax Schedule
Schedule 5.14 Tellium Liabilities and Obligations
Schedule 5.15 Tellium Litigation
Schedule 6.2(e) Other Actions
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AGREEMENT AND PLAN OF
MERGER AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization (this "Agreement") by
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and among Tellium, Inc., a Delaware corporation ("Tellium"), Astarte Acquisition
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Corporation, a Colorado corporation (the "Company"), Astarte Fiber Networks,
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Inc., a Colorado corporation ("Astarte"), AFN LLC, a Wyoming limited liability
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company that upon the Closing will be owned by some or all of the stockholders
of Astarte ("AFN LLC"), and ▇▇▇▇ ▇. ▇▇▇▇ (both in his personal capacity and as
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Stockholder Representative as defined herein), is dated, entered into and made
effective as of this 29th day of August, 2000.
WITNESSETH:
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WHEREAS, the respective Boards of Directors of Tellium, the Company and
Astarte have by resolutions approved this Agreement and deemed it advisable for
their respective mutual benefit and of their respective stockholders that the
Company merge with and into Astarte under and pursuant to the Colorado Business
Corporation Act (the "Colorado Corporation Law") and upon the terms and subject
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to the conditions hereinafter set forth;
WHEREAS, the parties to this Agreement intend that the merger of the
Company into Astarte qualify as a reorganization within the meaning of Code
Section 368(a)(1);
WHEREAS, the Company, Tellium and Astarte desire to make certain
representations, warranties, covenants and other agreements in connection with
this Agreement;
WHEREAS, pursuant to the terms of a Voting Agreement to be entered into
simultaneously with this Agreement (the "Voting Agreement"), certain significant
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stockholders of Astarte are committing to vote to approve the Merger and certain
other matters; and
WHEREAS, ▇▇▇▇ ▇. ▇▇▇▇, in his personal capacity, desires to enter into this
Agreement for the purpose of undertaking the obligations set forth in Section
10.2(d); and
WHEREAS, AFN LLC desires to enter into this Agreement for the purpose of
undertaking the obligations set forth in Sections 6.2(u), 6.5 and 10.2(e).
NOW, THEREFORE, in consideration of these premises and the mutual
agreements, provisions and covenants contained in this Agreement, the parties
hereby agree as follows:
Article I
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Definitions; Construction
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1.1. Definitions
For the purposes of this Agreement, the following terms have the meanings
set forth below:
"Acquired Properties" shall have the meaning assigned to it in Section 4.9.
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"Acquisition Proposals" shall have the meaning assigned to it in Section
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6.2(k).
"Affiliate" shall mean, when used with respect to a specified Person,
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another Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Person
specified.
"AFN LLC" shall have the meaning assigned to it in the preamble to this
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Agreement.
"Agreement" shall have the meaning assigned to it in the preamble of this
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Agreement.
"Applicable Cap" shall have the meaning assigned to it in Section 10.2(c).
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"Applicable Percentage" means, with respect to any Astarte Stockholder, the
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percentage of all issued and outstanding Astarte Common Stock owned by such
Astarte Stockholder immediately prior to the Effective Time.
"Ancillary Agreements" means the Supplemental Stockholders' Agreement, the
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Option Agreements, the License Agreement, the Escrow Agreement, the
Noncompetition Agreements and the Voting Agreement.
"Articles of Merger" means the Articles of Merger (including the Plan of
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Merger attached thereto as an exhibit) to be filed with the Secretary of State
of the State of Colorado in the form attached hereto as Exhibit M.
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"Astarte" shall have the meaning assigned to it in the preamble to this
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Agreement.
"Astarte Certificate" shall have the meaning assigned to it in Section
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3.5(a).
"Astarte Common Stock" shall mean the outstanding shares of Common Stock of
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Astarte, par value $0.0001 per share.
"Astarte Disability Plan" shall mean the Astarte, Inc. Long-Term Disability
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Plan.
"Astarte Disclosure Schedule" shall have the meaning assigned to it in
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Article IV.
"Astarte Employee Plans" means all employee benefit plans (as defined in
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Section 3(3) of ERISA) and all material bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance, insurance
(including any self-insured or post-retirement arrangements), disability,
vacation, pension, profit-sharing and other similar employee benefit plans,
arrangements, policies or agreements, and all unexpired employment and severance
agreements for the benefit of, or relating to, any current or former employee or
consultant of Astarte.
"Astarte Employees" means all full-time and part-time employees (including
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officers and directors), temporary employees, former employees, consultants and
outside directors of Astarte.
"Astarte Flexible Benefit Plan" means the Astarte, Inc. Flexible Benefit
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Plan.
"Astarte 401(k) Plan" means the Astarte, Inc. 401(k) Profit Sharing Plan.
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"Astarte Group Health Plan" means the United Healthcare Choice Plan
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provided by United Healthcare of Colorado, Inc. and the United Healthcare Choice
Plus Plan provided by the United Healthcare Insurance Company.
"Astarte Intellectual Property Rights" shall have the meaning assigned to
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it in Section 4.12(a).
"Astarte's Knowledge", "to the knowledge of Astarte" or words or phrases of
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similar import mean and refer to the actual knowledge of ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. Fee after reasonable investigation.
"Astarte LTD and Health Plans" shall have the meaning assigned to it in
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Section 6.2(p).
"Astarte Options" means all options, warrants and other contingent rights
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to purchase shares of Astarte Common Stock or Astarte Preferred Stock
outstanding immediately prior to the Effective Time, whether vested or unvested.
"Astarte Pending Orders" shall have the meaning assigned to it in Section
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4.28.
"Astarte Planar Array Rights" means all of Astarte's worldwide rights in
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the subject matter described in the Planar Array Application to be transferred
to AFN LLC as described in the Patent Assignment.
"Astarte Preferred Stock" shall mean the 35,436,075 outstanding shares of
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Series A Preferred Stock of Astarte, par value $.0001 per share and the
23,594,398 outstanding shares of Series B Preferred Stock of Astarte, par value
$.0001 per share.
"Astarte Products" shall have the meaning assigned to it in Section
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4.12(i).
"Astarte Restructuring Document" means any document distributed to the
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Astarte Stockholders in connection with the Redemption, Distribution or Patent
Assignment.
"Astarte Securities" shall have the meaning assigned to it in Section 4.5.
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"Astarte Stockholders" means all holders of Astarte Common Stock or Astarte
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Preferred Stock as of the Effective Time.
"Astarte Stock Option Plan" means the Astarte Fiber Networks, Inc. Employee
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Stock Option Plan.
"Astarte Third Party Intellectual Property Rights" shall have the meaning
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assigned to it in Section 4.12(b).
"Cash Reserve Amount" shall have the meaning assigned to it in Section
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8.2(s).
"Closing" shall have the meaning assigned to it in Section 7.1.
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"Closing Date" shall have the meaning assigned to it in Section 7.1.
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"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985,
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as amended.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Colorado Corporation Law" shall have the meaning assigned to it in the
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recitals to this Agreement.
"Company" shall have the meaning assigned to it in the preamble to this
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Agreement.
"Confidentiality Agreements" shall have the meaning assigned to it in
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Section 6.1(c).
"Control" including, with its correlative meanings, "controlled by" and
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"under common control with" shall mean possession, directly or indirectly, of
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power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).
"Corning Agreement" shall have the meaning assigned to it in Section
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8.2(n).
"Corning LOI" means the Letter of Intent, dated August 4, 2000 among
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Astarte, AFN LLC and Corning, Inc.
"Dissenting Shares" shall have the meaning assigned to it in Section 3.7.
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"Distribution" means the distribution of 99% of the membership interests of
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AFN LLC and up to the $12,500,000 to be paid by Corning, Inc. for the Peripheral
License pursuant to the Redemption Agreements or by means of a pro-rata dividend
to all stockholders of Astarte pursuant to documentation reasonably acceptable
to Tellium; provided, however, that in no event shall any dollar amount be so
distributed that would result in a breach of Section 4.28 or would cause
Astarte's cash reserves as of the Closing to be less than the Cash Reserve
Amount.
"Effective Time" shall have the meaning assigned to it in Section 2.2.
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"Employee Loans" means the loans by Astarte to certain of its employees for
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the exercise price of Astarte Options.
"Encumbrance" means any lien, pledge, charge, assessment, security
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interest, mortgage, claim, option, easement, imperfection of title, tenancy or
other legal or equitable right of others, or other encumbrance of any character
whatsoever (including a right of first refusal).
"Environmental Costs" means any actual or potential cleanup costs,
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remediation, removal, or other response costs (including costs to cause Astarte,
Tellium, the Surviving Corporation or their respective Affiliates to come into
compliance with Environmental Laws), investigation costs (including reasonable
fees of consultants, counsel, and other experts in connection with any
environmental investigation, testing, audits or studies), losses, liabilities or
obligations (including liabilities or obligations under any lease or other
contract), payments, damages (including any actual, punitive or consequential
damages under any statutory laws, common law cause of action or contractual
obligations, and any damages (a) of third parties for
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personal injury or property damage, or (b) to natural resources), civil or
criminal fines or penalties, judgments, amounts paid in settlement and fees
(including fees of consultants, counsel, and other experts in connection with
any action or proceeding) arising out of, relating to, or resulting from any
Environmental Matter.
"Environmental Laws" means the Comprehensive Environmental Response,
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Compensation and Liability Act, 42 U.S.C. (S)(S)9601 et seq., the Emergency
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Planning and Community Right-to-Know Act of 1986, 42 U.S.C. (S)(S)11001 et seq.,
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the Resource Conservation and Recovery Act, 42 U.S.C. (S)(S)6901 et seq., the
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Toxic Substances Control Act, 15 U.S.C. (S)(S)2601 et seq., the Federal
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Insecticide, Fungicide, and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇ ▇.▇.▇. (▇)(▇)▇▇▇ et seq., the
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Clean Air Act, 42 U.S.C. (S)(S)7401 et seq., the Clean Water Act (Federal Water
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Pollution Control Act), 33 U.S.C. (S)(S)1251 et seq., the Safe Drinking Water
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Act, 42 U.S.C. (S)(S)300f et seq., the Occupational Safety and Health Act, 29
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U.S.C. (S)(S)641, et seq., the Hazardous Materials Transportation Act, 49 U.S.C.
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(S)(S)1801 et seq., as any of the above statutes have been amended from time to
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time, all rules and regulations promulgated pursuant to any of the above
statutes, and any other Law governing Environmental Matters, as the same have
been amended from time to time, including any common law or equitable causes of
action and all applicable judicial and administrative decisions, orders, and
decrees relating to Environmental Matters, all as in effect as of the Closing
Date.
"Environmental Matter" means any matter arising out of, relating to, or
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resulting from pollution, contamination, protection of the environment, or human
(including employee) health and safety, and any matter relating to emissions,
discharges, disseminations, releases or threatened releases of Hazardous
Materials into the air (indoor or outdoor), surface water, groundwater, soil
(both surface and subsurface), buildings, facilities, real or personal property
or fixtures, or otherwise arising out of, relating to, or resulting from the
manufacture, generation, processing, recycling, distribution, use, treatment,
storage, disposal, transport, handling, release or threatened release of, or
exposure to, Hazardous Materials.
"Environmental Notices" shall have the meaning assigned to it in Section
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4.21(a).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
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which, together with Astarte would be treated as a single employer under Section
414 of the Code.
"Escrow Agent" shall have the meaning assigned to it in Section 3.8.
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"Escrow Agreement" shall have the meaning assigned to it in Section 3.8.
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"Escrow Shares" shall have the meaning assigned to it in Section 3.8.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Exchange Ratio" means the ratio that the Maximum Stock Consideration bears
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to the total number of shares of Astarte Common Stock outstanding immediately
prior to the Effective Time (and immediately after the exercise of all Astarte
Options and the conversion of all Astarte Preferred Stock actually exercised or
converted as contemplated in this Agreement).
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"Financial Statements" shall have the meaning assigned to it in Section
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4.7.
"Governmental Authority" shall have the meaning assigned to it in Section
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4.3.
"Hazardous Materials" means any pollutants, contaminants, substances,
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materials, wastes, constituents, compounds, chemicals, or natural or man-made
elements or forces regulated by, or that may form the basis for liability under,
any Environmental Laws.
"HMO" shall have the meaning assigned to it in Section 4.22(k).
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"Income Taxes" means Taxes which are imposed upon or with respect to,
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measured by, or based upon income, including federal, state, local and federal
income and alternative income taxes, together with interest, additions to tax
and penalties thereon.
"Indebtedness" shall mean, with respect to any Person:
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(a) all obligations of such Person for borrowed money, or with
respect to deposits or advances of any kind;
(b) all obligations of such Person evidenced by bonds, debentures,
notes or similar instruments;
(c) all obligations of such Person issued or assumed as the deferred
purchase price of property or services;
(d) trade payables and other accounts payable of such Person;
(e) any of the foregoing of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Encumbrance on property owned or acquired by such Person
whether or not the obligations secured thereby have been assumed;
(f) all capitalized lease obligations of such Person;
(g) all guarantees of such Person of any of the foregoing of any
other Person; and
(h) all obligations (including reimbursement obligations) relating to
the issuance of letters of credit for the account of such Person.
"Initial Public Offering" means a firm commitment underwritten public
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offering of the Tellium Common Stock under the Securities Act.
"Investor Questionnaires" shall mean the Investor Questionnaires in the
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form attached hereto as Exhibit K.
"IRS" means the Internal Revenue Service.
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"Laor Agreements" means that certain Amended and Restated License Agreement
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dated as of ▇▇▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ and Astarte, that certain Patent
Security Agreement dated September 15, 1999 by and between ▇▇. ▇▇▇▇ and Astarte,
that certain Consulting Agreement dated February 28, 2000 between ▇▇. ▇▇▇▇ and
Astarte, that certain Agreement dated February 25, 2000 between the Laor Family
(as defined therein), the ▇▇▇▇ Family (as defined therein), Art ▇▇▇▇ and
Astarte, those certain assignments dated September 15, 1999 by ▇▇▇▇▇▇ ▇▇▇▇ to
Astarte, any assignment agreement between ▇▇▇▇▇▇ ▇▇▇▇ and Laor Technology
Holdings, LLC or any other agreement entered into prior to the Effective Time to
which Astarte and any Laor Party are parties.
"Laor Parties" shall have the meaning assigned to it in Section 6.2(u).
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"Laor Payment Amount" shall have the meaning assigned to it in Section
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10.2(a).
"Laor Release" shall have the meaning set forth in Section 6.2(u).
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"Law" means any law, statute, ordinance, rule, regulation, injunction,
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judgment, decree, ruling or order (including any administrative or judicial
decision or principle of common law), domestic or foreign.
"Liability" means any liability or obligation, including any direct or
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indirect indebtedness, claim, loss, damage, deficiency (including deferred
income tax and other net tax deficiencies and interest and penalties with
respect to Taxes due and unpaid), cost, expense, obligation, guarantee or
responsibility, whether accrued, absolute or contingent, fixed or unfixed,
liquidated or unliquidated, secured or unsecured.
"License Agreement" shall have the meaning assigned to it in Section
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8.2(w).
"Lien" shall have the meaning assigned to it in Section 4.4.
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"Material Adverse Effect" shall mean, when used with respect to Astarte, on
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the one hand, or Tellium, on the other hand, any change, effect or circumstance
that, individually or when taken together with all other such changes, effects
or circumstances, is or could reasonably be expected to be materially adverse to
the financial condition, business, properties, assets, or operations taken as a
whole of Astarte, on the one hand, or Tellium, on the other hand, as the case
may be; provided, however, that any adverse change, effect or circumstance
resulting primarily from (i) the execution and delivery of this Agreement or
(ii) changes or developments in Astarte's or Tellium's respective industry or
(iii) changes in the financial markets, shall not be considered in determining
whether a Material Adverse Effect has occurred.
"Maximum Stock Consideration" shall have the meaning assigned to it in
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Section 3.3.
"Merger" shall have the meaning assigned to it in Section 2.1.
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"MEWA" shall have the meaning assigned to it in Section 4.22(j).
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"Noncompetition Agreements" shall have the meaning assigned to it in
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Section 8.2(l).
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"Non-Escrow Shares" shall have the meaning assigned to it in Section 3.3.
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"One-Time Bonus Payment" means the conditional one-time bonus payment to be
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paid by Astarte to certain Astarte Employees upon the sale of Astarte (whether
pursuant to a memorandum from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ dated on or about January 20,
2000 or otherwise) equal to the excess, if any, of $50,000 over the value of
such Astarte Employee's Astarte Options, effective as of the date of such sale.
"Option Agreements" means the Option Agreements to be entered between AFN
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LLC and Tellium, pursuant to which AFN LLC shall grant to Tellium the option to
purchase the intellectual property of AFN LLC described therein for one share of
Tellium Common Stock substantially in the form of Exhibits H-1, H-2 and H-3.
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"Patent Assignment" means the Patent Assignment to be entered between AFN
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LLC and Astarte pursuant to which Astarte shall contribute to AFN LLC the Planar
Array Applications and the intellectual property pertaining to the Planar Array
Applications in the form attached hereto as Exhibit I.
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"PBGC" means the Pension Benefit Guaranty Corporation.
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"Pension Plan" means each Astarte Employee Plan (other than a multi-
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employer plan) which is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA.
"Peripheral License" means the non-exclusive, non-sublicensable and non-
------------------
transferable license granted by Astarte to Corning, Inc. under the Peripheral
Patents to make, have made, use, sell, offer for sale and import non-modular,
single mode, all-optical switches.
"Peripheral Patents" means the following three U.S. patent applications and
------------------
their corresponding PCT application, and any patents granted on such
applications as well as any patents which may issue as a result of any reissue,
reexamination, division or continuation thereof when issued: U.S. Application
No. 09/092,099 (Compact Optical Matrix Switch with Fixed Location Fibers) now
U.S. Patent No. 6,097,860; U.S. Application No. 09/092,393 (Sensing
Configuration for Fiber Optic Switch Control System) now U.S. Patent No.
6,097,858; U.S. Application No. 09/092,400 (Optical Switch Targeting System) now
U.S. Patent No. 6,101,299; and International Application No. PCT/US99/12334
(Mirror Based Fiber Optic Switch and Control System).
"Permits" means any licenses, permits, franchises, authorizations,
-------
approvals, or other consents or orders of, or filings with, any Governmental
Authority, necessary for, or relating to, the conduct of the current business of
Astarte.
"Permitted Indebtedness" has the meaning set forth in Section 4.28.
----------------------
"Person" shall mean any individual, corporation, S corporation,
------
partnership, limited liability company, trust, joint venture, joint stock
company, unincorporated association, Governmental Authority or other entity.
-8-
"Planar Array Application" means the patent application relating to all
------------------------
optical switching, filed provisionally on June 5, 1998 (U.S. Application No.
60/088,075), with a utility filing on June 4, 1999 (U.S. Application No.
09/326,122) and a corresponding PCT application, International Application No.
PCT/US99/12550.
"Pre-Closing Issuances" shall have the meaning assigned to it in Section
---------------------
6.2(d).
"Pre-Closing Tax Period" shall have the meaning assigned to it in Section
----------------------
6.4(a).
"Pre-Closing Tax Return" shall have the meaning assigned to it in Section
----------------------
6.4(a).
"Recapitalization Transaction" means a stock dividend, stock split, reverse
----------------------------
stock-split, reclassification, exchange of shares or combination of shares,
recapitalization, or merger, consolidation or other similar event.
"Redemption" means the redemption by Astarte of 10% of its outstanding
----------
stock from its stockholders in exchange for the Distribution.
"Redemption Agreements" shall have the meaning assigned to it in Section
---------------------
8.2(k).
"Release" has the meaning specified in 42 U.S.C. (S) 9601(22).
-------
"Required Consents" shall mean all consents, approvals, registrations,
-----------------
waivers, authorizations and the like with respect to all of the items listed on
Schedules 4.3, 4.4 and 4.15.
"Restructuring" shall have the meaning assigned to it in Section 10.2(a).
-------------
"Section 6501 Disclosure Statement" means a disclosure statement
---------------------------------
substantially in the form attached hereto as Exhibit N.
"Securities Act" shall have the meaning assigned to it in Section 4.3.
--------------
"Significant Stockholder" shall mean any stockholder that holds greater
-----------------------
than 10% of any class of capital stock of Astarte.
"Special Reserve Account" shall have the meaning assigned to it in Section
-----------------------
8.2(s).
"Stockholder Approval" shall have the meaning assigned to it in Section
--------------------
4.2(b).
"Stockholder Communications" shall have the meaning assigned to in Section
--------------------------
4.24(b).
"Stockholder Representative" shall have the meaning assigned to it in
--------------------------
Section 10.3(c).
"Straddle Tax Period" shall have meaning assigned to it in Section 6.4(f).
-------------------
"Straddle Tax Return" shall have meaning assigned to it in Section 6.4(f).
-------------------
"Subsidiary" of any specified Person shall mean another Person (i) more
----------
than 50% of whose outstanding shares or securities (representing the right to
vote for the election of directors
-9-
or other managing authority) are, or (ii) which does not have outstanding shares
or securities (as may be the case in a partnership, limited liability company,
joint venture or unincorporated association), but more than 50% of whose
ownership interest representing the right to make decisions for such other
entity is, now or hereafter owned or controlled, directly or indirectly, by such
specified Person.
"Supplemental Stockholders' Agreement" means the Supplemental Stockholders'
------------------------------------
Agreement to be entered into by and among Tellium and the Astarte Stockholders
named therein in the form attached hereto as Exhibit A.
---------
"Surviving Corporation" shall have the meaning assigned to it in Section
---------------------
2.1.
"Tax" or "Taxes" as used herein means (i) any federal, state, local,
--- -----
foreign and other net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, value added, net worth, license, lease,
service, service use, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property (real or personal), windfall profits,
customs, duties, unemployment insurance, environmental (including taxes under
Section 59A of the Code), worker's compensation, Pension Benefit Guaranty
Corporation premiums, disability, capital stock, social security (or similar),
registration, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty or addition thereto, whether
disputed or not or (ii) any Liability for the payment of any amounts described
in (i) as a result of being a member of an affiliated, consolidated, combined or
unitary group for any taxable period or as a result of being a transferee or
successor thereof and (iii) any Liability for the payment of any amounts of the
type describe in (i) or (ii) as a result of any express or implied obligation to
indemnify any other Person.
"Tax Records" shall have the meaning assigned to it in Section 6.4(c).
-----------
"Tax Return" as used herein means any return, declaration, report, claim
----------
for refund, or information return or statement relating to any Tax, including
any schedule, supporting information or attachment thereto, and including any
amendment thereof.
"Tellium" shall have the meaning assigned to it in the preamble to this
-------
Agreement.
"Tellium Common Stock" shall mean the shares of common stock of Tellium,
--------------------
par value $0.001 per share.
"Tellium Disclosure Schedule" shall have the meaning assigned to it in
---------------------------
Article V.
"Tellium 401(k) Plan" shall have the meaning assigned to it in Section
-------------------
6.2(o).
"Tellium Financial Statements" shall have the meaning assigned to it in
----------------------------
Section 5.11.
"Tellium Indemnified Group" shall have the meaning assigned to it in
-------------------------
Section 10.2(a).
"Tellium Losses" shall have the meaning assigned to it in Section 10.2(a).
--------------
"Tellium Preferred Stock" shall have the meaning assigned to it in Section
-----------------------
5.5(a).
-10-
"Tellium Stock Option Plan" shall mean Tellium's 1997 Stock Option Plan.
-------------------------
"Temporary License" shall have the meaning assigned to it in Section
-----------------
6.2(l).
"Texas Instruments Agreement" shall have the meaning assigned to it in
---------------------------
Section 8.2(m).
"Texas Instruments LOI" means the Letter of Intent dated as of June 14,
---------------------
2000 by and between Astarte and Texas Instruments Incorporated.
"Title VII" means Title VII of the Civil Rights Act of 1964.
---------
"Transfer" when used as a verb means to sell, transfer, assign, pledge,
--------
dispose of, grant a security interest in, mortgage, hypothecate, encumber or
permit or suffer any encumbrance on or a similar act and when used as a noun
means the commission of any such act, or any such similar act in relation to a
Person's beneficial interest.
"Unaudited Balance Sheet" shall have the meaning assigned to it in Section
-----------------------
4.7(b).
"Unaudited Tellium Balance Sheet" shall have the meaning assigned to it in
-------------------------------
Section 5.11(b).
"United States Government" means all departments and agencies of any branch
------------------------
of the government of the United States, all independent agencies or
instrumentalities and all non-appropriated fund activities within the government
of the United States and all corporations of the government of the United
States.
"Valuation Report" means a written report prepared by a valuation firm
----------------
agreed to by Tellium and Astarte setting forth that firm's determination, as of
the date of the Distribution, of the fair market value of Astarte's interest in
AFN LLC for purposes of Code Section 311(b).
"Voting Agreement" shall have the meaning assigned to it in the recitals to
----------------
this Agreement.
"WARN Act" means the Worker Adjustment and Retraining Notification Act of
--------
1989.
"Welfare Plan" means each Astarte Employee Plan which is an "employee
------------
welfare benefit plan" within the meaning of Section 3(1) of ERISA.
1.2. Construction
Unless the context otherwise requires, in this Agreement:
(a) references to Schedules, Exhibits, Sections, paragraphs, subparagraphs
and clauses shall be construed as references to the Schedules, Exhibits,
Sections, paragraphs, subparagraphs and clauses of this Agreement;
(b) terms such as "herein," "hereof" and "hereinafter" refer to this
Agreement as a whole and not to the particular sentence or paragraph where they
appear, unless the context otherwise requires
-11-
(c) references to any statute or any provision thereof shall be deemed to
include a reference to any statute or provision that amends, extends,
consolidates or replaces the same and shall include any orders, regulations,
instruments, official interpretations or other subordinate legislation made
under the relevant statute;
(d) reference to any regulation or any provision thereof shall be deemed
to include a reference to any statute or regulation or provision thereof that
amends, extends, consolidates or replaces the same;
(e) headings are inserted for convenience of reference only and shall not
affect the interpretation of this Agreement;
(f) the use of the word "including" in this Agreement shall be by way of
example rather than by limitation and shall therefore mean "including, without
limitation"; and
(g) terms stated in either the singular or the plural shall include the
singular and the plural where appropriate, and pronouns stated in either the
masculine or the neuter gender shall include the masculine, the feminine and the
neuter where appropriate.
Article II
----------
The Merger
----------
2.1. The Merger.
In accordance with Section ▇-▇▇▇-▇▇▇ of the Colorado Corporation Law, the
Company shall be merged with and into Astarte (the "Merger"), and Astarte shall
------
be the surviving corporation (such corporation in its capacity as such surviving
corporation being hereinafter called the "Surviving Corporation"). The terms
---------------------
and conditions of the Merger, the mode of carrying the same into effect, and the
manner and basis of converting shares of Astarte and the Company into the
consideration which the holders of those shares are to receive upon conversion
of such shares, shall be as set forth in this Agreement.
2.2. Effective Time.
The Merger shall become effective as of the time of the filing of the
executed Articles of Merger with the Secretary of State of Colorado (the
"Effective Time") pursuant to Section ▇-▇▇▇-▇▇▇ of the Colorado Corporation Law.
--------------
2.3. Certain Effects of the Merger.
As of the Effective Time, the effect of the Merger shall be as provided in
this Agreement, the Articles of Merger (including the Plan of Merger attached
thereto) and the applicable provisions of the Colorado Corporation Law,
including Section ▇-▇▇▇-▇▇▇. Without limiting the generality of the foregoing
and subject thereto, at the Effective Time, the separate existence of the
Company shall cease and the Company shall be merged into Astarte. Astarte shall
continue
-12-
as the Surviving Corporation in the merger, and shall continue to be governed by
the laws of the State of Colorado.
2.4. Articles of Incorporation.
At the Effective Time, the Articles of Incorporation of the Surviving
Corporation shall be amended and restated, substantially in the form set forth
on Exhibit B hereto, and shall be the Articles of Incorporation of the Surviving
---------
Corporation until thereafter amended as provided by law and such Articles of
Incorporation.
2.5. Bylaws.
At the Effective Time, the Bylaws of the Surviving Corporation shall be
amended and restated, substantially in the form set forth on Exhibit C hereto,
---------
and shall be the Bylaws of the Surviving Corporation until thereafter amended.
2.6. Directors and Officers.
The directors and officers of Astarte shall resign as of the Effective
Time. The directors and officers of the Surviving Corporation from and after
the Effective Time shall be the directors and officers of the Company
immediately prior to the Effective Time, each to hold office in accordance with
applicable law and the Articles of Incorporation and Bylaws of the Surviving
Corporation.
2.7. Pre-Merger Transactions.
The parties hereto acknowledge and agree that prior to the Effective Time,
the Distribution and/or the Redemption and the other transactions outlined in
the Patent Assignment, the Corning LOI and the Texas Instruments LOI shall be
consummated substantially in accordance with the terms of the Redemption
Agreements (if a Redemption shall have occurred), the Patent Assignment, the
Corning LOI and Corning Agreement and the Texas Instruments LOI and Texas
Instruments Agreement with any changes that are reasonably satisfactory to
Tellium; provided, however, that any such change shall be deemed to be
reasonably satisfactory to Tellium if, as a result thereof, no term or condition
or agreement of such agreements or transactions is materially less favorable to
Tellium than as contemplated by the Patent Assignment, the Corning LOI, the
Redemption Agreements or the Texas Instruments LOI, as applicable. Astarte shall
have the right to effectuate the Distribution by means of a pro-rata dividend
pursuant to documentation reasonably approved by Tellium rather than by means of
a Redemption.
-13-
Article III
-----------
Conversion and Exchange of Securities
-------------------------------------
3.1. Shares of the Surviving Corporation.
The authorized number and par value of shares of all classes of stock of
the Company immediately prior to the Effective Time shall be the authorized
number and par value of shares of the classes of stock of the Surviving
Corporation from and after the Effective Time.
3.2. Conversion of Company Common Stock.
At the Effective Time, each share of Common Stock, par value $0.01 per
share, of the Company issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of the
holder thereof, automatically be converted into and represent one validly
issued, fully paid and nonassessable share of Common Stock, par value $0.01 per
share, of the Surviving Corporation.
3.3. Conversion of Astarte Securities.
The maximum consideration to be issued in the Merger for all issued and
outstanding shares of Astarte Common Stock immediately prior to the Effective
Time (other than shares of Astarte Common Stock held in the treasury of Astarte,
which shall not be considered as outstanding for purposes of this Agreement)
shall be an aggregate of 3,750,000 shares of Tellium Common Stock (the "Maximum
-------
Stock Consideration") consisting of (A) 2,400,000 shares of Tellium Common Stock
-------------------
payable to the Astarte Stockholders at the Effective Time, subject to Section
3.3(a) and pursuant to Section 3.5(a) (the "Non-Escrow Shares") and (B) the
-----------------
1,350,000 Escrow Shares payable to holders of Astarte Common Stock pursuant to
Section 3.8 and cash in lieu of any fractional shares of Tellium Common Stock;
provided, however, that the 1,350,000 shares of Tellium Common Stock to be
deposited in the Escrow Fund shall not be reduced whether or not any
stockholders of Astarte exercise dissenters rights. Pursuant to the foregoing,
at the Effective Time each issued and outstanding share of Astarte capital stock
shall, by virtue of the Merger and without any action on the part of the holder
thereof, automatically be canceled and extinguished and converted into the right
to receive the consideration as follows:
(a) at the Effective Time, with respect to each share of Astarte Common
Stock each holder thereof shall receive a fraction of a share of Tellium Common
Stock equal to the Exchange Ratio upon surrender of the certificate or
certificates or other instrument representing such shares of Astarte Common
Stock in the manner provided in Section 3.5;
(b) each holder of Astarte Options issued under the Astarte Stock Option
Plan will (i) be entitled to full vesting of the Astarte Options at the
Effective Time pursuant to Section 5(ii) of the Astarte Stock Option Plan or at
such earlier time designated by Astarte in its sole discretion (ii) be required
to forfeit such Astarte Options at the Effective Time unless such Astarte
Options are exercised prior to or as of the Effective Time, pursuant to Section
5(iii) of the Astarte Stock Option Plan by paying the exercise price thereof and
delivering a notice of exercise and (iii) upon exercise of such Astarte Options,
in lieu of receiving Astarte Common Stock, have
-14-
the same right to receive shares of Tellium Common Stock based on the Exchange
Ratio as if such holder of the Astarte Options had instead held the number of
shares of Astarte Common Stock underlying such Astarte Options;
(c) at the Effective Time, each holder of Astarte Options not issued under
the Astarte Stock Option Plan will be required to (i) forfeit such Astarte
Options at the Effective Time unless such Astarte Options are exercised prior to
or as of the Effective Time by paying the exercise price thereof and, as
appropriate, delivery of notice of exercise or surrendering the instruments, if
any, evidencing such Astarte Options and (ii) upon exercise of such Astarte
Options, in lieu of receiving Astarte Common Stock (after in some cases
conversion of the Astarte Preferred Stock), have the same right to receive
shares of Tellium Common Stock based on the Exchange Ratio as if such holder of
the Astarte Options had instead held the number of shares of Astarte Common
Stock (after in some cases conversion of the Astarte Preferred Stock) underlying
such Astarte Options;
(d) at the Effective Time, each share of Astarte Common Stock held in the
treasury of Astarte immediately prior to the Effective Time shall, by virtue of
the Merger and without any action on the part of Astarte, automatically be
canceled and retired and all rights in respect thereof shall cease to exist;
(e) if between the date of this Agreement and the Effective Time, (i) the
outstanding shares of Tellium Common Stock or Astarte Common Stock shall have
been changed (subject to compliance with the applicable provisions of Article
VI) into a different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, split-up, combination, exchange
of shares, reverse stock split, recapitalization or the like, or (ii) Tellium
issues or distributes to the holders of any of its outstanding securities any
securities, including options, warrants or convertible securities, for
consideration less than the fair market value of such securities (excluding the
grant of any options or exercise of options to or by employees or exercises or
conversions of securities outstanding on the date hereof) the number of shares
of Tellium Common Stock comprising the Non-Escrow Shares and the Escrow Shares,
and the Exchange Ratio shall be appropriately adjusted; and
(f) each certificate representing shares of Tellium Common Stock to be
issued in accordance with this Agreement shall bear a legend substantially in
the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE (I) HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL SUCH SHARES ARE REGISTERED
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO
TELLIUM IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS
NOT REQUIRED AND (II) MAY BE SUBJECT TO CERTAIN RESTRICTIONS
ON TRANSFER AND OTHER PROVISIONS SET FORTH IN A SUPPLEMENTAL
STOCKHOLDERS' AGREEMENT, AS AMENDED FROM TIME TO TIME, A
COPY OF WHICH MAY BE OBTAINED FROM TELLIUM UPON REQUEST."
-15-
3.4. No Fractional Tellium Common Stock.
Notwithstanding any other provision of this Agreement, neither certificates
nor scrip for fractional shares of Tellium Common Stock shall be issued to any
holder of Astarte Common Stock in the Merger and the holder thereof shall not be
entitled to any voting or other rights of a holder of shares or a fractional
share interest. Each holder of shares of Astarte Common Stock who otherwise
would have been entitled to receive a fraction of a share of Tellium Common
Stock (after aggregating all fractional shares of Tellium Common Stock to be
received by such holder) shall receive in lieu thereof cash (rounded to the
nearest whole cent), without interest, an amount determined by multiplying such
holder's fractional interest by the fair market value of one share of Tellium
Common Stock. All amounts of cash in respect of fractional interests which have
not been claimed at the end of three years from the Effective Time by surrender
of certificates for shares of Astarte Common Stock shall be repaid to the
Surviving Corporation, subject to the provisions of applicable escheat or
similar laws, for the account of the holders entitled thereto.
3.5. Exchange of Certificates; Distribution of Tellium Common Stock.
The procedures for exchanging outstanding shares of Astarte Common Stock
for Tellium Common Stock pursuant to the Merger are as follows:
(a) Exchange Procedures. No later than five (5) business days after the
Effective Time, Tellium shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Astarte Common Stock (each an "Astarte Certificate") whose
-------------------
shares were converted pursuant to Section 3.3 into the right to receive shares
of Tellium Common Stock, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Astarte
Certificates shall pass, only upon delivery of the Astarte Certificates to
Tellium) and (ii) instructions for use in effecting the surrender of the Astarte
Certificates in exchange for certificates representing shares of Tellium Common
Stock; provided that Tellium shall use commercially reasonable efforts to mail
the foregoing documents at the same time as the information statement described
in Section 6.2(h). Upon surrender of an Astarte Certificate for cancellation to
Tellium or to such other agent or agents as may be appointed by Tellium,
together with such letter of transmittal, duly executed, the holder of such
Astarte Certificate shall be entitled to receive in exchange therefor a
certificate or certificates in such denominations as such holder (or the
Stockholder Representative on behalf of such holder) may reasonably request
representing that number of whole shares of Tellium Common Stock which such
holder has the right to receive pursuant to the provisions of this Article III
and cash in lieu of any fractional shares of Tellium Common Stock, and the
Astarte Certificate so surrendered shall immediately be canceled; provided,
however, that Tellium shall use commercially reasonable efforts to deliver the
certificates representing Tellium Common Stock on the Closing Date to those
holders that have delivered the documents and Astarte Certificates described in
the previous sentence to Tellium at least three business days prior to the
Closing Date. Until surrendered as contemplated by this Section 3.5, each
Astarte Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the certificate
representing shares of Tellium Common Stock and cash in lieu of any fractional
shares of Tellium Common Stock as contemplated by Sections 3.3 and 3.4 above, or
the rights any holder may have with respect to Dissenting Shares.
-16-
(b) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect to
Tellium Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Astarte Certificate with respect to the
shares of Tellium Common Stock represented thereby, until the holder of record
of such Astarte Certificate shall surrender such Astarte Certificate. Subject
to the effect of applicable laws, following surrender of any such Astarte
Certificate, there shall be paid to the record holder of the certificates
representing whole shares of Tellium Common Stock issued in exchange therefor,
without interest, (i) the amount of dividends or other distributions with a
record date after the Effective Time previously paid with respect to such whole
shares of Tellium Common Stock, which amount shall be payable at the time of
issuance of such Tellium Common Stock to which such holder is entitled pursuant
to this Section 3.5 and (ii) the amount of dividends or other distributions with
a record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of Tellium
Common Stock, which amount shall be payable on the appropriate payment date.
(c) No Further Ownership Rights in Astarte Common Stock. At the Effective
Time, each holder of an outstanding certificate or certificates for shares of
Astarte Common Stock shall cease to have any rights with respect thereto, except
for any rights that such holder may have with respect to Dissenting Shares and
for the right to receive shares of Tellium Common Stock and cash in lieu of any
fractional shares of Tellium Common Stock upon the surrender of Astarte Common
Stock. All shares of Tellium Common Stock issued upon the surrender for
exchange of shares of Astarte Common Stock in accordance with the terms hereof,
shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Astarte Common Stock, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Astarte Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time, Astarte
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Section 3.5.
(d) Terms of Exchange. Any stockholders of Astarte who have not previously
complied with this Section 3.5 shall look only to Tellium for payment of their
claim for Tellium Common Stock, cash in lieu of fractional shares of Tellium
Common Stock and dividends or distributions with respect to Tellium Common
Stock, subject to application of any abandoned property, escheat or similar law.
(e) No Liability. Neither Tellium nor Astarte, nor any of their respective
directors, officers, employees or agents, shall be liable to any holder of
shares of Astarte Common Stock or Tellium Common Stock, as the case may be, for
such shares, cash in lieu of fractional shares of Tellium Common Stock or
dividends or distributions with respect thereto delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(f) Lost Certificates. In the event that any Astarte Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Astarte Certificate to be lost, stolen or
destroyed and, if required by Tellium, the giving by such Person of an indemnity
in form and substance reasonably satisfactory to Tellium against any claim that
may be made against it with respect to such Astarte Certificate, Tellium shall
issue, in
-17-
exchange for such lost, stolen or destroyed Astarte Certificate, the shares of
Tellium Common Stock, cash in lieu of fractional shares of Tellium Common Stock
and unpaid dividends and distributions on shares of Tellium Common Stock as
contemplated by Sections 3.3 and 3.5.
3.6. Closing of Stock Transfer Books.
The stock transfer books of Astarte shall be closed at the close of
business on the business day immediately preceding the Effective Time. In the
event of a transfer of ownership of Astarte Common Stock which is not registered
in the transfer records of Astarte, the shares of Tellium Common Stock to be
issued in the Merger as provided herein may be delivered to a transferee, if the
certificate representing such Astarte Common Stock is presented to Tellium,
accompanied by all documents required to evidence and effect such transfer and
by payment of any applicable stock transfer taxes.
3.7. Dissenting Shares.
Shares of Astarte Common Stock (whether or not issued upon the conversion
of Astarte Preferred Stock) that have not been voted for adoption of this
Agreement and with respect to which dissenters rights shall have been properly
perfected in accordance with Sections ▇-▇▇▇-▇▇▇ through ▇-▇▇▇-▇▇▇ of the
Colorado Corporation Law (the "Dissenting Shares") shall not be converted into
-----------------
the right to receive shares of Tellium Common Stock in accordance with this
Agreement at or after the Effective Time, unless and until the holder of such
Dissenting Shares becomes ineligible for such appraisal. If a holder of
Dissenting Shares shall become ineligible for such appraisal, then, as of the
later of the Effective Time or the occurrence of such event, such holder's
Dissenting Shares shall cease to be Dissenting Shares and shall be converted
into the right to receive the shares of Tellium Common Stock into which such
holder's Astarte Common Stock was converted as of the Effective Time pursuant to
this Agreement.
3.8. Escrow Shares.
At the Effective Time, Tellium shall deliver to the Stockholder
Representative who shall simultaneously deliver to an independent escrow agent
designated by Tellium and reasonably acceptable to Astarte (the "Escrow Agent"),
------------
1,350,000 shares of Tellium Common Stock issued in the name of the Stockholder
Representative (as defined in Section 10.3(c) below) (the "Escrow Shares") for
-------------
the benefit of the Astarte Stockholders to be held and applied in accordance
with Article X herein and the Escrow Agreement by and among Tellium, the
Stockholder Representative (as defined below) and the Escrow Agent to be entered
into at the Effective Time in the form attached hereto as Exhibit D (the "Escrow
--------- ------
Agreement"). By virtue of their approval of this Agreement under the Colorado
---------
Corporation Law, the Astarte Stockholders shall be deemed to (i) have approved
and agreed to the delivery of 1,350,000 shares of Tellium Common Stock to the
Escrow Agent by the Stockholder Representative, (ii) have approved and agreed to
the Escrow Agreement and its terms and conditions, including the indemnification
of the Stockholder Representative and delivery to Tellium of any Escrow Shares
and dividends and distributions with respect thereto that are payable to Tellium
under the Escrow Agreement and (iii) direct Tellium and the Escrow Agent to
deliver to the Stockholder Representative for delivery to the Astarte
Stockholders of any Escrow Shares and dividends and distributions with respect
thereto that are payable to the Astarte Stockholders under the Escrow Agreement.
-18-
Article IV
----------
Representations and Warranties of Astarte
-----------------------------------------
Except as set forth in the disclosure schedule delivered by Astarte to
Tellium and dated as of the date above (the "Astarte Disclosure Schedule"),
---------------------------
Astarte hereby represents and warrants to each of Tellium and the Company as set
forth in this Article IV. The Astarte Disclosure Schedule shall be organized in
paragraphs corresponding to the numbered Sections in this Article IV and the
disclosures in any paragraph shall only qualify the corresponding Section in
this Article IV:
4.1. Corporate Existence and Power.
Astarte is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Colorado and has all corporate power and
authority necessary to enable it to own, lease or otherwise hold its properties
and assets and to carry on its business as now conducted. Astarte is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary, except for
those jurisdictions where the failure to be so qualified would not have a
Material Adverse Effect on Astarte. All jurisdictions in which Astarte is so
qualified to do business are listed on Schedule 4.1. Astarte has previously
delivered to Tellium and the Company true and complete copies of the Articles of
Incorporation and Bylaws of Astarte, as amended to date and as in effect on the
date of this Agreement, and all minutes of meetings (including actions in lieu
thereof) of the board of directors (and each committee thereof) and stockholders
of Astarte.
4.2. Corporate Authorization.
(a) The execution, delivery and performance by Astarte of this Agreement
and the agreements contemplated hereby, and the consummation by Astarte of the
Merger and the Redemption and Distribution and other transactions contemplated
hereby and thereby are within Astarte's corporate power and authority, and have
been duly authorized by all necessary corporate action (other than the
Stockholder Approval). The Board of Directors of Astarte has (i) unanimously
determined that this Agreement and the transactions contemplated hereby,
including the Merger, are fair to and in the best interest of Astarte's
stockholders, (ii) unanimously approved this Agreement and the transactions
contemplated hereby, including the Merger, and (iii) unanimously resolved to
recommend approval and adoption of this Agreement and the Merger by Astarte's
stockholders. This Agreement has been duly authorized, executed and delivered
by Astarte and, subject to its execution by the other parties hereto,
constitutes a valid and binding obligation of Astarte, enforceable against
Astarte in accordance with its terms.
(b) The affirmative vote of the holders of a majority of the outstanding
shares of the capital stock of Astarte, is the only vote (the "Stockholder
-----------
Approval") of Astarte's capital stock necessary to approve this Agreement and
--------
the Merger.
-19-
4.3. Consents and Approvals.
Except as set forth on Schedule 4.3, the execution, delivery and
performance by Astarte of this Agreement, and the consummation of the Merger and
the Redemption and Distribution and other transactions contemplated by this
Agreement by Astarte, do not and will not require any consent, approval or
action by or in respect of, or any declaration, filing or registration with, any
governmental or regulatory body, court, agency, official or authority (each, a
"Governmental Authority") or other third party on the part of Astarte, other
-----------------------
than (i) routine filings with the Secretary of State of Colorado necessary to
consummate the Merger, (ii) compliance with the applicable requirements of the
Securities Act of 1933 (the "Securities Act"), and any applicable state
--------------
securities and "blue sky" laws in connection with the offering, sale and
delivery of the shares of Tellium Common Stock to be issued in the Merger, and
(iii) any consent, approval, action, declaration, filing or registration where
the failure to obtain and/or take such consent, approval or action, or to make
such declaration, filing or registration, would not have a Material Adverse
Effect on Astarte.
4.4. Non-Contravention.
Except as disclosed on Schedule 4.4, the execution, delivery and
performance by Astarte of this Agreement, and the consummation of the Merger and
the Redemption and Distribution and other transactions contemplated by this
Agreement by Astarte, do not and will not, with or without the giving of notice,
the lapse of time or both: (i) contravene or conflict with the Articles of
Incorporation or Bylaws of Astarte, (ii) contravene or conflict with or
constitute a violation of any provision of any law, rule, regulation, judgment,
injunction, order or decree currently in effect and binding upon or applicable
to Astarte, the effect of which would have a Material Adverse Effect on Astarte,
(iii) contravene or conflict with or constitute a violation of or a default
under, or give rise to any right of termination, cancellation or acceleration of
any right or obligation of Astarte or to a loss of any benefit to which Astarte
is entitled, under any provision of (A) any agreement, contract, indenture,
lease or other instrument binding upon Astarte or (B) assuming compliance with
the matters referred to in Section 4.3, any license, franchise, permit or other
similar authorization held by Astarte, the effect of which would have a Material
Adverse Effect on Astarte or (iv) except for the rights of any holders of
Dissenting Shares, result in the creation or imposition of any mortgage, pledge,
security interest, lien, claim, charge, restriction, encumbrance or assessment
of any kind (each, a "Lien") on any asset of Astarte.
----
4.5. Capitalization.
As of the date hereof, the authorized capital stock of Astarte consists of
(i) 100,000,000 shares of Preferred Stock, of which 60,000,000 are designated
Series A Preferred Stock, 35,436,075 of which are issued and outstanding and
none of which are treasury shares and 40,000,000 are designated Series B
Preferred Stock, 23,594,398 of which are issued and outstanding and none of
which are treasury shares, and (ii) 50,000,000 shares of Astarte Common Stock,
of which 28,259,499 shares are issued and outstanding and none of which are
treasury shares. All issued and outstanding shares of Astarte Common Stock and
Astarte Preferred Stock are validly issued, fully paid and nonassessable, and
have not been issued in violation of any preemptive, first refusal or other
subscription rights of any stockholder of Astarte or any other person, and have
been issued in compliance with federal and state securities
-20-
laws. Except as set forth on Schedule 4.5, there are no outstanding (i) shares
of capital stock or other voting securities of Astarte, (ii) securities of
Astarte convertible into or exchangeable for shares of capital stock or voting
securities of Astarte, (iii) options, warrants, exchange rights, subscription
rights or other agreements, commitments or rights to purchase or otherwise
acquire from Astarte, or agreements, commitments or obligations of Astarte to
issue or sell, any capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities of Astarte or (iv)
any agreement, commitment or obligation of Astarte to grant, or enter into any
such option, warrant, call, right, commitment or agreement (the items in clauses
(i), (ii) (iii) and (iv) being referred to collectively as the "Astarte
-------
Securities"). Except as set forth on Schedule 4.5, there are no outstanding
----------
obligations of Astarte to sell, issue or deliver, or to repurchase, redeem or
otherwise acquire, any Astarte Securities. Schedule 4.5 sets forth a true and
complete list of the record owners of all Astarte Securities (including holders
of options) (including the amount of each type of Astarte Securities held by
each such holder). No events have occurred that would cause an adjustment to the
exercise price or conversion price of the Astarte Preferred Stock or any Astarte
Option, whether pursuant to anti-dilution protections included in the
instruments granting or evidencing the Astarte Preferred Stock and the Astarte
Options or otherwise.
4.6. Subsidiaries.
Except as set forth on Schedule 4.6, Astarte does not hold or own, directly
or indirectly, any capital stock or other equity securities of any other
corporation, or have any direct or indirect equity or ownership interest in any
association, partnership, joint venture or other entity.
4.7. Financial Statements.
Astarte has previously delivered to Tellium and the Company the following
financial statements (collectively, the "Financial Statements"):
--------------------
(a) the audited balance sheet of Astarte as of December 31, 1998 and
December 31, 1999, and the related statements of operations, stockholders'
equity and cash flows for the periods from January 1, 1998 through December 31,
1998 and from January 1, 1999 through December 31, 1999, together with the notes
thereto, in each case audited by, and accompanied by the report thereon, of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP; and
(b) the unaudited balance sheet of Astarte as of July 31, 2000 (the
"Unaudited Balance Sheet") and the related statements of operations and cash
-----------------------
flows for the seven months then ended.
Each of the Financial Statements has been prepared in accordance with
generally accepted accounting principles applied on a consistent basis, is
correct and complete in all material respects and fairly presents in all
material respects the financial position of Astarte as of its date or the
results of operations or changes in financial position, as is appropriate, of
Astarte for the periods then ended (subject, in the case of unaudited interim
financial statements to normal recurring year-end adjustments, which adjustments
will not be material in amount or effect, and the absence of notes). The
accounting records underlying the Financial Statements accurately and fairly
reflect, in reasonable detail, the transactions of Astarte, reflect only valid
-21-
transactions, and fairly present in all material respects the basis for the
financial position, the results of operations, and the changes in financial
position set forth in the Financial Statements, and Astarte's books of account
have been maintained on a consistent basis in accordance with acceptable
business practice. All accounts receivable of Astarte are valid and
enforceable, are not subject to any valid defense, set off or counterclaim, and
are collectible in all material respects in accordance with their terms in the
ordinary course of business of Astarte, except to the extent of any reserves
therefor reflected on the Unaudited Balance Sheet or taken in the ordinary
course of business which in the aggregate are not material to Astarte.
4.8. Absence of Undisclosed Liabilities.
Astarte has no Liabilities, except those Liabilities which are (a) fully
reflected or in the aggregate adequately reserved against in the Unaudited
Balance Sheet, (b) disclosed in this Agreement or on Schedule 4.8 hereto, or (c)
incurred in the ordinary course of business and consistent with past practices
and in the aggregate are not material to Astarte. There has not been any
assertion against Astarte of any Liability of any nature or in any amount not
(i) fully reflected or in the aggregate adequately reserved against in the
Unaudited Balance Sheet, (ii) disclosed in this Agreement or on Schedule 4.8
hereto, or (iii) incurred in the ordinary course of business and consistent with
past practices and in the aggregate not material in amount to Astarte.
4.9. Assets and Properties.
All of the material assets and properties of Astarte are reflected on the
Unaudited Balance Sheet (except to the extent not required to be so reflected by
generally accepted accounting principles). Except as set forth in Section 4.12
or disclosed on the schedules referenced therein, Astarte has good, valid and
marketable title to all of its owned assets and properties, whether real,
personal or mixed, tangible or intangible, free and clear of all Liens, except
Liens for current taxes not delinquent or being contested in good faith by
appropriate proceedings or as set forth on Schedule 4.9. As of the date hereof,
Astarte's assets include its rights with respect to the Peripheral Patents, the
Astarte Planar Array Rights, the Astarte Intellectual Property Rights and the
Astarte Third Party Intellectual Property Rights, trade, secrets, know-how and
software, and all work in progress on Astarte's "Beehive Project" (which project
has been discontinued). As of the Closing, Astarte's assets will include its
rights with respect to the Peripheral Patents, the Astarte Intellectual Property
Rights (other than the Astarte Planar Array Rights which will be owned by AFN
LLC at the Closing), the Astarte Third Party Intellectual Property Rights and
the Cash Reserve Amount (collectively, the "Acquired Properties").
-------------------
4.10. Real Property.
Astarte does not own any real property. Set forth on Schedule 4.10 is an
accurate and complete list and summary description of all real property
currently leased by or on behalf of Astarte and, except as set forth on Schedule
4.10, none of the described leases require any consent to the transactions
contemplated by this Agreement. Astarte has previously delivered to Tellium and
the Company accurate and complete copies of all leases listed and described on
Schedule 4.10. Except as set forth on Schedule 4.10, Astarte has possession of
each of the aforementioned properties and no event has occurred which, with the
lapse of time or notice or
-22-
both, would result in a default under any of the described leases, which default
would have a Material Adverse Effect on Astarte. All rents or other payment
obligations which have become due in respect of each of such leased properties
have been paid, Astarte has complied with its obligations under the said leases
and Astarte has neither received any notice of any breach of, nor breached in
any respect, its obligations under any covenants, agreements, statutory
requirements, planning consents, bylaws, orders and regulations affecting any of
such properties, their use and any business of Astarte there carried on, except
where non-payment, non-compliance or breach would not have a Material Adverse
Effect on Astarte.
4.11. Condition of Tangible Assets.
All material tangible property, including leased property and the
fixtures therein, of Astarte is in good operating condition, reasonable wear and
tear excepted and, the operation and use of such property in the business of
Astarte conforms to all applicable laws, ordinances, regulations, permits,
licenses and certificates, except where non-compliance would not result in a
Material Adverse Effect on Astarte.
4.12. Intellectual Property.
(a) Except as set forth on Schedule 4.12(a), Astarte owns, or has the
right to use by written license or sublicense, the Peripheral Patents, the
Astarte Planar Array Rights (which will be owned by AFN LLC at the Closing), all
other patents, trademarks, trade names, service marks, copyrights, and any
applications therefor, domain name, corporate name, logo, mask works, trade
dress, formulae, netlists, cores, cells, designs, schematics, technology, trade
secrets, know-how, computer software programs or applications (in both source
code and object code form), and tangible or intangible proprietary information
or material that are used or proposed to be used in the business of Astarte as
currently conducted (excluding any of the foregoing validly licensed or
purchased from third parties as set forth on Schedule 4.12(b), the "Astarte
-------
Intellectual Property Rights"). Schedule 4.12(a) sets forth a list of all
----------------------------
registered trademarks, service marks, trade names, copyrights and patents (and
any applications for the registration thereof) owned or licensed by Astarte
specifying as to each, as applicable: (i) whether the property is owned or
licensed by Astarte; (ii) in the case of licensed properties, the owner of such
property; and (iii) if applicable, the jurisdictions by or in which such right
has been issued or registered or in which an application for such issuance or
registration has been filed, including the respective registration or
application numbers. Astarte has received executed assignments for each of
Astarte's patents and patent applications listed on Schedule 4.12(a), and has
recorded the assignments for each of Astarte's patents and patent applications
in the United States Patent and Trademark Office and in the other patent offices
listed on Schedule 4.12(a). To Astarte's Knowledge, all registered trademarks,
service marks and copyrights held by Astarte are valid and subsisting. To
Astarte's Knowledge, all patents held by Astarte are subsisting, and all patent
applications held by Astarte are pending in the appropriate national patent
office, and Astarte is unaware of any defects in the prosecution of any such
application or the development of the inventions disclosed in such application
that would irrevocably foreclose the grant of patent rights under such
application.
(b) Schedule 4.12(b) sets forth a complete list of (i) all material
licenses, sublicenses and other agreements as to which Astarte is a party and
pursuant to which any person is authorized to use any Astarte Intellectual
Property Right, including the identity of all parties
-23-
thereto (other than customer licensing agreements received by customers in
connection with purchases of Astarte's products that are not material to Astarte
Intellectual Property Rights), and (ii) all licenses, sublicenses and other
agreements as to which Astarte is a party and pursuant to which Astarte is
authorized to use (1) any third party patents, trademarks or copyrights
(including software) (the "Astarte Third Party Intellectual Property Rights")
which are incorporated in, or form a part of, any Astarte product, or (2) any
trade secret of a third party in or as to any Astarte product including the
identity of all parties thereto. Astarte has no knowledge that the Astarte Third
Party Intellectual Property Rights are not owned by or have not been assigned or
licensed to the licensor of such right. Astarte is not, nor will it be as a
result of the execution and delivery of this Agreement or the performance of its
obligations hereunder, in breach or violation of any license, sublicense or
agreement described on Schedule 4.12(b).
(c) No claims with respect to Astarte Intellectual Property Rights or
Astarte Third Party Intellectual Property Rights (to the extent arising out of
any use, reproduction or distribution of such Astarte Third Party Intellectual
Rights by or through Astarte), have been asserted or, to Astarte's Knowledge,
are threatened by any person. Astarte has no knowledge of any grounds for any
bona fide claims (i) to the effect that the manufacture, sale, licensing or use
of any product as now used, sold or licensed or proposed for use, sale or
license by Astarte infringes on any copyright, patent, trademark, service ▇▇▇▇
or trade secret, (ii) against the use by Astarte of any trademarks, trade names,
trade secrets, copyrights, patents, technology, know how or computer software
programs and applications used in Astarte's business as currently conducted,
(iii) challenging the ownership, validity or effectiveness of any of Astarte
Intellectual Property Rights, or (iv) challenging Astarte's license or legally
enforceable right to use, or the validity or effectiveness of Astarte Third
Party Intellectual Property Rights. Astarte (i) has not been sued or charged in
writing as a defendant in any claim, suit, action or proceeding which involves a
claim of infringement of any patents, trademarks, service marks, copyrights or
violation of any trade secret or other proprietary right of any third party, and
(ii) except as set forth on Schedule 4.12(c), has not been threatened or charged
in writing, orally or otherwise with infringement or violation of any patents,
trademarks, service marks, copyrights or trade secrets or other proprietary
right of any third party, and (iii) has no knowledge of the basis for any such
threat or claim.
(d) To Astarte's Knowledge, there is no unauthorized use, disclosure,
infringement or misappropriation of any Astarte Intellectual Property Rights or
any Astarte Third Party Intellectual Property Right to the extent licensed by or
through Astarte, by any third party, including any employee or former employee
of Astarte.
(e) No Astarte Intellectual Property Right or, to Astarte's Knowledge,
Astarte Third Party Intellectual Property Right is subject to any outstanding
order, judgment, decree, legal or governmental proceeding (other than pending
applications for patent, trademark registration or copyright registration) or
stipulation restricting in any manner the licensing thereof by Astarte. Except
for contracts licensing Astarte's products executed in the ordinary course of
business and in accordance with Astarte's past practices, Astarte has not
entered into any agreement to indemnify any other person against any charge of
infringement of any third party's intellectual property right.
-24-
(f) Astarte has taken reasonable measures to protect and preserve (i) the
validity and enforceability of trademarks included in the Astarte Intellectual
Property Rights, (ii) the confidentiality and validity and enforceability of
unpublished copyrighted works or pending patent applications included in the
Astarte Intellectual Property Rights, (iii) the validity and enforceability of
patents included in the Astarte Intellectual Property Rights, and (iv) the
confidentiality and validity and enforceability of its trade secrets and other
confidential information. Except as set forth on Schedule 4.12(f), each
employee and consultant of Astarte involved in the development of Astarte
Intellectual Property Rights has executed a nondisclosure and assignment of
inventions agreement to protect the confidentiality and to vest in Astarte
exclusive ownership of such Astarte Intellectual Property Rights. To Astarte's
Knowledge, no employee or consultant of Astarte has used any trade secrets or
other confidential information of any other person in the course of their work
for Astarte and, except as set forth on Schedule 4.12(c), Astarte has not been
sued, charged or threatened with any such claim. To Astarte's Knowledge, no
employee or consultant has used, divulged or appropriated for the benefit of,
himself or any person other than Astarte any trade secret or confidential
information of Astarte. Astarte has no written or oral agreements with
employees or consultants with respect to the ownership of inventions, trade
secrets or other works created by them as a result of which any such employee or
consultant may have nonexclusive rights to the portions of Astarte's
Intellectual Property Rights so created by such individual, except as set forth
on Schedule 4.12(f).
(g) To Astarte's Knowledge, no Astarte Employee or consultant is in
violation of any term of any employment contract, patent disclosure agreement,
proprietary information agreement, noncompetition agreement, nonsolicitation
agreement, confidentiality agreement, or any other similar contract or agreement
or any restrictive covenant relating to the right of any such officer, employee
or consultant to be employed or engaged by Astarte because of the nature of the
business conducted or to be conducted by Astarte or relating to the use of trade
secrets or proprietary information of others; and, to Astarte's Knowledge, the
continued employment or retention of its officers, employees or consultants does
not subject Astarte to any material Liability with respect to any of the
foregoing matters; and, except as set forth on Schedule 4.12(c), Astarte has not
been sued, charged or threatened with any claim with respect to any of the
foregoing matters.
(h) Except as set forth on Schedule 4.12(h), Astarte owns or has the
exclusive right to use, make, sell, license, or sublicense and bring actions for
infringement of all Astarte Products (as defined below) and Astarte Intellectual
Property Rights developed by or for Astarte or that are used or currently
proposed to be used in the business of Astarte as currently conducted or
proposed to be conducted. Except as set forth on Schedule 4.12(h), all Astarte
Products and Astarte Intellectual Property Rights are owned by Astarte free and
clear of any rights or claims of any former Astarte Employees and former
employers of all current Astarte Employees or consultants or other third
parties. The source codes for the Astarte Products constitute trade secrets of
Astarte that are presently valid and protectable. All Taxes and fees, including
patent and trademark registration and prosecution fees and all professional fees
in connection therewith pertaining to the Astarte Intellectual Property Rights,
due and payable on or before the date hereof, have been paid by Astarte, except
where failure to pay has not had and could not reasonably be expected to have a
material adverse effect on such Astarte Intellectual Property Rights.
-25-
(i) Each of the Astarte products is listed on Schedule 4.12(i) (the
"Astarte Products"). Except as set forth on Section 4.12(i), Astarte has not
-----------------
granted a license to use or the right to acquire a license to use any future
version of any Astarte Product, and no agreement to which Astarte is a party
will restrict Tellium or the Surviving Corporation from charging customers for
any such new version. No Person has any rights under any source code escrow
agreement relating to Astarte Products or Astarte Intellectual Property Rights.
Except as set forth in Schedule 4.12(i), to Astarte's Knowledge no Person
outside of Astarte has had access to or the right of access to source code for
the Astarte Products or will have the right to such access as a result of any of
the transactions contemplated by this Agreement.
(j) No Person has a right to receive a royalty or similar payment in
respect of any Astarte Product or any Astarte Intellectual Property Rights,
except as set forth in Schedule 4.12(j). Except as set forth on Schedule
4.12(j), Astarte has no licenses granted, sold or otherwise transferred by or to
it nor other agreements to which it is a party, relating in whole or in part to
any Astarte Product or Astarte Intellectual Property Rights.
(k) Each of the representations in this Section 4.12 is qualified by the
impact of the agreements and transactions set forth below and the matter
referred to in subparagraph (vi) below, and the fulfillment of obligations under
such agreements and/or consummation of the transactions and the existence of any
prior art by reason of the matter referred to in subparagraph (vi) below and
shall not constitute a breach of representation, warranty, covenant or agreement
contained in this Section 4.12:
(i) the transactions contemplated by the Patent Assignment;
(ii) the distribution by Astarte of all of its interest in AFN LLC
to Astarte shareholders in the Distribution;
(iii) the consummation of the transactions contemplated by the
Corning LOI and the Corning Agreement;
(iv) the transactions between Astarte and Texas Instruments
Incorporated described in or contemplated by the Texas Instruments LOI and the
Texas Instruments Agreement;
(v) the rights of the Laor Parties under the Laor Agreements; and
(vi) Astarte has recently been furnished with an article pre-dating
the Planar Array Application which foretells significant portions of the Astarte
Planar Array Rights and could be considered prior art, and Astarte has caused to
be furnished to Tellium a copy of the article, receipt of which is hereby
acknowledged by Tellium.
4.13. Absence of Certain Changes.
(a) Except as disclosed on Schedule 4.13, or as reflected in the
Unaudited Balance Sheet, since December 31, 1999, the business of Astarte has
been conducted in the ordinary course and, except as may result from the
transactions contemplated by this Agreement, there has not been:
-26-
(i) other than with respect to the Texas Instruments LOI and the
Texas Instruments Agreement, the Corning LOI and the Corning Agreement, the
Redemption Agreements and the Distribution, any event, occurrence, development
or state of circumstances or fact which has had a Material Adverse Effect on
Astarte;
(ii) other than with respect to the Redemption Agreements, and the
Distribution, any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of Astarte, or any
repurchase, redemption or other acquisition by Astarte of any outstanding shares
of capital stock or other securities of, or other equity or ownership interests
in, Astarte;
(iii) any amendment of any term of any Astarte Securities or any
amendment to Astarte's Articles of Incorporation or Bylaws;
(iv) any incurrence, assumption or guarantee by Astarte of any
indebtedness for borrowed money other than in the ordinary course of business;
(v) any creation or assumption by Astarte of any Lien on any asset;
(vi) any making of any loan, advance or capital contributions to or
investment in any person, except with respect to loans made to certain Astarte
Employees by AFN LLC to enable such Astarte Employees to exercise their stock
options which shall be disclosed on Schedule 4.13;
(vii) any damage, destruction or other casualty loss not fully
covered by insurance affecting the business or assets of Astarte which has had
or could reasonably be expected to result in or have a Material Adverse Effect
on Astarte;
(viii) any acquisitions of any capital assets or any other
investments for aggregate consideration in excess of $20,000;
(ix) other than with respect to the Redemption Agreements, the
Patent Assignment and the Distribution, any sale, lease, pledge, transfer or
other disposition of any capital assets for aggregate consideration in excess of
$20,000;
(x) other than with respect to the Redemption Agreements, the
Patent Assignment and the Distribution, any transaction or commitment made, or
any contract or agreement entered into, by Astarte relating to its assets or
business (including the acquisition or disposition of any assets) other than
those transactions covered by any other subparagraphs of this Section 4.13 or
any relinquishment by Astarte of any contract or other right, in either case,
involving an amount in excess of $20,000;
(xi) any change in any method of accounting or significant
accounting practice (including for bad debts, contingent Liabilities or
otherwise, respecting capitalization or expense of research and development
expenditures, depreciation or amortization rates or timing of recognition of
income or expense), or any writing up, down, or off of the book value of any
material amount of assets, by Astarte;
-27-
(xii) any (A) grant of any severance or termination pay to any
Astarte Employee or (B) change in benefits payable under any Astarte Employee
Plan, including existing severance or termination pay policies or employment,
severance, management, consulting or other similar agreements, except as
otherwise contemplated in Section 3.3(b) or 6.2(n) of this Agreement;
(xiii) any increase in the rate or terms of compensation payable or
to become payable by Astarte to Astarte Employees or any increase in the rate or
terms of any bonus, pension or other employee benefit plan covering any of the
Astarte Employees (including any new or amended employment, consulting or other
compensation agreement), except in each case increases occurring in the ordinary
course of business in accordance with its customary practices (including normal
periodic performance reviews and related compensation and benefit increases) and
except as otherwise provided in Section 6.2(n) of this Agreement;
(xiv) any labor dispute, including any claims brought under the WARN
Act, Title VII, ERISA or any other applicable federal, state or local Law
(domestic or foreign), other than routine individual grievances, or to Astarte's
Knowledge, any activity or proceeding by a labor union or representative thereof
to organize any employees of Astarte, or any lockouts, strikes, slowdowns, work
stoppages or to Astarte's Knowledge, threats thereof by or with respect to any
employees of Astarte;
(xv) any agreement or commitment containing a covenant limiting or
purporting to limit the freedom of Astarte to compete with any person in any
geographic area or engage in any line of business;
(xvi) any joint venture or similar arrangement which involves a
sharing of assets, profits or future payments to other persons;
(xvii) other than with respect to the Texas Instruments LOI and the
Texas Instruments Agreement and the Corning LOI and the Corning Agreement, any
transfer (by way of a license or otherwise) to any Person of rights to any
material Astarte Intellectual Property Rights, other than licenses in the
ordinary course of business consistent with past practice;
(xviii) other than with respect to the Texas Instruments LOI and the
Texas Instruments Agreement, the Corning LOI and the Corning Agreement or the
Laor Agreements, any failure or ineffective act to maintain, renew, extend or
enforce any material Astarte Intellectual Property Rights;
(xix) forgiven, compromised, canceled, released, waived or permitted
to lapse any material rights or claims; or
(xx) any agreement, undertaking or commitment to do any of the
foregoing.
4.14. Litigation.
Except as set forth on Schedule 4.14, there is no claim, action, suit,
investigation or proceeding pending or, to Astarte's Knowledge, threatened
against or affecting, Astarte or any of its properties or assets before any
court or arbitrator or any Governmental Authority. Except as
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set forth on Schedule 4.14, to Astarte's Knowledge, there is no litigation
pending or threatened against any director, officer or key employee relating to
Astarte or its business. Neither Astarte nor, to Astarte's Knowledge, any
director, officer or key employee, is subject to any judgment, order, decree,
ruling, injunction or writ relating to Astarte entered in any lawsuit or
proceeding or issued by any Governmental Authority. The foregoing sentences
include, without limiting their generality, actions pending or threatened (or
any basis therefor known to Astarte) involving the prior employment or
engagement of any of the Astarte's directors, officers, key employees or
consultants or their use in connection with Astarte's business of any
information or techniques allegedly proprietary to any of their former employers
or to any other Person and any form of adversarial inquiry, investigation or
proceeding (e.g., arbitration or mediation).
4.15. Material Contracts.
(a) Except for agreements, contracts, plans, leases, arrangements or
commitments disclosed on Schedule 4.15, copies of which have been provided to
Tellium, or except for the Astarte Employee Plans disclosed pursuant to Section
4.22(a), Astarte is not a party to or subject to:
(i) any collective bargaining agreement;
(ii) any agreements that contain, or require payment of, severance
Liabilities;
(iii) any severance or termination pay plans, policies or
arrangements, any bonus plans, policies or arrangements, any deferred
compensation, any incentive compensation, pension, profit-sharing or retirement
plans, agreements or arrangements, any group health, retiree medical or other
types of plans or arrangements (whether funded or unfunded) providing for
welfare benefits, or any other employee benefit plans or arrangements;
(iv) any employment or consulting agreement, contract or
commitment with an Astarte Employee or salesperson or consulting or sales
agreement, contract or commitment with a firm or other organization;
(v) any agreement or plan, including any stock option plan, stock
appreciation right plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement;
(vi) any fidelity or surety bond or completion bond;
(vii) any lease of personal property having a remaining value
individually in excess of $20,000;
(viii) any agreement of indemnification or guaranty;
(ix) any agreement, contract or commitment containing any
covenant limiting the freedom of Astarte or any Astarte Employees to engage in
any line of business or compete with any person;
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(x) any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of $20,000;
(xi) any agreement, contract or commitment relating to the
disposition or acquisition of assets not in the ordinary course of business or
any ownership interest in any corporation, partnership, joint venture or other
business enterprise;
(xii) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating to the borrowing
of money or extension of credit, including guaranties referred to in clause
(viii) hereof;
(xiii) any purchase order or contract for the purchase of raw
materials or acquisition of assets involving $20,000 or more;
(xiv) any distribution, joint marketing, teaming or development
agreement;
(xv) any material distributor, dealer, franchise, original
equipment manufacturer, reseller, manufacturer's representative or sales agency
contract or commitment;
(xvi) any material agreements pertaining to Astarte's maintenance or
support of its products, services or supplies;
(xvii) any agreement, contract or commitment which involves $20,000
or more and is not cancelable without penalty within thirty (30) days;
(xviii) any material agreement, contract or commitment in respect of
licenses or other intellectual property or relating to retailer relationships,
e-commerce relationships or advertising or promotional agreements or any joint
development agreement, revenue sharing agreement, website marketing agreement,
co-branding agreement, business development agreement or other similar
agreement; and
(xix) any other agreement, contract or commitment that is material
to Astarte.
Astarte has not breached, or received any claim or threat that it has breached,
any of the terms or conditions of any agreement, contract or commitment set
forth in any of the Astarte Disclosure Schedules in such a manner as would
permit any other party to cancel or terminate the same. Each agreement, plan,
contract or commitment set forth in any of the Astarte Disclosure Schedules is a
valid, binding and enforceable agreement of Astarte and, to Astarte's Knowledge,
each other party thereto and is in full force and effect and is not subject to
any default thereunder to Astarte's Knowledge by any party obligated to Astarte
pursuant thereto.
(b) Except as disclosed on Schedule 4.15, there is no contract, agreement,
commitment or obligation to which Astarte is a party or is bound that at the
time it was entered into or made was, or is currently, known or expected by
Astarte to result in any material loss to Astarte upon completion or performance
thereof, or any bid, offer or proposal which if accepted would constitute such a
contract, agreement, commitment or obligation.
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(c) Except as disclosed on Schedule 4.15, (i) Astarte is not a party to
any agreement with any of its securityholders or optionholders, or, to Astarte's
Knowledge, any Affiliate of any Significant Stockholder of Astarte and (ii) to
Astarte's Knowledge, no Significant Stockholder of Astarte is a party to any
agreement with any other such Significant Stockholder, in each case relating to
Astarte or any of its securities.
4.16. Taxes.
(a) Astarte has filed when due (including any extensions of such due
date) all Tax Returns required to be filed by or on its behalf and such Tax
Returns are true, complete and correct in all material respects. Astarte is not
currently the beneficiary of (i) any extension of time within which to file or
(ii) any waiver of the limitation period applicable to any Tax Return. All
material Taxes shown to be payable by Astarte on the Tax Returns or on
subsequent assessments with respect thereto have been paid in full on a timely
basis, and no other material Taxes are payable by Astarte with respect to items
or periods covered by such Tax Returns (whether or not shown on or reportable on
such Tax Returns or claimed to be due by any taxing authority) or with respect
to any period ending on or prior to the Effective Time. Astarte has paid all
material estimated Taxes required to be paid on or prior to the Effective Time.
No claim has ever been made by an authority in a jurisdiction where Astarte does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Liens on any of the assets of Astarte with respect to
Taxes that arose in connection with any failure (or alleged failure) to pay any
Tax when due and no Liens will arise as a result of the transactions
contemplated by this Agreement.
(b) Astarte has withheld and paid over all material Taxes required to
have been withheld and paid over by it, and complied in all material respects
with all information reporting and backup withholding requirements, including
maintenance of required records with respect thereto, in connection with amounts
paid or owing to any employee, creditor, independent contractor, stockholder or
other third party.
(c) Except as disclosed on Schedule 4.16(c), the amount of Astarte's
Liability for unpaid Taxes for all periods ending on or before the Closing Date
(excluding unpaid Taxes with respect to the Distribution, the consummation of
the Corning Agreement, and franchise, use, ad valorem, payroll and similar taxes
incurred in the ordinary course of business subsequent to the date of the
Unaudited Balance Sheet until the Closing Date) does not, in the aggregate,
exceed by any material amount the amount of the net current liability accruals
for Taxes set forth on the Unaudited Balance Sheet and, except with respect to
the Distribution, Astarte will incur no additional Taxes subsequent to the date
of the Unaudited Balance Sheet until the Closing Date except in the ordinary
course of business. Astarte reasonably expects that the Escrow Shares will be
adequate to indemnify Tellium and the Surviving Corporation pursuant to Section
10.2(a)(iii) for the amount of Astarte's Liability for unpaid Taxes in excess of
$3,500,000 for all Pre-Closing Tax Periods including unpaid Taxes with respect
to the Distribution, the consummation of the Corning Agreement or portion of
periods ending on or before the Closing Date.
(d) No material claim, audit, action, suit, proceeding or investigation
is currently pending or to the knowledge of Astarte threatened in writing
against or with respect to Astarte by any taxing authority in connection with
any of the Tax Returns of Astarte. No notice of
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deficiency or similar document of a taxing authority asserting Astarte has
unpaid Tax Liability has been received by Astarte and there are no Liabilities
for Taxes with respect to the issues that have been raised (and are currently
pending) by any taxing authority that could, if determined adversely to Astarte,
materially and adversely effect the Liability of Astarte for Taxes. Schedule
4.16 lists all federal, state, local and foreign income Tax Returns filed with
respect to Astarte for taxable periods ended since December 31, 1995, indicates
those returns that have been audited and indicates those returns that currently
are the subject of audit. Astarte has delivered to Tellium and the Company
correct and complete copies of all federal income tax returns, examination
reports, and statements of deficiencies assessed against or agreed to by Astarte
since December 31, 1995. All elections with respect to Taxes affecting Astarte,
as of the date hereof, are set forth in the Tax Returns, other than any such
elections which are not required to be included in the Tax Returns, copies of
which have been made available to Tellium and the Company.
(e) Astarte has not waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to a Tax assessment or
deficiency.
(f) Astarte has not filed a consent under Section 341(f) of the Code
concerning collapsible corporations. Neither Astarte or any ERISA Affiliate
sponsors or maintains, or otherwise is a party to, any contract, agreement, plan
or arrangement covering any Astarte Employee that, individually or collectively,
could reasonably give rise to the payment of any amount that would not be
deductible pursuant to the terms of Section 280G of the Code. Astarte has not
agreed to make any adjustment under Section 481(a) of the Code by reason of a
change in accounting method or otherwise. Astarte is not a party to any safe
harbor lease within the meaning of Section 168(f)(8) of the Code, as in effect
prior to amendment by the Tax Equity and Fiscal Responsibility Act of 1982.
None of the assets of Astarte is "tax-exempt use property" within the meaning of
Section 168(h) of the Code. Astarte is not and has not ever been, a "United
States real property holding corporation" within the meaning of Section
897(c)(2) of the Code. Astarte has never been a party (either as a distributing
corporation or as a corporation that has been distributed) to any transaction
intended to qualify under Section 355 of the Code or any corresponding provision
of state law. Astarte is not (and has not ever been) a party to any Tax
indemnity allocation or sharing agreement. Astarte (A) has not ever been a
member of a group of corporations filing a consolidated, unitary or combined Tax
Return and (B) is not liable for the Taxes of any other person under Treas. Reg.
(S) 1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract, or otherwise. Astarte has not taken any
action that would have the effect of deferring any material Liability for Taxes
for Astarte from any taxable period ending at or before the Effective Time to
any taxable period thereafter other than actions consistent with past practices.
Astarte has not participated in or cooperated with any international boycott
within the meaning of Section 999 of the Code. The ability of Astarte to use
its net operating loss and other carryovers have not been affected by Sections
382, 383 or 384 of the Code (other than as a result of the Merger). The
transactions set forth in this Agreement are not subject to the Tax withholding
provisions of Section 3406 of the Code, or of Subchapter A of Chapter 3 of the
Code or of any other provision of law. Astarte is not a party to any joint
venture, partnership, or other arrangement or contract which could be treated as
a partnership for federal income tax purposes. Astarte has not had a permanent
establishment in any foreign country, as defined in any applicable Tax treaty or
convention between the United States and such foreign country. No power of
attorney has been granted by Astarte, and is currently in
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force, with respect to any matter relating to Taxes. Astarte has disclosed on
its federal income Tax Returns all positions taken therein that could give rise
to a substantial understatement of federal income Tax within the meaning of
Section 6662 of the Code.
4.17. Transactions With Affiliates.
Except as set forth on Schedule 4.17, there are no loans, leases, royalty
agreements or other agreements between Astarte, on the one hand, and any
Affiliate of Astarte, any of the stockholders of Astarte, to Astarte's
Knowledge, any Affiliate of any Significant Stockholder of Astarte, or, to
Astarte's Knowledge, any member of any such Significant Stockholder's family, on
the other hand. Except as set forth on Schedule 4.17, no Astarte Stockholder,
Astarte Employee or director of Astarte (a) to Astarte's Knowledge, has any
material direct or indirect interest in any entity which does business with
Astarte, (b) to Astarte's Knowledge, has any direct or indirect interest in any
property, asset or right which is used by Astarte in the conduct of its
business, or (c) has any contractual relationship with Astarte other than such
relationships which occur from being an employee, officer, director or
stockholder of Astarte.
4.18. Insurance Coverage.
Schedule 4.18 sets forth an accurate and complete list of all insurance
policies and fidelity bonds covering the assets, business, equipment,
properties, operations and Astarte Employees, except for the Astarte Employee
Plans disclosed pursuant to Section 4.22(a). There is no claim by Astarte
pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds.
All premiums payable under all such policies and bonds have been paid, and
Astarte has otherwise complied with the terms and conditions of all such
policies and bonds in all material respects. Such policies of insurance and
bonds (or other policies and bonds providing substantially similar insurance
coverage) have been in effect since the dates indicated on Schedule 4.18 and
remain in full force and effect. Astarte has no knowledge of any threatened
termination of, and has not received written notice of any premium increase with
respect to, any of such policies or bonds. Astarte's insurance coverage is
customary for corporations of similar size engaged in similar lines of business.
4.19. Compliance With Laws; No Defaults.
Astarte has been, and is in compliance with, and is not in default under,
and no condition exists that with notice or lapse of time or both would
constitute a violation of or default under, any applicable provisions of any Law
or Permit, except for violations that have not had and could not reasonably be
expected to have individually or in the aggregate a Material Adverse Effect on
Astarte. The Distribution, the Redemption and the other transactions outlined
in the Patent Assignment, the Corning LOI and the Texas Instruments LOI have
been or shall be made in compliance with all Laws.
4.20. Permits.
Astarte has all Permits necessary for the conduct of its business, except
for Permits as to which the failure to maintain such Permits does not, in the
aggregate, have a Material Adverse Effect on Astarte. All such Permits used in
Astarte's business are set forth on Schedule 4.20, are
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in full force and effect, and except as set forth on Schedule 4.20, no written
notice of any violations has been received by Astarte relating to such Permits.
Astarte is not in violation of any such Permit, except where such violations
would not have a Material Adverse Effect and no action, suit, proceeding,
investigation, audit or claim is pending or, to the knowledge of Astarte,
threatened, that would have the effect, directly or indirectly, of revoking or
limiting in any way any such Permits, except where such revocation or limitation
would not have a Material Adverse Effect. Except as disclosed on Schedule 4.20,
to the knowledge of Astarte, all such Permits will remain in force and effect
after the Closing without notice to or approval by any Governmental Authority.
4.21. Environmental Matters.
Except as otherwise disclosed on Schedule 4.21:
(a) Astarte has not received during the past five (5) years any written
notice, citation, claim, assessment, proposed assessment or demand or any other
written communication (collectively, "Environmental Notices") alleging any past
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or present violation of any Environmental Law by or on behalf of Astarte with
respect to which any Environmental Cost may hereafter become due or payable and,
to the knowledge of Astarte, there is no reasonable basis for any such
Environmental Notice;
(b) Astarte has not received any Environmental Notices that it is or may
be a potentially responsible party or otherwise liable under any Environmental
Law in connection with any waste disposal site allegedly containing, or in
connection with any other location used for the disposal of, any Hazardous
Materials. Schedule 4.21 contains a list of all sites or locations, to the
knowledge of Astarte, at any time used by or on behalf of Astarte for the
disposal of any waste containing Hazardous Materials;
(c) no portion of the real property owned, leased or controlled by
Astarte, whether currently or prior hereto, has been the site or source of any
release, as defined under any Environmental Law, of any Hazardous Material in an
amount or concentration or to an extent which exceeds applicable cleanup or
other applicable legal standards or requirements or which was reportable under
any Environmental Law, and such real property is free of all contamination
arising out of, relating to, or resulting from any release, discharge or
emission of Hazardous Materials, other than such releases and contamination that
are or were permitted by, or could not result in any Liability of Astarte under,
Environmental Laws;
(d) no Hazardous Materials exist at, on, under or about any portion of
the real property currently owned, leased or controlled by Astarte, other than
Hazardous Materials consisting of stock in trade or actively used for the
maintenance or operation of Astarte's business, all of which are maintained, in
compliance with Environmental Laws;
(e) Astarte is and, to Astarte's Knowledge, has been in compliance with
all applicable Environmental Laws in the conduct of its business and with
respect to the real property described in Section 4.21(c) and activities thereat
or related thereto;
(f) Astarte has made timely and complete application for the issuance,
renewal, extension, and reissuance of all Permits required under any
Environmental Law and will, prior to
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the Closing Date, make timely and complete application for the maintenance in
force and effect of all such Permits as may be necessary due to the change in
control of Astarte;
(g) there are no claims, written notices, civil, criminal or
administrative actions, suits, hearings, investigations, inquiries or
proceedings pending or, to the knowledge of Astarte, threatened against Astarte,
and no written requests from any Governmental Authority to perform any
investigatory or remedial activity have been made to Astarte or, to the
knowledge of Astarte, any other Persons, that are based on or related to any
actual or alleged release of Hazardous Materials, any other Environmental
Matters, or the failure to have any required Permits, in each instance in
connection with the activities or assets of Astarte and that could result in any
liability of Astarte under Environmental Laws;
(h) there are no conditions, events, circumstances, facts, activities,
practices, incidents, actions or omissions arising out of, related to or
resulting from the activities or assets of Astarte that (i) may give rise to any
Liability or any other obligation under any Environmental Laws that may, after
the Closing, require Tellium, the Surviving Corporation or any of their
Affiliates to pay any Environmental Costs, (ii) may form the basis of any claim,
action, suit, proceeding, hearing, investigation or inquiry against Tellium, the
Surviving Corporation or any of their Affiliates that may, after the Closing,
require Tellium, the Surviving Corporation or any of their Affiliates to pay any
Environmental Costs, or (iii) may, after the Closing, interfere with or prevent
compliance by Tellium, the Surviving Corporation or its Affiliates with
Environmental Laws or any Permits thereunder;
(i) there are and have been no underground storage tanks, incinerators or
surface impoundments at, on, under, or within any portions of the real property
currently or at any time during the past three years owned, leased or operated
by Astarte and that could result in any liability of Astarte under Environmental
Laws;
(j) to Astarte's Knowledge, no poly- or monochlorinated biphenyls, no
equipment containing any poly- or monochlorinated biphenyls, asbestos or
asbestos-containing materials are or have been present at, on, under, or within
any real property described in Section 4.21(i); and
(k) there has been no environmental investigation, study, audit, test,
review or other analysis conducted of which Astarte has possession, or to which
it has reasonable access, in relation to the current or prior business of
Astarte or any property or facility now or previously owned or leased by Astarte
relevant to the environmental condition of said property or facility at the time
Astarte owned or leased such property.
For purposes of this Section 4.21, the term "Astarte" shall include any
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business or business entity (including a corporation) which is a predecessor, in
whole or in part, of Astarte.
4.22. Employees and Employee Plans.
(a) Schedule 4.22 lists all Astarte Employee Plans.
(b) With respect to each Astarte Employee Plan, Astarte has made available
to Tellium, (i) a true and correct copy of the two (2) most recent annual
reports (Form 5500), if applicable, filed with the IRS, (ii) a current, accurate
and complete copy of the Astarte Employee
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Plan, including any amendments thereto, (iii) each trust or funding agreement
and group annuity contract, if any, relating to such Astarte Employee Plan, (iv)
the most recent actuarial report or valuation, if any, relating to the Astarte
Employee Plan, (v) the most recent summary plan description of such Astarte
Employee Plan, and (vi) summaries of any material modifications to the most
recent summary plan description provided to any Astarte Employee relating to
each Astarte Employee Plan.
(c) Each Astarte Employee Plan which is intended to be qualified under
Section 401(a) of the Code, including the Astarte 401(k) Plan, has received a
determination letter issued by the IRS to the effect that each such Astarte
Employee Plan is so qualified, and that each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code, and that, to Astarte's
Knowledge, no condition exists that could reasonably be expected to adversely
affect the qualified status of such plans. Astarte has furnished to Tellium
copies of the most recent IRS determination letters with respect to each such
plan and, except as otherwise disclosed in Schedule 4.22, no such Astarte
Employee Plan has been amended since the date of such determination letters.
Except as otherwise disclosed on Schedule 4.22, no Astarte Employee who
participates in the Astarte 401(k) Plan has a loan under such plan.
(d) Each Astarte Employee Plan has been maintained in material compliance
with, and is not in any material respects in default of, its terms and the
requirements imposed under ERISA, the Code or any other federal, state or local
Law (domestic or foreign), including without limiting the foregoing, the timely
filing of all required Form 5500s and other reports, documents and notices,
where applicable, with the IRS and the Department of Labor. To Astarte's
Knowledge, Astarte and each ERISA Affiliate have performed all material
obligations required to be performed by them under each Astarte Employee Plan,
and no action or failure to act and no transaction or holding of any asset by,
or with respect to, any Astarte Employee Plan has or may subject Astarte, the
Surviving Corporation or any ERISA Affiliate or any fiduciary to any material
tax or other penalty. There are no actions, proceedings, arbitrations, suits or
claims pending, or to the knowledge of Astarte, threatened or anticipated (other
than routine claims for benefits) against Astarte or any ERISA Affiliate or any
administrator, trustee or other fiduciary of any Astarte Employee Plan with
respect to any Astarte Employee Plan, or against any Astarte Employee Plan or
against the assets of any Astarte Employee Plan. To Astarte's Knowledge, no
event or transaction has occurred with respect to any Astarte Employee Plan that
would result in the imposition of any tax under Chapter 43 of Subtitle D of the
Code. Astarte has made all payments required to be made to an Astarte Employee
Plan on a timely basis with respect to all periods through the date hereof. No
Astarte Employee Plan is under audit or investigation by the IRS, the Department
of Labor, the PBGC, or any other governmental agency and to the knowledge of
Astarte, no such audit or investigation is pending or threatened. To Astarte's
Knowledge, no "prohibited transaction" (as that term is defined in Section 406
of ERISA or Section 4975 of the Code) has occurred which could reasonably be
expected to result in the imposition of any material taxes or other penalties on
Astarte.
(e) Except where failure to comply with each of the following
representations could not individually or in the aggregate be expected to have a
Material Adverse Effect on Astarte, Astarte (i) is in compliance with all
applicable federal, state and local Laws (domestic and foreign) respecting
employment, employment practices, labor, terms and conditions of employment and
wages and hours, in each case, with respect to Astarte Employees; (ii) has
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withheld all amounts required by Law or by agreement to be withheld from the
wages, salaries and other payments to Astarte Employees; (iii) is not liable for
any arrears of wages or any taxes or any penalty for failure to comply with any
of the foregoing; (iv) is not liable for any past due payment to any trust or
other fund or to any Governmental Authority, with respect to unemployment
compensation benefits, social security or other benefits for Astarte Employees;
and (v) with respect to any Astarte Employees whose employment was terminated
prior to the date hereof, is not liable for any unpaid severance pay provided
under any severance plan or policy or any employment agreement, any accrued and
unpaid commissions, salary or other wages, any accrued and unpaid vacation pay,
or any unpaid bonus payments (other than the One-Time Bonus Payment).
(f) Except as set forth on Schedule 4.22, neither Astarte nor any of its
ERISA Affiliates presently sponsors, maintains or contributes to, nor has
Astarte or any of its ERISA Affiliates ever sponsored, maintained, contributed
to, or been required to contribute to, a Pension Plan which is subject to Title
IV of ERISA. Neither Astarte nor any of its ERISA Affiliates maintains, or has
ever maintained or contributed, or has been required to contribute, to or
incurred any withdrawal liability (within the meaning of Section 4201 of ERISA)
for, any "multiemployer plan" (as that term is defined in Section 3(37) of
ERISA).
(g) To Astarte's Knowledge, no event has occurred in connection with the
termination of the Astarte Employees on or prior to the date hereof, and there
exists no condition or set of circumstances with respect to the termination of
any remaining Astarte Employees, which could reasonably be expected to subject
Astarte to any Liability, including any Liability under the WARN Act, Title VII,
ERISA, or any other applicable federal, state or local Law (domestic or
foreign), other than those obligations or liabilities associated with (i) making
contributions, paying premiums or making any other payments required to be made
under the Astarte Employee Plans, (ii) with respect to any Astarte Employees who
are employed by Astarte on the date hereof, paying any unpaid severance pay
pursuant to any employment agreement or any severance plan, policy or other
similar agreement, any accrued and unpaid salary or other wages, any accrued and
unpaid vacation pay, and any unpaid bonuses, (iii) with respect to any Astarte
Employees whose employment was terminated prior to the date hereof, paying the
One-Time Bonus Payment, or (iv) providing COBRA. Astarte is not involved in any
dispute, grievance or litigation relating to the termination of any Astarte
Employee's employment on or prior to the Closing.
(h) Astarte does not maintain or contribute to, nor has entered into, any
Astarte Employee Plan which provides, or has any liability to provide, life
insurance, medical, severance or other employee welfare benefits to any Astarte
Employee upon his or her retirement or termination of employment, except as may
be required by Section 4980B of the Code.
(i) No Astarte Employees are currently represented by any labor union for
purposes of collective bargaining and, to Astarte's Knowledge, no activities the
purpose of which is to achieve such representation of all or some of such
Astarte Employees are threatened or ongoing. No work stoppage or labor strike
against Astarte by Astarte Employees is pending or, to Astarte's Knowledge,
threatened. Astarte (i) is not involved in or, to Astarte's Knowledge,
threatened with any labor dispute, grievance, or litigation relating to labor
matters involving any Astarte Employees, including, without limitation,
violation of any federal, state or local labor,
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safety or employment Laws (domestic or foreign), charges of unfair labor
practices or discrimination complaints; (ii) has not engaged in any unfair labor
practices within the meaning of the National Labor Relations Act or the Railway
Labor Act; or (iii) is not presently, nor has been in the past a party to, or
bound by, any collective bargaining agreement or union contract with respect to
Astarte Employees and no such agreement or contract is currently being
negotiated by Astarte or any of its affiliates.
(j) To Astarte's Knowledge, any Welfare Plan that that is a "multiple
employer welfare arrangement" within the meaning of Section 3(40) of ERISA
("MEWA") has complied in all material respects with all requirements imposed
----
under ERISA and or any other federal, state or local Law (foreign or domestic)
arising directly or indirectly from its status as a MEWA. No Astarte Employee
Plan or agreement is funded by a trust described in Section 501(c)(9) of the
Code.
(k) With respect to each Welfare Plan, other than the Astarte Flexible
Benefit Plan, all claims incurred (including claims incurred but not reported)
by Astarte Employees thereunder for which Astarte is, or will become, liable are
(i) insured pursuant to a contract of insurance whereby the insurance company
bears any risk of loss with respect to such claims; or (ii) covered under a
contract with a health maintenance organization (an "HMO") pursuant to which the
---
HMO bears all Liability for such claims. Except for the Astarte Flexible
Benefit Plan, all Welfare Plans maintained by Astarte prior to and as of the
Effective Time are "Small Welfare Plans" within the meaning of Labor Regulations
Section 2528.109-20. Except for the Astarte Group Health Plan, the Astarte
Flexible Benefit Plan and the Astarte Disability Plan, to Astarte's Knowledge,
no event has occurred and there exists no condition or set of circumstances
which, upon the termination of each Welfare Plan, will result in liability to
Astarte or the Surviving Corporation. As of the date hereof, no Astarte
Employees are receiving long-term disability, and to Astarte's Knowledge, no
Astarte Employee is currently entitled to receive long-term disability benefits.
(l) Except as set forth on Schedule 4.22, Astarte is not a party to any
(i) agreement with any Astarte Employee, the benefits of which are contingent,
or the terms of which are altered, upon the occurrence of a transaction
involving Astarte of the nature contemplated by this Agreement, (ii) agreement
with any Astarte Employee providing any term of employment or compensation
guarantee extending for a period longer than one year from the date hereof or
for the payment of compensation in excess of $80,000 per annum, or (iii) bonus
arrangement, agreement or plan, including any stock option plan, stock
appreciation right plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased or become payable, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement (either alone or together with any
subsequent event) 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.
4.23. Finders' Fees.
Except as disclosed on Schedule 4.23, there is no employee, consultant,
investment banker, broker, finder or other intermediary that has been retained
by or is authorized to act on behalf of Astarte which might be entitled to any
fee or commission from Tellium, the Company,
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Astarte or any other Person upon consummation of the transactions contemplated
by this Agreement.
4.24. Disclosure.
(a) None of the representations and warranties of Astarte contained
herein or in and of the Schedules hereto contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances in
which it was made.
(b) None of the information supplied by Astarte or any Subsidiary of
Astarte, including AFN LLC, to the stockholders of Astarte in connection with
the Redemption and Distribution and the Merger, including any Astarte
Restructuring Document or any information statement referred to in Section
6.2(h) hereof, or similar document (collectively and as supplemented or amended
from time to time, "Stockholder Communications") will at the time of mailing of
--------------------------
any such Stockholder Communications, and at the time of any meeting of the
stockholders of Astarte contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made not misleading. Notwithstanding the foregoing, Astarte shall not have any
liability for any information (i) contained in the Tellium private placement
memorandum distributed to the Astarte Stockholders or (ii) included in the
Stockholder Communication at the express written direction of Tellium pursuant
to this Section 4.24(b). All of the Astarte Restructuring Documents as of the
date of this Agreement are attached hereto as Exhibit L or will be provided to
---------
Tellium prior to distribution to the Astarte Stockholders.
4.25. Investment Representations.
Schedule 4.25 sets forth the location (and address) where each holder of
Astarte Securities, to Astarte's Knowledge, is a resident, is domiciled, or
maintains its principal executive office.
4.26. Government Contracts.
Astarte is not, and, except as set forth on Schedule 4.26, the execution
and delivery of this Agreement by Astarte and the consummation of the
transactions contemplated by this Agreement will not result, in any material
violation, breach or default by Astarte of any term or provision of (i) any
agreement, contract or commitment with the United State Government or any state,
municipal or other local government or government entity, (ii) any subcontract
issued at any tier under a prime agreement, contract or commitment with the
United States Government or any state, municipal or other local government or
government entity or (iii) any bid, proposal or quotation relating to an
agreement, contract or commitment with the United States Government or any
state, municipal or other local government or governmental entity or a
subcontract issued under such an agreement, contract or commitment.
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4.27. Customers and Suppliers.
Schedule 4.27 lists (i) Astarte's 10 largest customers determined on the
basis of 1999 revenues and (ii) Astarte's 10 largest suppliers determined on the
basis of 1999 purchases. Except as disclosed on Schedule 4.27, since January 1,
2000, none of such customers has ceased or materially reduced its purchases from
or use of the services of Astarte or, to the knowledge of Astarte, has
threatened to cease or materially reduce such purchases or use and none of such
suppliers has reduced its sales to or provision of services to Astarte or, to
the knowledge of Astarte, has threatened to reduce its sales or provision of
services to Astarte. Except as disclosed on Schedule 4.27, to the knowledge of
Astarte, no such customer or supplier is threatened with bankruptcy or
insolvency or is owed any amount due or payable 30 days or more in arrears.
4.28. Indebtedness.
Except as set forth on Schedule 4.28, Astarte does not have any
outstanding Indebtedness. As of the Closing Date, the aggregate amount of
Astarte's outstanding Indebtedness (other than the capital leases listed as such
on Schedule 4.28) shall not exceed the sum of (i) Astarte's accounts receivable
listed on Schedule 4.28 under "Accounts Receivable" for which Astarte has not
received payment prior to the Closing, (ii) the amounts received on account of,
or receivable upon completion of, all purchase orders (or portions thereof)
listed on Schedule 4.28 under "Pending Orders" that Astarte has not delivered
under (or otherwise completely discharged its obligation in connection with) as
of the Closing ("Astarte Pending Orders"), which amounts receivable are set
----------------------
forth under "Pending Orders" on Schedule 4.28 opposite the corresponding Astarte
Pending Orders and shall be reduced by any amounts for which Astarte has
received payment prior to the Closing, (iii) the Indebtedness listed under
"Permitted Indebtedness" on Schedule 4.28 (the "Permitted Indebtedness"), which
----------------------
shall not in the aggregate exceed $3,400,000 and (iv) any cash reserves in
excess of the Cash Reserve Amount. Astarte has not defaulted, and no waiver of
default is currently in effect, in the payment of any principal or interest on
any such Indebtedness and no event or condition exists with respect to any such
Indebtedness that would permit (or that with notice or the lapse of time, or
both, would permit) one or more Persons to cause such Indebtedness to become due
and payable before its stated maturity or before its regularly scheduled dates
of payment.
4.29. No Other Representations and Warranties.
Except for the representations and warranties of Astarte contained in
Article IV of this Agreement, Astarte has not made, and Tellium is not relying
on, any representation or warranty with respect to Astarte or the transactions
contemplated by this Agreement.
Article V
---------
Representations and Warranties of Tellium and the Company
---------------------------------------------------------
Except as set forth in the disclosure schedule delivered by Tellium to
Astarte and dated as of the date above (the "Tellium Disclosure Schedule"),
---------------------------
Tellium and the Company hereby jointly and severally represent and warrant to
Astarte as set forth in this Article V. The Tellium Disclosure Schedule shall
be organized in paragraphs corresponding to the numbered sections in
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this Article V and the disclosures in every paragraph shall only qualify the
corresponding section in this Article V.
5.1. Corporate Existence and Power.
Each of Tellium and the Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and Colorado, respectively, and has all corporate power and authority necessary
to enable it to own, lease or otherwise hold its properties and assets and to
carry on its business as now conducted and proposed to be conducted. Tellium has
previously delivered to Astarte true and complete copies of the Certificate of
Incorporation and Bylaws of Tellium.
5.2. Corporate Authorization.
The execution, delivery and performance by Tellium and the Company of this
Agreement, the Supplemental Stockholders' Agreement, the Escrow Agreement and
all other agreements contemplated hereby and the consummation by Tellium and the
Company of the Merger and other transactions contemplated hereby and thereby,
are within the corporate power and authority of Tellium and the Company,
respectively, and, have been duly authorized by all necessary corporate action.
This Agreement has been duly and validly authorized, executed and delivered by
Tellium and the Company and, subject to its execution by the other parties
hereto, constitutes a valid and binding obligation of Tellium and the Company,
enforceable against Tellium and the Company in accordance with its terms. The
Supplemental Stockholders' Agreement, the Escrow Agreement and all other
agreements contemplated hereby have been duly and validly authorized by Tellium
and the Company and, upon execution and delivery by Tellium and the Company at
Closing and subject to execution by the other parties thereto, will constitute a
valid and binding obligation of Tellium and the Company, enforceable against
Tellium and the Company in accordance with their terms.
5.3. Consents and Approvals.
The execution, delivery and performance by Tellium and the Company of this
Agreement, the Supplemental Stockholders' Agreement, the Escrow Agreement and
all other agreements contemplated hereby and the consummation by Tellium and the
Company of the Merger and other transactions contemplated hereby and thereby, do
not and will not require any consent, approval or action by or in respect of, or
any declaration, filing or registration with, any Governmental Authority or
other third party, other than (i) routine filings with the Secretary of State of
the State of Colorado necessary to consummate the Merger, (ii) compliance with
the applicable requirements of the Securities Act, the Exchange Act and any
applicable state securities and "blue sky" laws in connection with the offering,
sale and delivery of the shares of Tellium Common Stock to be issued in the
Merger and (iii) consents, approvals, actions, declarations, filings or
registrations where the failure to obtain such consents, approvals, action, or
to make such declaration, filing or registration, would not have a Material
Adverse Effect on Tellium.
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5.4. Non-Contravention.
Except as set forth on Schedule 5.4, the execution, delivery and
performance by Tellium and the Company of this Agreement, the Supplemental
Stockholders' Agreement, the Escrow Agreement and all other agreements
contemplated hereby and the consummation by Tellium and the Company of the
Merger and other transactions contemplated hereby and thereby, do not and will
not, with or without the giving of notice, the lapse of time or both: (i)
contravene or conflict with the Certificate of Incorporation or Bylaws of
Tellium or Articles of Incorporation or Bylaws of the Company; or (ii)
contravene or conflict with or constitute a violation of any provision of any
law, rule, regulation, judgment, injunction, order or decree binding upon or
applicable to Tellium or the Company; (iii) require any consent, approval or
other action by any person, contravene or conflict with or constitute a
violation of or a default under, or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Tellium or to a loss
of any benefit to which Tellium is entitled, under any provision of (A) any
material agreement, contract, indenture, lease or other instrument binding upon
Tellium or (B) any material license, franchise, permit or other similar
authorization held by Tellium or (iv) except for the rights of any holders of
Dissenting Shares, result in the creation or imposition of any Lien on any asset
of Tellium.
5.5. Capitalization.
(a) As of the date of this Agreement, the authorized capital stock of
Tellium consisted of (i) 21,112,268 shares of Preferred Stock, par value $.001
per share (the "Tellium Preferred Stock"), 10,433,334 of which are designated
-----------------------
Series A Preferred Stock, 10,089,584 of which are issued and outstanding and
none of which are treasury shares, 250,000 of which are designated Series B
Preferred Stock, 233,333 of which are issued and outstanding and none of which
are treasury shares, 4,403,934 of which are designated Series C Preferred Stock,
2,564,465 of which are issued and outstanding and none of which are treasury
shares and 6,025,000 of which are designated Series D Preferred Stock, 6,010,926
of which are issued and outstanding and none of which are treasury shares and
(ii) 250,000,000 shares of Common Stock, par value $.001 per share, 22,961,973
of which were issued and outstanding and none of which are treasury shares. As
of the date of this Agreement, there were reserved for issuance an aggregate of
up to 32,925,000 shares of Common Stock under the Tellium Stock Option Plan and
an aggregate of 6,000,000 shares of Common Stock reserved for issuance pursuant
to options granted outside of the Tellium Stock Option Plan. As of the date of
this Agreement, there were reserved for issuance upon exercise of warrants (x)
an aggregate of up to 29,510 shares of Series C Preferred Stock and an aggregate
of up to 88,530 shares of Common Stock for issuance upon conversion of the
Series C Preferred Stock and (y) an aggregate of up to 5,226,000 shares of
Common Stock. As of the date of this Agreement, there are 56,694,924 shares of
Common Stock issuable on conversion of the outstanding Tellium Preferred Stock.
As of the date of this Agreement, except as disclosed on Schedule 5.5, there are
no options, warrants, exchange rights, subscription rights or other agreements,
commitments or rights to purchase or otherwise acquire from Tellium, or
agreements, commitments or obligations of Tellium to issue or sell, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Tellium, other than those contemplated by
this Agreement.
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(b) All issued and outstanding shares of Tellium Common Stock and Tellium
Preferred Stock are validly issued, fully paid and nonassessable, and have not
been issued in violation of any preemptive, first refusal or other subscription
rights of any stockholder of Tellium, the Company or any other Person.
(c) The authorized capital stock of the Company consists of 100 shares of
Common Stock, par value $0.01 per share, all of which are issued and outstanding
and owned beneficially and of record by Tellium.
5.6. Tellium Common Stock.
The shares of Tellium Common Stock to be issued and exchanged for shares
of Astarte Common Stock in the Merger will, at the Effective Time be duly
authorized, validly issued, fully paid and nonassessable and subject to no
preemptive rights or restrictions on transfer other than those required by Law
and those set forth in the Supplemental Stockholders' Agreement. Upon
consummation of the Merger and subject to the provisions of the Escrow Agreement
and the Supplemental Stockholders' Agreement, each holder of Astarte Common
Stock who participates in the Merger shall acquire good and valid title to all
the shares of Tellium Common Stock issued to such holder hereunder, free and
clear of any Encumbrance.
5.7. Absence of Material Adverse Effects.
Since December 31, 1999, Tellium has not, except as may result from the
transactions contemplated by this Agreement, suffered any Material Adverse
Effect.
5.8. Compliance With Laws; No Defaults.
Tellium is not in violation of or default under, and no condition exists
that with notice or lapse of time or both would constitute a violation of or
default under, any applicable provisions of any law, statute, ordinance,
regulation, judgment, order, injunction, permit, license, certificate or other
authorization, or its governing instruments, except for any violations, defaults
or conditions that have not had and could not reasonably be expected to have a
Material Adverse Effect on Tellium.
5.9. Finders' Fees.
Except as set forth in Schedule 5.9, there is no investment banker,
broker, finder or other intermediary that has been retained by or is authorized
to act on behalf of Tellium or the Company who might be entitled to any fee or
commission from Tellium or the Company or any other person upon consummation of
the transactions contemplated by this Agreement.
5.10. Taxes.
Tellium has (i) timely filed all Tax Returns required to be filed (taking
into account any extension of time within which to file any Tax Return that has
been granted by the relevant taxing authority) for all taxable periods ending on
or prior to the date hereof, and such Tax Returns are true, complete and correct
in all material respects, (ii) paid or accrued all material Taxes shown to be
due and payable on such Tax Returns, (iii) properly accrued all material
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Taxes for periods subsequent to the periods covered by such Tax Returns, and
(iv) disclosed on Schedule 5.10 all actions, suits, proceedings, investigations,
audits or claims now pending against it in respect of any Taxes.
5.11. Financial Statements.
Tellium has previously delivered to Astarte the following financial
statements (collectively, the "Tellium Financial Statements"):
----------------------------
(a) the audited balance sheet of Tellium as of December 31, 1998 and
December 31, 1999, and the related statements of operations, stockholders'
equity and cash flows for the periods from January 1, 1998 through December 31,
1998 and from January 1, 1999 through December 31, 1999, together with the notes
thereto, audited by, and accompanied by the report thereon, of Ernst & Young LLP
relating to 1998 and Deloitte & Touche LLP relating to 1999; and
(b) the unaudited balance sheet of Tellium as of March 31, 2000 (the
"Unaudited Tellium Balance Sheet") and the related statements of operations and
--------------------------------
cash flows for the three months then ended.
Each of the Tellium Financial Statements has been prepared in accordance
with generally accepted accounting principles applied on a consistent basis, is
correct and complete in all material respects and fairly presents in all
material respects the financial position of Tellium as of its date or the
results of operations or changes in financial position, as is appropriate, of
Tellium for the periods then ended (subject, in the case of unaudited interim
financial statements to normal recurring year-end adjustments, which adjustments
will not be material in amount or effect, and the absence of notes). The
accounting records underlying the Tellium Financial Statements accurately and
fairly reflect, in reasonable detail, the transactions of Tellium, reflect only
valid transactions, and fairly present in all material respects the basis for
the financial position, the results of operations, and the changes in financial
position set forth in the Tellium Financial Statements and Tellium's books of
account have been maintained on a consistent basis in accordance with acceptable
business practice. All accounts receivable of Tellium are valid and
enforceable, are not subject to any valid defense, set off or counterclaim, and
are collectible in all material respects in accordance with their terms in the
ordinary course of business of Tellium, except to the extent of any reserves
therefor reflected on the Unaudited Tellium Balance Sheet or taken in the
ordinary course of business which in the aggregate are not material to Tellium.
5.12. Subsidiaries.
Other than the Company, Tellium does not hold or own, directly or
indirectly, any capital stock or other equity securities of any other
corporation, or have any direct or indirect equity or ownership interest in any
association, partnership, joint venture or other entity.
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5.13. Continuity of Business Enterprise.
It is the present intention of Tellium to cause Astarte to use the
Acquired Properties in a business. Tellium has no present intent to liquidate
Astarte, to sell or otherwise dispose of the shares of Astarte, or to merge
Astarte with and into another legal entity.
5.14. Absence of Undisclosed Liabilities and Decrease in Assets.
Tellium does not have any Liabilities, except those Liabilities which are
(a) fully reflected or in the aggregate adequately reserved against in the
Unaudited Tellium Balance Sheet (including any notes thereto), (b) disclosed in
this Agreement or on Schedule 5.14 hereto, or (c) incurred in the ordinary
course of business and consistent with past practices and in the aggregate are
not material to Tellium. Since the date of the Unaudited Tellium Balance Sheet
there has been no decrease in the total assets or current assets of Tellium
other than in the ordinary course of business consistent with past practice.
5.15. Litigation.
Except as set forth on Schedule 5.15, there is no claim, action, suit,
investigation or proceeding pending or threatened against or affecting, Tellium
or the Company or any of their respective properties or assets before any court
or arbitrator or any Governmental Authority that, if adversely determined, would
have a Material Adverse Effect on Tellium or would impair the ability of Tellium
or the Company to consummate the transactions contemplated hereby.
5.16. Disclosure.
None of the representations and warranties of Tellium or the Company
contained herein or in the Schedules hereto contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances in
which it was made.
5.17. The Company.
The Company is a special purpose Subsidiary of Tellium organized solely
to effectuate the Merger, and the Company has no assets (other than the shares
of Tellium Common Stock which will be used as consideration for the Merger).
5.18. No Other Representations or Warranties.
Except for the representations and warranties of Tellium and the Company
contained in Article V of this Agreement, Tellium and the Company have not made,
and Astarte is not relying on, any representation or warranty with respect to
Tellium and the Company or the transactions contemplated by this Agreement.
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Article VI
----------
Covenants
---------
6.1. Mutual Covenants and Agreements.
Each of the parties hereby covenants and agrees with the other parties as
follows:
(a) Cooperation. It shall use commercially reasonable efforts to
cooperate fully with the other parties hereto in furnishing any information or
performing any action reasonably requested by any such party, which information
or action is necessary, appropriate or desirable to the successful consummation
of the transactions contemplated by this Agreement.
(b) Other Required Information. It shall furnish to the other parties
hereto any application or statement, and all information concerning itself and
its subsidiaries as is required to be set forth in any application or statement,
to be filed with any Governmental Authority in connection with the transactions
contemplated by this Agreement.
(c) Confidentiality. Astarte and Tellium have entered into
Confidentiality Agreements, dated April 15, 1999, February 28, 2000 and March
17, 2000 (the "Confidentiality Agreements") to protect, among other things,
--------------------------
the confidential information of the other party. The Company and Tellium each
hereby affirm each of their obligations under such agreements which shall
continue in full force and effect in accordance with its terms.
(d) Publicity. Except as required by applicable law, it shall not issue
any press release or make any other public statement concerning the transactions
contemplated by this Agreement without obtaining the prior approval of the other
parties hereto, which approval shall not be unreasonably withheld.
(e) Miscellaneous Agreements And Consents. Subject to the terms and
conditions provided in this Agreement, it shall use all commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, under applicable laws and regulations to consummate
the transactions contemplated by this Agreement. It will, and will cause each
of its subsidiaries to, use their respective commercially reasonable efforts to
obtain consents of all third parties and Governmental Authorities necessary, for
the consummation of the transactions contemplated by this Agreement and the
satisfaction of all closing conditions set forth in Article VIII.
(f) Tax Treatment of Merger. It will treat the Merger as a
reorganization within the meaning of I.R.C. (S) 368(a)(1); it will file Tax
Return statements in accordance with Treas. Reg. (S) 1.368-3 that are consistent
with such treatment; and will not take any Tax Return position that is
inconsistent with such treatment.
6.2. Certain Covenants of Astarte.
Astarte hereby covenants and agrees with Tellium and the Company, until
the Effective Time, as follows:
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(a) Preservation of Business Organization. Except as otherwise
contemplated by this Agreement, Astarte shall use its commercially reasonable
efforts to preserve the business organization of Astarte, its assets and
properties and its goodwill as to payors, providers, suppliers, distributors,
clients and others having business relations with Astarte. Astarte shall not
transfer any asset or property to AFN other than the loans referred to on
Schedule 4.13(vi) and the assignment of the Planar Array Applications and the
intellectual property pertaining to the Plan Array Applications pursuant to the
terms of the Patent Assignment.
(b) Carry On In Regular Course. Except as contemplated by this
Agreement, Astarte shall carry on its business in the ordinary course in a
manner consistent with its past practices and use commercially reasonable
efforts to maintain all of the material assets owned or used by Astarte in the
ordinary course of business consistent with past practice. Without limiting the
foregoing, Astarte shall (i) not make any capital expenditures in excess of
$10,000, (ii) maintain insurance policies in full force and effect substantially
comparable in amount, scope and coverage to that in effect on the date of this
Agreement, (iii) comply with all applicable Laws, except where failure to comply
would not have a Material Adverse Effect on Astarte and (iv) perform its
obligations under any agreements, contracts, commitments and Astarte Employee
Plans, including making all payments on a timely basis with respect to all
periods through the Closing, in each case to the extent required by each Astarte
Employee Plan, by each related trust or by law to be made to, or with respect
to, each Astarte Employee Plan (including all insurance premiums or intercompany
charges with respect to each Astarte Employee Plan), except where nonperformance
would not have a Material Adverse Effect on Astarte.
(c) Consents. Astarte shall use all commercially reasonable efforts to
obtain consents in writing to the transactions contemplated by this Agreement
and/or such amendments, assignments or modifications of such documents or
instruments as may be required in order that the transactions contemplated by
this Agreement shall not result in any default with respect to any law, rule,
regulation, order, decree, license, agreement, contract, commitment or
instrument to which Astarte is a party or by which Astarte, or any of its assets
is bound. Astarte shall use all commercially reasonable efforts to obtain in
writing all consents necessary to convert all of the Astarte Preferred Stock
into Astarte Common Stock pursuant to the terms applicable to the Series A
Astarte Preferred Stock and the Series B Astarte Preferred Stock within 10 days
of the date disclosure documents and solicitations relating to the Merger are
mailed to stockholders of Astarte.
(d) Capital Stock. Astarte shall not redeem, purchase or otherwise
acquire, any Astarte Securities, or agree to do any of the foregoing, except in
connection with (i) the Redemption and Distribution, (ii) the conversion of
Astarte Preferred Stock into Astarte Common Stock and (iii) the exercise of
Astarte Options (the "Pre-Closing Issuances"). Astarte shall not issue,
---------------------
deliver, sell or grant or authorize or propose the issuance, delivery, sale or
grant of, or purchase or propose the purchase of, any shares of its capital
stock or securities convertible into, or subscriptions, rights, warrants or
options to acquire, or other agreements or commitments of any character
obligating it to issue any such shares or other convertible securities, other
than (i) the issuance by Astarte of stock options that Astarte has disclosed on
Schedule 4.5 hereto and (ii) in connection with the Pre-Closing Issuances.
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(e) Other Actions. Astarte shall not (i) amend its Articles of
Incorporation or Bylaws, (ii) except in connection with the Redemption and
Distribution, declare, set aside or pay any dividend or otherwise make a
distribution with respect to any shares of capital stock of Astarte, or
repurchase, redeem or otherwise acquire any outstanding shares of capital stock
or other securities of, or other equity or ownership interests in, Astarte
(except for any conversion of its outstanding preferred stock), (iii) except as
set forth on Schedule 6.2(e), amend any term of any outstanding security of
Astarte, (iv) incur, assume or guarantee any indebtedness for borrowed money
other than in the ordinary course of business and in amounts and on terms
consistent with past practices, but in any event not exceeding an aggregate of
$50,000, (v) create or assume any Lien on any asset, (vi) except as disclosed in
Schedule 6.2(e), make any loan, advance or capital contributions to or
investment in any person, (vii) acquire any capital assets or any other
investments, (viii) except in connection with the Patent Assignment, the Corning
LOI and the Corning Agreement or the Texas Instruments LOI and the Texas
Instruments Agreement, sell, lease, pledge, transfer or dispose of any assets,
other than in the ordinary course of business (ix) except in connection with the
Patent Assignment, the Corning LOI and the Corning Agreement or the Texas
Instruments LOI and the Texas Instruments Agreement enter into any material
transaction or make any commitment or any material contract or material
agreement relating to its assets or business (including the acquisition or
disposition of any assets other than in the ordinary course of business) or
relinquish any material contract or other material right, (x) make or change any
election in respect of Taxes, adopt or change any method of accounting or
accounting practice in respect of Taxes (except with respect to any change
required under Section 448 of the Code in connection with the Merger), settle
any claim in respect of Taxes, or consent to any extension or waiver of the
limitation period applicable to any claim or assessment in respect of Taxes,
(xi) except as (A) disclosed on Schedule 6.2(e), (B) may be required by
applicable Law or (C) with respect to increases or changes occurring in the
ordinary course of business in accordance with its customary practices
(including normal periodic performance reviews and related compensation and
benefit increases), grant any severance or termination pay to any Astarte
Employee, enter into any new employment, severance, bonus, management,
consulting, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any Astarte Employee, change the benefits
payable under existing severance or termination pay policies or employment,
severance, bonus, management, consulting or other similar agreements or other
arrangements, change the compensation, bonus or other benefits payable to
Astarte Employees, or make any new grants of stock options to Astarte Employees,
(xii) enter into any partnership arrangements, joint development agreements or
strategic alliances, (xiii) except in connection with the Patent Assignment, the
Corning LOI and the Corning Agreement and the Texas Instruments LOI and the
Texas Instruments Agreement, transfer or license to any person or entity or
otherwise extend, amend or modify any rights to the Astarte Intellectual
Property Rights or enter into grants to future patent rights, (xiv) except in
connection with the Corning LOI and the Corning Agreement or the Texas
Instruments LOI or the Texas Instruments Agreement make any grant of exclusive
rights to any third party, (xv) except in connection with the Redemption, the
Distribution and the Employee Loans, enter into any transaction with any of its
stockholders or any affiliates of any of its stockholders, (xvi) except as may
be required by applicable Law or with respect to increases or changes occurring
in the ordinary course of business in accordance with its customary practices
(including normal periodic performance reviews and related compensation and
benefit increases), and except as
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contemplated in Sections 6.2(n), 6.2(o) and 6.2(p) amend any Astarte Employee
Plan, or (xvii) agree to do any of the foregoing.
(f) Access. Subject to the Confidentiality Agreement, Astarte shall
permit officers, employees, agents, attorneys and accountants and other
representatives of Tellium full access after reasonable notice during normal
business hours to the properties, books, contracts, commitments, tax returns,
examination reports of the IRS and other records of Astarte in connection with
and in furtherance of the transactions contemplated by this Agreement. Unless
prohibited by law or contract, such representatives of Tellium shall be
furnished with true, accurate and complete copies of such contracts, commitments
and other records and all other information with respect to the assets and
business of Astarte as such representatives may reasonably request. Prior to the
Effective Time, Astarte shall use its commercially reasonable best efforts to
deliver to Tellium any other documents or information reasonably requested by
Tellium as soon as practicable, but in any event within 10 days of such request.
(g) Documents and Information to be Furnished. Astarte shall deliver to
Tellium promptly at the end of each month, Astarte's unaudited financial reports
with respect to monthly and cumulative periods ending after July 31, 2000 and
all other documents, financial statements, budgets, proxy or information
statements, reports, correspondence, notices and other items Astarte delivers,
or is required to deliver, to any of its stockholders.
(h) Stockholder Consent. Astarte shall (i) hold a meeting on or prior
to September 15, 2000 for the purpose of obtaining the Stockholder Approval and
(ii) use all commercially reasonable efforts to obtain the consent or vote of
its stockholders owning at least 92% of each class or series of Astarte's issued
and outstanding capital stock entitled to vote on the Merger no later than
September 15, 2000 for the purpose of approving and adopting this Agreement
(including the transactions contemplated hereby). On or before September 1,
2000, or as promptly as practicable thereafter, Astarte shall mail to each
stockholder who was a stockholder on the record date for determining
stockholders entitled to vote, (i) a solicitation seeking the approval and
adoption of this Agreement (including the transactions contemplated hereby) of
the Astarte Stockholders, (ii) an information statement with respect to the
matters to be submitted for stockholder approval in such solicitation; and (iii)
a notice that dissenters rights are available for the shares of Astarte Common
Stock and Astarte Preferred Stock held by each such stockholder of Astarte or
issuable upon exercise of the Astarte Options, together with a copy of Article
113 of Title 7 of the Colorado Corporation Law, in satisfaction of Astarte's
obligations under Section ▇-▇▇▇-▇▇▇ of the Colorado Corporation Law. In
addition, such information statement shall be accompanied by such other
information provided by Tellium as Tellium deems necessary in order to provide
for the offer and sale of the Tellium Common Stock to be issued in the Merger to
be exempt from any applicable registration or qualification requirements under
either federal or state securities or "blue sky" laws. Astarte shall use all
commercially reasonable efforts to obtain all votes and approvals of its
stockholders necessary for the approval and adoption of this Agreement under the
Colorado Corporation Law (including the transactions contemplated hereby).
Notwithstanding any provision of this Agreement to the contrary, Astarte will
not mail or otherwise provide any information related to the Merger, this
Agreement or Tellium to any holder of Astarte Securities without the prior
written consent of Tellium, which consent will not be unreasonably withheld, it
being understood that it will not be unreasonable for Tellium to withhold its
consent (i) from any written distribution until such time
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as Investor Questionnaires, completed to the reasonable satisfaction of Tellium,
have been received from all holders of Astarte Securities or (ii) from any
mailing or other provision of information to any holder of Astarte Securities
from whom an Investor Questionnaire has not been received in a form reasonably
acceptable to Tellium; provided, however, that representatives of Astarte may
contact holders of Astarte's Securities to discuss Investor Questionnaires and
after receipt of an Investor Questionnaire, completed to the reasonable
satisfaction of Tellium, from a particular holder of Astarte's Securities,
Tellium's consent shall only be required for written communications with such
holder.
(i) Notices of Certain Events. Astarte shall promptly notify Tellium
of:
(i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(ii) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or proceedings
commenced relating to or involving or otherwise affecting Astarte or that relate
to the consummation of the transactions contemplated by this Agreement;
(iv) any request by an Astarte Employee who is a participant in
the Astarte 401(k) Plan for a distribution of his or her 401(k) account balance
or portion thereof; and
(v) any matter arising and discovered after the date of this
Agreement that, if existing or known on the date of this Agreement, would have
been required to be disclosed pursuant to this Agreement or that constitutes a
breach or prospective breach of this Agreement by Astarte or any of its
Affiliates.
(j) Accuracy of Representations And Warranties. Astarte shall not (a)
take or agree or commit to take any action that would make any representation
and warranty of Astarte hereunder inaccurate in any respect at, or as of any
time prior to, the Closing Date or (b) omit or agree or commit to omit to take
any action necessary to prevent any such representation or warranty from being
inaccurate in any respect at any such time provided that nothing in this Section
6.2(j) shall require Astarte to do anything that is commercially unreasonable.
(k) No Solicitation. Until the earlier of the Effective Time or
termination of this Agreement pursuant to its terms, Astarte shall not, and will
instruct its directors, officers, other employees, representatives, investment
bankers, agents and affiliates not to, directly or indirectly, initiate,
solicit, encourage or participate in discussions with, provide information to,
or approve a transaction with, any Person concerning any merger, purchase or
sale of substantial assets, sale of shares of capital stock (or securities
convertible or exchangeable or otherwise evidencing, or any agreement or
instrument evidencing, the right to acquire capital stock) or similar
transaction involving Astarte (all such transactions being referred to herein as
"Acquisition Proposals"). Astarte will immediately cease any and all existing
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activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. Astarte will (i) notify Tellium as
promptly as practicable if any inquiry or proposal is made or any information or
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access is requested in writing in connection with an Acquisition Proposal or
potential Acquisition Proposal and (ii) as promptly as practicable notify
Tellium of the significant terms and conditions of any such Acquisition
Proposal. In addition, subject to the other provisions of this Section 6.2(k),
from and after the date of this Agreement until the earlier of the Effective
Time and termination of this Agreement pursuant to its terms, Astarte will not,
and will instruct their respective directors, officers, employees,
representatives, investment bankers, agents and affiliates not to, directly or
indirectly, make or authorize any public statement, recommendation or
solicitation in support of any Acquisition Proposal made by any Person other
than Tellium.
(l) Grant of Temporary License. Astarte hereby grants to Tellium and
Tellium accepts, a non-exclusive, non-sub-licensable, non-transferable license
(the "Temporary License") to all of the Astarte Planar Array Rights, the
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Peripheral Patents and all other Astarte Intellectual Property Rights. Such
Temporary License shall extend only until the earlier of the (i) the Effective
Time or (ii) the termination of this Agreement pursuant to Section 9.1 and will
give Tellium the right to make, have made, use, sell, offer for sale and import
all inventions disclosed and/or claimed by the Astarte Intellectual Property
Rights and to use, display, make derivative works of and perform all works of
authorship fixed in any tangible media created by Astarte before the date of
this Agreement. Upon the termination of the Temporary License as the result of
the termination of this Agreement pursuant to Section 9.1, Tellium will have no
further right to use any of the Astarte Intellectual Property Rights and Astarte
will have full and uncontested ownership of all such Astarte Intellectual
Property Rights.
(m) Termination of Employees and Liabilities to Astarte Employees.
Until Closing, Astarte shall continue to make payments on a timely basis to the
Astarte Employee Plans to the extent required thereunder and shall continue to
pay any salary or other wages on a timely basis to Astarte Employees and
withhold all amounts required by Law or by agreement. Immediately prior to the
Closing, Astarte shall use commercially reasonable efforts to terminate the
employment by Astarte of any remaining Astarte Employees such that no Astarte
Employees are employed by Astarte immediately following the Closing and shall
pay all severance benefits to the extent required under any employment agreement
or any severance plan, policy or other similar agreement, including any
severance benefits due under ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇'▇ employment agreement dated
April 7, 1997 and any other severance payments due ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and shall
discharge any other past or present Liabilities to such Astarte Employees,
whether in connection with their termination or otherwise, including, to the
extent required, the payment in full of any accrued and unpaid salary or other
wages, any accrued and unpaid vacation pay, and unpaid bonuses (including the
One-Time Bonus Payment) and any amounts due (and the provision in full of any
benefits provided) under any Astarte Employee Plan (except as otherwise
contemplated hereunder). Any Astarte Employee may apply for employment with
Tellium, which shall be free to accept or reject such application in its sole
discretion.
(n) Consents Relating to the Astarte Stock Option Plan. On or prior to
the Closing, Astarte shall take all action necessary to effectuate certain
amendments or other actions required in connection with the Merger with respect
to the Astarte Stock Option Plan or other agreements, and such amendments and
other actions shall be completed on or prior to the Closing, including without
limitation: (i) (A) decreasing the exercise period of certain Astarte Options
held under the Astarte Stock Option Plan and the Astarte Options held by ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ under their non-qualified stock option grant
agreements, and (B) vesting Astarte Options
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(effective on the Closing or such earlier time as determined by Astarte in its
sole discretion); (ii) obtaining the consent (which shall be obtained through an
amendment to each individual option agreement under the Astarte Stock Option
Plan) of any such optionees required under the Astarte Stock Option Plan or non-
qualified stock option grant agreements with respect to the actions described in
clause (i); and (iii) providing written documentation satisfactory to Tellium
evidencing any such amendments or actions.
(o) Astarte 401(k) Plan. Until the Closing, Astarte shall take all
action reasonably requested by Tellium to cease Astarte's and Astarte Employees'
active participation in the Astarte 401(k) Plan for all purposes, and such
actions shall be completed on or prior to the Closing, including without
limitation, (i) adopting any amendments to the Astarte 401(k) Plan or taking any
other actions necessary to permit, effect or facilitate the cessation of future
contributions thereunder or, under terms reasonably agreed to between Astarte,
Inc. and Tellium, the transferring of all the account balances of Astarte
Employees to another tax-qualified plan designated by Tellium that is qualified
under Section 401(a) of the Code and that contains a cash or deferred
arrangement under Section 401(k) of the Code (the "Tellium 401(k) Plan"), (ii)
-------------------
distributing, or taking any such actions to permit, effect or facilitate any
distributions of, benefits under the Astarte 401(k) Plan to Astarte Employees
participating thereunder (or their beneficiaries) who have balances equal to
$5,000 or less, including the adoption of any amendments to the Astarte 401(k)
Plan to increase the cash-out limits provided thereunder from $3,500 to $5,000
and distributing any rollover notice and election forms required under Section
401(a)(31) of the Code, (iii) distributing, or taking any such action necessary
to permit, effect or facilitate any distributions of, account balances under the
Astarte 401(k) Plan to Astarte Employees (or their beneficiaries) with account
balances exceeding $5,000, to the extent permitted by Law, and (iv) using all
commercially reasonable efforts to notify all Astarte Employees (whether
terminated or not) who participate in the Astarte 401(k) Plan (or their
beneficiaries) of their rights thereunder, if any. On or prior to the Closing,
Astarte shall provide Tellium written documentation, reasonably satisfactory to
Tellium, evidencing any such action contemplated herein and shall provide
Tellium with such records and documents as Tellium may reasonably request with
respect to the Astarte 401(k) Plan and shall cooperate with Tellium (and cause
the trustees of the Astarte 401(k) Plan to cooperate with Tellium) to the extent
necessary to effect the actions contemplated herein.
(p) Termination of Welfare Plans. On or prior to the Closing, Astarte
shall take all action necessary to terminate their participation in the Welfare
Plans, except for the Astarte Flexible Benefit Plan, the Astarte Group Health
Plan, and the Astarte Disability Plan, and such actions shall be completed on or
prior to the Closing, and shall provide Tellium written documentation,
satisfactory to Tellium, evidencing such terminations. Prior to Closing,
Astarte shall use commercially reasonable efforts to take all action necessary
to notify Astarte Employees who are participants in the Welfare Plans (whether
such participant's employment has been terminated or not) of their rights with
respect to these plans, if any, and shall provide copies of any such notices to
Tellium. Tellium shall take all actions to maintain or cause the Surviving
Corporation to continue to maintain the Astarte Disability Plan, the Astarte
Flexible Benefit Plan and Astarte Group Health Plan (the "Astarte LTD and Health
Plans") on and after the Closing Date. Tellium or the Surviving Corporation
shall continue to maintain the Astarte Flexible Plan and Astarte Group Health
Plan for as long as is reasonably necessary to administer COBRA with regard to
such plans and to pay COBRA claims incurred on and after the Closing
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and other non-COBRA and COBRA claims incurred prior to the Closing but submitted
on or after the Closing. Tellium or the Surviving Corporation shall continue to
maintain the Astarte Long Term Disability Plan for as long as is reasonably
necessary to pay claims incurred with respect to disabilities occurring prior to
Closing but submitted on or after Closing. Tellium acknowledges that the
continued maintenance of Astarte LTD and Health Plans shall be implemented
through the Astarte LTD and Health Plans, as administered by Astarte, Inc.,
without any action taken by Tellium (unless reasonably requested or unless
Tellium deems it necessary).
(q) Continuing Obligations. Astarte shall continue to maintain, and
shall continue to perform all obligations required to be performed under, each
Astarte Employee Plan, including without limitation, paying any and all
contributions on a timely basis required to be paid to any Astarte Employee Plan
and administering all benefit claims and elections submitted thereunder. Astarte
shall act in a manner that shall not violate any applicable federal, state or
local Law (foreign or domestic) in any material respect.
(r) WARN Act. Astarte shall not effectuate, at anytime within the one
hundred and twenty (120) day period immediately prior to the Closing Date, an
employment action affecting any Astarte Employee that could reasonably be
expected to give rise to liability under the WARN Act and under applicable state
and local Laws. Astarte agrees to indemnify and hold harmless Tellium, the
Company, the Surviving Corporation, and each of their respective Affiliates from
any liability that arises under the WARN Act and under applicable state and
local Laws in connection with any action taken by Astarte with respect to any
Astarte Employee prior to the Closing Date.
(s) Corning Agreement. Astarte will use all commercially reasonable
efforts to enter into and to cause AFN LLC to enter into the Corning Agreement.
(t) Texas Instruments Agreement. Astarte will use all commercially
reasonable efforts to cause AFN LLC to enter into the Texas Instruments
Agreement.
(u) Laor Arbitration. At the request of the Stockholder Representative,
Astarte will promptly bring settlement negotiations or arbitration or litigation
proceedings against ▇▇▇▇▇▇ ▇▇▇▇ and all other necessary parties including Ita
Laor, Laor Technology Holdings, LLC and their Affiliates (collectively, the
"Laor Parties") to determine whether any payments are due or may become due to
-------------
the Laor Parties under the Laor Agreements. The Stockholder Representative will
control any such negotiation or proceeding. Tellium and/or the Surviving
Corporation shall be entitled to participate in any such negotiation or
proceeding at their own expense with counsel of their own choice and at their
own expense. AFN shall pay all costs and expenses (including legal fees)
related to any such negotiation or proceeding. No settlement shall be reached
and no proceeding shall be compromised or settled in any manner which might
materially and adversely affect the interests of Tellium or the Surviving
Corporation without the prior written consent of Tellium; provided, however,
that any settlement that contains a Laor Release and payment for which is
limited to any or all of the Specific Claim Shares (as defined in the Escrow
Agreement) shall be deemed not adverse to Tellium or the Surviving Corporation.
Notwithstanding anything in this Agreement to the contrary, the Stockholder
Representative shall not, without the written consent of Tellium, enter into a
settlement or settle or compromise
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any proceeding or consent to the entry of any judgment binding on Tellium or the
Surviving Corporation which does not include as an unconditional term thereof
the delivery by the Laor Parties to Tellium and the Surviving Corporation of a
written release from all Liability under the Laor Agreements by any Laor Party
named above (a "Laor Release"). The Stockholder Representative will keep Tellium
------------
promptly and reasonably informed of all developments relating to the settlement
negotiations and any proceedings, shall give Tellium or the Surviving
Corporation and its counsel copies of any documents relating to such negotiation
or proceeding, and shall permit them to consult, during normal business hours,
with him and his counsel regarding such negotiation or proceeding.
(v) Bonus Payments. On or prior to the Closing, Astarte shall use its
commercially reasonable efforts to obtain written releases signed by all of such
Astarte Employees who are entitled to a One-Time Bonus Payment, which releases
shall state that Astarte has discharged in full its obligations with respect to
any such payment. If obtained, Astarte shall provide copies of the releases
described in the preceding sentence to Tellium on or prior to the Closing.
(w) List of Employees. Prior to the Closing, Astarte shall provide
Tellium a list of all persons to whom notice is required to be sent under any of
the Astarte Employee Plans, which list shall include the names of any and all
Astarte Employees employed by Astarte as of June 20, 2000.
6.3. Covenants of Tellium and the Company.
Tellium and the Company hereby covenant and agree with Astarte as follows:
(a) Consents. Tellium shall use all reasonable efforts to obtain
consents in writing to the transactions contemplated by this Agreement and/or
such amendments, assignments or modifications of such documents or instruments
as may be required in order that the transactions contemplated by this Agreement
shall not result in any default with respect to any law, rule, regulation,
order, decree, license, agreement, contract, commitment or instrument to which
Tellium is a party or by which Tellium or any of its assets is bound.
(b) Notices Of Certain Events. Tellium shall promptly notify Astarte
of:
(i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(ii) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or proceedings
commenced relating to or involving or otherwise affecting Tellium or any of its
subsidiaries that, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Article V or that relate to the
consummation of the transactions contemplated by this Agreement; and
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(iv) any matter arising and discovered after the date of this
Agreement that, if existing or known on the date of this Agreement, would have
been required to be disclosed pursuant to this Agreement or that constitutes a
breach or prospective breach of this Agreement by Tellium or the Company.
(c) Continuity of Business Enterprise. Tellium will cause Astarte to
use the Acquired Properties in a business, except that Astarte may transfer the
Acquired Properties to a member of Tellium's "qualified group" within the
meaning of Treas. Reg. (S) 1.368-1(d)(4)(ii).
(d) Use of Special Reserve Account. Tellium shall cause the Surviving
Corporation to set aside the funds in the Special Reserve Account in order to
satisfy all cash obligations of the Surviving Corporation relating to Dissenting
Shares until such time as (i) no Dissenting Shares remain eligible for
dissenters rights and (ii) all cash obligations with respect to Dissenting
Shares have been paid in full.
(e) Discharge of Certain Obligations. Tellium shall cause the Surviving
Corporation to apply against any outstanding Permitted Indebtedness for which
any Astarte Stockholder or its Affiliates has personal liability all payments
received after the Closing Date from (a) accounts receivable described in clause
(i) of Section 4.28 and (b) amounts receivable on Astarte Pending Orders,
promptly upon receipt of such payments.
6.4. Certain Tax Matters.
(a) Tax Returns for Periods Ending on or Prior to Closing. The Astarte
Stockholders, acting by and through the Stockholder Representative, shall
prepare all Tax Returns (each a "Pre-Closing Tax Return") related to Astarte for
----------------------
all periods ending on or prior to the Closing Date (a "Pre-Closing Tax Period").
----------------------
The Stockholder Representative shall provide Tellium with a draft of each such
completed Pre-Closing Tax Return which is required to be filed for a taxable
year (including a short taxable year ending on the Closing Date) at least 30
days prior to the due date (including extensions) for the filing of such Pre-
Closing Tax Return for Tellium's review and comment. Tellium shall provide any
comments to the Stockholder Representative concerning such Pre-Closing Tax
Return within 15 days after receiving such Pre-Closing Tax Return. The
Stockholder Representative shall consider in good faith the comments provided by
Tellium but, if Astarte files the Section 6501 Disclosure Statement, the
Stockholder Representative shall not be required to change the draft Pre-Closing
Tax Return in response to Tellium's comments unless Tellium reasonably
determines that any position taken on such Pre-Closing Tax Return (A) has no
"reasonable basis" within the meaning of Treas. Reg. (S) 1.6662-3(b)(3), (B)
could reasonably result in an omission of gross income in excess of 25% of the
amount of gross income stated in the return (excluding from any such omission
(i) if the Section 6501 Disclosure Statement is filed with the federal Income
Tax Return for Astarte for the short taxable year ending on the Closing Date,
any items of gross income resulting from or arising out of the Distribution and
(ii) any other amount which is disclosed in the Pre-Closing Tax Return or in a
statement attached to the Pre-Closing Tax Return in a manner adequate to satisfy
the disclosure requirements of Code Section 6501(e)(1)(A)(ii)), or (C) would
unreasonably defer the recognition of taxable income until after the Effective
Time. The Stockholder Representative and Tellium shall endeavor in good faith
to agree on Pre-Closing Tax Return positions as to which any of (A), (B) and
(C), above are reasonably alleged by Tellium to be applicable. If
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Tellium and the Stockholder Representative cannot agree on finalizing such Pre-
Closing Tax Return, Tellium and the Stockholder Representative shall refer the
matter to an independent "Big-Five" accounting firm agreed to by Tellium and the
Stockholder Representative to arbitrate the dispute. Such accounting firm shall
be instructed to modify the draft Pre-Closing Tax Return prepared by the
Stockholder Representative to the minimum extent necessary to avoid any position
to which any of (A), (B) or (C) could apply. Tellium and the Stockholder
Representative shall equally share the fees and expenses of such accounting firm
and its determination shall be binding on all parties. Upon finalization,
Tellium shall cause the Surviving Corporation to execute and timely file with
the appropriate Tax authority any such Pre-Closing Tax Return received from the
Stockholder Representative and pay the Tax shown thereon as due, subject to any
rights of indemnification under Article X. Any review or comment by Tellium on a
Pre-Closing Tax Return shall not impair or waive any of Tellium's rights to
indemnification under Article X.
(b) Section 6501 Disclosure Statement, Tax Attributes and Closing-of-
the-Books Election. In preparing Pre-Closing Tax Returns, the Astarte
Stockholders, acting by and through the Stockholder Representative, shall (i)
attach the Section 6501 Disclosure Statement to Astarte's federal Income Tax
Return for the short taxable year ending on the Closing Date and prepare such
Tax Return in a manner consistent with the Section 6501 Disclosure Statement,
and (ii) shall utilize all available tax carryforwards and other tax attributes
in determining the Taxes due, if any, on each such Pre-Closing Tax Return.
Astarte Stockholders, acting by and through the Stockholder Representative,
shall file an election under Treas. Reg. (S) 1.382-6(b) in accordance with the
requirements of Treas. Reg. (S) 1.382-6(b)(2) to allocate the net operating loss
or taxable income and the net capital loss or modified capital gain income of
Astarte as if Astarte's books were closed at the Effective Time.
(c) Cooperation and Exchange of Information. Tellium shall receive all
Tax-related books, records, receipts, documents, work papers, rulings,
determinations, audit letters, court papers, correspondence, and other
information of or pertaining to Astarte relating to periods ending on, before or
including the Closing Date ("Tax Records"). The Astarte Stockholders may retain
-----------
copies of the Tax Records. Tellium and Astarte shall provide each other with
such cooperation and information (including copies of Tax Records) as either of
them reasonably may request of the other in conducting due diligence, filing any
Tax Return, including any amended Tax Return or claim for refund, determining a
liability for Taxes or a right to a refund of Taxes, or participating in or
conducting any Tax proceeding. Any information obtained under this Section
6.4(c) shall be kept confidential except as may be otherwise necessary in
connection with the preparation or filing of any Tax Return or any Tax
proceeding.
(d) Filing of Amended Returns and Control of Tax Proceedings. The
Astarte Stockholders, at their own expense, shall in their sole discretion
determine whether to file any amended Pre-Closing Tax Return and how to handle
any Tax audit with respect to a Pre-Closing Tax Return; provided that the
Astarte Stockholders shall not, without the prior written consent of Tellium,
which consent shall not be unreasonably withheld, make or cause to be made, any
such filing, to the extent such filing, if accepted, reasonably might be
expected to increase by more than an immaterial amount the Tax liability of
Astarte for any Tax period. The Astarte Stockholders, at their own expense,
shall in their sole discretion determine whether to contest, protest, litigate
or settle any Tax proceeding with respect to Pre-Closing Tax Periods, except
that
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(i) the Astarte Stockholders shall not consent to any settlement of issues
relating to Astarte (A) that reasonably might be expected to have an adverse
effect on the Taxes of Astarte in any period after the Closing Date, or (B) for
an amount in excess of the Escrow Shares valued at the Fixed Value (as defined
in the Escrow Agreement), without Tellium's consent which consent shall not be
unreasonably withheld and (ii) the Astarte Stockholders shall not withhold their
consent to any offer to settle issues relating to Astarte if such refusal to
consent reasonably might be expected to cause Taxes to exceed by more than an
immaterial amount the Escrow Shares valued at the Fixed Value (as defined in the
Escrow Agreement) plus $3,500,000 (reduced by any amount that previously has
been applied to other Taxes payable by Tellium, the Company or the Surviving
Corporation that otherwise would have been indemnifiable under section
10.2(a)(iii) but for the reference to $3,500,000 contained therein). Tellium
shall have the right to participate in any such Tax proceeding, at its own
expense. Tellium shall not file or allow the Surviving Corporation to file any
amended Tax Return for any Pre-Closing Tax Period without the prior written
consent of the Stockholder Representative which consent shall not be
unreasonably withheld. Tellium shall cause the Surviving Corporation to execute
such powers of attorney or similar instruments as the Astarte Stockholders shall
reasonably request to conduct any such Tax proceedings or file such amended Pre-
Closing Tax Returns.
(e) Refund Rights. The Astarte Stockholders shall be entitled to any
refund of Taxes with respect to Pre-Closing Tax Periods. For purposes of the
preceding sentence and Section 10.2(a)(iii), in the case of any Tax imposed on a
periodic basis for any Taxable period that includes (but does not begin on) the
Closing Date, the portion of Taxes which relate to the portion of such Taxable
period ending on or before the Closing Date shall (a) in the case of any Taxes
other than Income Taxes, be deemed to be the amount of such Tax for the entire
Taxable period multiplied by a fraction, the numerator of which is the number of
days in the Taxable period before the Closing Date and the denominator of which
is the number of days in the entire taxable period; and (b) in the case of any
Income Tax, be deemed equal to the amount which would be payable if the relevant
Taxable period closed on the date immediately before the Closing Date.
(f) Straddle Tax Returns. Tellium shall prepare all Tax Returns (each
a "Straddle Tax Return") related to Astarte for all periods commencing before
--------------------
and ending after the Closing Date (a "Straddle Tax Period"). Tellium shall
-------------------
provide the Stockholder Representative with a draft of each such completed
Straddle Tax Return which is required to be filed for a Straddle Tax Period at
least 30 days prior to the due date (including extensions) for the filing of
such Straddle Tax Return for the Stockholder Representative's review and
comment. The Stockholder Representative shall provide any comments to Tellium
concerning such Straddle Tax Return within 15 days after receiving such Straddle
Tax Return. To the extent permitted by applicable law and solely with respect to
items attributable to Pre-Closing Tax Periods, Tellium shall prepare each
Straddle Tax Return in a manner consistent with the federal Income Tax Return
for Astarte for the short taxable year ending on the Closing Date. Subject to
the preceding sentence, Tellium shall accept any reasonable comments provided by
the Stockholder Representative to the extent such comments relate solely to
items attributable to Pre-Closing Tax Periods, provided, however, if Tellium
does not agree that a comment provided by the Stockholder Representative is
reasonable, Tellium and the Stockholder Representative shall refer the matter to
an independent "Big-Five" accounting firm agreed to by Tellium and the
Stockholder Representative to arbitrate the dispute. Tellium and the Stockholder
Representative shall equally
-57-
share the fees and expenses of such accounting firm and its determination shall
be binding on all parties. Upon finalization, Tellium shall cause the Surviving
Corporation to execute and timely file with the appropriate Tax authority any
such Straddle Tax Return and pay the Tax shown thereon as due, subject to any
rights of indemnification under Article X. Tellium's preparation of any Straddle
Tax Return shall not impair or waive any of Tellium's rights to indemnification
under Article X.
6.5. Covenants relating to Astarte Pending Orders.
AFN LLC hereby covenants and agrees with Tellium and the Surviving
Corporation that it shall take all action necessary after the Closing to
discharge in a timely manner all delivery and other obligations of Astarte under
the Astarte Pending Orders. Within five days of the collection of any amounts
receivable with respect to such obligations, AFN LLC shall submit to Tellium a
notice setting forth its actual labor and other out-of-pocket costs necessary to
perform such obligations together with evidence thereof and shall pay to Tellium
in cash an amount equal to the excess, if any, of (i) the amounts receivable
collected under "Pending Orders" on Schedule 4.28 (as updated immediately prior
to the Closing) over (ii) the actual costs set forth in such notice; provided,
however, that the Surviving Corporation shall provide AFN LLC with parts in its
possession and reasonable use of its existing space necessary to make such
delivery.
Article VII
-----------
Closing Matters
---------------
7.1. The Closing.
Subject to the satisfaction or waiver of all conditions precedent set forth
in Article VIII, the closing of the Merger (the "Closing") shall be held at the
-------
offices of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ no later than seven business days after
all conditions precedent set forth in Article VIII have been satisfied or as
soon as thereafter as practicable (the "Closing Date"). If any condition in
------------
Article VIII is not satisfied (or is not duly waived) at the Closing, any party
whose obligations are subject to such condition may, subject to Section 9.1(b),
extend the period in which the Closing must be consummated (during which period
each other party shall use its respective commercially reasonable efforts to
cause all such conditions to be satisfied in all material respects). If all
conditions are determined to be satisfied (or are duly waived) at the Closing
(whether or not delayed), the Closing shall be consummated by the making of all
necessary filings with the Secretary of State of Colorado under the Colorado
Corporation Law.
7.2. Documents and Certificates.
Each of Tellium, the Company and Astarte shall use all commercially
reasonable efforts, on or prior to the Closing, to execute and deliver all such
instruments, documents or certificates as may be necessary or advisable, on the
advice of counsel, for the consummation at the Closing of the transactions
contemplated by this Agreement or to cause the Effective Time, subject to
consummation at the Closing, to occur as soon as practicable.
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Article VIII
------------
Conditions of Closing
---------------------
8.1. Conditions to Obligations of Tellium, the Company and Astarte.
Except as may be waived by Tellium, the Company, and Astarte, the
obligations of each of Tellium, the Company and Astarte under this Agreement to
cause the Merger to be consummated are subject to the satisfaction of the
following condition:
(a) No Litigation. None of the parties hereto shall be subject to any
order or injunction of a court of competent jurisdiction or any applicable law,
rule, regulation or decree restraining, enjoining or prohibiting consummation of
the Merger or placing any limitation upon such consummation or invalidating,
suspending or requiring modification of any provision of this Agreement.
(b) Stockholder Approval. This Agreement shall have been approved and
adopted by the requisite vote of the Astarte Stockholders, if required by
applicable law and the governing documents of Astarte, in order to consummate
the Merger and the other transactions contemplated herein.
(c) Statutes. No statute, rule, order, decree or regulation shall have
been enacted or promulgated by any foreign or domestic Governmental Authority of
competent jurisdiction which prohibits the consummation of the Merger.
8.2. Conditions Applicable to Tellium and the Company.
Except as may be waived by Tellium and the Company, the obligations of
Tellium and the Company under this Agreement to cause the Merger to be
consummated are subject to the satisfaction of the following conditions, in
addition to the condition contained in Section 8.1:
(a) Agreements and Covenants. Astarte shall have performed or complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by Astarte on or prior to the Closing
Date.
(b) Accuracy of Representations And Warranties. The representations and
warranties of Astarte contained in this Agreement and in any document delivered
in connection herewith shall be true and correct in all material respects as of
the Closing Date, except that representations and warranties that themselves
include a materiality qualification shall be true and correct as of the Closing
Date.
(c) No Material Adverse Effect. Since the date of this Agreement, Astarte
shall have not suffered any Material Adverse Effect.
(d) Officers' Certificate. Astarte shall have furnished to Tellium and the
Company (i) a certificate dated the Closing Date, signed by its chairman, its
chief executive officer or its principal financial officer, to the effect that
the conditions set forth in Sections 8.2(a) through
-59-
8.2(c) have been satisfied and (ii) certified copies of resolutions duly adopted
by Astarte's Board of Directors and stockholders and in the case of AFN LLC
certified copies of consents or resolutions or other organizational documents
duly adopted by AFN LLC's managing members and members evidencing the taking of
all corporate action necessary to authorize the execution, delivery and
performance of this Agreement and all Ancillary Agreements and the consummation
of the transactions evidenced hereby.
(e) Opinion of Counsel. Tellium and the Company shall have received from
Proskauer Rose LLP and ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to Astarte, opinions
dated the Closing Date, in substantially the forms attached hereto as Exhibits
--------
E-1 and E-2.
--- ---
(f) Consent of Accountants. Tellium shall have received the consent of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP with respect to its future use of Astarte's audited
Financial Statements and such accountant's certificate thereto.
(g) Required Consents. All Required Consents and all consents listed on
Schedule 5.4 shall have been filed, accrued, or been obtained, other than those
consents which the failure to obtain do not individually or in the aggregate
result in a Material Adverse Effect. Tellium and the Company shall have
received all state securities or blue sky permits and other authorizations
necessary to offer, sell and issue Tellium Common Stock pursuant to the Merger
and other terms of this Agreement and shall have qualified such offer, sale and
issuance for exemption under the Securities Act.
(h) Approval. Holders of 92% or more of the outstanding shares of Astarte
Common Stock and Astarte Preferred Stock shall have consented to, or voted at a
duly called stockholders meeting in favor of, this Agreement and the Merger in
accordance with the Colorado Corporation Law.
(i) Tax Certificate. Astarte shall have paid any sales, use, transfer and
documentary Taxes and recording and filing fees applicable to the transactions
set forth in this Agreement and the Redemption Agreements. Astarte shall have
delivered to Tellium a properly executed statement satisfying the requirements
of Treas. Reg. Section 1.1445-2(c)(3) in a form reasonably acceptable to
Tellium.
(j) Supplemental Stockholders' Agreement; Voting Agreement. The
stockholders of Astarte listed on Exhibit A to the Form of Supplemental
Stockholders' Agreement attached hereto as Exhibit A shall have entered into the
---------
Supplemental Stockholders' Agreement and the Astarte Stockholders named in the
Voting Agreement shall have entered into the Voting Agreement in the form
attached hereto as Exhibit F.
---------
(k) Redemption Agreements. If a Redemption shall have occurred, Astarte
and the other parties to the redemption in substantially the form annexed hereto
as Exhibit O (the "Redemption Agreements") or pursuant to other documents
--------- ---------------------
reasonably satisfactory to Tellium shall have performed their respective
obligations with respect to the Distribution pursuant to the Redemption
Agreements.
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(l) Noncompetition Agreements. ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and AFN LLC
shall have entered into Noncompetition Agreements in the form attached hereto as
Exhibit G (collectively, the "Noncompetition Agreements").
--------- -------------------------
(m) Resolution of Texas Instruments Patent Dispute. AFN LLC and Texas
Instruments shall have entered into an agreement in a form reasonably
satisfactory to Tellium (the "Texas Instruments Agreement"); provided, however,
---------------------------
that the Texas Instruments Agreement will be deemed to be satisfactory to
Tellium if it contains no term or condition or agreement materially less
favorable to Tellium than the terms and conditions set forth in the Texas
Instruments LOI.
(n) Corning Agreement. Astarte, AFN LLC and Corning, Inc. shall have
entered into an agreement in a form reasonably satisfactory to Tellium (the
"Corning Agreement"); provided, however, that the Corning Agreement shall be
------------------
deemed to be satisfactory to Tellium if it contains no term or condition or
agreement materially less favorable to Tellium than the terms and conditions set
forth in the Corning LOI.
(o) Delivery of Books and Records. Astarte shall have delivered all of its
books and records to Tellium, including the originals of (i) all corporate and
other records of Astarte, including minute books, stock books, stock transfer
registers, books of account, leases, contracts and financial statements and (ii)
such other of its documents as reasonably requested by Tellium.
(p) Escrow Agreement. Astarte and the Stockholder Representative shall
have entered into the Escrow Agreement.
(q) Option Agreements. AFN LLC and Tellium shall have entered into the
Option Agreements substantially in the form attached hereto as Exhibits H-1, H-2
------------ ---
and H-3 for the United States, European Patent Office, Japan and any other
---
countries or regions designated and/or elected under the International
Convention, including those countries and regions designated in International
Application Number PCT/US99/12550.
(r) Patent Assignment. AFN LLC and Astarte shall have entered into the
Patent Assignment.
(s) Cash Requirement. Astarte shall have wired an amount in cash not less
than the sum of (A) $3,500,000, (B) the aggregate amount of the Permitted
Indebtedness outstanding at the Effective Time and (C) any other Indebtedness in
excess of the amounts covered by Section 4.28 (i) and (ii) with respect to which
Astarte has not furnished to Tellium evidence of payment, satisfactory to
Tellium in its reasonable discretion, prior to the Effective Time (such sum, the
"Cash Reserve Amount") to an account of Astarte (the "Special Reserve Account")
------------------- -----------------------
designated by Tellium prior to the Closing.
(t) Exercise of Astarte Options and Conversion of Astarte Preferred Stock.
All Astarte Options, including those held by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇,
shall have been exercised or forfeited prior to or effective as of the Effective
Time. All of the Astarte Preferred Stock shall have been converted into Astarte
Common Stock pursuant to the terms applicable to the Series A Astarte Preferred
Stock and the Series B Astarte Preferred Stock. AFN LLC shall have released
Astarte from any guarantees or contingent liabilities in connection with any
loans
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made by AFN LLC to holders of Astarte Options in connection with exercises of
such Astarte Options.
(u) Termination of Employees and Discharge of Liabilities. Astarte shall
have taken any and all actions necessary to effectuate Sections 6.2(n), 6.2(o)
and 6.2(p).
(v) Finders. The Persons listed on Schedule 4.23 shall have been paid in
full and shall have provided releases to Astarte in a form reasonably acceptable
to Tellium of all obligations.
(w) License. AFN LLC and Tellium shall have entered into a License
Agreement substantially in the form attached hereto as Exhibit P (the "License
-------
Agreement").
---------
(x) Laor. AFN LLC shall have assumed the Laor Agreements with respect to
the Astarte Planar Array Rights in a form reasonably acceptable to Tellium.
(y) Valuation Report. Astarte shall have obtained the Valuation Report in
a form and substance reasonably acceptable to Tellium and which Valuation Report
sets a value of AFN LLC not to exceed $60,000,000 or, if the Valuation Report
sets forth a range of values, the upper end of which does not exceed
$60,000,000.
(z) Release of Lakeside Bank Lien. Astarte shall have delivered to Tellium
copies of documents reasonably acceptable to Tellium, including a UCC-3
Termination Statement, unconditionally releasing all Liens on any assets of
Astarte held by Lakeside Bank.
(aa) Loan Contributions. Astarte shall have contributed to AFN LLC any of
the loans referred to on Schedule 4.13(vi) that have not been repaid prior to
the Closing.
8.3. Conditions Applicable to Astarte.
Except as may be waived by Astarte, the obligations of Astarte under this
Agreement to cause the Merger to be consummated are subject to the satisfaction
of the following conditions, in addition to the condition contained in Section
8.1:
(a) Agreements and Covenants. Tellium and the Company shall have performed
or complied with all agreements and covenants required by this Agreement to be
performed or complied with by them on or prior to the Closing Date.
(b) Accuracy of Representations And Warranties. The representations and
warranties of Tellium and the Company contained in this Agreement and in any
document delivered in connection herewith shall be true and correct in all
material respects as of the Closing Date, except that representations and
warranties that themselves include a materiality qualification shall be true and
correct as of the Closing Date.
(c) No Material Adverse Effect. Since the date of this Agreement, neither
Tellium nor the Company shall have suffered any Material Adverse Effect.
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(d) Officer's Certificate Concerning This Agreement. Tellium shall have
furnished to Astarte (i) a certificate dated the Closing Date, signed by the
chief financial officer of Tellium, to the effect that, the conditions set forth
in Sections 8.3(a) through 8.3(c) hereof have been satisfied and (ii) certified
copies of resolutions duly adopted by Tellium's and the Company's Board of
Directors and the stockholders of the Company evidencing the taking of all
corporate action necessary to authorize the execution, delivery and performance
of this Agreement and the consummation of the transactions evidenced hereby.
(e) Opinion Of Counsel. Astarte shall have received from Fried, Frank,
Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C. counsel to Tellium,
opinions dated the Closing Date, in substantially the forms attached hereto as
Exhibits J-1 and J-2.
------------ ---
(f) Required Consents. Other than any necessary filings with the Secretary
of State of the State of Colorado as described in Article VII, all
authorizations, orders, approvals of, or declarations or filings with, or
expirations or terminations of waiting periods imposed by any government or
governmental entity, and all required third party consents, the failure to
obtain which would have a Material Adverse Effect in respect of Tellium, shall
have been filed, occurred, or been obtained.
(g) Supplemental Stockholders' Agreement, Etc. Tellium shall have executed
and delivered the Supplemental Stockholders' Agreement, the Escrow Agreement and
the Option Agreements.
(h) Corning Agreement. Corning, Inc. shall have executed and delivered,
and consummated the transactions to be consummated by Corning, Inc. at or prior
to the Closing Date set forth in the Corning Agreement.
Article IX
----------
Termination
-----------
9.1. Termination.
This Agreement may be terminated at any time prior to the Effective Time of
the Merger (whether before or after approval of the Merger by the stockholders
of Astarte):
(a) by mutual written consent duly authorized by the Boards of Directors
of Tellium and Astarte;
(b) by either Astarte or Tellium, if the Merger shall not have been
consummated by September 30, 2000; provided, however, that the right to
terminate this Agreement under this Section 9.1(b) shall not be available to any
party whose action or failure to act has been a principal cause of or resulted
in the failure of the Merger to occur on or before such date and such action or
failure to act constitutes a breach of this Agreement;
(c) by either Astarte or Tellium, if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or
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taken any other action, in any case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger, which order, decree
or ruling is final and nonappealable;
(d) by Tellium, upon a material breach of any representation, warranty,
or covenant on the part of Astarte set forth in this Agreement; provided,
however, that if the breach is capable of cure and Astarte cures such breach
within the lesser of thirty days from the date it receives notice of the failure
from Tellium and the period ending on the Closing Date, then Tellium may not
terminate this Agreement and the transactions contemplated hereby by reason of
such breach;
(e) by Astarte, upon a material breach of any representation, warranty,
or covenant on the part of Tellium set forth in this Agreement; provided,
however, that if the breach is capable of cure and Tellium cures such breach
within the lesser of thirty days from the date it receives notice of the failure
from Astarte and the period ending on the Closing Date, then Astarte may not
terminate this Agreement and the transactions contemplated hereby by reason of
such breach; or
(f) by Tellium, if the Stockholder Approval is not obtained on
or prior to September 15, 2000.
9.2. Notice of Termination; Effect of Termination.
Any termination of this Agreement under Section 9.1 above will be
effective immediately upon the delivery of written notice of the terminating
party to the other parties hereto. In the event of the termination of this
Agreement as provided in Section 9.1, this Agreement shall be of no further
force or effect, except (i) as set forth in this Section 9.2, Sections 6.1(c),
6.1(d), 9.3 and Article XI (Miscellaneous), each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from Liability for any breach of this Agreement. No termination of this
Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreement, all of which obligations shall survive termination of
this Agreement in accordance with their terms.
9.3. Procedure Upon Termination.
In the event of the termination of this Agreement, the Board or Boards of
Directors so terminating may direct its or their officers not to file the
Articles of Merger with the Secretary of State of the State of Colorado,
notwithstanding favorable action by the stockholders of Tellium, the Company and
Astarte.
Article X
---------
Indemnification
---------------
10.1. Survival.
The representations and warranties set forth in Article IV of this
Agreement shall expire, together with any associated right of indemnification,
on the expiration of twelve months after the Effective Time, except that the
representations and warranties set forth in (i) Sections 4.5 and-64-
4.22(g) shall survive indefinitely, and (ii) Section 4.16 shall expire six years
after the filing of the federal Income Tax Return for Astarte for the short
taxable year ending on the Closing Date; provided, however, that if the Astarte
Stockholders, acting by and through the Stockholder Representative, prepare and
attach the Section 6501 Disclosure Statement, such representations and
warranties shall expire three years after the filing of the federal Income Tax
Return for Astarte for the short taxable year ending on the Closing Date,
provided further, however, that the six and three years periods referenced in
this subsection (iii) shall be increased to include any extensions of the
statute of limitations agreed to by Astarte Stockholders, acting by and through
the Stockholder Representative. The representations and warranties set forth in
Section 5.5 of this Agreement shall expire, together with any associated right
of indemnification, on the earlier of (x) twelve months after the Effective Time
or (y) 30 days following the consummation of an Initial Public Offering. After
the expiration of the applicable periods described above, any claim by a party
based upon any such representation or warranty shall be of no further force and
effect, except to the extent a party has asserted a claim in accordance with
this Article X for breach of any such representation or warranty prior to the
expiration of such period, in which event any representation or warranty to
which such claim relates shall survive with respect to such claim until such
claim is resolved as provided in this Article X.
10.2. Indemnification by Astarte Stockholders and ▇▇▇▇ ▇. ▇▇▇▇.
(a) Scope of Astarte's Stockholder Indemnification. From and after the
Effective Time, and subject to Sections 10.2(b) and 10.2(c), each of the Astarte
Stockholders (except as set forth in clause (i) and (ii) below), severally shall
indemnify, defend and hold harmless Tellium, the Company, the Surviving
Corporation, and each of their respective Affiliates (collectively, the "Tellium
-------
Indemnified Group"), from and against all losses, and any and all costs and
-----------------
expenses (including attorneys' fees) incurred or suffered by any member of the
Tellium Indemnified Group resulting from or arising out of (i) the breach of any
representation or warranty of Astarte, (ii) the breach of any covenant or other
agreement of Astarte (but with respect to Astarte only for breaches of covenants
and agreements to be performed prior to or at the Effective Time) contained in
this Agreement, (iii) any Taxes in excess of $3,500,000 payable by Tellium, the
Company or the Surviving Corporation after the Effective Time attributable
(under Section 6.4(e)) to periods or portions of periods ending on or before the
Effective Time that are not reflected on the Unaudited Balance Sheet, (iv) the
Laor Payment Amount (as defined below) and (v) the failure of ▇▇▇▇ ▇. ▇▇▇▇ or
AFN LLC to promptly indemnify, defend and hold harmless the Tellium Indemnified
Group as required by Section 10.2(d) and Section 10.2(e), respectively (the
"Tellium Losses"). The "Laor Payment Amount" shall mean the sum of (x) all
--------------- -------------------
payments made by Tellium or the Surviving Corporation to the Laor Parties as
reasonably determined by Tellium to be required under the Laor Agreements on or
prior to December 31, 2004 plus (y) if, on December 31, 2004, Tellium or the
Surviving Corporation has the obligation to make any additional payments to any
Laor Party pursuant to the Laor Agreements after such date, an additional amount
equal to 3.5 times the aggregate amount paid to the Laor Parties described in
clause (x) above from January 1, 2002 through December 31, 2004; provided,
however, that (A) if there is a binding settlement agreement that contains a
Laor Release, a final and binding arbitration award or the entry of a non-
appealable order or final appellate decision that no payments are due to any
Laor Party from Tellium or the Surviving Corporation under the Laor Agreements,
the Laor Payment Amount shall be $0, (B) if there is a binding settlement
agreement that contains a Laor Release (other than the payments specified in
this clause), a final
-65-
and binding arbitration award or the entry of a non-appealable order or final
appellate decision with respect to the Laor Agreements that a 2.5% royalty is
payable to any Laor Party by Tellium or the Surviving Corporation pursuant to
Laor Agreements, the Laor Payment Amount shall be equal to all amounts due under
such settlement, agreement, award, order or decision plus, without duplication,
all amounts due under clauses (x) and (y) above, but in no event more than
$20,000,000 and (C) if there is a binding settlement agreement that contains a
Laor Release (consistent with this clause), a final and binding arbitration
award or the entry of a non-appealable order or final appellate decision with
respect to the Laor Agreements that would allow no royalties of any kind to be
payable to any Laor Party if Tellium or the Surviving Corporation were to sell
the Peripheral Patent and/or the Astarte Planar Array Rights to Corning, Inc.
and Corning, Inc. were to grant Tellium or the Surviving Corporation an
exclusive, sub-licensable, transferable sublicense of the Peripheral Patents
and/or the Astarte Planar Array Rights (the "Restructuring"), and Tellium and
--------------
the Surviving Corporation in its sole discretion does not effect such
Restructuring or Corning, Inc. does not agree to such Restructuring, the Laor
Payment Amount shall be equal to all amounts due under such settlement,
agreement, award, or decision plus, without duplication, all amounts due under
clauses (x) and (y) above but in no event more than $10,000,000; and (D) if
there is a binding settlement agreement that contains a Laor Release, a final
and binding arbitration award or the entry of a non-appealable order or final
appellate decision with respect to the Laor Agreements that would allow no
royalties of any kind to be payable to any Laor Party if Tellium or the
Surviving Corporation were to effect the Restructuring, and Tellium and the
Surviving Corporation in its sole discretion effects such Restructuring and
Corning, Inc. agrees to such Restructuring, the Laor Payment Amount shall be $0
and provided further neither Tellium nor the Surviving Corporation shall make
any payment to any Laor Party under the Laor Agreements prior to the first
anniversary of the date hereof without the prior written consent of the
Stockholder Representative, which consent shall not be unreasonably withheld or
delayed.
(b) No Materiality. The materiality (or correlative meaning)
qualifications included in the representations and warranties set forth in
Article IV shall have no effect on any provisions in this Section 10.2
concerning the indemnities of the Astarte Stockholders with respect to such
representations and warranties, insofar as it relates to the determination of
any amount to be paid as indemnification under this Section 10.2; provided,
however, that nothing contained in this Section 10.2(b) shall affect the
determination of whether there has occurred a breach of a representation or
warranty containing a materiality (or correlative meaning) qualification.
(c) Limitations on Astarte Stockholders' Indemnification. Notwithstanding
anything to the contrary contained in this Agreement or the Escrow Agreement:
(i) the aggregate liability of all Astarte Stockholders under Section
10.2(a)(iv) shall not, at any time, exceed $20,000,000 (the "Applicable Cap"),
--------------
(ii) the aggregate liability of any individual Astarte Stockholder in respect of
(A) Section 10.2(a)(iv) shall not exceed at any time the amount of the
Applicable Cap multiplied by such Astarte Stockholder's Applicable Percentage
and (B) any other Tellium Loss as to which indemnification is due from the
Astarte Stockholders pursuant to Section 10.2(a)(i) shall not exceed the amount
of such indemnification that is so due multiplied by such Astarte Stockholder's
Applicable Percentage, (iii) that the amount of any indemnification claimed by
any party under Section 10.2(a) shall be net of (A) any proceeds of insurance
coverage actually received by the party to be indemnified and (B) any decrease
in Tax actually realized by the party seeking indemnification in respect of the
claim, (iv) except to the extent the Astarte Stockholders
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elect to make cash payments under the Escrow Agreement, Tellium's sole recourse
against the Astarte Stockholders relating to the subject matter of this
Agreement shall be the Escrow Shares, (v) the parties hereto acknowledge and
agree that the sole and exclusive remedy with respect to any and all claims
against the Astarte Stockholders relating to the subject matter of this
Agreement shall be made pursuant to the provisions of this Article X and the
Escrow Agreement, and (vi) no party shall have any liability to any other party
under Section 10.2 or otherwise in the event that the Closing does not occur
other than for a willful breach of this Agreement.
(d) From and after the Effective Time, ▇▇▇▇ ▇. ▇▇▇▇, in his personal
capacity, hereby agrees to indemnify, defend and hold harmless all members of
the Tellium Indemnified Group from and against all losses incurred or suffered
by any member of the Tellium Indemnified Group resulting from or arising out of
the failure of Astarte to discharge in full all of its obligations related to
the One-Time Bonus Payments or the failure of Astarte to obtain the releases
described in Section 6.2(v) prior to the Effective Time.
(e) From and after the Effective Time, AFN LLC hereby agrees to indemnify,
defend and hold harmless all members of the Tellium Indemnified Group from and
against all losses incurred or suffered by any member of the Tellium Indemnified
Group resulting from or arising out of the failure of AFN LLC to discharge in a
timely manner all delivery and other obligations of Astarte under the Astarte
Pending Orders as described in Section 6.5.
10.3. Escrow.
(a) At the Effective Time, the Stockholder Representative shall deposit
the Escrow Shares with the Escrow Agent pursuant to Section 3.8 and the terms of
the Escrow Agreement. The Stockholder Representative for the benefit of the
Astarte Stockholders shall have all rights with respect to voting of the Escrow
Shares in connection with all matters coming before a vote of the holders of
shares of Tellium Common Stock. For Income Tax purposes, the parties shall treat
the Astarte Stockholders as the owners of the Escrow Shares. Tellium shall
deliver to the Stockholder Representative for the benefit of (and for
distribution to) the Astarte Stockholders all dividends or other distributions
other than dividends or distributions payable as part of any Recapitalization
Transaction, which other dividends or distributions shall be paid to the Escrow
Agent for deposit into the Escrow Fund (as defined in the Escrow Agreement).
(b) Any claim by a member of the Tellium Indemnified Group for
indemnification and the resolution thereof shall be governed by the terms of the
Escrow Agreement, subject to the provisions of this Agreement.
(c) The stockholders of Astarte who have not properly perfected dissenters
rights in accordance with the Colorado Corporation Law, by virtue of their
approval of the Agreement under the Colorado Corporation Law, shall be deemed to
have irrevocably constituted and appointed ▇▇▇▇ ▇▇▇▇ (together with any
permitted successor, the "Stockholder Representative") as their true and lawful
--------------------------
agent and attorney-in-fact to enter into any agreement in connection with the
transactions contemplated by this Agreement, including the resolution of
indemnity claims under this Article X and in accordance with the Escrow
Agreement, and any transactions contemplated by the Escrow Agreement to exercise
all or any of the powers, authority and discretion conferred on it under any
such agreement, to waive any terms and conditions of any
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such agreement (other than the consideration to be received by the Astarte
Stockholders in the Merger), to give and receive notices on their behalf and to
be their exclusive representative with respect to any matter, suit, claim,
action or proceeding arising with respect to any transaction contemplated by any
such agreement, including the defense, settlement or compromise of any claim,
action or proceeding for which Tellium or the Surviving Corporation may be
entitled to indemnification and the Stockholder Representative agrees to act as,
and to undertake the duties and responsibilities of, such agent and attorney-in-
fact. This power of attorney is coupled with an interest and is irrevocable. The
Stockholder Representative shall keep the Astarte Stockholders reasonably
informed of his decisions of a material nature.
10.4. Indemnification by Tellium
From and after the Effective Time, Tellium shall indemnify, defend and
hold harmless the Astarte Stockholders from and against all losses, and any and
all costs and expenses (including attorney's fees) incurred or suffered by them
resulting from or arising out of the breach of the representations and
warranties of Tellium set forth in Section 5.5(a).
Article XI
----------
Miscellaneous
-------------
11.1. Expenses.
All fees and expenses (including all accounting, legal and finders' fees,
if any, and expenses and all other expenses) incurred by Tellium and the Company
in connection with this Agreement and the transactions contemplated hereby will
be paid by Tellium. All fees and expenses (including all accounting and legal
fees and expenses) incurred by Astarte in connection with this Agreement and the
transactions contemplated hereby will be paid by Astarte; provided, however,
that all finders' fees and related expenses of Astarte in connection with the
Merger shall be paid by the Astarte Stockholders.
11.2. Further Assurances.
If at any time after the Effective Time, Tellium or the Company shall
consider it advisable that any further conveyance, agreements, documents,
instruments and assurances of law or any other things are necessary or advisable
to vest, perfect, confirm or record in the Surviving Corporation the title to
any property, rights, privileges, powers and franchises of Astarte, the
directors and the officers of Astarte last in office and such other persons, if
any, as the Board of Directors of Astarte last in office may authorize shall, at
Tellium's expense, execute and deliver, upon Tellium's or the Company's
reasonable request, any and all proper conveyances, agreements, documents,
instruments and assurances of law, in a form acceptable to counsel to such
officers or other persons (at Tellium's expense) and do all things reasonably
necessary or proper to vest, perfect, confirm or record title to such property,
rights, privileges, powers and franchises in the Surviving Corporation, and
otherwise to carry out the provisions of this Agreement.
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11.3. Parties in Interest; Third Party Beneficiaries.
All the terms and provisions of this Agreement shall be binding upon,
shall inure to the benefit of and shall be enforceable by the respective
successors and permitted assigns of the parties hereto. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned, by
operation of law or otherwise, by any of the parties hereto without the prior
written consent of the other. Subject to Section 10.2, nothing expressed or
implied in this Agreement is intended or shall be construed to confer upon or
give any person other than the parties hereto any rights or remedies under or by
reason of this Agreement or any transaction contemplated hereby.
11.4. Survival of Representations and Warranties and Covenants.
Except as provided in Article X, the representations and warranties of
each party contained herein or in any exhibit, certificate, document or
instrument delivered pursuant to this Agreement shall not survive the Closing,
and the covenants and other agreements of the parties (other than those
contained in Article II, Article III, Article X and Article XI (together with
related definitions of Article I)) shall not survive the Closing.
11.5. Entire Agreement.
This Agreement, the Ancillary Agreements and the Schedules and other
Exhibits hereto and thereto, supersede any other agreement, whether written or
oral, that may have been made or entered into by Tellium and Astarte (or by any
officer or officers of such parties) relating to the matters contemplated hereby
or thereby. This Agreement, the Ancillary Agreements and the Schedules and other
Exhibits hereto and thereto, constitute the entire agreement by the parties, and
there are no agreements or commitments except as set forth herein and therein.
11.6. Amendment.
This Agreement may not be amended except by an instrument in writing
signed by Tellium, the Company, and Astarte, provided that after the Effective
Time no amendment shall be effective without the written consent of a majority
of Astarte's voting capital stock immediately prior to the Effective Time acting
as a single class.
11.7. Waiver.
Any party to this Agreement may, by written notice to the other parties
to this Agreement, (a) extend the time for the performance of any of the
obligations or other actions of the other parties under this Agreement, (b)
waive any inaccuracies in the representations or warranties of the other parties
contained in this Agreement or in any document delivered pursuant to this
Agreement, (c) waive compliance with any of the conditions or covenants of the
other parties contained in this Agreement, or (d) waive or modify performance of
any of the obligations of the other parties under this Agreement. Except as
provided in the preceding sentence or as expressly provided in this Agreement,
no action taken pursuant to this Agreement, including any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representations, warranties, covenants,
conditions or agreements contained in this Agreement. The failure of any party
hereto to enforce
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at any time any of the provisions of this Agreement shall in no way be construed
to be a waiver of any such provision, nor in any way to affect the validity of
this Agreement or any part hereof or the right of such party thereafter to
enforce each and every such provision. No waiver of any breach of or non-
compliance with this Agreement shall be held to be a waiver of any other or
subsequent breach or non-compliance.
11.8. Notices.
All notices and other communications under this Agreement shall be in
writing and shall be delivered by hand or overnight courier service, mailed or
sent by facsimile as follows:
If to Tellium or the Company:
Tellium, Inc.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
Oceanport, N.J. 07757-0901
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, Esq. and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Astarte:
Astarte Fiber Networks, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Proskauer Rose LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt. All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt if delivered by hand or
overnight courier service or sent by facsimile, or on the date five business
days after dispatch by certified or registered mail if mailed, in each case
delivered, sent or mailed (properly addressed) to such party as provided in this
Section 11.8 or in accordance with the latest unrevised direction from such
party given in accordance with this Section 11.8.
11.9. Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
11.10. Consent to Jurisdiction.
SUBJECT TO SECTION 9 OF THE ESCROW AGREEMENT, EACH OF THE PARTIES HERETO
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF NEW YORK AND THE STATE COURTS OF THE STATE OF NEW
YORK, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. TO THE FULLEST EXTENT
PERMITTED BY LAW, EACH OF THE PARTIES HERETO FURTHER AGREES THAT SERVICE OF ANY
PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. CERTIFIED OR REGISTERED MAIL TO
SUCH PARTY'S RESPECTIVE ADDRESS SET FORTH IN SECTION 11.8 SHALL BE EFFECTIVE
SERVICE OF PROCESS IN ANY ACTION, SUIT OR PROCEEDING IN NEW YORK WITH RESPECT TO
ANY MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION AS SET FORTH ABOVE IN THE
IMMEDIATELY PRECEDING SENTENCE. EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT
OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW YORK OR THE
STATE COURTS OF NEW YORK, AND HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR
PROCEEDING BROUGHT IN SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
11.11. Invalidity of Provisions.
Each of the provisions contained in this Agreement is distinct and
severable and a declaration of invalidity or unenforceability of any such
provision or part thereof by a court of competent jurisdiction shall not affect
the validity or enforceability of any other provision hereof. The parties agree
to replace such invalid or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such invalid or unenforceable
provision.
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11.12. Mutual Contribution.
The parties to this Agreement and their counsel have mutually contributed
to its drafting. Consequently, no provision of this Agreement shall be construed
against any party on the ground that such party drafted the provision or caused
it to be drafted or the provision contains a covenant of such party.
11.13. Counterparts.
This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the parties on the date first above written.
TELLIUM, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: VP Business Development
ASTARTE ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Executive Officer
ASTARTE FIBER NETWORKS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman
AFN LLC, solely with respect to Sections
6.2(u), 6.5 and 10.2(e)
By ABK, Inc., its Manager
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: President
/s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇, in his personal capacity,
solely with respect to Section 10.2(d)
STOCKHOLDER REPRESENTATIVE (as Stockholder
Representative, and subject to designation
as such by the Astarte Stockholders)
/s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇
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