<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
YURIE SYSTEMS, INC.
(NAME OF SUBJECT COMPANY)
REINDEER ACQUISITION, INC.
LUCENT TECHNOLOGIES INC.
(BIDDERS)
------------------------
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
------------------------
98871Q 10 2
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
PAMELA F. CRAVEN, ESQ.
REINDEER ACQUISITION, INC.
C/O LUCENT TECHNOLOGIES INC.
600 MOUNTAIN AVENUE
MURRAY HILL, NEW JERSEY 07974
(908) 582-8500
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF BIDDERS)
------------------------
COPIES TO:
ROBERT I. TOWNSEND, III, ESQ.
CRAVATH, SWAINE & MOORE
WORLDWIDE PLAZA
825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019
(212) 474-1000
------------------------
APRIL 27, 1998
(DATE OF EVENT WHICH REQUIRES FILING STATEMENT ON SCHEDULE 13D)
------------------------
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
- --------------------------------------------------------------------------------------------
<S> <C>
$1,085,178,220.............................................. $217,036
============================================================================================
</TABLE>
* For purposes of calculating amount of filing fee only. The amount assumes the
purchase of 31,005,092 shares of Common Stock, par value $.01 per share
(collectively, the "Shares"), at a price per Share of $35 in cash. Such
number of shares represents all the Shares outstanding as of April 24, 1998,
determined on a fully diluted basis.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: None Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
================================================================================
Page 1 of 9 Pages
Exhibit Index on Page 9
<PAGE> 2
14D-1 AND 13D
<TABLE>
<S> <C>
CUSIP No. 98871Q 10 2
- ---------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON REINDEER ACQUISITION, INC.
- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS AF
- ---------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
- ---------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
17,766,200*
- ---------------------------------------------------------------------------
8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES [ ]
- ---------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
APPROXIMATELY 57% OF THE SHARES OUTSTANDING ON A FULLY
DILUTED BASIS AS OF APRIL 24, 1998*
- ---------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON CO
- ---------------------------------------------------------------------------
</TABLE>
* See footnote on page 4.
Page 2 of 9 Pages
Exhibit Index on Page 9
<PAGE> 3
14D-1 AND 13D
<TABLE>
<S> <C>
CUSIP No. 98871Q 10 2
- ---------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON LUCENT TECHNOLOGIES INC.
- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS WC
- ---------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
- ---------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
17,766,200*
- ---------------------------------------------------------------------------
8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES [ ]
- ---------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
APPROXIMATELY 57% OF THE SHARES OUTSTANDING ON A FULLY
DILUTED BASIS AS OF APRIL 24, 1998*
- ---------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON CO
- ---------------------------------------------------------------------------
</TABLE>
* See footnote on page 4.
Page 3 of 9 Pages
Exhibit Index on Page 9
<PAGE> 4
* On April 27, 1998, Lucent Technologies Inc., a Delaware corporation
("Parent"), and Reindeer Acquisition, Inc., a Delaware corporation and a wholly
owned subsidiary of Parent (the "Purchaser"), entered into a Stockholders
Agreement (the "Stockholders Agreement") with certain principal stockholders
(the "Stockholders") of Yurie Systems, Inc., a Delaware corporation (the
"Company"), pursuant to which each Stockholder has agreed to tender into the
Offer (as hereinafter defined) the shares of Common Stock, par value $.01 per
share, of the Company (the "Subject Shares"), that such Stockholder owned as set
forth in Exhibit A to the Stockholders Agreement, as well as any Subject Shares
that they thereafter acquire, including upon the exercise of stock options.
Under the Stockholders Agreement, each Stockholder has granted an irrevocable
proxy for the benefit of the Purchaser with respect to the Subject Shares to
vote such Subject Shares under certain circumstances. The Purchaser's right to
purchase and vote the Subject Shares is reflected in Rows 7 and 9 of each of the
tables above, which information takes into account all stock options owned by
the Stockholders on April 27, 1998. A copy of the Stockholders Agreement is
attached hereto as Exhibit (c)(2), and the Stockholders Agreement is described
more fully in Section 12 of the Offer to Purchase dated April 30, 1998 (the
"Offer to Purchase") attached hereto as Exhibit (a)(1), each of which is
incorporated by reference herein.
Page 4 of 9 Pages
Exhibit Index on Page 9
<PAGE> 5
This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement
on Schedule 13D with respect to the acquisition by the Purchaser and Parent of
beneficial ownership of the shares subject to the Stockholders Agreement. The
cover page above and items numbers and responses thereto below are in accordance
with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Yurie Systems, Inc., which has its
principal executive offices at 8301 Professional Place, Landover, MD 20785.
(b) This Schedule 14D-1 relates to the offer by the Purchaser to purchase
all outstanding Shares at a price of $35 per Share, net to the seller in cash
(the "Offer Price"), upon the terms and subject to the conditions set forth in
the Offer to Purchase and in the related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the
"Offer"), copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively. Information concerning the number of outstanding Shares is set
forth in "Introduction" of the Offer to Purchase and is incorporated herein by
reference.
(c) Information concerning the principal market in which the Shares are
traded and the high and low sales prices of Shares for each quarterly period
during the past two years is set forth in Section 6 ("Price Range of the Shares;
Dividends on the Shares") of the Offer to Purchase and is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Schedule 14D-1 is being filed by the Purchaser and
Parent. Information concerning the principal business and the address of the
principal offices of the Purchaser and Parent is set forth in Section 9
("Certain Information Concerning the Purchaser and Parent") of the Offer to
Purchase and is incorporated herein by reference. The names, business addresses,
present principal occupations or employment, material occupations, positions,
offices or employments during the last five years and citizenship of the
directors and executive officers of the Purchaser and Parent are set forth in
Schedule I to the Offer to Purchase and are incorporated herein by reference.
(e) and (f) The information set forth in Section 9 ("Certain Information
Concerning the Purchaser and Parent") of the Offer to Purchase is incorporated
herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 11 ("Contacts with the
Company; Background of the Offer") and Section 12 ("Purpose of the Offer; The
Merger Agreement; The Stockholders Agreement") of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in Section 12 ("Purpose of the Offer; The
Merger Agreement; The Stockholders Agreement") of the Offer to Purchase is
incorporated herein by reference.
(f) and (g) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
Page 5 of 9 Pages
Exhibit Index on Page 9
<PAGE> 6
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in "Introduction," Section 9
("Certain Information Concerning the Purchaser and Parent") and Section 12
("Purpose of the Offer; The Merger Agreement; The Stockholders Agreement") of
the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in "Introduction," Section 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 11 ("Contacts with
the Company; Background of the Offer") and Section 12 ("Purpose of the Offer;
The Merger Agreement; The Stockholders Agreement") of the Offer to Purchase is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 12 ("Purpose of the Offer; The
Merger Agreement; The Stockholders Agreement") of the Offer to Purchase is
incorporated herein by reference.
(b) and (c) The information set forth in Section 15 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Agreement and Plan of Merger dated as of April 27, 1998, among
the Purchaser, Parent and the Company, and the Stockholders Agreement dated as
of April 27, 1998, among the Purchaser, Parent and the Stockholders, copies of
which are attached hereto as Exhibits (a)(1), (a)(2), (c)(1) and (c)(2),
respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated April 30, 1998.
(a)(8) Text of Press Release dated April 27, 1998, issued by Parent.
(b) None.
(c)(1) Agreement and Plan of Merger dated as of April 27, 1998, among the
Purchaser, Parent and the Company.
(c)(2) Stockholders Agreement dated as of April 27, 1998, among the
Purchaser, Parent and the Stockholders.
Page 6 of 9 Pages
Exhibit Index on Page 9
<PAGE> 7
(c)(3) Retention Agreement, dated April 27, 1998, among Parent, the
Purchaser, the Company, The Bank of New York and Jeong H. Kim.
(c)(4) Retention Agreement dated April 27, 1998, among Parent, the
Purchaser, the Company, The Bank of New York and Kwok L. Li.
(c)(5) Retention Agreement dated April 27, 1998, among Parent, the
Purchaser, the Company, The Bank of New York and Harry J. Carr.
(c)(6) Retention Agreement dated April 27, 1998, among Parent, the
Purchaser, the Company, The Bank of New York and Barton Y.
Shigemura.
(d) None.
(e) Not applicable.
(f) None.
Page 7 of 9 Pages
Exhibit Index on Page 9
<PAGE> 8
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: April 30, 1998
REINDEER ACQUISITION, INC.
By: /s/ PAMELA F. CRAVEN
------------------------------------
Name: Pamela F. Craven
Title: Vice President and Secretary
LUCENT TECHNOLOGIES INC.
By: /s/ PAMELA F. CRAVEN
------------------------------------
Name: Pamela F. Craven
Title: Vice President-Law
Page 8 of 9 Pages
Exhibit Index on Page 9
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NAME NUMBER
- ------- ------------ ------
<S> <C> <C>
(a)(1) Offer to Purchase...........................................
(a)(2) Letter of Transmittal.......................................
(a)(3) Notice of Guaranteed Delivery...............................
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees....................................................
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees................................
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9...............................
(a)(7) Form of Summary Advertisement dated April 30, 1998..........
(a)(8) Text of Press Release dated April 27, 1998, issued by
Parent......................................................
(b) None
(c)(1) Agreement and Plan of Merger dated as of April 27, 1998,
among the Purchaser, Parent and the Company.................
(c)(2) Stockholders Agreement dated as of April 27, 1998, among the
Purchaser, Parent and the Stockholders......................
(c)(3) Retention Agreement dated April 27, 1998, among Parent, the
Purchaser, the Company, The Bank of New York and Jeong H.
Kim.........................................................
(c)(4) Retention Agreement dated April 27, 1998, among Parent, the
Purchaser, the Company, The Bank of New York and Kwok L.
Li..........................................................
(c)(5) Retention Agreement dated April 27, 1998, among Parent, the
Purchaser, the Company, The Bank of New York and Harry J.
Carr........................................................
(c)(6) Retention Agreement dated April 27, 1998, among Parent, the
Purchaser, the Company, The Bank of New York and Barton Y.
Shigemura...................................................
(d) None
(e) Not applicable
(f) None
</TABLE>
Page 9 of 9 Pages
Exhibit Index on Page 9
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
YURIE SYSTEMS, INC.
AT
$35 NET PER SHARE
BY
REINDEER ACQUISITION, INC.
A WHOLLY OWNED SUBSIDIARY OF
LUCENT TECHNOLOGIES INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, MAY 28, 1998, UNLESS EXTENDED.
THE BOARD OF DIRECTORS OF YURIE SYSTEMS, INC. HAS UNANIMOUSLY APPROVED THE
OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS
OF THE COMPANY AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY
ACCEPT THE OFFER AND TENDER THEIR SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES THAT WOULD REPRESENT AT LEAST A MAJORITY OF THE OUTSTANDING SHARES
(DETERMINED ON A FULLY DILUTED BASIS FOR ALL OUTSTANDING STOCK OPTIONS AND ANY
OTHER RIGHTS TO ACQUIRE SHARES ON THE DATE OF PURCHASE) AND (II) ANY WAITING
PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED, AND THE REGULATIONS THEREUNDER APPLICABLE TO THE PURCHASE OF SHARES
PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (1) complete and sign the Letter of
Transmittal or a facsimile copy thereof in accordance with the instructions in
the Letter of Transmittal, have such stockholder's signature thereon guaranteed
if required by Instruction 1 to the Letter of Transmittal, mail or deliver the
Letter of Transmittal or such facsimile, or, in the case of a book-entry
transfer effected pursuant to the procedure set forth in Section 2, an Agent's
Message (as defined herein), and any other required documents, to the Depositary
and either deliver the certificates for such Shares to the Depositary along with
the Letter of Transmittal or facsimile or deliver such Shares pursuant to the
procedure for book-entry transfer set forth in Section 2 or (2) request such
stockholder's broker, dealer, bank, trust company or other nominee to effect the
transaction for such stockholder. A stockholder having Shares registered in the
name of a broker, dealer, bank, trust company or other nominee must contact such
broker, dealer, bank, trust company or other nominee if such stockholder desires
to tender such Shares.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available or who cannot comply in a timely manner
with the procedure for book-entry transfer, or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer, may tender
such Shares by following the procedure for guaranteed delivery set forth in
Section 2.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent at its address and telephone
number set forth on the back cover of this Offer to Purchase.
------------------------
The Information Agent for the Offer is:
MORROW & CO., INC.
April 30, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Introduction............................................... 1
1. Terms of the Offer...................................... 2
2. Procedure for Tendering Shares.......................... 4
3. Withdrawal Rights....................................... 6
4. Acceptance for Payment and Payment...................... 7
5. Certain Federal Income Tax Consequences................. 8
6. Price Range of the Shares; Dividends on the Shares...... 9
7. Effect of the Offer on the Market for the Shares; Stock
Quotation; Exchange Act Registration; Margin
Regulations............................................. 9
8. Certain Information Concerning the Company.............. 10
9. Certain Information Concerning the Purchaser and
Parent.................................................. 12
10. Source and Amount of Funds.............................. 13
11. Contacts with the Company; Background of the Offer...... 13
12. Purpose of the Offer; The Merger Agreement; The
Stockholders Agreement.................................. 14
13. Dividends and Distributions............................. 23
14. Certain Conditions of the Offer......................... 24
15. Certain Legal Matters................................... 25
16. Fees and Expenses....................................... 27
17. Miscellaneous........................................... 27
Schedule I -- Directors and Executive Officers.............. 28
</TABLE>
<PAGE> 3
To the Holders of Common Stock
of Yurie Systems, Inc.:
INTRODUCTION
Reindeer Acquisition, Inc., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Lucent Technologies Inc., a Delaware corporation
("Parent"), is offering to purchase all outstanding shares (the "Shares") of
Common Stock, par value $.01 per share ("Company Common Stock"), of Yurie
Systems, Inc., a Delaware corporation (the "Company"), at $35 per Share (the
"Offer Price"), net to the seller in cash, upon the terms and subject to the
conditions set forth in this Offer to Purchase dated April 30, 1998 and in the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses of The Bank of New York, which is
acting as the Depositary (the "Depositary") and Morrow & Co., Inc., which is
acting as Information Agent (the "Information Agent"), incurred in connection
with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER
AND THE MERGER (AS DEFINED BELOW) AND DETERMINED THAT THE TERMS OF THE OFFER AND
THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE
COMPANY AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE
OFFER AND TENDER THEIR SHARES.
BT Alex. Brown Incorporated has delivered to the Board of Directors of the
Company its written opinion to the effect that, as of the date of such opinion,
the $35 per Share in cash to be received by the holders of Shares in the Offer
and the Merger is fair to such holders from a financial point of view. Such
opinion is set forth in full as an exhibit to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being mailed to stockholders of the Company herewith. STOCKHOLDERS ARE
URGED TO, AND SHOULD, READ SUCH OPINION CAREFULLY IN ITS ENTIRETY.
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in Section
1) such number of Shares that would constitute at least a majority of the
outstanding Shares (determined on a fully diluted basis for all outstanding
stock options and any other rights to acquire Shares on the date of purchase)
(the "Minimum Condition") and (2) any waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the regulations thereunder
(the "HSR Act") applicable to the purchase of Shares pursuant to the Offer
having expired or been terminated. The Purchaser reserves the right (subject to
obtaining the consent of the Company and the applicable rules and regulations of
the Securities and Exchange Commission (the "Commission")), which it presently
has no intention of exercising, to waive or reduce the Minimum Condition and to
elect to purchase, pursuant to the Offer, less than the number of Shares
required to satisfy the Minimum Condition. See Sections 1 and 14.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of April 27, 1998 (the "Merger Agreement"), among Parent, the Purchaser and
the Company pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company, with the Company surviving the merger (as such, the
"Surviving Corporation") as a wholly owned subsidiary of Parent (the "Merger").
In the Merger, each outstanding Share (other than Shares owned by the Company or
any subsidiary of the Company or by Parent, the Purchaser or any other
subsidiary of Parent or by stockholders, if any, who are entitled to and who
properly exercise dissenters' rights under Delaware law) will be converted into
the right to receive the per Share price paid in the Offer in cash, without
interest (the "Merger Consideration"). See Section 12.
The Merger is subject to a number of conditions, including approval by
stockholders of the Company, if such approval is required by applicable law. In
the event the Purchaser acquires 90% or more of the outstanding Shares pursuant
to the Offer or otherwise, the Purchaser will effect the Merger pursuant to the
1
<PAGE> 4
short-form merger provisions of the Delaware General Corporation Law (the
"DGCL"), without prior notice to, or any action by, any other stockholder of the
Company. See Section 12.
Parent and the Purchaser entered into a Stockholders Agreement dated as of
April 27, 1998 (the "Stockholders Agreement") with certain principal
stockholders of the Company (the "Stockholders"), pursuant to which each
Stockholder has agreed to tender into the Offer all the Shares that such
Stockholder owns. These Shares represent more than a majority of the outstanding
Shares (determined on a fully diluted basis) and, upon the tendering of these
Shares, the Minimum Condition will be satisfied. As of April 24, 1998, there
were 17,766,200 Shares subject to the Stockholders Agreement, representing
approximately 57% of the outstanding Shares on a fully diluted basis. Once the
Minimum Condition is satisfied and the Purchaser accepts for payment Shares
tendered pursuant to the Offer, the Purchaser will be able to elect a majority
of the members of the Company's Board of Directors and to effect the Merger
without the affirmative vote of any other stockholder of the Company.
The Merger Agreement and the Stockholders Agreement are more fully
described in Section 12. Certain Federal income tax consequences of the sale of
Shares pursuant to the Offer and the exchange of Shares for the Merger
Consideration pursuant to the Merger are described in Section 5.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3. The
term "Expiration Date" means 12:00 Midnight, New York City time, on Thursday,
May 28, 1998, unless and until the Purchaser shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by the
Purchaser, shall expire.
Subject to the terms of the Merger Agreement (see Section 12) and the
applicable rules and regulations of the Commission, the Purchaser expressly
reserves the right, in its sole discretion, at any time and from time to time,
and regardless of whether or not any of the events set forth in Section 14
hereof shall have occurred or shall have been determined by the Purchaser to
have occurred, to (1) extend the period of time during which the Offer is open,
and thereby delay acceptance for payment of and the payment for any Shares, by
giving oral or written notice of such extension to the Depositary and (2) amend
the Offer in any other respect by giving oral or written notice of such
amendment to the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If by 12:00 Midnight, New York City time, on Thursday, May 28, 1998 (or any
other date or time then set as the Expiration Date), any or all conditions to
the Offer have not been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated), subject to the terms and conditions contained in
the Merger Agreement and to the applicable rules and regulations of the
Commission, to (1) terminate the Offer and not accept for payment any Shares and
return all tendered Shares to tendering stockholders, (2) waive all the
unsatisfied conditions (other than the Minimum Condition and the condition with
respect to the HSR Act) and, subject to complying with the terms of the Merger
Agreement and the applicable rules and regulations of the Commission, accept for
payment and pay for all Shares validly tendered prior to the Expiration Date and
not theretofore withdrawn, (3) extend the Offer and, subject to the right of
stockholders to withdraw Shares until the Expiration Date, retain the Shares
that have been tendered during the period or periods for which the Offer is
extended or (4) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer (other than as required by the Merger Agreement). Any
extension, waiver, amendment or termination will be followed as promptly as
practicable by public announcement. In the case of an extension, Rule 14e-l(d)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires that the announcement be issued no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date in
accordance with the public announcement requirements of Rule 14d-4(c) under the
Exchange Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d)
under the Exchange Act,
2
<PAGE> 5
which require that any material change in the information published, sent or
given to stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
In the Merger Agreement the Purchaser has agreed that it will not, without
the prior consent of the Company, extend the Offer, except that, without the
consent of the Company, the Purchaser may extend the Offer (1) if at the
Expiration Date any of the conditions to the Purchaser's obligations to accept
Shares for payment are not satisfied or waived, until such time as such
conditions are satisfied or waived, (2) for any period required by any rule,
regulation, interpretation or position of the Commission or the staff thereof
applicable to the Offer or any period required by applicable law and (3) on one
or more occasions for an aggregate period of not more than 10 business days
beyond the latest expiration date that would otherwise be permitted under clause
(1) or (2) of this sentence, if on such expiration date there shall not have
been tendered at least 90% of the outstanding Shares. The Merger Agreement
further provides that if all of the conditions to the Offer are not satisfied on
any scheduled expiration date of the Offer then, provided that all such
conditions are reasonably capable of being satisfied, Purchaser will extend the
Offer from time to time until such conditions are satisfied or waived, provided
that Purchaser will not be required to extend the Offer beyond September 28,
1998. As used in this Offer to Purchase, "business day" has the meaning set
forth in Rule 14d-1 under the Exchange Act.
In addition, the Purchaser has agreed in the Merger Agreement that it will
not, without the consent of the Company, (1) reduce the number of Shares subject
to the Offer, (2) reduce the Offer Price, (3) amend or add to the Offer
conditions, (4) extend the Offer, except as provided above, (5) change the form
of consideration payable in the Offer or (6) amend any other term of the Offer
in any manner adverse to the holders of the Shares.
If the Purchaser extends the Offer or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its acceptance for
payment of or payment for Shares or it is unable to pay for Shares pursuant to
the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described in Section 3.
However, the ability of the Purchaser to delay the payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14e-1 under the Exchange
Act, which requires that a bidder pay the consideration offered or return the
securities deposited by or on behalf of holders of securities promptly after the
termination or withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including, with the Company's consent, a waiver of the Minimum Condition), the
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-l under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of the offer or information concerning
the offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. With
respect to a change in price or a change in the percentage of securities sought,
a minimum period of 10 business days is generally required to allow for adequate
dissemination to stockholders.
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Condition (which will be satisfied following the tendering of the Shares subject
to the Stockholders Agreement), the expiration or termination of all waiting
periods imposed by the HSR Act and the other conditions set forth in Section 14.
Subject to the terms and conditions contained in the Merger Agreement, the
Purchaser reserves the right (but shall not be obligated) to waive any or all
such conditions.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of the Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed by the Purchaser to record holders
of Shares
3
<PAGE> 6
and will be furnished by the Purchaser to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (1) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees, or in
the case of a book-entry transfer, an Agent's Message, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase prior to
the Expiration Date and either certificates for tendered Shares must be received
by the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedure for book-entry transfer set forth below (and a
Book-Entry Confirmation (as defined below) received by the Depositary), in each
case prior to the Expiration Date, or (2) the tendering stockholder must comply
with the guaranteed delivery procedure set forth below.
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with the Book-Entry Transfer Facility's procedures for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's
Message, and any other required documents, must, in any case, be transmitted to,
and received by, the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase prior to the Expiration Date, or the tendering
stockholder must comply with the guaranteed delivery procedure described below.
The confirmation of a book-entry transfer of Shares into the Depositary's
account at the Book-Entry Transfer Facility as described above is referred to
herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (1) the Letter of Transmittal is signed by the registered holder
(which term, for purposes of this Section, includes any participant in the
Book-Entry Transfer Facility's system whose name appears on a security position
listing as the owner of the Shares) of Shares tendered therewith unless such
registered holder has completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of Transmittal or (2) such Shares are tendered for the account of a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) that is a participant in the Security Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (such participant, an "Eligible
Institution"). In all other cases, all signatures on the Letters of Transmittal
must be guaranteed by an Eligible Institution. See Instructions 1
4
<PAGE> 7
and 5 to the Letter of Transmittal. If the certificates for Shares are
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made or certificates for Shares not tendered
or not accepted for payment are to be issued to a person other than the
registered holder of the certificates surrendered, the tendered certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered holders or owners appear
on the certificates, with the signatures on the certificates or stock powers
guaranteed as aforesaid. See Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Purchaser is received by
the Depositary, as provided below, prior to the Expiration Date; and
(3) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message, and any other documents
required by the Letter of Transmittal, are received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day" is any day on which the New York Stock
Exchange, Inc. (the "NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by facsimile transmission or mail to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (1) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (2) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (3) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations are actually
received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of the Purchaser as
such stockholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after April 27, 1998. All such proxies shall be considered
coupled with an interest in the tendered Shares. Such appointment will be
effective when, and only to the extent that, the Purchaser accepts for payment
Shares tendered by such stockholder as provided herein. Upon such acceptance for
payment, all prior powers of attorney and proxies given by such stockholder with
respect to such Shares or other securities or rights will, without further
action, be revoked and no subsequent powers of attorney and proxies may be given
(and, if given, will not be deemed effective). The designees of the Purchaser
will thereby be empowered to exercise all voting and other rights with respect
to such Shares or other securities or rights in respect of any
5
<PAGE> 8
annual, special or adjourned meeting of the Company's stockholders, or
otherwise, as they in their sole discretion deem proper. The Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of such Shares, the
Purchaser must be able to exercise full voting and other rights with respect to
such Shares and other securities or rights, including voting at any meeting of
stockholders then scheduled.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of, or payment for, which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any defect or irregularity in any tender with respect to any particular Shares,
whether or not similar defects or irregularities are waived in the case of other
Shares. No tender of Shares will be deemed to have been validly made until all
defects or irregularities relating thereto have been cured or waived. None of
the Purchaser, Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification. The
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
Backup Withholding. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalty of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service ("IRS") may impose
a penalty on such stockholder and payment of cash to such stockholder pursuant
to the Offer may be subject to backup withholding of 31%. All stockholders
surrendering Shares pursuant to the Offer should complete and sign the main
signature form and the Substitute Form W-9 included as part of the Letter or
Transmittal to provide the information and certification necessary to avoid
backup withholding (unless an applicable exemption exists and is proven in a
manner satisfactory to the Purchaser and the Depositary). Certain stockholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Noncorporate foreign
stockholders should complete and sign the main signature form and a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 to the
Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after June 28, 1998.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and must specify
the name of the person having tendered the Shares to be withdrawn, the number of
Shares to be withdrawn and the name of the registered holder of the Shares to be
withdrawn, if different from the name of the person who tendered the Shares. If
certificates for Shares have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and,
unless such Shares have been tendered by an Eligible Institution, the signatures
on the notice of withdrawal must be guaranteed by an Eligible Institution.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for any purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 2 at any time prior to the Expiration Date.
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<PAGE> 9
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms, and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with Section 3 promptly after the Expiration Date. Any determination
concerning the satisfaction of such terms and conditions will be within the sole
discretion of the Purchaser, and such determination will be final and binding on
all tendering stockholders. See Sections 1 and 14. The Purchaser expressly
reserves the right, in its sole discretion, to delay acceptance for payment of
or payment for Shares in order to comply in whole or in part with any applicable
law, including, without limitation, the HSR Act. Any such delays will be
effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to
the Purchaser's obligation to pay for or return tendered Shares promptly after
the termination or withdrawal of the Offer).
Parent will file a Notification and Report Form with respect to the Offer
under the HSR Act. The waiting period under the HSR Act with respect to the
Offer will expire at 11:59 p.m., New York City time, on the 15th day after the
date such form is filed, unless early termination of the waiting period is
granted. In addition, the Antitrust Division of the Department of Justice (the
"Antitrust Division") or the Federal Trade Commission (the "FTC") may extend the
waiting period by requesting additional information or documentary material from
Parent. If such a request is made, such waiting period will expire at 11:59
p.m., New York City time, on the 10th day after substantial compliance by Parent
with such request. See Section 15 hereof for additional information concerning
the HSR Act and the applicability of the antitrust laws to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (1) certificates for
such Shares (or timely Book-Entry Confirmation of a transfer of such Shares as
described in Section 2), (2) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees and
(3) any other documents required by the Letter of Transmittal. The per Share
consideration paid to any stockholder pursuant to the Offer will be the highest
per Share consideration paid to any other stockholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer), the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares. Any such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer because of
an invalid tender or otherwise, certificates for any such Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer of such Shares into the Depositary's
account at the Book-Entry
7
<PAGE> 10
Transfer Facility pursuant to the procedure set forth in Section 2, such Shares
will be credited to an account maintained at the Book-Entry Transfer Facility),
as promptly as practicable after the expiration or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to one or more direct or indirect wholly
owned subsidiaries of Parent, the right to purchase Shares tendered pursuant to
the Offer. Any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer or the Merger will constitute a
taxable transaction for Federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also constitute a taxable
transaction under applicable state, local, foreign and other tax laws. As a
result, a tendering stockholder will generally recognize gain or loss for
Federal income tax purposes in an amount equal to the difference between the
amount of cash received by the stockholder pursuant to the Offer or the Merger
and such stockholder's aggregate adjusted tax basis in the Shares tendered and
purchased pursuant to the Offer (or canceled pursuant to the Merger). Gain or
loss will be calculated separately for each block of Shares tendered and
purchased pursuant to the Offer (or canceled pursuant to the Merger). If
tendered Shares are held by a tendering stockholder as capital assets (within
the meaning of Section 1221 of the Code), any gain or loss recognized by the
tendering stockholder will constitute capital gain or loss, and will constitute
long-term capital gain or loss if the tendering stockholder held the underlying
Shares for more than 12 months as of the date of disposition.
For noncorporate stockholders, long-term capital gain generally will be
subject to Federal income tax at a maximum rate of 28% if the underlying Shares
have been held for more than 12 months but not more than 18 months as of the
date of disposition. If the underlying Shares have been held for more than 18
months as of the date of disposition, however, any long-term capital gain
recognized by a noncorporate stockholder generally will be subject to Federal
income tax at a maximum rate of 20%. There are limits on the deductibility of
losses.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals) that tenders Shares
may be subject to backup withholding at a rate of 31% unless the stockholder
provides its correct TIN (or certifies that it is awaiting a TIN) and certifies
as to no loss of exemption from backup withholding and otherwise complies with
the applicable requirements of the backup withholding rules. A stockholder that
does not furnish its correct TIN in the prescribed manner or that does not
otherwise establish a basis for an exemption from backup withholding may be
subject to a penalty imposed by the IRS, and gross proceeds of the Offer or the
Merger payable to such stockholder may be subject to backup withholding at a
rate of 31%. Each stockholder should complete and sign the Substitute Form W-9
included as part of the Letter of Transmittal so as to provide the information
and certification necessary to avoid backup withholding.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the Federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A
HOLDER OF SHARES IN LIGHT OF ITS INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
8
<PAGE> 11
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded in the over-the-counter market and prices are quoted
on The Nasdaq Stock Market's National Market System under the symbol "YURI". The
following table sets forth, for each of the periods indicated since February 4,
1997, the date of the Company's initial public offering, the high and low
reported last sale prices per Share, as reported by the Nasdaq National Market
and the Dow Jones News Retrieval Service.
<TABLE>
<CAPTION>
SALES PRICE
------------------
HIGH LOW
------- -------
<S> <C> <C>
1997
First Quarter (from February 4)........................ $16.750 $ 9.500
Second Quarter......................................... 19.125 9.375
Third Quarter.......................................... 37.250 15.750
Fourth Quarter......................................... 39.875 17.250
1998
First Quarter.......................................... $24.188 $19.875
Second Quarter (through April 24, 1998)................ 31.500 24.250
</TABLE>
On April 24, 1998, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the reported last sale
price of the Shares on the Nasdaq National Market was $31.500 per Share. On
April 29, 1998, the last full day of trading before the commencement of the
Offer, the reported last sale price of the Shares on the Nasdaq National Market
was $34.625 per Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997 (the "Form 10-K"), the Company has not paid cash
dividends on Company Common Stock to date and does not plan to pay cash
dividends to its stockholders in the foreseeable future.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the National Association of
Securities Dealers, Inc. (the "NASD") for continued inclusion in the Nasdaq
National Market (the top tier market of The Nasdaq Stock Market), which requires
that an issuer have at least 200,000 publicly held shares, held by at least 400
stockholders or 300 stockholders of round lots, with a market value of
$1,000,000, and have net tangible assets of at least either $2,000,000 or
$4,000,000, depending on profitability levels during the issuer's four most
recent fiscal years. If these standards are not met, the Shares might
nevertheless continue to be included in The Nasdaq Stock Market with quotations
published in the Nasdaq "additional list" or in one of the "local lists," but if
the number of holders of the Shares were to fall below 300, or if the number of
publicly held Shares were to fall below 100,000 or there were not at least two
registered and active market makers for the Shares, the NASD's rules provide
that the Shares would no longer be "qualified" for Nasdaq Stock Market reporting
and The Nasdaq Stock Market would cease to provide any quotations. Shares held
directly or indirectly by directors, officers or beneficial owners of more than
10% of the Shares are not considered as being publicly held for this purpose.
According to the Company, as of April 24, 1998, there were approximately 235
holders of record of Shares and 25,520,763 Shares were outstanding. If, as a
result of the purchase of Shares pursuant to the Offer, the Shares no longer
meet the requirements of the NASD for continued inclusion in The Nasdaq Stock
Market or the Nasdaq National Market, as the case may be, the market for Shares
could be adversely affected.
9
<PAGE> 12
In the event that the Shares no longer meet the requirements of the NASD
for quotation through any tier of The Nasdaq Stock Market, it is possible that
the Shares would continue to trade in the over-the-counter market and that price
quotations would be reported by other sources. The extent of the public market
for the Shares and the availability of such quotations would, however, depend
upon the number of holders of Shares remaining at such time, the interests in
maintaining a market in Shares on the part of securities firms, the possible
termination of registration of the Shares under the Exchange Act, as described
below, and other factors.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are neither listed on a national
securities exchange nor held by 300 or more holders of record. Termination of
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to its stockholders and to
the Commission and would make certain provisions of the Exchange Act no longer
applicable to the Company, such as the shortswing profit recovery provisions of
Section 16(b) of the Exchange Act, the requirement of furnishing a proxy
statement pursuant to Section 14(a) of the Exchange Act in connection with
stockholders' meetings and the related requirement of furnishing an annual
report to stockholders and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 or 144A promulgated
under the Securities Act of 1933, may be impaired or eliminated. The Purchaser
intends to seek to cause the Company to apply for termination of registration of
the Shares under the Exchange Act as soon after the completion of the Offer as
the requirements for such termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will cease to be reported on The Nasdaq Stock Market and the
registration of the Shares under the Exchange Act will be terminated following
the consummation of the Merger.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers. If
registration of Shares under the Exchange Act were terminated, the Shares would
no longer be "margin securities" or be eligible for Nasdaq reporting.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal executive offices
at 8301 Professional Place, Landover, Maryland, 20785. According to the Form
10-K, the Company's principal line of business is designing, manufacturing and
servicing ATM (asychronous transfer mode) access products and equipment for
telecommunications service providers, Internet service providers, corporate end
users and government end users.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted or derived from the
information contained in the Form 10-K or the Company's press release dated
April 15, 1998. More comprehensive financial information is included in that
report and other documents filed by the Company with the Commission, and the
following summary is qualified in its entirety by reference to that report and
such other documents and all the financial information (including any related
notes) contained therein. The Form 10-K and such other documents should be
available for inspection and copies thereof should be obtainable in the manner
set forth below under "Available Information."
10
<PAGE> 13
YURIE SYSTEMS, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------ --------------------------------
1998 1997(1) 1997(1)(2) 1996(1) 1995(1)
------- ------- ---------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Total revenues........................... $19,107 $8,403 $51,068 $21,657 $6,622
Income from operations................... 5,606 844 8,522 3,897 1,525
Net income............................... 3,765 677 6,136 2,424 949
Basic net income per share............... $ 0.15 $ 0.03 $ 0.25 $ 0.12 $ 0.05
Diluted net income per share............. $ 0.14 $ 0.03 $ 0.23 $ 0.11 $ 0.05
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------------
1997(1) 1996(1)
---------- -------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 8,142 $ 5,245
Working capital............................................. 57,046 9,344
Total assets................................................ 75,402 16,907
Stockholders' equity........................................ 65,134 11,571
</TABLE>
- ---------------
(1) Effective December 1, 1997, Data Labs, Inc. merged with a subsidiary of the
Company. The transaction was accounted for as a pooling-of-interests.
Accordingly, the financial statements of the Company have been restated to
reflect Data Labs, Inc. results for the periods shown. Acquisition costs
totaling approximately $1 million are included.
(2) Sales to related parties totaled $13.5 million during 1997.
Available Information. The Company is subject to the reporting
requirements of the Exchange Act and, in accordance therewith, is required to
file reports and other information with the Commission relating to its business,
financial condition and other matters. Information as of particular dates
concerning the Company's directors and officers, their remuneration, stock
options granted to them, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the Company's
stockholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the public reference
facilities of the Commission located at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the Commission located in the Northwestern
Atrium Center, 500 West Madison Street (Suite 1400), Chicago, Illinois 60661 and
Seven World Trade Center, 13th Floor, New York, New York 10048. Copies should be
obtainable, by mail, upon payment of the Commission's customary charges, by
writing to the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. Such reports, proxy
and information statements and other information may be found on the
Commission's web site, the address of which is: http://www.sec.gov. Such
information should also be on file at The Nasdaq Stock Market, 1735 K Street,
N.W., Washington, D.C. 20006.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although the Purchaser and Parent do not have any
knowledge that any such information is untrue, neither the Purchaser nor Parent
takes any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
11
<PAGE> 14
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser, a Delaware corporation and a wholly owned subsidiary of
Parent, was organized to acquire the Company and has not conducted any unrelated
activities since its organization. The principal offices of the Purchaser are
located at 600 Mountain Avenue, Murray Hill, New Jersey, 07974. All outstanding
shares of capital stock of the Purchaser are owned by Parent.
Parent designs, builds and delivers a wide range of public and private
networks, communications systems and software, data networking systems, business
telephone systems and microelectronics components. Bell Labs is the research and
development arm for Parent. Parent is a Delaware corporation with its principal
offices located at 600 Mountain Avenue, Murray Hill, New Jersey, 07974.
Financial information with respect to Parent and its subsidiaries is
included in Parent's Annual Report on Form 10-K for the fiscal year ended
September 30, 1997, Parent's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1997 and other documents filed by Parent with the Commission. Such
reports and other documents should be available for inspection and copies
thereof should be obtainable in the manner set forth below under "Available
Information."
Except as described in this Offer to Purchase, neither the Purchaser nor
Parent (together, the "Corporate Entities") or, to the best knowledge of the
Corporate Entities, any of the persons listed in Schedule I or any associate or
majority-owned subsidiary of the Corporate Entities or any of the persons so
listed, beneficially owns any equity security of the Company, and none of the
Corporate Entities or, to the best knowledge of the Corporate Entities, any of
the other persons referred to above, or any of the respective directors,
executive officers or subsidiaries of any of the foregoing, has effected any
transaction in any equity security of the Company during the past 60 days.
Except as described in this Offer to Purchase, (1) there have not been any
contacts, transactions or negotiations between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I, on the one hand, and the
Company or any of its directors, officers or affiliates, on the other hand, that
are required to be disclosed pursuant to the rules and regulations of the
Commission and (2) none of the Corporate Entities or, to the best knowledge of
the Corporate Entities, any of the persons listed in Schedule I has any
contract, arrangement, understanding or relationship with any person with
respect to any securities of the Company.
Except as described in this Offer to Purchase, during the last five years,
none of the Corporate Entities or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I (1) has been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors) or
(2) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, Federal or state securities laws or finding any violation
of such laws. The name, business address, present principal occupation or
employment, five-year employment history and citizenship of each of the
directors and executive officers of the Purchaser and Parent are set forth in
Schedule I.
Available Information. Parent is subject to the reporting requirements of
the Exchange Act and, in accordance therewith, is required to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning
Parent's directors and officers, their remuneration, stock options granted to
them, the principal holders of Parent's securities and any material interest of
such persons in transactions with Parent is disclosed in proxy statements
distributed to Parent's stockholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the Commission, and copies thereof should be obtainable from the
Commission, in the same manner as set forth with respect to information
concerning the Company in Section 8. Such material should also be available for
inspection at the library of the NYSE, 20 Broad Street, New York, New York
10005.
12
<PAGE> 15
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all
outstanding Shares pursuant to the Offer and to pay fees and expenses related to
the Offer and the Merger is estimated to be approximately $1.1 billion. The
Purchaser plans to obtain all funds needed for the Offer and the Merger through
a capital contribution which will be made by Parent to the Purchaser. Parent
plans to use funds it has available in its cash accounts and pursuant to
short-term borrowings for such capital contribution.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
In August 1997, the Company and Parent entered into a private-label
agreement (the "OEM Contract"), under which the Company granted Parent the
non-exclusive right to resell the Company's ATM access products under Parent's
brand name for a period of three years. The Company's sales to Parent pursuant
to the OEM Contract were approximately $1.8 million, or approximately 3.5%, of
the Company's total revenues for 1997, and approximately $1.7 million, or
approximately 9.1%, of the Company's total revenues for the quarter ended March
31, 1998.
On February 20, 1998, the Company's President and Chief Operating Officer,
Harry J. Carr, met with the President of Parent's Data Networking Systems
business unit, William T. O'Shea, to discuss the possibilities for broadening
their business relationship under the OEM Contract. On March 23, 1998, Mr.
O'Shea called Mr. Carr to express Parent's interest in exploring the possibility
of a strategic business combination and proposed a meeting to discuss further
that possibility.
On March 31, 1998, Mr. O'Shea again met with Mr. Carr and confirmed
Parent's interest in pursuing a strategic business combination with the Company.
Mr. O'Shea suggested that they exchange additional information and further
discuss the Company's strategic plans. This meeting was followed by a telephone
call later that day among Mr. Carr, William Viqueira, Parent's Business
Development Vice President, and Carl Pavarini, Vice President -- Business
Development and Operations of Parent's Data Networking Systems business unit.
On April 2, 1998, Parent and the Company entered into a confidentiality
agreement regarding the exchange of non-public information between them. On
April 9, 1998, representatives of the Company met with representatives of Parent
to discuss overall approaches to a transaction and to commence the exchange of
information.
On April 17, 1998, representatives of Parent called Mr. Carr to inform him
that Parent was prepared to make an offer to the Company in connection with a
proposed transaction.
On April 20, 1998, representatives of Parent met again with representatives
of the Company to discuss various proposed acquisition structures. Negotiations
with respect to structure, price, the form of consideration and other material
terms continued throughout the day. On April 21, 1998, the parties agreed upon a
cash transaction at $35 per Share, subject to completion of due diligence,
agreement on post-acquisition organizational structure and negotiation of a
definitive Merger Agreement and Stockholders Agreement.
From April 20, 1998, through April 26, 1998, Parent conducted additional
due diligence, and there were additional meetings between representatives of
Parent and the Company and the Stockholders during that time. In addition,
during the period, ongoing discussions were held concerning, among other things,
post-acquisition organizational structure and the terms of the Merger Agreement
and the Stockholders Agreement. The remaining open issues were resolved during
the night of April 25 and the early morning of April 26. The Board of Directors
of the Company approved the transaction on April 26, 1998.
On the morning of April 27, 1998, the Board of Directors of Parent, after
being briefed on the transaction, approved the transaction, after which the
Merger Agreement, the Stockholders Agreement and the other agreements
contemplated therein were executed and delivered and the transaction was
publicly announced.
13
<PAGE> 16
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE STOCKHOLDERS AGREEMENT
Purpose. The purpose of the Offer is to enable Parent to acquire control
of and the entire equity interest in the Company. Following the consummation of
the Offer, the Purchaser and Parent intend to acquire any remaining equity
interest in the Company not acquired in the Offer by consummating the Merger.
The Merger Agreement. The Merger Agreement provides that following the
satisfaction or waiver of the conditions described below under "Conditions to
the Merger," the Purchaser will be merged with and into the Company, and each
then outstanding Share (other than Shares owned by the Company or any subsidiary
of the Company or by Parent, the Purchaser or any other subsidiary of Parent or
by stockholders, if any, who are entitled to and who properly exercise
dissenters' rights under Delaware law), will be converted into the right to
receive an amount in cash, without interest, equal to the price per Share paid
pursuant to the Offer.
VOTE REQUIRED TO APPROVE MERGER. The DGCL requires, among other
things, that the adoption of any plan of merger or consolidation of the
Company must be approved by the Board of Directors of the Company and, if
the "short form" merger procedure described below is not available, by the
holders of a majority of the Company's outstanding Shares. The Board of
Directors of the Company has approved the Offer, the Merger and the Merger
Agreement; consequently, the only additional action of the Company that may
be necessary to effect the Merger is approval by such stockholders if the
"short-form" merger procedure described below is not available. Under the
DGCL, the affirmative vote of holders of a majority of the outstanding
Shares (including any Shares owned by the Purchaser), is generally required
to approve the Merger. If the Purchaser acquires, through the Offer or
otherwise, voting power with respect to at least a majority of the
outstanding Shares (which would be the case if the Minimum Condition were
satisfied and the Purchaser were to accept for payment Shares tendered
pursuant to the Offer), it would have sufficient voting power to effect the
Merger without the vote of any other stockholder of the Company. However,
the DGCL also provides that if a parent company owns at least 90% of each
class of stock of a subsidiary, the parent company can effect a
"short-form" merger with that subsidiary without the action of the other
stockholders of the subsidiary. Accordingly, if, as a result of the Offer
or otherwise, the Purchaser acquires or controls the voting power of at
least 90% of the outstanding Shares, the Purchaser could (and, under the
Merger Agreement, is required to) effect the Merger using the "short-form"
merger procedures without prior notice to, or any action by, any other
stockholder of the Company.
CONDITIONS TO THE MERGER. The Merger Agreement provides that the
Merger is subject to the satisfaction of certain conditions, including the
following: (1) if required by applicable law, the Merger Agreement having
been approved and adopted by the affirmative vote of holders of a majority
of the outstanding Shares, (2) no statute, rule, regulation, executive
order, decree, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other Federal, state or local government or any court, administrative
agency or commission or other governmental authority or agency, domestic or
foreign (a "Governmental Entity"), or other legal restraint or prohibition
preventing the consummation of the Merger being in effect; provided,
however, that each of the parties shall have used reasonable efforts to
prevent the entry of any such injunction or other order and to appeal as
promptly as possible any injunction or other order that may be entered and
(3) the Purchaser shall have previously accepted for payment and paid for
the Shares pursuant to the Offer.
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be
terminated at any time prior to the effective time of the Merger (the
"Effective Time"), whether before or after approval by the stockholders of
the Company (provided, however, that if Shares are purchased pursuant to
the Offer, neither Parent nor Purchaser may in any event terminate the
Merger Agreement), (1) by mutual written consent of Parent and the Company,
(2) by either Parent or the Company (a) if the Purchaser has not accepted
for payment any Shares pursuant to the Offer prior to October 9, 1998,
provided, however, that the right to terminate the Merger Agreement
pursuant to this sentence will not be available to (i) Parent, if Purchaser
has breached its obligations under the second to last sentence of the fifth
paragraph under Section 1 above or (ii) any party whose failure to perform
any of its obligations under the Merger
14
<PAGE> 17
Agreement results in the failure of any such condition or if the failure of
such condition results from facts or circumstances that constitute a
willful breach of a representation or warranty under the Merger Agreement
by such party, or (b) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or
payment for, Shares pursuant to the Offer or the Merger and such order,
decree or ruling or other action has become final and nonappealable, (3) by
Parent or the Purchaser prior to the purchase of Shares pursuant to the
Offer in the event of a breach or failure to perform by the Company of any
representation, warranty, covenant or other agreement contained in the
Merger Agreement which (i) would give rise to the failure of a condition
set forth in paragraph (e) or (f) under "Certain Conditions of the Offer"
and (ii) cannot be cured, or has not been cured within 30 days after the
Company receives written notice from Parent of such breach or failure to
perform; or (4) by the Company in the event of a material breach or failure
to perform in any material respect by Parent or the Purchaser of any
representation, warranty, covenant or other agreement contained in the
Merger Agreement which cannot be cured, or has not been cured within 30
days after Parent or the Purchaser receives written notice from the Company
of such breach or failure to perform.
The Merger Agreement provides that in the event of a termination as
described in clause (1) or (2) of the preceding paragraph or the failure
otherwise to consummate the Offer by October 9, 1998, Parent will, or will
cause an affiliate to, purchase available products of the Company in the
aggregate amount of at least (1) $50 million during the first 12 month
period from the earlier of (i) October 9, 1998 or (ii) the date of such
termination and (2) $100 million during the succeeding 12 month period, in
each case, on an approximately level order basis throughout the period
pursuant to the Company's standard form of purchase agreement and subject
to the terms (including price and applicable discounts) and conditions
contained in the OEM Contract (the "Purchase Commitment"). Each of the
Company and Parent have agreed to use their best efforts to agree upon the
type of available products and to schedule their delivery consistent with
the Company's operations in the ordinary course but the failure to agree
upon the products to be purchased and sold will not change Parent's
obligation to purchase products of the Company in such amounts in such
periods. The Merger Agreement further provides that, notwithstanding the
foregoing, Parent will have the right to terminate the Purchase Commitment
at any time upon delivery of written notice to the Company following a
Change of Control (as defined below) of the Company. Such termination will
not affect issued and open purchase orders. The Merger Agreement defines
"Change of Control" of the Company as: (1) the acquisition by any
individual, entity or group (within the meaning of Section 13(d)(3) and
14(d)(2) of the Exchange Act) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or
more of the then outstanding shares of Company Common Stock; (2)
individuals who, as of the date of the Merger Agreement, constitute the
board of directors (or any successor body performing similar functions) of
the Company (the "Board" and, as constituted on the date of the Merger
Agreement, the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date of the Merger Agreement whose
election, or nomination for election by such party's shareholders, was
approved by a vote of at least two-thirds of the directors then comprising
the Incumbent Board, will be considered as though such individual were a
member of the Incumbent Board; (3) consummation of a reorganization, merger
or consolidation or sale or other disposition of all or substantially all
of the assets of the Company (each, a "Business Combination"), unless,
following such Business Combination, the individuals and entities who were
the beneficial owners of the Company Common Stock outstanding immediately
prior to such Business Combination beneficially own, immediately after
consummation of such Business Combination, more than 75% of the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities of the corporation resulting from such
Business Combination; or (4) consummation of the acquisition of a company
or the assets and liabilities of a company if the individuals and entities
who were beneficial owners of the Company Common Stock immediately prior to
such acquisition would fail to own, directly or indirectly, more than 75%
of the Company Common Stock after the acquisition.
15
<PAGE> 18
TAKEOVER PROPOSALS. The Merger Agreement provides that the Company
will not, nor will it permit any of it subsidiaries to, nor will it
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or any subsidiary to, directly or indirectly,
(1) solicit, initiate or knowingly encourage the submission of any Takeover
Proposal (as defined below) or (2) participate in any discussions or
negotiations regarding, or furnish to any person any nonpublic information
with respect to, or take any other action designed or reasonably likely to
facilitate any inquiries or the making of any proposal that constitutes any
Takeover Proposal. The Merger Agreement defines "Takeover Proposal" as any
inquiry, proposal or offer from any person relating to any direct or
indirect acquisition or purchase of a substantial amount of assets of the
Company and its subsidiaries, taken as a whole (other than the purchase of
the Company's products in the ordinary course of business), or more than a
20% interest in the total voting securities of the Company or any of its
subsidiaries or any tender offer or exchange offer that if consummated
would result in any person beneficially owning 20% or more of any class of
equity securities of the Company or any of its subsidiaries or any merger,
consolidation, business combination, sale of all or substantially all of
its assets, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its subsidiaries, other than
the transactions contemplated by the Merger Agreement.
The Merger Agreement provides further that neither the Board of
Directors of the Company nor any committee thereof may (1) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent,
the approval or recommendation by such Board of Directors or such committee
of the Offer, the Merger, the Merger Agreement or the Stockholders
Agreement, (2) approve or recommend, or propose publicly to approve or
recommend, any Takeover Proposal or (3) cause the Company to enter into any
letter of intent, agreement in principle, acquisition agreement or other
similar agreement related to any Takeover Proposal.
In addition to the obligations of the Company set forth in the
preceding paragraphs, the Merger Agreement provides that the Company must
promptly advise Parent orally and in writing of any inquiry with respect to
a Takeover Proposal, any request for nonpublic information (except in the
ordinary course of business and not in connection with a possible Takeover
Proposal) or of any Takeover Proposal known to it, the material terms and
conditions of such inquiry, request or Takeover Proposal and the identity
of the person making such inquiry, request or Takeover Proposal. The
Company must promptly inform Parent of any material change in the status
and details (including amendments or proposed amendments) of any such
inquiry, request or Takeover Proposal.
The Merger Agreement provides that nothing contained therein will
prohibit the Company from taking and disclosing to its stockholders a
position contemplated by Rule 14d-9 or Rule 14e-2(a) promulgated under the
Exchange Act; provided, however, that neither the Company nor its Board of
Directors nor any committee thereof may withdraw or modify, or propose to
withdraw or modify, its position with respect to the Offer, the Merger or
the Merger Agreement or approve or recommend, or propose to approve or
recommend, a Takeover Proposal.
FEES AND EXPENSES. The Merger Agreement provides that all fees and
expenses incurred in connection with the Offer, the Merger, the Merger
Agreement, the Stockholders Agreement and the transactions contemplated by
the Merger Agreement and the Stockholders Agreement will be paid by the
party incurring such fees or expenses, whether or not the Offer or the
Merger is consummated.
CONDUCT OF BUSINESS BY THE COMPANY. The Merger Agreement provides
that until the earlier of termination of the Merger Agreement and the
consummation of the Offer, the Company will, and will cause its
subsidiaries to, carry on their respective businesses in the ordinary
course consistent with the manner conducted prior to the execution of the
Merger Agreement and, to the extent consistent therewith, use commercially
reasonable efforts to preserve intact their current business organization,
keep available the services of their current officers and employees and
preserve their relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with them. In
addition, and without limiting the generality of the foregoing, during the
period from the date of the Merger Agreement until the earlier termination
of the Merger Agreement and the consummation of the
16
<PAGE> 19
Offer, except as otherwise expressly permitted by the Merger Agreement (or
for certain matters disclosed in connection therewith), the Company will
not, and will not permit any of its subsidiaries to, without Parent's prior
written consent: (1) other than dividends and distributions by a direct or
indirect wholly owned subsidiary of the Company to its parent, (a) declare,
set aside or pay any dividends on, or make any other distributions (whether
in cash, stock or property), in respect of, any of its capital stock, (b)
split, combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock (other than the issuance of
shares of Company Common Stock upon the exercise of Stock Options (as
defined below) outstanding on the date of the Merger Agreement and in
accordance with their present terms) or (c) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities; (2) issue, deliver,
sell, pledge or otherwise encumber any shares of its capital stock, any
other voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities (other than the issuance of shares of Company Common
Stock upon the exercise of Stock Options outstanding on the date of the
Merger Agreement and in accordance with their present terms and other than
the issuance of shares of Company Common Stock pursuant to the terms of the
Yurie Systems, Inc. 401(k) Plan and the Yurie Systems, Inc. Employee Stock
Purchase Plan (the "ESPP") in accordance with the amounts disclosed in
connection with the Merger Agreement); (3) amend its Certificate of
Incorporation, Amended and Restated By-Laws or other comparable charter or
organizational documents; (4) acquire or agree to acquire (including,
without limitation, by merger, consolidation or acquisition of stock or
assets) any business, including through the acquisition of any interest in
any corporation, partnership, joint venture, association or other business
organization or division thereof; (5) sell, lease, license, mortgage or
otherwise encumber or otherwise dispose of any of its properties or assets,
other than in the ordinary course of business consistent with past
practice; (6) (a) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt securities
or warrants or other rights to acquire any debt securities of the Company
or any of its subsidiaries, or guarantee any debt securities of another
person, other than short-term bank financing in the ordinary course of
business consistent with past practice or (b) make any loans, advances or
capital contributions to, or investments in, any other person, other than
in the ordinary course of business consistent with past practice; (7) make
or agree to make any new capital expenditure or expenditures, other than in
the ordinary course of business consistent with past practice; (8) except
as required to comply with applicable law or agreements, plans or
arrangements existing on the date of the Merger Agreement, (a) adopt, enter
into, terminate or amend any employment contract, collective bargaining
agreement or Benefit Plan (as defined in the Merger Agreement), (b)
increase in any manner the compensation or fringe benefits of, or pay any
bonus to, any director, officer or employee (except for normal increases of
cash compensation or cash bonuses to individuals (and not across-the-board
actions) in the ordinary course of business consistent with past practice),
(c) pay any benefit not provided for under any Benefit Plan or any other
benefit plan or arrangement of the Company or its subsidiaries, (d)
increase in any manner the severance or termination pay of any officer or
employee, (e) enter any employment, consulting, severance, termination or
indemnification agreement, arrangement or understanding with any current or
former employee, officer or director, (f) except as permitted in clause
(b), grant any awards under any bonus, incentive, performance or other
compensation plan or arrangement or Benefit Plan (including the grant of
stock options, stock appreciation rights, stock based or stock related
awards, performance units or restricted stock or the removal of existing
restrictions in any Benefit Plans or agreements or awards made thereunder),
(g) take any action to fund or in any other way secure the payment of
compensation or benefits under any employee plan, agreement, contract or
arrangement or Benefit Plan or (h) take any action to accelerate the
vesting of, or cash out rights associated with, any Stock Options (except
that appropriate action will be taken to accelerate the vesting of all
Stock Options outstanding as of the date of the Merger Agreement under the
Data Labs, Inc. 1996 Stock Option Plan as of the consummation of the
Offer); (9) enter into any agreement of a nature that would be required to
be filed as an exhibit to Form 10-K under the Exchange Act, other than
contracts for the sale of the Company's products in the ordinary course of
business; (10) except as required by GAAP, make any material change in
accounting methods, principles or practices; (11) make any material tax
election or
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enter into any settlement or compromise with respect to any material income
tax liability; or (12) authorize any of, or commit or agree to take any of,
the foregoing actions.
BOARD OF DIRECTORS. The Merger Agreement provides that promptly upon
the acceptance for payment of, and payment for, Shares by the Purchaser
pursuant to the Offer, the Purchaser will be entitled to designate such
number of directors on the Board of Directors of the Company as will give
the Purchaser, subject to compliance with Section 14(f) of the Exchange
Act, representation on the Company's Board of Directors equal to the
product of (1) the total number of directors on the Company's Board of
Directors and (2) the percentage that the number of Shares purchased by
Purchaser in the Offer bears to the number of Shares outstanding, and the
Company will, at such time, cause the Purchaser's designees to be so
elected by its existing Board of Directors. Subject to applicable law, the
Company has agreed to take all action requested by Parent necessary to
effect any such election, including mailing to its stockholders the
Information Statement containing the information required by Section 14(f)
of the Exchange Act and Rule 14f-1 promulgated thereunder. The Merger
Agreement further provides that in the event that the Purchaser's designees
are elected to the Board of Directors of the Company, until the effective
time of the Merger, the Board of Directors of the Company will have at
least two directors who are not officers of the Company or any of its
subsidiaries. The Merger Agreement also provides that the Company will
promptly, at the option of Parent, either increase the size of the
Company's Board of Directors and/or obtain the resignation of such number
of its current directors as is necessary to enable Purchaser's designees to
be elected or appointed to, and to constitute a majority of, the Company's
Board of Directors as provided above.
STOCK OPTIONS. The Merger Agreement provides that as soon as
practicable following the date of the Merger Agreement, the Board of
Directors of the Company (or, if appropriate, any committee administering
the Company Stock Plans, as defined below) will adopt such resolutions or
take such other actions if any, as may be reasonably required to: (1)
adjust the terms of all outstanding options to purchase Company Common
Stock (the "Stock Options") granted under any plan or arrangement providing
for the grant of options to purchase Company Common Stock to current or
former directors, officers, employees or consultants of the Company or its
subsidiaries (the "Company Stock Plans"), whether vested pursuant to clause
(8)(h) of the section above entitled "-- Conduct of Business by the
Company" or otherwise vested by their terms (including as a result of the
consummation of the transactions contemplated by the Merger Agreement), as
necessary to provide that, at the consummation of the Offer, each Stock
Option outstanding immediately prior to the consummation of the Offer will
be amended and converted into an option to acquire, on the same terms and
conditions as were applicable under the Stock Option, the number of shares
of common stock of Parent ("Parent Common Stock") determined by multiplying
the number of shares of Company Common Stock subject to such Stock Option
by a fraction (the "Conversion Fraction"), the numerator of which is $35
and the denominator of which is the average of the high and low sales
prices of Parent Common Stock as reported by the New York Stock Exchange
for three trading days immediately preceding (but not including) the date
of the consummation of the Offer, rounded down to the nearest whole share,
at a price per share of Parent Common Stock equal to (a) the exercise price
per share of Company Common Stock subject to such Stock Option immediately
prior to the consummation of the Offer divided by (b) the Conversion
Fraction (each, as so adjusted, an "Adjusted Option"), rounded up to the
nearest one-hundredth of a cent, and (2) make such other changes to the
Company Stock Plans as Parent and the Company may agree are appropriate to
give effect to the foregoing and the Merger.
The Merger Agreement further provides that upon consummation of the
Offer, in accordance with the terms of the ESPP, the ESPP and all options
outstanding thereunder will automatically terminate and each participant
thereunder will be paid the outstanding balance of payroll deductions that
are in his or her account thereunder at the Effective Time.
EMPLOYEE MATTERS. The Merger Agreement provides that upon
consummation of the Offer, Parent (and the Company) will, or Parent will
cause the Purchaser to, (i) employ each Company Employee (as defined below)
at the same base pay as in effect immediately prior to the consummation of
the Offer and (ii) provide benefits substantially similar in the aggregate
to current Company benefits, or provide
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<PAGE> 21
Company Employees who continue to be employed by the Company or the
Purchaser with the employee benefit plans and compensation provided by
Parent to similarly situated employees in the Data Networking Systems
Division of Parent. "Company Employees" means those persons who are
employees of the Company and its subsidiaries immediately prior to the
consummation of the Offer, other than those executives (the "Specified
Executives") of the Company who have entered into Retention Agreements (as
defined below under "-- Certain Agreements with Company Executives") with
Parent.
The Merger Agreement also provides that Parent will, or will cause the
Surviving Corporation to, grant to the Company Employees (including the
Specified Executives) credit for purposes of determining eligibility to
participate and vesting in Parent's or the Surviving Corporation's employee
benefit plans for service with the Company and its subsidiaries. The Merger
Agreement further provides that Parent will waive any and all pre-existing
condition limitations and exclusions and waiting periods that may otherwise
apply to the Company Employees (including the Specified Executives) under
the benefit plans of Parent and its affiliates, and Parent will cause such
Company Employees to receive full credit for amounts paid or accrued
towards any deductible or copayment requirements incurred during the
current plan year.
The Merger Agreement provides that in the event it is determined that
in connection with the transactions contemplated by the Merger Agreement,
any payment, acceleration of vesting or distribution of any type to or for
the benefit of any Company Employee identified in writing by the Company to
Parent, whether paid or payable or distributed or distributable pursuant to
any Benefit Plan or otherwise (the "Total Payments"), will be subject to
the excise tax imposed by Section 4999 of the Code or any interest or
penalties with respect to such excise tax (such excise tax, together with
any such interest and penalties, are collectively referred to as the
"Excise Tax"), then such Company Employee will be entitled to receive from
Parent an additional payment (a "Gross-Up Payment") in an amount such that
after payment by such Company Employee of all taxes (including any interest
or penalties imposed with respect to such taxes), including any Excise Tax,
imposed upon the Gross-Up Payment, such Company Employee retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Total
Payments.
As a result of uncertainty in the application of Section 4999 of the
Code at the time of the initial determination of the Gross-Up Payment as
described hereunder, it is possible that Gross-Up Payments not made by
Parent should have been made (an "Underpayment"), or that Gross-Up Payments
will have been made by Parent which should not have been made (an
"Overpayment"). In either such event, the amount of the Underpayment or
Overpayment that has occurred will be determined as soon as practicable. In
the case of an Underpayment, the amount of such Underpayment will be
promptly paid by Parent to or for the benefit of the applicable Company
Employee. In the case of an Overpayment, the applicable Company Employee
will, at the direction and expense of Parent, take such steps as are
reasonably necessary (including the filing of returns and claims for
refund), follow reasonable instructions from, and procedures established
by, Parent, and otherwise reasonably cooperate with Parent to correct such
Overpayment; provided, however, that (1) a Company Employee will not in any
event be obligated to return to Parent an amount greater than the net
after-tax portion of the Overpayment that he has retained or has recovered
as a refund from the applicable taxing authorities and (2) the provision
described in this paragraph will be interpreted in a manner consistent with
the intent of the foregoing provisions, which is to make the Company
Employee whole, on an after-tax basis, from the application of the Excise
Tax, it being understood that the correction of an Overpayment may result
in the Company Employee repaying to Parent an amount which is less than the
Overpayment.
INDEMNIFICATION. From and after the consummation of the Offer, Parent
will, and will cause the Surviving Corporation to, fulfill and honor in all
respects the obligations of the Company pursuant to (1) each
indemnification agreement in effect at such time between the Company and
each person who is or was a director or officer of the Company at or prior
to the Effective Time and (2) any indemnification provisions under the
Company's Certificate of Incorporation or Amended and Restated By-laws as
each was in effect on the date of the Merger Agreement (the persons to be
indemnified pursuant to the agreements or provisions referred to in clauses
(1) and (2) of this sentence are referred to as, collectively, the
"Indemnified Parties"). Pursuant to the Merger Agreement, the Certificate
of Incorporation and By-
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laws of the Surviving Corporation will contain the provisions with respect
to indemnification and exculpation from liability set forth in the
Company's Certificate of Incorporation and By-laws on the date of the
Merger Agreement, which provisions will not be amended, repealed or
otherwise modified for a period of six years after the Effective Time in
any manner that would adversely affect the rights thereunder of any
Indemnified Party.
REASONABLE EFFORTS. Upon and subject to the terms and subject to the
conditions set forth in the Merger Agreement, Parent, the Purchaser and the
Company have each agreed to use all reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with each other in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer, the Merger and the other transactions contemplated
by the Merger Agreement and the Stockholders Agreement, including using
reasonable efforts to take the following actions: (1) the taking of all
reasonable acts necessary to cause the conditions of the Offer to be
satisfied, (2) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making
of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as
may be necessary to avoid an action or proceeding by any Governmental
Entity, (3) the obtaining of all necessary consents, approvals or waivers
from third parties, (4) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging the Merger
Agreement or the Stockholders Agreement or the consummation of the
transactions contemplated thereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental
Entity vacated or reversed, and (5) the execution and delivery of any
additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, the Merger
Agreement and the Stockholders Agreement. In connection with and without
limiting the foregoing, but subject to the terms and conditions of the
Merger Agreement, the Company and its Board of Directors will, if any state
takeover statute or similar statute or regulation is or becomes applicable
to the Offer, the Merger, the Merger Agreement, the Stockholders Agreement
or any other transactions contemplated by the Merger Agreement or the
Stockholders Agreement, use all reasonable efforts to ensure that the
Offer, the Merger and the other transactions contemplated by the Merger
Agreement or the Stockholders Agreement may be consummated as promptly as
practicable on the terms contemplated by the Merger Agreement and otherwise
to minimize the effect of such statute or regulation on the Offer, the
Merger, the Merger Agreement and the Stockholders Agreement and the other
transactions contemplated by the Merger Agreement and the Stockholders
Agreement.
The Merger Agreement further provides that the Company will give
prompt notice to Parent, and Parent will give prompt notice to the Company,
of (1) any representation or warranty made by it contained in the Merger
Agreement that is qualified as to materiality becoming untrue or inaccurate
in any respect or any such representation or warranty that is not so
qualified becoming untrue or inaccurate in any material respect or (2) the
failure by it to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it
under the Merger Agreement; provided, however, that no such notification
will affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under the
Merger Agreement.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties.
The foregoing summary of the Merger Agreement is qualified in its entirety
by reference to the Merger Agreement, a copy of which is filed as Exhibit (c)(1)
to Purchaser's Tender Offer Statement on Schedule 14D-1 filed with the
Commission on the date hereof (the "Schedule 14D-1") and incorporated by
reference herein. The Merger Agreement should be read in its entirety for a more
complete description of the matters summarized above.
The Stockholders Agreement. Pursuant to the Stockholders Agreement, the
Stockholders have agreed to tender into the Offer the Shares that each such
Stockholder owned as set forth on Exhibit A to the Stockholders Agreement, as
well as any Shares that they thereafter acquire, including upon the exercise of
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stock options (the "Subject Shares"). The Stockholders have agreed to sell to
the Purchaser, and the Purchaser has agreed to purchase, all the Subject Shares
at a price per Share of $35, subject only to the condition (which may be waived
only by the Purchaser in its sole discretion) that the Purchaser will have
accepted for payment and paid for Shares pursuant to the Offer (the "Purchase").
The closing of the Purchase will be effected by each Stockholder tendering all
such Stockholder's Subject Shares into the Offer, and by the Purchaser accepting
for payment and paying for such Subject Shares pursuant to the terms of the
Offer.
The Subject Shares represent more than a majority of the outstanding Shares
(determined on a fully diluted basis) and, upon the tendering of these Shares,
the Minimum Condition will be satisfied. As of April 24, 1998, there were
17,766,200 Subject Shares, representing approximately 57% of the outstanding
Shares on a fully diluted basis. Once the Minimum Condition is satisfied and the
Purchaser accepts for payment Shares tendered pursuant to the Offer, the
Purchaser will be able to elect a majority of the members of the Company's Board
of Directors and to effect the Merger without the affirmative vote of any other
stockholder of the Company.
The Stockholders Agreement provides that each of the Stockholders has
agreed not to: (1) sell, transfer, pledge, assign or otherwise dispose of, or
enter into any contract, option or other arrangement (including any profit
sharing arrangement) or understanding with respect to the sale, transfer,
pledge, assignment or other disposition of, the Subject Shares (including any
options or warrants to purchase Company Common Stock) to any person other than
the Purchaser or the Purchaser's designee, (2) enter into any voting
arrangement, whether by proxy, voting agreement, voting trust, power-of-attorney
or otherwise, with respect to the Subject Shares or (3) take any other action
that would in any way restrict, limit or interfere with the performance of its
obligations under the Stockholders Agreement or the transactions contemplated by
the Stockholders Agreement.
The Stockholders Agreement further provides that each of the Stockholders
has also agreed that until the Merger is consummated or the Merger Agreement is
terminated, the Stockholder will not, nor will the Stockholder permit any
investment banker, financial adviser, attorney, accountant or other
representative or agent of the Stockholder to, directly or indirectly (1)
solicit, initiate or encourage (including by way of furnishing information), or
take any other action designed or reasonably likely to facilitate, any inquiries
or the making of any proposal which constitutes, or may reasonably be expected
to lead to, any Takeover Proposal or (2) participate in any discussions or
negotiations regarding any Takeover Proposal.
Each Stockholder has further agreed in the Stockholders Agreement that at
any meeting of stockholders of the Company called to vote upon the Merger and
the Merger Agreement or at any adjournment thereof or in any other circumstances
upon which a vote, consent or other approval (including by written consent) with
respect to the Merger and the Merger Agreement is sought, each Stockholder will,
including by initiating a written consent solicitation if requested by Parent,
vote (or cause to be voted) such Stockholder's Subject Shares in favor of the
Merger, the adoption by the Company of the Merger Agreement and the approval of
the other transactions contemplated by the Merger Agreement. At any meeting of
stockholders of the Company or at any adjournment thereof or in any other
circumstances upon which a Stockholder's vote, consent or other approval is
sought, such Stockholder will vote (or cause to be voted) such Stockholder's
Subject Shares against (1) any merger agreement or merger (other than the Merger
Agreement and the Merger), consolidation, combination, sale of substantial
assets, reorganization, recapitalization, dissolution, liquidation or winding up
of or by the Company or any other Takeover Proposal (collectively, "Alternative
Transactions") and (2) any amendment of the Company's Certificate of
Incorporation or Amended and Restated By-laws or other proposal or transaction
involving the Company or any of its subsidiaries, which amendment or other
proposal or transaction would in any manner impede, frustrate, prevent or
nullify the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement (collectively, "Frustrating Transactions").
Under the Stockholders Agreement, Parent has agreed to indemnify each of the
Stockholders for any liabilities, to the extent pertaining to such Stockholder
solely in his capacity as a stockholder of the Company, arising out of the
Stockholders Agreement or the transactions contemplated thereby, unless such
liability arises out of a breach of such Stockholder's representations,
warranties or covenants contained in the Stockholders Agreement.
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Under the Stockholders Agreement, each Stockholder has granted an
irrevocable proxy with respect to the Subject Shares to, and appoints, certain
representatives of Parent, and any other individual who shall be designated by
Parent, to vote such Stockholder's Subject Shares, or grant a consent or
approval in respect of such Subject Shares, in favor of the Merger, the adoption
by the Company of the Merger Agreement and the approval of the other
transactions contemplated by the Merger Agreement and against any Alternative
Transaction or Frustrating Transaction.
The foregoing summary of the Stockholders Agreement is qualified in its
entirety by reference to the Stockholders Agreement, a copy of which is filed as
Exhibit (c)(2) to the Schedule 14D-1 and incorporated by reference herein. The
Stockholders Agreement should be read in its entirety for a more complete
description of the matters summarized above.
Certain Agreements with Company Executives. In connection with the Merger
Agreement, four of the Company's executive officers, Jeong H. Kim, Kwok L. Li,
Harry J. Carr and Barton Y. Shigemura (collectively, the "Company Executives"),
have entered into retention agreements (the "Retention Agreements") with Parent,
the Purchaser, the Company and an escrow agent (the "Escrow Agent"). The
Retention Agreements of Dr. Kim and Messrs. Carr and Shigemura provide for terms
of employment with Parent following the consummation of the Offer, with an
annual salary and the right to participate in certain benefit and incentive
plans of Parent. Mr. Li's Retention Agreement provides for a consulting
arrangement with Parent with an annual consulting fee. Each of the Retention
Agreements becomes effective upon the consummation of the Offer and is for a
term of three years thereafter, subject to earlier termination upon certain
events. Capitalized terms used in this section without definitions have the
meanings ascribed thereto in the Retention Agreements.
Each Retention Agreement requires the applicable Company Executive to apply
15% of the aggregate proceeds that he receives from the tender of all his Shares
into the Offer to the purchase of shares of Parent Common Stock in open market
brokerage transactions and to deposit such Parent Common Stock into escrow (the
"Escrowed Shares") with the Escrow Agent in accordance with the terms of the
Retention Agreement. During the term of each Retention Agreement, the Escrow
Agent will deliver one-twelfth of the Company Executive's Escrowed Shares to the
Company Executive on the last day of each three month period following the
consummation of the Offer, with the first delivery commencing on August 31,
1998, subject to certain conditions. All cash dividends and distributions paid
on the Escrowed Shares will be passed through to the Company Executives and will
not be subject to any restrictions. The Company Executives will have the right
to vote the Escrowed Shares on any matter upon which shares of Parent Common
Stock are entitled to vote.
In addition, Messrs. Carr and Shigemura have also agreed in their Retention
Agreements that 20% of the options to acquire Parent Common Stock (the "Adjusted
Options") that they will hold as a result of the conversion of Stock Options at
the consummation of the Offer, will be subject to a revised three-year vesting
schedule. The revised vesting schedule provides that one-twelfth of the Adjusted
Options will vest on the last day of each three month period following
consummation of the Offer, with the first vesting date being August 31, 1998,
subject to certain conditions. Dr. Kim and Mr. Li do not own any Stock Options.
Pursuant to the terms of each Company Executive's Retention Agreement, in
the event that (i) the Company Executive terminates his employment (or
consultancy) for Good Reason, (ii) Parent terminates the Company Executive other
than for Cause or (iii) the Company Executive dies or suffers a Disability, then
in each case, all Escrowed Shares will be released to the Company Executive by
the Escrow Agent and all Adjusted Options shall be immediately vested and
exercisable. If (A) the Company Executive elects to terminate his employment (or
consultancy) with Parent other than for Good Reason or (B) the Company Executive
is terminated for Cause, then in either case, the Company Executive will lose
the economic value of any Escrowed Shares or unvested Adjusted Options.
In entering into the Retention Agreements, each Company Executive has also
agreed that any employment relationship between the Company Executive and the
Company will be terminated upon consummation of the Offer, and that no
termination or other amount otherwise payable to the Company Executive will be
payable in connection with such termination.
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The foregoing summary of the Retention Agreements is qualified by reference
to such agreements, copies of which are filed as Exhibits (c)(3) to (c)(6) to
the Schedule 14D-1 and incorporated by reference herein.
Appraisal Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
will have certain rights pursuant to the provisions of Section 262 of the DGCL
to dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. If the statutory procedures were complied with, such
rights could lead to a judicial determination of the fair value required to be
paid in cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than or in addition to the Offer Price or the market value of the Shares,
including asset values and the investment value of the Shares. The value so
determined could be more or less than the Offer Price or the Merger
Consideration.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his right to appraisal, as
provided in the DGCL, the Shares of such stockholder will be converted into the
Merger Consideration in accordance with the Merger Agreement. A stockholder may
withdraw his demand for appraisal by delivery to the Surviving Corporation of a
written withdrawal of his demand for appraisal and acceptance of the Merger.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
Going Private Transactions. The Merger would have to comply with any
applicable Federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act is applicable to certain "going private" transactions.
The Purchaser does not believe that Rule 13e-3 will be applicable to the Merger
unless the Merger is consummated more than one year after the termination of the
Offer. If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the Merger and the consideration offered to minority
stockholders be filed with the Commission and disclosed to minority stockholders
prior to consummation of the Merger.
Other Matters. Except as otherwise described in this Offer to Purchase,
the Purchaser and Parent have no current plans or proposals that would relate
to, or result in, any extraordinary corporate transaction involving the Company
or any of its subsidiaries, such as a merger, reorganization or liquidation
involving the Company or any of its subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries, any change
in the present Board of Directors of the Company or management of the Company,
any material change in the Company's capitalization or dividend policy or any
other material change in the Company's business, corporate structure or
personnel.
13. DIVIDENDS AND DISTRIBUTIONS
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two succeeding paragraphs, and
nothing herein shall constitute a waiver by the Purchaser or Parent of any of
its rights under the Merger Agreement or a limitation of remedies available to
the Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.
If, on or after the date of the Merger Agreement, the Company should (1)
split, combine or otherwise change the Shares or its capitalization, (2) acquire
currently outstanding Shares or otherwise cause a reduction in the number of
outstanding Shares or (3) issue or sell additional Shares, shares of any other
class of capital stock, other voting securities or any securities convertible
into, or rights, warrants or options, to acquire any of the foregoing, other
than Shares issued pursuant to the exercise of Stock Options outstanding as of
the date of the Merger Agreement, then, subject to the provisions of Section 14
below, the Purchaser, in its sole discretion, may make such adjustments as it
deems appropriate in the Offer Price and other terms of the Offer, including,
without limitation, the number or type of securities offered to be purchased.
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If, on or after the date of the Merger Agreement, the Company should
declare or pay any cash dividend on the Shares or other distribution on the
Shares, or issue with respect to the Shares any additional Shares, shares of any
other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, payable or distributable to stockholders of
record on a date prior to the transfer of the Shares purchased pursuant to the
Offer to the Purchaser or its nominee or transferee on the Company's stock
transfer records, then, subject to the provisions of Section 14 below, (1) the
Offer Price may, in the sole discretion of the Purchaser, be reduced by the
amount of any such cash dividend or cash distribution and (2) the whole of any
such noncash dividend, distribution or issuance to be received by the tendering
stockholders will (a) be received and held by the tendering stockholders for the
account of the Purchaser and will be required to be promptly remitted and
transferred by each tendering stockholder to the Depositary for the account of
the Purchaser, accompanied by appropriate documentation of transfer, or (b) at
the direction of the Purchaser, be exercised for the benefit of the Purchaser,
in which case the proceeds of such exercise will promptly be remitted to the
Purchaser. Pending such remittance and subject to applicable law, the Purchaser
will be entitled to all rights and privileges as owner of any such noncash
dividend, distribution, issuance or proceeds and may withhold the entire Offer
Price or deduct from the Offer Price the amount or value thereof, as determined
by the Purchaser in its sole discretion.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Merger Agreement, the
Purchaser will not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares after the termination or withdrawal of the Offer), to pay for
any Shares tendered pursuant to the Offer unless (1) the Minimum Condition shall
have been satisfied and (2) any waiting period under the HSR Act applicable to
the purchase of Shares pursuant to the Offer shall have expired or been
terminated. Furthermore, Purchaser will not be required to accept for payment
or, subject as aforesaid, to pay for any Shares not theretofore accepted for
payment or paid for, and may, in accordance with the provisions of the Merger
Agreement described in the subsection entitled "Termination of the Merger
Agreement" in Section 12 above, terminate the Merger Agreement or amend the
Offer with the consent of the Company, if, upon the scheduled expiration date of
the Offer (as extended, if required, pursuant to the provisions discussed in the
fifth paragraph of Section 1 above) and before the acceptance of such Shares for
payment or the payment therefor, any of the following conditions exists and is
continuing and does not result principally from the breach by Parent or the
Purchaser of any of their obligations under the Merger Agreement:
(a) there shall be instituted or pending by any Governmental Entity
any suit, action or proceeding (i) challenging the acquisition by Parent or
the Purchaser of any Shares under the Offer, seeking to restrain or
prohibit the making or consummation of the Offer or the Merger or the
performance of any of the other transactions contemplated by the Merger
Agreement or the Stockholders Agreement or seeking to obtain from the
Company, Parent or Purchaser any damages that are material in relation to
the Company and its subsidiaries as a whole, (ii) seeking to prohibit or
materially limit the ownership or operation by the Company, Parent or any
of Parent's subsidiaries of a material portion of the business or assets of
the Company or Parent and its subsidiaries, taken as a whole, or to compel
the Company or Parent to dispose of or hold separate any material portion
of the business or assets of the Company or Parent and its subsidiaries,
taken as a whole, in each case as a direct result of the Offer or any of
the other transactions contemplated by the Merger Agreement or the
Stockholders Agreement or (iii) seeking to impose material limitations on
the ability of Parent or the Purchaser to acquire or hold, or exercise full
rights of ownership of, any Shares to be accepted for payment pursuant to
the Offer including, without limitation, the right to vote such Shares on
all matters properly presented to the stockholders of the Company or (iv)
seeking to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect any material portion of the business or
operations of the Company;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, by any Governmental Entity or
24
<PAGE> 27
court, other than the application to the Offer or the Merger of applicable
waiting periods under the HSR Act, that would result in any of the
consequences referred to in clauses (i) through (iv) of paragraph (a)
above;
(c) there shall have occurred any material adverse change with respect
to the Company since the date of the Merger Agreement;
(d) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not be
true and correct or any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each
case at the date of the Merger Agreement and at the scheduled or extended
expiration of the Offer;
(e) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed or
complied with by it under the Merger Agreement, which failure to perform or
comply cannot be cured, or has not been cured within 30 business days after
the Company receives written notice from Parent of such breach or failure
to perform; or
(f) the Merger Agreement shall have been terminated in accordance with
its terms;
which, in the good faith judgment of Parent or the Purchaser, in its sole
discretion, make it inadvisable to proceed with such acceptance of Shares for
payment or the payment therefor.
The Merger Agreement provides that the foregoing conditions are for the
sole benefit of Parent and the Purchaser and (except for the Minimum Condition)
may, subject to the terms of the Merger Agreement, be waived by Parent and the
Purchaser in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or the Purchaser at any time to exercise any
of the foregoing rights will not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances will
not be deemed a waiver with respect to any other facts and circumstances and
each such right will be deemed an ongoing right that may be asserted at any time
and from time to time.
15. CERTAIN LEGAL MATTERS
Based on a review of publicly available filings made by the Company with
the Commission and other publicly available information concerning the Company,
neither the Purchaser nor Parent is aware of any license or regulatory permit
that appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the Purchaser's
acquisition of Shares as contemplated herein or of any approval or other action,
except as otherwise described in this Section 15, by any Governmental Entity
that would be required for the acquisition or ownership of Shares by the
Purchaser as contemplated herein. Should any such approval or other action be
required, the Purchaser and Parent currently contemplate that such approval or
other action will be sought, except as described below under "State Takeover
Laws." While, except as otherwise expressly described in this Section 15, the
Purchaser does not presently intend to delay the acceptance for payment of or
payment for Shares tendered pursuant to the Offer pending the outcome of any
such matter, there can be no assurance that any such approval or other action,
if needed, would be obtained or would be obtained without substantial conditions
or that failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of if such approvals were not
obtained or such other actions were not taken or in order to obtain any such
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, the Purchaser could decline to accept
for payment or pay for any Shares tendered. See Section 14 for certain
conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places or business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics
25
<PAGE> 28
Corp. of America, however, the Supreme Court of the United States held that a
state may, as a matter of corporate law, and, in particular, those laws
concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders; provided that such laws were applicable
only under certain conditions.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined
generally as any beneficial owner of 15% or more of the outstanding voting stock
of the corporation) unless, among other things, the corporation's board of
directors has given its prior approval to either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." The Company's Board of Directors has approved the Merger Agreement
and the Stockholders Agreement and the Purchaser's acquisition of Shares
pursuant to the Offer and, therefore, Section 203 of the DGCL is inapplicable to
the Offer, the Merger and the Stockholders Agreement.
Based on information supplied by the Company, the Purchaser does not
believe that any other state takeover statutes purport to apply to the Offer,
the Merger or the Stockholders Agreement. Neither the Purchaser nor Parent has
currently complied with any state takeover statute or regulation. The Purchaser
reserves the right to challenge the applicability or validity of any state law
purportedly applicable to the Offer, the Merger or the Stockholders Agreement
and nothing in this Offer to Purchase or any action taken in connection with the
Offer, the Merger or the Stockholders Agreement is intended as a waiver of such
right. If it is asserted that any state takeover statute is applicable to the
Offer, the Merger or the Stockholders Agreement and if an appropriate court does
not determine that it is inapplicable or invalid as applied to the Offer, the
Merger or the Stockholders Agreement, the Purchaser might be required to file
certain information with, or to receive approvals from, the relevant state
authorities, and the Purchaser might be unable to accept for payment or pay for
Shares tendered pursuant to the Offer, or be delayed in consummating the Offer
or the Merger. In such case, the Purchaser may not be obliged to accept for
payment or pay for any Shares tendered pursuant to the Offer.
Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the purchase of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by Parent of
a Notification and Report Form with respect to the Offer, unless Parent receives
a request for additional information or documentary material from the Antitrust
Division or the FTC or unless early termination of the waiting period is
granted. Parent is in the process of making such filing. If, within the initial
15-day waiting period, either the Antitrust Division or the FTC requests
additional information or material from Parent concerning the Offer, the waiting
period will be extended and would expire at 11:59 p.m., New York City time, on
the tenth calendar day after the date of substantial compliance by Parent with
such request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Parent. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the Antitrust Division or the
FTC raises substantive issues in connection with a proposed transaction, the
parties frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's purchase of Shares
pursuant to the Offer, the Antitrust Division or FTC could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of Parent or
its subsidiaries, or the Company or its subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain
26
<PAGE> 29
circumstances. There can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if such a challenge is made, of the
results thereof.
16. FEES AND EXPENSES
The Purchaser has retained Morrow & Co., Inc. to act as the Information
Agent and The Bank of New York to serve as the Depositary in connection with the
Offer. The Information Agent and the Depositary each will receive reasonable and
customary compensation for their services, be reimbursed for certain reasonable
out-of-pocket expenses and be indemnified against certain liabilities and
expenses in connection therewith, including certain liabilities under the
Federal securities laws.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent and the
Depositary) in connection with the solicitation of tenders of Shares pursuant to
the Offer. Brokers, dealers, banks and trust companies will be reimbursed by the
Purchaser upon request for customary mailing and handling expenses incurred by
them in forwarding material to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. None of the Purchaser or Parent is aware of any jurisdiction in
which the making of the Offer or the tender of Shares in connection therewith
would not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or Parent becomes aware of any state law that would limit the class of
offerees in the Offer, the Purchaser will amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser or Parent has filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional
information with respect to the Offer. In addition, the Company has filed with
the Commission the Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act
setting forth its recommendation with respect to the Offer and the reasons for
such recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Sections 8 and 9 (except that they will not be available at the regional offices
of the Commission).
REINDEER ACQUISITION, INC.
April 30, 1998
27
<PAGE> 30
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The name, business
address, present principal occupation or employment and five-year employment
history of each of the directors and executive officers of Parent are set forth
below. Unless otherwise indicated, the business address of each such director
and each such executive officer is 600 Mountain Avenue, Murray Hill, New Jersey
07974. All directors and executive officers listed below are citizens of the
United States.
<TABLE>
<CAPTION>
POSITION WITH PARENT;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
------------------------- -----------------------------------
<S> <C>
Paul A. Allaire........................... Director of Parent since October 1996. Chairman and
Xerox Corporation Chief Executive Officer of Xerox Corporation (document
800 Long Ridge Road processing services and products) since 1991. Director
P.O. Box 1600 of Sara Lee Corp., J. P. Morgan & Co., Inc. and
Stamford, CT 06904 SmithKline Beecham p.l.c. and consultant to Parent
Board of Directors (1996). Committees: member of the
Audit and Finance and Corporate Governance and
Compensation Committees. Age: 59.
Carla A. Hills............................ Director of Parent since April 1996. Chairman and
Hills & Company Chief Executive Officer of Hills & Company
1200 Nineteenth St., N.W. (international consultants) since 1993 and United
Suite 201 States Trade Representative (1989-1993). Director of
Washington, DC 20036 American International Group, Inc., Chevron Corp. and
Time Warner Inc. Committees: member of the Corporate
Governance and Compensation Committee. Age: 64.
Drew Lewis................................ Director of Parent since April 1996. Retired Chairman
Box 70 and Chief Executive Officer of Union Pacific
Lederach, PA 19450 Corporation (rail transportation and trucking)
(1987-1996). Director of American Express Company, FPL
Group, Inc., Gannett Co., Inc., Union Pacific
Resources Group Inc. and Gulfstream Aerospace
Corporation. Committees: member of the Audit and
Finance and Corporate Governance and Compensation
Committees. Age: 66.
Richard A. McGinn......................... Chairman of Parent since February 1998, and Director
since April 1996. Chief Executive Officer and
President of Parent since October 1997. President and
Chief Operating Officer of Parent from February 1996
to October 1997. Executive Vice President of AT&T and
Chief Executive Officer of the AT&T Network Systems
Group (1994-1996) and President and Chief Operating
Officer of the AT&T Network Systems Group (1993-1994).
Director of Oracle Corporation. Age: 51.
Paul H. O'Neill........................... Director of Parent since October 1996. Chairman and
ALCOA Chief Executive Officer of Aluminum Company of America
425 Sixth Avenue (ALCOA) (production of aluminum) since 1987. Chairman
31st Floor of the Rand Corporation. Director of the Gerald R.
Pittsburgh, PA 15219-1850 Ford Foundation, Manpower Demonstration Research
Corporation, National Association of Securities
Dealers, Inc. and Eastman Kodak Corporation.
Committees: member of the Audit and Finance and
Corporate Governance and Compensation Committees. Age:
62.
</TABLE>
28
<PAGE> 31
<TABLE>
<CAPTION>
POSITION WITH PARENT;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
------------------------- -----------------------------------
<S> <C>
Donald S. Perkins......................... Director of Parent since April 1996. Retired Chairman
One First National Plaza and Chief Executive Officer of Jewel Companies, Inc.
Suite 2530 (diversified retailer) (1970-1980). From January
21 South Clark Street through June 1995, Mr. Perkins served as Non-Executive
Chicago, IL 60603-2006 Chairman of Kmart Corp. Director of Aon Corp., Cummins
Engine Company, Inc., Current Assets, LaSalle Street
Fund, Inc., LaSalle U.S. Realty Income and Growth
Fund, Inc., The Putnam Funds, Ryerson Tull Inc.,
Springs Industries, Inc., Time Warner Inc. and
Nanophase Technology Corporation. Committees: Chairman
of the Audit and Finance Committee and member of the
Corporate Governance and Compensation Committee. Age:
71.
Donald K. Peterson........................ Executive Vice President and Chief Financial Officer
of Parent since February 1996. Joined AT&T in 1995 as
Vice President and Chief Financial Officer of AT&T's
Communications Services Group. Joined Northern
Telecom, Inc. in 1976 and served in various executive
positions there including President of Nortel
Communications Systems, Inc. (1993-1995). Age: 48.
Richard J. Rawson......................... Senior Vice President, General Counsel and Secretary
of Parent since February 1996. Joined AT&T Law
Division in 1984 and was appointed Vice President,
Law -- AT&T Network Systems Group in 1992. Age: 45.
Patricia F. Russo......................... Executive Vice President, Corporate Staff Operations
of Parent since December 1997, Executive Vice
President, Chief Staff Officer of Parent from December
1996 through December 1997 and President, Business
Communications Systems business unit of Parent from
February 1996 through December 1996. President, Global
Business Communications Systems of AT&T (1993-1996).
Age: 45.
Henry B. Schacht.......................... Director of Parent since April 1996, Chairman of
32 Old Slip Parent from April 1996 to February 1998. Chief
New York, NY 10005 Executive Officer of Parent from February 1996 to
October 1997. Chairman (1977-1995) and Chief Executive
Officer (1973-1994) of Cummins Engine Company, Inc.
Director of The Chase Manhattan Corporation and The
Chase Manhattan Bank, N.A., Aluminum Company of
America (ALCOA), Cummins Engine Company, Inc. and
Johnson & Johnson. Age: 63.
Daniel C. Stanzione....................... Executive Vice President and Chief Operating Officer
of Parent since December 1997, President, Bell
Laboratories (since February 1996) and Network Systems
business unit of Parent (1996-1997). President, AT&T
Bell Laboratories (1995-1996) and President, Global
Public Networks (1994-1995) and President, Switching
Systems (1993-1994), both units of the AT&T Network
Systems Group. Age: 52.
</TABLE>
29
<PAGE> 32
<TABLE>
<CAPTION>
POSITION WITH PARENT;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
------------------------- -----------------------------------
<S> <C>
Franklin A. Thomas........................ Director of Parent since April 1996. Consultant to the
TFF Study Group TFF Study Group since April 1996 (a non-profit
Fuller Building initiative assisting development in southern Africa).
595 Madison Avenue Retired President of The Ford Foundation (1979-1996).
33rd Floor Director of Aluminum Company of America (ALCOA),
New York, NY 10022 Citicorp and its subsidiary, Citibank, N.A., Cummins
Engine Company, Inc. and PepsiCo, Inc. Committees:
Chairman of the Corporate Governance and Compensation
Committee and member of the Audit and Finance
Committee. Age: 63.
Ben J. M. Verwaayen....................... Executive Vice President and Chief Operating Officer
of Parent since December 1997 and Executive Vice
President-President International from September 1997
through December 1997. President of PTT Telecom
(national telecommunications operator of the
Netherlands) from 1988 through September 1997.
Co-founder of Unisource (pan-European alliance of
Telia of Sweden, Swiss Telecom and PTT Telecom). Age:
46.
John A. Young............................. Director of Parent since October 1996. Retired
c/o Hewlett-Packard Company President and Chief Executive Officer of
Mail Stop 16AB Hewlett-Packard Company (manufacturer of measurement
3200 Hillview Avenue and computation products) (1978-1992). Director of
Palo Alto, CA 94304 Wells Fargo Bank, Wells Fargo & Co., Chevron Corp.,
Shaman Pharmaceuticals, Inc., SmithKline Beecham
p.1.c., Affymetrix, Inc. and Novell, Inc. and
consultant to Parent Board of Directors (1996).
Committees: member of the Corporate Governance and
Compensation Committee. Age: 66.
</TABLE>
30
<PAGE> 33
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The name, business
address, present principal occupation or employment and five-year employment
history of each of the directors and executive officers of the Purchaser are set
forth below. The business address of the directors and executive officers listed
below is 600 Mountain Avenue, Murray Hill, New Jersey 07974. The directors and
executive officers listed below are citizens of the United States.
<TABLE>
<CAPTION>
POSITION WITH THE PURCHASER;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME 5-YEAR EMPLOYMENT HISTORY
---- -----------------------------------
<S> <C>
William T. O'Shea......................... Group President, Business Communications Systems
business unit and Data Networking Systems business
unit of Parent since December 1997 and President of
the Purchaser since April 1998. President, Business
Communications Systems business unit of Parent from
January 1997 through December 1997 and President,
International, Network Systems of Parent from February
1996 through January 1997. President, International
Regions and Professional Services of the AT&T Network
Systems Group (1995-1996). Acting Chief Executive
Officer of AT&T Global Information Solutions Company
(now NCR Corporation) (1995). Prior thereto, held
various senior positions at AT&T Global Information
Solutions Company. Age: 50.
Paul D. Diczok............................ Corporate Counsel for the Business Communications
Systems business unit of Parent and AT&T Corp. since
1990 and Director, Chief Financial Officer, Vice
President and Treasurer of the Purchaser since April
1998. Joined AT&T Corp. Law Division in 1977. Age: 54.
Pamela F. Craven.......................... Vice President -- Law of Parent since February 1996
and Director, Vice President and Secretary of the
Purchaser since April 1998. Joined AT&T Corp. Law
Division in January 1992. Age: 44.
Jean F. Rankin............................ Corporate Counsel in the Mergers and Acquisitions Law
Group of Parent and AT&T Corp. since 1993 and Director
of the Purchaser since April 1998. Joined AT&T Corp.
Law Division in 1990. Age: 39.
</TABLE>
31
<PAGE> 34
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand/Overnight Courier:
(For Eligible Institutions
Tender & Exchange Only) Tender & Exchange
Department (212) 815-6213 Department
P.O. Box 11248 101 Barclay Street
Church Street Station Confirm by Telephone: Receive and Deliver Window
New York, New York 1-800-507-9357 New York, New York 10286
10286-1248
</TABLE>
Questions or requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be obtained from the Information Agent. A stockholder may also
contact brokers, dealers, commercial banks or trust companies for assistance
concerning the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, NY 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms
Please call:
(800) 662-5200
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
YURIE SYSTEMS, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED APRIL 30, 1998
BY
REINDEER ACQUISITION, INC.
A WHOLLY OWNED SUBSIDIARY OF
LUCENT TECHNOLOGIES INC.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, MAY 28, 1998, UNLESS EXTENDED.
- --------------------------------------------------------------------------------
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand or Overnight Courier:
Tender & Exchange (For Eligible Institutions Only) Tender & Exchange
Department (212) 815-6213 Department
P.O. Box 11248 101 Barclay Street
Church Street Station Confirm by Telephone: Receive and Deliver Window
New York, New York 1-800-507-9357 New York, New York 10286
10286-1248
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates for Shares
(as defined below) are to be forwarded herewith or, unless an Agent's Message
(as defined in Section 2 of the Offer to Purchase (as defined below)) is
utilized, if delivery of Shares is to be made by book-entry transfer to an
account maintained by the Depositary at the Book-Entry Transfer Facility as
defined in and pursuant to the procedures set forth in Section 2 of the Offer to
Purchase. Stockholders who deliver Shares by book-entry transfer are referred to
herein as "Book-Entry Stockholders" and other Stockholders are referred to
herein as "Certificate Stockholders." Stockholders whose certificates for Shares
are not immediately available or who cannot deliver either the certificates for,
or a Book-Entry Confirmation (as defined in Section 2 of the Offer to Purchase)
with respect to, their Shares and all other documents required hereby to the
Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase) must tender their Shares in accordance with the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase. See Instruction 2.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARES TENDERED
APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
TOTAL SHARES
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares described
herein are being tendered. See Instruction 4.
================================================================================
<PAGE> 2
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
------------------------------------------------------------------------
The Depository Trust Company Account Number
------------------------------------------------------------------------
Transaction Code Number
------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s)
------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
------------------------------------------------------------------------
If delivered by book-entry transfer check box: [ ]
The Depository Trust Company Account Number
------------------------------------------------------------------------
Transaction Code Number
------------------------------------------------------------------------
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Reindeer Acquisition, Inc., a Delaware
corporation (the "Purchaser") which is a wholly owned subsidiary of Lucent
Technologies Inc., a Delaware corporation ("Parent"), the above-described shares
of Common Stock, par value $.01 per share (the "Shares"), of Yurie Systems,
Inc., a Delaware corporation (the "Company"), upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase dated April 30, 1998
(the "Offer to Purchase"), and this Letter of Transmittal (which, together with
any amendments or supplements thereto or hereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for, the Shares tendered herewith in accordance with the
terms of the Offer, the undersigned hereby sells, assigns and transfers to, or
upon the order of, the Purchaser all right, title and interest in and to all the
Shares that are being tendered hereby (and any and all other Shares or other
securities or rights issued or issuable in respect thereof on or after April 27,
1998), and irrevocably constitutes and appoints The Bank of New York (the
"Depositary"), the true and lawful agent and attorney-in-fact of the
undersigned, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to the full extent
of the undersigned's rights with respect to such Shares (and any such other
Shares or securities or rights), (a) to deliver certificates for such Shares
(and any such other Shares or securities or rights) or transfer ownership of
such Shares (and any such other Shares or securities or rights) on the account
books maintained by the Book-Entry Transfer Facility together, in any such case,
with all accompanying evidences of transfer and authenticity to, or upon the
order of, the Purchaser, (b) to present such Shares (and any such other Shares
or securities or rights) for transfer on the Company's books and (c) to receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any such other Shares or securities or rights), all in accordance
with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Shares (and any and all other shares or other securities or rights issued or
issuable in respect of such Shares on or after April 27, 1998) and, when the
same are accepted for payment by the Purchaser, the Purchaser will acquire good
title thereto, free and clear of all liens, restrictions, claims and
encumbrances, and the same will not be subject to any adverse claim. The
undersigned will, upon request, execute any additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the tendered Shares (and any and all such other
Shares or securities or rights).
All authority conferred or agreed to be conferred pursuant to this Letter
of Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby irrevocably appoints Pamela F. Craven and Paul D.
Diczok, and each of them, and any other designees of the Purchaser, the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to vote at any annual, special or adjourned meeting of the
Company's stockholders or otherwise in such manner as each such attorney-in-fact
and proxy or his substitute shall in his sole discretion deem proper with
respect to, to execute any written consent concerning any matter as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper with respect to, and to otherwise act as each such attorney-in-fact and
proxy or his substitute shall in his sole discretion deem proper with respect
to, the Shares tendered hereby that have been accepted for payment by the
Purchaser prior to the time any such action is taken and with respect to which
the undersigned is entitled to vote (and any and all other Shares or other
securities or rights issued or issuable in respect of such Shares on or after
April 27, 1998). This appointment is effective when, and only to the extent
that, the Purchaser accepts for payment such Shares as provided in the Offer to
Purchase. This power of attorney and proxy are irrevocable and are granted in
consideration of the acceptance for payment of such Shares in accordance with
the terms of the Offer. Upon such acceptance for payment, all prior powers of
attorney, proxies and consents given by the undersigned with respect to such
Shares (and any such other Shares or securities or rights) will, without further
action, be revoked and no subsequent powers of attorney, proxies, consents or
revocations may be given (and, if given, will not be deemed effective) by the
undersigned.
The undersigned understands that the valid tender of Shares pursuant to any
of the procedures described in Section 2 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer.
<PAGE> 4
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment in the name(s) of the registered
holder(s) appearing under "Description of Shares Tendered." Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the check
for the purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered." In the event that both "Special Delivery Instructions" and "Special
Payment Instructions" are completed, please issue the check for the purchase
price and/or return any certificates for Shares not tendered or accepted for
payment (and any accompanying documents, as appropriate) in the name of, and
deliver such check and/or return such certificates (and any accompanying
documents, as appropriate) to, the person or persons so indicated. Please credit
any Shares tendered herewith by book-entry transfer that are not accepted for
payment by crediting the account at the Book-Entry Transfer Facility. The
undersigned recognizes that the Purchaser has no obligation pursuant to "Special
Payment Instructions" to transfer any Shares from the name of the registered
holder thereof if the Purchaser does not accept for payment any of the Shares so
tendered.
[ ] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number of Shares represented by the lost or destroyed certificates:
- ---------------------------
<PAGE> 5
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares not
tendered or not accepted for payment and/or the check
for the purchase price of Shares accepted for payment
are to be issued in the name of someone other than
the undersigned.
Issue: [ ] Check
[ ] Certificate(s) to:
Name:
--------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
--------------------------------------------------
(INCLUDE ZIP CODE)
--------------------------------------------------
(EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
==================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares not
tendered or not accepted for payment and/or the check
for the purchase price of Shares accepted for payment
are to be sent to someone other than the undersigned,
or to the undersigned at an address other than that
above.
Mail: [ ] Check
[ ] Certificate(s) to:
Name:
--------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
--------------------------------------------------
(INCLUDE ZIP CODE)
--------------------------------------------------
(EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
---------------------------------------------------
</TABLE>
<PAGE> 6
- --------------------------------------------------------------------------------
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
--------------------------------------------------------
--------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated:
--------------------------------------------- , 1998
(Must be signed by registered holder(s) as name(s)
appear(s) on the certificate(s) for the Shares or on a
security position listing or by person(s) authorized to
become registered holder(s) by certificates and
documents transmitted herewith. If signature is by
trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, please
provide the following information and see Instruction
5.)
Name(s)-------------------------------------------------
--------------------------------------------------------
(PLEASE PRINT)
Capacity (Full Title)
----------------------------------------
Address
--------------------------------------------------
--------------------------------------------------------
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.
----------------------------
Employer Identification or Social Security Number
-----------------------
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
----------------------------------------
Name ---------------------------------------------------
--------------------------------------------------------
(PLEASE PRINT)
Name of Firm
---------------------------------------------
Address
--------------------------------------------------
--------------------------------------------------------
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.
----------------------------
Dated:
------------------------------------------------- , 1998
- --------------------------------------------------------------------------------
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS
AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in the Book-Entry Transfer Facility's system whose name appears on a
security position listing as the owner of the Shares) of Shares tendered
herewith, unless such registered holder(s) has completed either the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(such participant, an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. Requirements of Tender. This Letter of Transmittal is to be completed
by stockholders either if certificates are to be forwarded herewith or, unless
an Agent's Message (as defined below) is utilized, if delivery of Shares is to
be made pursuant to the procedures for book-entry transfer set forth in Section
2 of the Offer to Purchase. For a stockholder validly to tender Shares pursuant
to the Offer, either (a) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
any other required documents, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date and either certificates
for tendered Shares must be received by the Depositary at one of such addresses
or such Shares must be delivered pursuant to the procedures for book-entry
transfer set forth herein (and a Book-Entry Confirmation received by the
Depositary), in each case prior to the Expiration Date, or (b) the tendering
stockholder must comply with the guaranteed delivery procedures set forth below
and in Section 2 of the Offer to Purchase.
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's certificates for Shares are not immediately available or the
procedures for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach the Depositary prior to the
Expiration Date, such stockholder's tender may be effected by properly
completing and duly executing the Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth in Section 2 of the Offer to Purchase.
Pursuant to such procedures, (a) such tender must be made by or through an
Eligible Institution, (b) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by the Purchaser, must
be received by the Depositary prior to the Expiration Date and (c) the
certificates for all tendered Shares in proper form for transfer (or a
Book-Entry Confirmation with respect to all such Shares), together with a Letter
of Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message, and any other required documents, must be received
by the Depositary within three trading days after the date of execution of such
Notice of Guaranteed Delivery as provided in Section 2 of the Offer to Purchase.
A "trading day" is any day on which the New York Stock Exchange, Inc. is open
for business.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or facsimile hereof), waive any right to receive any
notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
<PAGE> 8
4. Partial Tenders (Applicable to Certificate Stockholders Only). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares that are to be tendered in the box entitled "Number
of Shares Tendered." In any such case, new certificate(s) for the remainder of
the Shares that were evidenced by the old certificate(s) will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the acceptance for payment
of, and payment for, the Shares tendered herewith. All Shares represented by
certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder of the Shares
tendered hereby, the signature must correspond with the name as written on the
face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or accepted for payment are to be issued
to, a person other than the registered owner(s). Signatures on such certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the certificates listed, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates. Signatures on such certificates or stock powers must be guaranteed
by an Eligible Institution.
6. Stock Transfer Taxes. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any person(s) other than the registered owner(s), or
if tendered certificates are registered in the name(s) of any person(s) other
than the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered owner(s) or such person(s))
payable on account of the transfer to such person(s) will be deducted from the
purchase price unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. Special Payment and Delivery Instructions. If a check is to be issued
in the name of, and/or certificates for Shares not accepted for payment are to
be returned to, a person other than the signer of this Letter of Transmittal or
if a check is to be sent and/or such certificates are to be returned to a person
other than the signer of this Letter of Transmittal or to an address other than
that shown above, the appropriate boxes on this Letter of Transmittal should be
completed.
8. Waiver of Conditions. The Purchaser reserves the absolute right in its
sole discretion to waive any of the specified conditions of the Offer, in whole
or in part, in the case of any Shares tendered.
9. 31% Backup Withholding. In order to avoid backup withholding of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on
Substitute Form W-9 below in this Letter of Transmittal and certify under
penalty of perjury that such TIN is correct and that such stockholder is not
subject to backup withholding. If a stockholder does not provide such
stockholder's correct TIN or fails to provide the certifications described
above, the Internal Revenue Service (the "IRS") may impose a $50 penalty on such
stockholder and payment of cash to such stockholder pursuant to the Offer may be
subject to backup withholding of 31%.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the U.S. federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing an
income tax return.
<PAGE> 9
10. Requests for Assistance or Additional Copies. Questions and requests
for assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at its address set forth below.
11. Lost, Destroyed or Stolen Certificates. If any certificate
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. The stockholder will then be instructed as to the steps that must
be taken in order to replace the certificate. This Letter of Transmittal and
related documents cannot be processed until the procedures for replacing lost or
destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION
DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES FOR
GUARANTEED DELIVERY.
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder is required to provide the
Depositary such stockholder's TIN (i.e., social security number or employer
identification number) on Substitute Form W-9 (or otherwise establish a basis
for exemption from backup withholding) and certify under penalty of perjury that
such TIN is correct and that such stockholder is not subject to backup
withholding. If the Shares are held in more than one name or are not in the name
of the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report. If the Depositary is not provided with a
stockholder's correct TIN, the stockholder or other payee may be subject to a
$50 penalty imposed by the Internal Revenue Service. In addition, any amounts
payable to such stockholder in connection with the Offer may be subject to
backup withholding at a 31% rate.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
<PAGE> 10
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PAYER'S NAME: THE BANK OF NEW YORK
- ---------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND
FORM W-9 CERTIFY BY SIGNING AND DATING BELOW ------------------------------
DEPARTMENT OF THE TREASURY Social Security Number(s)
INTERNAL REVENUE SERVICE
OR
PAYER'S REQUEST FOR ------------------------------
TAXPAYER IDENTIFICATION Employer Identification
NUMBER (TIN) Number(s)
---------------------------------------------------------------------------------------------
PART 2 -- Certification -- Under penalties of perjury, I
certify that:
(1) the number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to
be issued to me) and
(2) I am not subject to backup withholding because (a) I
am exempt from backup withholding or (b) I have not been
notified by the Internal Revenue Service ("IRS") that
I am subject to backup withholding as a result of a
failure to report all interest or dividends or (c) the
IRS has notified me that I am no longer subject to
backup withholding.
---------------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) in Part 2 above if you have been
notified by the IRS that you are subject to backup withholding because of under reporting
interest or dividends on your tax returns. However, if after being notified by the IRS that
you were subject to backup withholding you received another notification from the IRS stating
that you are no longer subject to backup withholding, do not cross out such item (2). If you
are exempt from backup withholding, check the box in Part 4 above.
- ---------------------------------------------------------------------------------------------------------------------------------
Signature Date , 1998
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PART 3 --
Awaiting TIN
[ ]
--------------------------
PART 4 --
Exempt TIN
[ ]
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that, if I do not provide a taxpayer identification number to the
Depositary by the time of payment, 31% of all reportable payments made to me
thereafter will be withheld until I provide a properly certified taxpayer
identification number to the Depositary.
- ------------------------------------------------------------------------, 1998
Signature Date
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INFORMATION.
The Information Agent for the Offer is:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, NY 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms
please call:
(800) 662-5200
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
YURIE SYSTEMS, INC.
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates for shares of Common Stock, par value $.01 per
share (the "Shares"), of Yurie Systems, Inc., a Delaware corporation (the
"Company"), are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase). This form may be delivered by
hand to the Depositary or transmitted by facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution (as defined
in Section 2 of the Offer to Purchase). See Section 2 of the Offer to Purchase.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<CAPTION>
By Mail: By Facsimile: By Hand/Overnight Courier:
<S> <C> <C>
Tender & Exchange (For Eligible Institutions Tender & Exchange
Only)
Department (212) 815-6213 Department
P.O. Box 11248 101 Barclay Street
Church Street Station Confirm by Telephone: Receive and Deliver Window
New York, New York 1-800-507-9357 New York, New York 10286
10286-1248
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Reindeer Acquisition, Inc., a Delaware
corporation (the "Purchaser") which is a wholly owned subsidiary of Lucent
Technologies Inc., a Delaware corporation, upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase dated April 30, 1998
(the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged, the number of Shares set
forth below, all pursuant to the guaranteed delivery procedures set forth in
Section 2 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares Name(s) of Record Holder(s)
- ----------------------------------------------------- -----------------------------------------------------
Certificate Nos. -----------------------------------------------------
(if available): -----------------------------------------------------
- ----------------------------------------------------- PLEASE PRINT
- ----------------------------------------------------- Address(es)
- ----------------------------------------------------- -----------------------------------------------------
Check box if Shares -----------------------------------------------------
will be tendered by book-entry transfer: [ ] ZIP CODE
The Depository Trust Company Account Number Daytime Area Code
and Tel. No.:
- ----------------------------------------------------- -----------------------------------------------------
Dated: Signature(s):
- ----------------------------------------------------- -----------------------------------------------------
-----------------------------------------------------
</TABLE>
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation (as defined in the Offer
to Purchase) with respect to such Shares, in any such case together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase), and any other required documents, within
three trading days (as defined in the Offer to Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate this
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
<TABLE>
<S> <C>
Name of Firm:
-------------------------------------- -----------------------------------------------------
Address: AUTHORIZED SIGNATURE
------------------------------------------- Name:
- --------------------------------------------------- ------------------------------------------------
PLEASE PRINT
Area Code and Tel No.: Title:
------------------------------ -----------------------------------------------
Dated:
-----------------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
MORROW & CO., INC.
909 THIRD AVENUE
20TH FLOOR
NEW YORK, NEW YORK 10022
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
YURIE SYSTEMS, INC.
AT
$35 NET PER SHARE
BY
REINDEER ACQUISITION, INC.
A WHOLLY OWNED SUBSIDIARY OF
LUCENT TECHNOLOGIES INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, MAY 28, 1998, UNLESS EXTENDED.
April 30, 1998
To Brokers, Dealers, Banks,
Trust Companies and Other Nominees:
We have been appointed by Reindeer Acquisition, Inc., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Lucent
Technologies Inc., a Delaware corporation ("Parent"), to act as Information
Agent in connection with the Purchaser's offer to purchase all outstanding
shares of common stock, par value $.01 per share (the "Shares"), of Yurie
Systems, Inc., a Delaware corporation (the "Company"), at $35 per Share, net to
the seller in cash, upon the terms and subject to the conditions set forth in
the Purchaser's Offer to Purchase dated April 30, 1998 (the "Offer to
Purchase"), and the related Letter of Transmittal (which, together with any
supplements or amendments thereto, collectively constitute the "Offer").
Please furnish copies of the enclosed materials to those of your clients
for whom you hold Shares registered in your name or in the name of your nominee.
Enclose herewith are copies of the following documents:
1. Offer to Purchase dated April 30, 1998;
2. Letter of Transmittal to be used by stockholders of the Company
accepting the Offer;
3. The Letter to Stockholders of the Company from the Chairman and Chief
Executive Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9;
<PAGE> 2
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with space
provided for obtaining such client's instructions with regard to the Offer;
5. Notice of Guaranteed Delivery;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to The Bank of New York, the Depositary.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES THAT WOULD REPRESENT AT LEAST A MAJORITY OF THE OUTSTANDING SHARES
(DETERMINED ON A FULLY DILUTED BASIS FOR ALL OUTSTANDING STOCK OPTIONS AND ANY
OTHER RIGHTS TO ACQUIRE SHARES ON THE DATE OF PURCHASE) (THE "MINIMUM
CONDITION") AND (2) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER APPLICABLE
TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN
TERMINATED.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER
AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
THURSDAY, MAY 28, 1998, UNLESS EXTENDED.
The Board of Directors of the Company has unanimously approved the Offer
and the Merger and determined that the terms of the Offer and the Merger are
fair to, and in the best interests of, the stockholders of the Company and
unanimously recommends that stockholders of the Company accept the Offer and
tender their Shares.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of April 27, 1998 (the "Merger Agreement"), among Parent, the Purchaser and
the Company pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company, with the Company surviving the merger as a wholly owned
subsidiary of Parent (the "Merger"). In the Merger, each outstanding Share
(other than Shares owned by the Company or any subsidiary of the Company or by
Parent, the Purchaser or any other subsidiary of Parent or by stockholders, if
any, who are entitled to and who properly exercise dissenters' rights under
Delaware law) will be converted into the right to receive $35 per Share, without
interest, as set forth in the Merger Agreement and described in the Offer to
Purchase.
Parent and the Purchaser entered into a Stockholders Agreement dated as of
April 27, 1998 (the "Stockholders Agreement") with certain principal
stockholders of the Company (the "Stockholders"), pursuant to which each
Stockholder has agreed to tender into the Offer all the Shares that such
Stockholder owns. These Shares represent more than a majority of the outstanding
Shares (determined on a fully diluted basis) and, upon the tendering of these
Shares, the Minimum Condition will be satisfied. As of April 24, 1998, there
were 17,766,200 Shares subject to the Stockholders Agreement, representing
approximately 57% of the outstanding Shares on a fully diluted basis.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by The Bank of New York (the
"Depositary"), of (a) certificates for (or a timely Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect to) such Shares, (b) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer
effected pursuant to the procedure set forth in Section 2 of the Offer to
Purchase, an Agent's Message (as defined in the Offer to Purchase), and (c) any
other documents required by the Letter of Transmittal. Accordingly, tendering
stockholders may be paid at different times depending upon when certificates for
Shares or Book-Entry Confirmations with respect to Shares are actually received
by
2
<PAGE> 3
the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE
PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF
THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent and the
Depositary as described in the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer. You will be reimbursed
upon request for customary mailing and handling expenses incurred by you in
forwarding the enclosed offering materials to your customers.
Questions and requests for additional copies of the enclosed material may
be directed to the Information Agent at the address and telephone number set
forth on the back cover of the enclosed Offer to Purchase.
Very truly yours,
MORROW & CO., INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY, THE
INFORMATION AGENT OR ANY AFFILIATE THEREOF OR AUTHORIZE YOU OR ANY OTHER PERSON
TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF
ANY OF THEM WITH RESPECT TO THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
YURIE SYSTEMS, INC.
AT
$35 NET PER SHARE
BY
REINDEER ACQUISITION, INC.
A WHOLLY OWNED SUBSIDIARY OF
LUCENT TECHNOLOGIES INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, MAY 28, 1998, UNLESS EXTENDED.
April 30, 1998
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated April 30,
1998 (the "Offer to Purchase"), and a related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to an offer by Reindeer Acquisition, Inc., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Lucent
Technologies Inc., a Delaware corporation ("Parent"), to purchase shares of
Common Stock, par value $.01 per share (the "Shares"), of Yurie Systems, Inc., a
Delaware corporation (the "Company"), at $35 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer. Also
enclosed is the Letter to Stockholders of the Company from the Chairman and
Chief Executive Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to tender any of or all the
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is directed to the following:
1. The tender price is $35 per Share, net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer.
2. The Board of Directors of the Company has unanimously approved the
Offer and the Merger (as defined below) and determined that the terms of
the Offer and the Merger are fair to, and in the best interests of, the
stockholders of the Company and unanimously recommends that the
stockholders of the Company accept the Offer and tender their Shares.
3. The Offer is being made for all outstanding Shares.
<PAGE> 2
4. The Offer is being made pursuant to the Agreement and Plan of
Merger dated as of April 27, 1998 (the "Merger Agreement"), among Parent,
the Purchaser and the Company pursuant to which, following the consummation
of the Offer and the satisfaction or waiver of certain conditions, the
Purchaser will be merged with and into the Company, with the Company
surviving the merger as a wholly owned subsidiary of Parent (the "Merger").
In the Merger, each outstanding Share (other than Shares owned by the
Company or any subsidiary of the Company or by Parent, the Purchaser or any
other subsidiary of Parent or by stockholders, if any, who are entitled to
and who properly exercise dissenters' rights under Delaware law) will be
converted into the right to receive $35 per Share, without interest, as set
forth in the Merger Agreement and described in the Offer to Purchase.
5. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn prior to the expiration of the Offer
that number of Shares which would represent at least a majority of the
outstanding Shares (determined on a fully diluted basis for all outstanding
stock options and any other rights to acquire Shares on the date of
purchase) (the "Minimum Condition") and (2) any waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations thereunder applicable to the purchase of Shares pursuant to the
Offer having expired or been terminated.
6. Parent and the Purchaser entered into a Stockholders Agreement
dated as of April 27, 1998 (the "Stockholders Agreement") with certain
principal stockholders of the Company (the "Stockholders"), pursuant to
which each Stockholder has agreed to tender into the Offer all the Shares
that such Stockholder owns. These Shares represent more than a majority of
the outstanding Shares (determined on a fully diluted basis) and, upon the
tendering of these Shares, the Minimum Condition will be satisfied. As of
April 24, 1998, there were 17,766,200 Shares subject to the Stockholders
Agreement, representing approximately 57% of the outstanding Shares on a
fully diluted basis.
7. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Thursday, May 28, 1998, unless the Offer is extended by
the Purchaser.
8. The Purchaser will pay any stock transfer taxes with respect to
the transfer and sale of Shares to it or its order pursuant to the Offer,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
If you wish to have us tender any of or all your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction form
set forth below. An envelope to return your instructions to us is enclosed. If
you authorize tender of your Shares, all such Shares will be tendered unless
otherwise specified below. Your instructions to us should be forwarded promptly
to permit us to submit a tender on your behalf prior to the expiration of the
Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by The Bank of New York (the
"Depositary"), of (a) certificates for (or a timely Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect to) such Shares, (b) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer
effected pursuant to the procedure set forth in Section 2 of the Offer to
Purchase, an Agent's Message (as defined in the Offer to Purchase), and (c) any
other documents required by the Letter of Transmittal. Accordingly, tendering
stockholders may be paid at different times depending upon when certificates for
Shares or Book-Entry Confirmations with respect to Shares are actually received
by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE
PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF
THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK OF
YURIE SYSTEMS, INC.
The undersigned acknowledges receipt of your letter enclosing the Offer to
Purchase, dated April 30, 1998, of Reindeer Acquisition, Inc., a Delaware
corporation and a wholly owned subsidiary of Lucent Technologies Inc., a
Delaware corporation, and the related Letter of Transmittal, relating to shares
of Common Stock, par value $.01 per share, of Yurie Systems, Inc., a Delaware
corporation (the "Shares").
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned on the terms and conditions set forth
in such Offer to Purchase and the related Letter of Transmittal.
<TABLE>
<S> <C>
Dated: ____________________ 1998 ______________________________________________
______________________________________________
Number of Shares SIGNATURE(S)
to be Tendered* ______________________________________________
________________________ Shares ______________________________________________
PLEASE PRINT NAME(S)
Address ______________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No. ________
Taxpayer Identification or Social
Security No. ________________
</TABLE>
- ---------------
* Unless otherwise indicated, it will be assumed that all your Shares are to be
tendered.
3
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
============================================================
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
8. Sole proprietorship account The Owner(4)
9. A valid trust, estate, or pension Legal entity (Do
trust not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan or a custodial account under Section 403(b)(7).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
<PAGE> 1
EXHIBIT (A)(7)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase
dated April 30, 1998, and the related Letter of Transmittal and is not
being made to (nor will tenders be accepted from or on behalf of) holders
of Shares in any jurisdiction in which the making of the Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
YURIE SYSTEMS, INC.
AT
$35 NET PER SHARE
BY
REINDEER ACQUISITION, INC.
A WHOLLY OWNED SUBSIDIARY OF
LUCENT TECHNOLOGIES INC.
Reindeer Acquisition, Inc., a Delaware corporation (the "Purchaser")
and a wholly owned subsidiary of Lucent Technologies Inc., a Delaware
corporation ("Parent"), is offering to purchase all outstanding shares of Common
Stock, par value $.01 per share (the "Shares"), of Yurie Systems, Inc., a
Delaware corporation (the "Company"), at $35 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated April 30, 1998, and in the related Letter of Transmittal (which
together with any amendments or supplements thereto, collectively constitute the
"Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, MAY 28, 1998, UNLESS EXTENDED.
<PAGE> 2
2
The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer such
number of Shares that would constitute at least a majority of the outstanding
Shares (determined on a fully diluted basis for all outstanding stock options
and any other rights to acquire Shares on the date of purchase) (the "Minimum
Condition") and (ii) any waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, applicable to the purchase of Shares
pursuant to the Offer having expired or been terminated.
The Offer is being made pursuant to an Agreement and Plan of Merger
dated as of April 27, 1998 (the "Merger Agreement"), among Parent, the Purchaser
and the Company pursuant to which, following the consummation of the Offer, the
Purchaser will be merged with and into the Company (the "Merger"). On the
effective date of the Merger, each outstanding Share (other than Shares owned by
the Company or any subsidiary of the Company or by Parent, the Purchaser or any
other subsidiary of Parent or by stockholders, if any, who are entitled to an
who properly exercise appraisal rights under Delaware law) will be converted
into the right to receive $35, in cash, without interest.
Parent and the Purchaser entered into a Stockholders Agreement dated as
of April 27, 1998, with certain principal stockholders of the Company (the
"Stockholders"), pursuant to which each Stockholder has agreed to tender into
the Offer all the Shares that such Stockholder owns. These Shares represent more
than a majority of the outstanding Shares (determined on a fully diluted basis)
and, upon the tendering of these Shares, the Minimum Condition will be
satisfied.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
OFFER AND THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, AND
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND
TENDER THEIR SHARES.
For purposes of the Offer, the Purchaser shall be deemed to have
accepted for payment, and thereby purchased, Shares properly tendered to the
Purchaser and not properly withdrawn as, if and when the Purchaser gives oral or
written notice to the Depositary of the Purchaser's acceptance for payment of
such Shares. Upon the terms and subject to the conditions of the Offer, payment
for Shares purchased pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders whose Shares have been
accepted for payment. In all cases, payment for Shares purchased pursuant to the
Offer will be made only after timely receipt by the Depositary of (a)
certificates for such Shares or timely confirmation of book-entry transfer of
such Shares into the Depositary's account at the Book-Entry Transfer Facility
(as defined in the Offer to Purchase) pursuant to the procedures set forth in
Section 2 of the Offer to Purchase, (b) a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined in the Offer to Purchase) and (c) any other documents required by the
Letter of Transmittal. Under no circumstances will interest be paid by the
Purchaser on the purchase price of the Shares to be paid by the Purchaser,
regardless of any extension of the Offer or any delay in making such payment.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Thursday, May 28, 1998, unless and until the Purchaser, in its sole discretion
but subject to the terms of the Merger Agreement, shall have extended the period
of time during which the Offer is open, in which event the term "Expiration
Date" shall mean the latest time and date on which the Offer, as so extended by
the Purchaser, shall expire. The Purchaser expressly reserves the right, in its
sole discretion (but subject to the terms of the Merger Agreement), at any time
or from time to time, and regardless of whether or not any of the events set
forth in Section 14 of the Offer to Purchase shall have occurred, (i) to extend
the period of time during which the Offer is open and thereby delay acceptance
for payment of, and the payment for, any Shares, by giving oral or written
notice of such extension to the Depositary and (ii) to amend the Offer in any
other respect by giving oral or written notice of such amendment to the
Depositary. The Purchaser shall not have any obligation to pay interest on the
purchase price for tendered Shares, whether or not the Purchaser exercises its
right to extend the Offer. There can be no assurance that the Purchaser will
exercise the right to extend the Offer. Any such extension will be followed by a
public announcement thereof no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date. During any
such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the right of a tendering stockholder to
withdraw such stockholder's Shares.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment and paid for by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after June
28, 1998. For a withdrawal to be effective, a written or facsimile
<PAGE> 3
3
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution as defined in Section 2 of the Offer to Purchase, the signature on
the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been delivered pursuant to the procedures for book-entry transfer as
set forth in Section 2 of the Offer to Purchase, any notice of withdrawal must
also specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn shares and otherwise comply with the
Book-Entry Transfer Facility's procedures. Withdrawals of tenders of Shares may
not be rescinded, and any Shares properly withdrawn will thereafter be deemed
not validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures described in Section 2 of
the Offer to Purchase at any time prior to the Expiration Date. All questions as
to the form and validity (including time of receipt) of notices of withdrawal
will be determined by the Purchaser, in its sole discretion, whose determination
will be final and binding.
The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and furnished to
brokers, dealers, banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on the stockholder lists or, if applicable, who
are listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owner of Shares.
The information require to be disclosed by Rule 14d-6(e)(1)(vii) of the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE
OFFER.
Requests for copies of the Offer to Purchase, the Letter of Transmittal
and all other tender offer materials may be directed to the Information Agent as
set forth below, and copies will be furnished promptly at the Purchaser's
expense.
The Information Agent is:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms Please Call:
(800) 662-5200
<PAGE> 4
The Depositary for the Offer is:
THE BANK OF NEW YORK
4
<TABLE>
<CAPTION>
By Mail: By Facsimile: By Hand/Overnight Courier:
<S> <C> <C>
Tender & Exchange (for Eligible Institutions only) Tender & Exchange Department
Department (212) 815-6213 101 Barclay Street
P.O. Box 11248 Confirm by Telephone: Receive and Deliver Window
Church Street Station 1-800-507-9357 New York, New York 10286
New York, New York 10286-1248
</TABLE>
<PAGE> 1
EXHIBIT (A)(8)
For Lucent: For Lucent:
John Callahan Lynda Beighley
908-953-5350 (office) 908-582-3060 (office)
703-758-1449 (home) 973-635-7959 (home)
[email protected] [email protected]
Lucent Technologies To Purchase Yurie Systems, Inc., A Leader In ATM Access Data
Networking
Purchase of Yurie Adds to Growing Data Networking Portfolio
FOR IMMEDIATE RELEASE: Monday, April 27, 1998
MURRAY HILL, N.J. - In a key move to address another high-growth
opportunity in the data networking business, Lucent Technologies today said it
will acquire Yuries Systems, Inc. (NASDAQ: YURI), a global leader in ATM access
technology and equipment for data, voice and video networking, for about $1
billion in cash or $35 a share in a tender offer. The transaction is expected to
be completed by the end of the quarter ending June 30, 1998.
Based in Landover, Maryland, Yurie provides ATM wide area network (WAN)
access equipment for service providers, corporations and government users. ATM
is an industry standard, cell-based, very high-speed communications technology
used to transmit data - including Internet traffic - voice and video over
backbone networks.
"Today we fill in another key space in our data networking portfolio with
this important acquisition," said Bill O'Shea, president of Lucent's Data
Networking Systems group. " The ATM access opportunity is growing explosively -
at annual rates greater than 60 percent - and Yurie is the recognized leader in
developing and delivering nextgeneration, highly-reliable, ATM WAN access
solutions for multi-service networking. Adding Yurie to the Lucent team will
help us meet our aggressive leadership and growth objectives in this business."
O'Shea noted that Lucent already works closely with Yurie through and OEM
relationship.
"Yurie's LDR product family of intelligent ATM access concentrators now
serves as the basis for our Lucent AC 60 and Lucent AC 120 products," he said.
"Yurie's next generation technology will create a platform for our portfolio or
multiservice access solutions. We've learned through experience that both
companies share a strong desire to deliver data networking products that are
easy to install, highly reliable, easy to manage and less complex to operate."
"An added bonus is the company has an exceptionally strong management team
that is well regarded by Wall Street
<PAGE> 2
2
and the industry. In fact, Yurie was recognized by Business Week as the Number
One Hot Growth Company in 1997," he said.
Jeong Kim, chairman and CEO of Yurie, will join Lucent as president of
Carrier Networks within the Data Networking Systems' group. It will remain
headquartered in Landover, Md.
"When we founded Yurie, our goal was to develop and deliver a family of
highly reliable and scaleable access products that could link a broad range of
voice, data and video services into ATM backbone networks," Kim said. "Our
products give network service providers and corporate users best-in-class
manageability, scaleability and Quality of Service (QoS).
"We are also delighted to be a part of Lucent's data networking business,"
he said. "Several of our key people are pioneers in ATM technology. We recognize
the power of linking our capabilities to the technological heritage and global
reach of Lucent and Bell Lab in communications networking."
Last year Lucent introduced a strategy to address the data networking
business and announced a series of new and enhance products. Since then the
company has acquired Livingston Enterprises, Inc., and Prominet Corporation, two
leading data networking equipment technology companies.
The Yurie purchase is expected to result in an one-time charge against
earnings. The charge involves an accounting writeoff assigned to in-process
research and development and will be taken in the third fiscal quarter of 1998
assuming the transaction is closed by June 30, 1998. Excluding this one time
charge, the impact of the purchase to earnings is expected to be slightly
dilutive in the first full year of operation.
Yurie led both in worldwide and North American sales for ATM WAN access
equipment for 1996 and 1997, according to several industry analysts groups.
According to Vertical Systems Group, Yurie captured more than 28 percent of the
sales for 1997.
Vertical System predicts a growth rate in this business of more than 80
percent. Dataquest estimates growth rates at more than 60 percent.
Yurie's LDR200 ATM access concentrator was introduced in 1996 and won Data
communications Hot Product Award for WAN equipment. It delivers high port
density, low cost per port and frame relay interworking capabilities. The LDR50
has half the capacity of the LDR200 for regional and branch office applications.
Another member of the product family, the LDR5, is designed for small office
applications.
The Yurie LDR family is a part of the Lucent portfolio as the Lucent
Access Concentrator 120 and Lucent Access Concentrator 60. These products are
deployed with the Lucent
<PAGE> 3
3
Multiservice Switch 100(Lucent MX1000) to provide the industry's most
comprehensive integrated access and ATM switching solution.
"In addition to current products, this acquisition provides Lucent with
the ability to integrate the technology of the two companies to create exciting
new products," O'Shea said.
Other Yurie customers have included AT&T, Sprint, Ericsson, Bay Networks
and the U.S. government, universities and hospitals.
Yurie completed its IPO in February 1997 and was recognized as America's
Number One Hot Growth Company by Business Week in May 1997.
In September, Lucent introduced and enhanced portfolio of intelligent
switching, access and network management products as a part of its plan to
dramatically improve data networking performance. In December, the company
acquired Livingston Enterprises, Inc., of Pleasanton, CA., a leading provider of
remote access networking solutions for the Internet. In January, Lucent acquired
Prominent Corporation, a Marlborough, MA.-based developer of high-performance
local area network(LAN) switching equipment.
Under the terms of the definitive agreement, Lucent will begin a cash
tender offer for all outstanding shares of Yurie common stock for $35 a share.
The offer is expected to commence no later than April 30 and will be scheduled
to close by May 28. In addition, shareholders holding in excess of 50 percent of
Yurie's common stock on a fully diluted basis have agreed to tender Yurie stock.
Any shares not purchased in the offer will be acquired for the same price in
cash, in a second-step merger.
The boards of both companies have approved the acquisition. The offer and
merger is subject to the purchase of a majority of outstanding shares of Yurie
common stock, as well as other customary legal requirements.
In addition, certain key members of the Yurie management team have agreed
to invest a portion of their proceeds in Lucent stock to be vested over a
three-year period.
As a part of its data networking portfolio, Lucent offers
industry-industry professional support services capabilities through NetCare(R)
Services, a broad set of consulting, integration, management and maintenance
services for multivendor data and video networks, voice systems and networks and
call centers.
For more information on Yurie, browse the company's home page at
http://www.yurie.com.
Lucent Technologies designs, builds and delivers a wide range of public
and private networks, communications systems and software, business telephone
systems and microelectronics components. Bell Labs is the research and
development arm
<PAGE> 4
4
for the company. More information about Lucent Technologies, headquartered in
Murray Hill, NJ, is available on its Web site at http://www.lucent.com.
###
(Editor's Note: There will be a media conference call today at 2:30 p.m. EDT
with Bill O'Shea, president of Lucent's Data Networking Systems group and Jeong
Kim, chairman and CEO of Yurie Systems. Call-in numbers: USA/Canada
1-800-553-5275; other locations 1-612-332-0802)
<PAGE> 1
EXHIBIT (C)(1)
CONFORMED COPY
================================================================================
AGREEMENT AND PLAN OF MERGER
Dated as of April 27, 1998
Among
LUCENT TECHNOLOGIES INC.
REINDEER ACQUISITION, INC.
And
YURIE SYSTEMS, INC.
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
The Offer
SECTION 1.01. The Offer.................................................. 2
SECTION 1.02. Company Actions ........................................... 4
ARTICLE II
The Merger
SECTION 2.01. The Merger ................................................ 5
SECTION 2.02. Closing ................................................... 6
SECTION 2.03. Effective Time ............................................ 6
SECTION 2.04. Effects of the Merger ..................................... 6
SECTION 2.05. Certificate of Incorporation and By-laws................... 6
SECTION 2.06. Directors ................................................. 7
SECTION 2.07. Officers................................................... 7
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock.................................... 7
SECTION 3.02. Exchange of Certificates .................................. 8
SECTION 3.03. Adjustment of the Merger Consideration .................... 11
ARTICLE IV
Representations and Warranties of the Company
SECTION 4.01. Organization, Standing and Corporate Power................. 11
SECTION 4.02. Subsidiaries; Equity Interests............................. 12
SECTION 4.03. Capital Structure ......................................... 12
SECTION 4.04. Authority; Noncontravention................................ 13
SECTION 4.05. SEC Documents; Financial Statements ....................... 15
SECTION 4.06. Information Supplied ...................................... 16
<PAGE> 3
Contents, p. 2
Page
----
SECTION 4.07. Absence of Certain Changes or Events ...................... 16
SECTION 4.08. Litigation ................................................ 17
SECTION 4.09. Contracts ................................................. 17
SECTION 4.10. Compliance with Laws ...................................... 18
SECTION 4.11. Absence of Changes in Benefit Plans; Labor Relations....... 19
SECTION 4.12. ERISA Compliance .......................................... 20
SECTION 4.13. Taxes ..................................................... 21
SECTION 4.14. No Excess Parachute Payments .............................. 22
SECTION 4.15. Intellectual Property ..................................... 22
SECTION 4.16. State Takeover Statutes ................................... 23
SECTION 4.17. Brokers; Schedule of Fees and Expenses..................... 23
SECTION 4.18. Opinion of Financial Advisor .............................. 23
ARTICLE V
Representations and Warranties
of Parent and Sub
SECTION 5.01. Organization, Standing and Corporate Power ................ 24
SECTION 5.02. Authority; Noncontravention................................ 24
SECTION 5.03. Information Supplied....................................... 25
SECTION 5.04. Interim Operations of Sub ................................. 26
SECTION 5.05. Brokers ................................................... 26
SECTION 5.06. Financing ................................................. 26
ARTICLE VI
Covenants
SECTION 6.01. Covenants of the Company................................... 26
SECTION 6.02. No Solicitation ........................................... 29
SECTION 6.03. Other Actions.............................................. 31
ARTICLE VII
Additional Agreements
SECTION 7.01. Company Stockholder Approval;
Preparation of Proxy Statement........................... 31
SECTION 7.02. Access to Information...................................... 32
SECTION 7.03. Reasonable Efforts......................................... 32
SECTION 7.04. Company Stock Options...................................... 34
<PAGE> 4
Contents, p. 3
Page
----
SECTION 7.05. Employee Matters........................................... 36
SECTION 7.06. Directors.................................................. 37
SECTION 7.07. Fees and Expenses.......................................... 38
SECTION 7.08. Indemnification............................................ 39
SECTION 7.09. Certain Litigation......................................... 39
ARTICLE VIII
Conditions
SECTION 8.01. Conditions to Each Party's Obligation
To Effect The Merger..................................... 40
ARTICLE IX
Termination and Amendment
SECTION 9.01. Termination................................................ 40
SECTION 9.02. Effect of Termination...................................... 41
SECTION 9.03. Amendment.................................................. 43
SECTION 9.04. Extension; Waiver.......................................... 43
ARTICLE X
Miscellaneous
SECTION 10.01. Nonsurvival of Representations,
Warranties and Agreements................................ 44
SECTION 10.02. Notices.................................................... 44
SECTION 10.03. Interpretation............................................. 45
SECTION 10.04. Counterparts............................................... 46
SECTION 10.05. Entire Agreement; Third Party Beneficiaries................ 46
SECTION 10.06. Governing Law.............................................. 46
SECTION 10.07. Publicity.................................................. 46
SECTION 10.08. Assignment................................................. 47
SECTION 10.09. Enforcement................................................ 47
SECTION 10.10. Severability............................................... 47
Exhibit A Conditions of the Offer
Exhibit B Certificate of Incorporation of the Surviving Corporation
<PAGE> 5
AGREEMENT AND PLAN OF MERGER dated as of April 27, 1998,
among LUCENT TECHNOLOGIES INC., a Delaware corporation
("Parent"), REINDEER ACQUISITION, INC., a Delaware corporation
and a wholly owned subsidiary of Parent ("Sub"), and YURIE
SYSTEMS, INC., a Delaware corporation (the "Company").
WHEREAS, in furtherance of the acquisition of the Company by Parent
on the terms and subject to the conditions set forth in this Agreement, Parent
proposes to cause Sub to make a tender offer (as it may be amended from time to
time as permitted under this Agreement, the "Offer") to purchase all the
outstanding shares of Common Stock, par value $.01 per share, of the Company,
the "Company Common Stock"; the shares of Company Common Stock being hereinafter
collectively referred to as the "Shares"), at a purchase price (the "Offer
Price") of $35.00 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the Offer and the merger of Sub with the Company (the
"Merger") upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding Share, other than Shares owned
directly or indirectly by Parent or the Company and Dissenting Shares (as
defined in Section 3.01(d)), will be converted into the right to receive the
price per Share paid in the Offer;
WHEREAS, concurrently with the execution of this Agreement and as a
condition to the willingness of Parent and Sub to enter into this Agreement,
Parent, Sub and certain principal stockholders of the Company (the "Principal
Stockholders") have entered into a stockholders agreement dated as of the date
hereof (the "Stockholders Agreement") pursuant to which, among other things, the
Principal Stockholders will agree to tender all their shares of Company Common
Stock into the Offer upon the terms and subject to the conditions set forth in
the Stockholders Agreement; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
<PAGE> 6
2
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Sub and the Company hereby agree as follows:
ARTICLE I
The Offer
SECTION 1.01. The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than five business
days after the date of the public announcement by Parent and the Company of this
Agreement, Sub shall, and Parent shall cause Sub to, commence the Offer. The
initial expiration date for the Offer shall be the 20th business day following
the commencement of the Offer. The obligation of Sub to accept for payment, and
pay for, any Shares tendered pursuant to the Offer shall be subject only to the
conditions set forth in Exhibit A (the "Offer Conditions") (any of which may be
waived in whole or in part by Sub in its sole discretion, provided that, without
the prior written consent of the Company, Sub shall not waive the Minimum
Condition (as defined in Exhibit A)) and to the terms and conditions of this
Agreement. Sub expressly reserves the right to modify the terms of the Offer,
except that, without the consent of the Company, Sub shall not (i) reduce the
number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) amend
or add to the Offer Conditions, (iv) except as provided in the next sentence,
extend the Offer, (v) change the form of consideration payable in the Offer or
(vi) amend any other term of the Offer in any manner adverse to the holders of
the Shares. Notwithstanding the foregoing, Sub may, without the consent of the
Company, (A) extend the Offer, if at the scheduled or extended expiration date
of the Offer any of the Offer Conditions shall not be satisfied or waived, until
such time as such conditions are satisfied or waived, (B) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission (the "SEC") or the staff thereof applicable
to the Offer or any period required by applicable law and (C) extend the Offer
on one or more occasions for an aggregate period of not more than 10 business
days beyond the latest expiration date that would otherwise be permitted under
clause (A) or (B) of this sentence, if on such expiration date there shall not
have been tendered at least 90% of the outstanding Shares. Parent and Sub agree
that if all of the Offer Conditions are not satisfied on any scheduled
expiration date of the Offer
<PAGE> 7
3
then, provided that all such conditions are reasonably capable of being
satisfied, Sub shall extend the Offer from time to time until such conditions
are satisfied or waived, provided that Sub shall not be required to extend the
Offer beyond September 28, 1998. Subject to the terms and conditions of the
Offer and this Agreement, Sub shall, and Parent shall cause Sub to, accept for
payment, and pay for, all Shares validly tendered and not withdrawn pursuant to
the Offer that Sub becomes obligated to accept for payment, and pay for,
pursuant to the Offer as promptly as practicable after the expiration of the
Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule
14D-1") with respect to the Offer, which shall contain an offer to purchase and
a related letter of transmittal and summary advertisement (such Schedule 14D-1
and the documents included therein pursuant to which the Offer will be made,
together with any supplements or amendments thereto, the "Offer Documents").
Parent and Sub agree that the Offer Documents shall comply as to form in all
material respects with the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated thereunder and the
Offer Documents, on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation or warranty is made by
Parent or Sub with respect to information supplied by the Company or any of its
stockholders specifically for inclusion or incorporation by reference in the
Offer Documents. Each of Parent, Sub and the Company agree promptly to correct
any information provided by it for use in the Offer Documents if and to the
extent that such information shall have become false or misleading in any
material respect, and Parent and Sub further agree to take all steps necessary
to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the
other Offer Documents as so corrected to be disseminated to the Company's
stockholders, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given reasonable
opportunity to review and comment upon the Offer Documents prior to their filing
with the SEC or dissemination to the stockholders of the Company. Parent and Sub
agree to provide the Company and its counsel any comments Parent, Sub or their
counsel may receive from the SEC or its staff with
<PAGE> 8
4
respect to the Offer Documents promptly after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Sub on a timely
basis the funds necessary to accept for payment, and pay for, any Shares that
Sub becomes obligated to accept for payment, and pay for, pursuant to the Offer.
SECTION 1.02. Company Actions. (a) The Company hereby approves of
and consents to the Offer and represents that the Board of Directors of the
Company, at a meeting duly called and held, duly adopted resolutions approving
this Agreement, the Stockholders Agreement, the Offer and the Merger,
determining, as of the date of such resolutions, that the terms of the Offer and
the Merger are fair to, and in the best interests of, the Company's
stockholders, recommending that the Company's stockholders accept the Offer,
tender their shares pursuant to the Offer and approve this Agreement (if
required) and approving the acquisition of Shares by Sub pursuant to the Offer
and the other transactions contemplated by this Agreement. The Company has been
advised by each of its directors and executive officers that each such person
currently intends to tender all Shares (other than Shares, if any, held by such
person that, if tendered, could cause such person to incur liability under the
provisions of Section 16(b) of the Exchange Act) owned by such persons pursuant
to the Offer.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as supplemented
or amended from time to time, the "Schedule 14D-9") containing, subject to the
terms of this Agreement, the recommendation described in paragraph (a) and shall
mail the Schedule 14D-9 to the stockholders of the Company. The Schedule 14D-9
shall comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations promulgated thereunder and, on the
date filed with the SEC and on the date first published, sent or given to the
Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation or
warranty is made by the Company with respect to information supplied by Parent
or Sub specifically for inclusion in the Schedule 14D-9. Each of the Company,
Parent and Sub agrees promptly to correct any information provided by it for use
<PAGE> 9
5
in the Schedule 14D-9 if and to the extent that such information shall have
become false or misleading in any material respect, and the Company further
agrees to take all steps necessary to amend or supplement the Schedule 14D-9 and
to cause the Schedule 14D-9 as so amended or supplemented to be filed with the
SEC and disseminated to the Company's stockholders, in each case as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given reasonable opportunity to review and comment upon the Schedule
14D-9 prior to its filing with the SEC or dissemination to stockholders of the
Company. The Company agrees to provide Parent and its counsel any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer and the Merger, the Company shall
cause its transfer agent to furnish Sub promptly with mailing labels containing
the names and addresses of the record holders of Shares as of a recent date and
of those persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings and computer
files and all other information in the Company's possession or control regarding
the beneficial owners of Shares, and shall furnish to Sub such information and
assistance (including updated lists of stockholders, security position listings
and computer files) as Parent may reasonably request in communicating the Offer
to the Company's stockholders. Subject to the requirements of applicable law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Merger, Parent and Sub and
each of their affiliates, associates and agents shall hold in confidence the
information contained in any such labels, listings and files, will use such
information only in connection with the Offer and the Merger and, if this
Agreement shall be terminated, will deliver, and will use their reasonable
efforts to cause their agents to deliver, to the Company all copies and any
extracts or summaries from such information then in their possession or control.
ARTICLE II
The Merger
SECTION 2.01. The Merger. Subject to the last two sentences of this
Section 2.01, upon the terms and subject to the conditions set forth in this
Agreement, and
<PAGE> 10
6
in accordance with the Delaware General Corporation Law (the "DGCL"), Sub shall
be merged with and into the Company at the Effective Time (as defined in Section
2.03). Following the Effective Time, the separate corporate existence of Sub
shall cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all the rights and
obligations of Sub in accordance with the DGCL. At the election of Parent, to
the extent that any such action would not cause a failure of a condition to the
Offer or the Merger, any direct or indirect wholly owned subsidiary (as defined
in Section 10.03) of Parent may be substituted for and assume all of the rights
and obligations of Sub as a constituent corporation in the Merger. In either
such event, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect the foregoing.
SECTION 2.02. Closing. The closing of the Merger will take place at
10:00 a.m. (New York City time) on a date to be specified by Parent or Sub,
which shall be no later than the second business day after satisfaction or
waiver of the conditions set forth in Article VIII (the "Closing Date"), at the
offices of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New
York, New York 10019, unless another date, time or place is agreed to in writing
by the parties hereto.
SECTION 2.03. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings or recordings required
under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Delaware Secretary of State, or at
such other time as Sub and the Company shall agree should be specified in the
Certificate of Merger (the time the Merger becomes effective being hereinafter
referred to as the "Effective Time").
SECTION 2.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 2.05. Certificate of Incorporation and Bylaws. (a) The
Certificate of Incorporation of the Surviving Corporation as in effect
immediately prior to the Effective Time shall be amended as of the Effective
Time so that such Certificate of Incorporation shall read in its entirety as set
forth in Exhibit B. As so amended, such
<PAGE> 11
7
certificate of incorporation shall be the certificate of incorporation of the
Surviving Corporation, until thereafter changed or amended, subject to Section
7.08, as provided therein or by applicable law.
(b) The By-laws of Sub as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation, until
thereafter changed or amended, subject to Section 7.08, as provided therein or
by applicable law.
SECTION 2.06. Directors. The directors of Sub immediately prior to
the Effective Time shall be the directors of the Surviving Corporation, until
the earlier of their resignation or removal or their respective successors are
duly elected and qualified, as the case may be.
SECTION 2.07. Officers. The officers of Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or their respective successors are duly
elected and qualified, as the case may be.
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
Shares or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the
Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent Owned Stock. Each Share
that is owned by the Company and each Share that is owned by Parent or Sub
shall automatically be canceled and retired and shall cease to exist, and
no consideration shall be delivered in exchange therefor. Each Share that
is owned by any subsidiary of the Company or Parent (other than Sub) shall
remain outstanding without change.
<PAGE> 12
8
(c) Conversion of Shares. Subject to Section 3.01(d), each issued
and outstanding Share (other than Shares to be canceled or to remain
outstanding in accordance with Section 3.01(b) and other than Dissenting
Shares (as defined in Section 3.01(d)) shall be converted into the right
to receive from the Surviving Corporation in cash, without interest, the
price per share paid in the Offer (the "Merger Consideration"). As of the
Effective Time, all such Shares shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such Shares shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration, without interest.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in
this Agreement to the contrary, any issued and outstanding Shares held by
a person (a "Dissenting Stockholder") who complies with all the provisions
of Delaware law concerning the right of holders of Shares to dissent from
the Merger and require appraisal of their Shares ("Dissenting Shares")
shall not be converted as described in Section 3.01(c), but shall be
converted into the right to receive such consideration as may be
determined to be due to such Dissenting Stockholder pursuant to Delaware
law. If, after the Effective Time, such Dissenting Stockholder withdraws
his demand for appraisal or fails to perfect or otherwise loses his right
to appraisal, in any case pursuant to the DGCL, his Shares shall be deemed
to be converted as of the Effective Time into the right to receive the
Merger Consideration. The Company shall give Parent (i) prompt notice of
any demands for appraisal of Shares received by the Company and (ii) the
opportunity to participate in and direct all negotiations and proceedings
with respect to any such demands. The Company shall not, without the prior
written consent of Parent, make any payment with respect to, or settle,
offer to settle or otherwise negotiate, any such demands.
SECTION 3.02. Exchange of Certificates. (a) Paying Agent. Prior to
the Effective Time, Parent shall designate The Bank of New York, or another bank
or trust company reasonably satisfactory to the Company, to act as paying agent
in the Merger (the "Paying Agent"), and, from time to time on, prior to or after
the Effective Time, Parent shall make available, or cause the Surviving
Corporation to make available, to the Paying Agent cash in
<PAGE> 13
9
amounts and at the times necessary for the prompt payment of the Merger
Consideration upon surrender of certificates representing Shares as part of the
Merger pursuant to Section 3.01, and such amounts as and when so made available
shall hereinafter be referred to as the "Exchange Fund" (it being understood
that any and all interest earned on funds made available to the Paying Agent
pursuant to this Agreement shall be turned over to Parent).
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented Shares (the "Certificates"), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in a form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancelation to the Paying Agent or to such other agent or agents
as may be appointed by Parent, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required by the Paying
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor the amount of cash into which the Shares theretofore represented by
such Certificate shall have been converted pursuant to Section 3.01, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, payment may be made to a person other than the person in whose
name the Certificate so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other taxes required by reason
of the payment to a person other than the registered holder of such Certificate
or establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered as contemplated by this
Section 3.02, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the amount of
cash, without interest, into which the Shares theretofore represented by such
Certificate shall have been converted pursuant to Section 3.01. No interest will
be paid or will accrue on the cash payable upon the surrender of any
Certificate.
<PAGE> 14
10
(c) No Further Ownership Rights in Shares. All cash paid upon the
surrender of Certificates in accordance with the terms of this Article III shall
be deemed to have been paid in full satisfaction of all rights pertaining to the
Shares theretofore represented by such Certificates. At the Effective Time, the
stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Paying Agent for any reason, they shall be canceled
and exchanged as provided in this Article III.
(d) No Liability. None of Parent, Sub, the Company or the Paying
Agent shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered immediately prior to such
date on which any payment pursuant to this Article III would otherwise escheat
to or become the property of any Governmental Entity (as defined in Section
4.04)), the cash payment in respect of such Certificate shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interests of any person previously entitled
thereto.
(e) Lost, Stolen or Destroyed Certificates. In the event any
Certificates evidencing Shares shall have been lost, stolen or destroyed, the
Paying Agent shall pay to such holder the Merger Consideration required pursuant
to Section 3.01, in exchange for such lost, stolen or destroyed certificates,
upon the making of an affidavit of that fact by the holder thereof with such
assurances as the Paying Agent, in its discretion and as a condition precedent
to the payment of the Merger Consideration, may reasonably require of the holder
of such lost, stolen or destroyed certificates.
(f) Unclaimed Portion of the Exchange Fund. Any portion of the
Exchange Fund (including the proceeds of any interest and other income received
by the Paying Agent in respect of all such funds) that remains unclaimed by the
former stockholders of the Company six months (or such later time as Parent may
elect) after the Effective Time shall be delivered to the Surviving Corporation.
Any former stockholders of the Company who have not therefore complied with this
Article III shall thereafter look only to Parent and the Surviving Corporation
for payment of any Merger
<PAGE> 15
11
Consideration that may be payable in respect of each Certificate such former
stockholder holds as determined pursuant to this Agreement, without any interest
thereon.
(g) Withholding. Parent or Sub, as the case may be, shall be
entitled to withhold from the consideration otherwise payable to any former
holder of Shares pursuant to this Agreement such amounts as are required to be
withheld with respect to the making of such payment under the applicable tax
withholding requirements of the Code (as defined in Section 4.12) or under any
provision of state, local or foreign tax law. Any amount so withheld shall be
delivered to the applicable taxing authority for the account of such former
holder of Shares from whom the amount was withheld.
(h) Payment of Expenses. Parent shall pay all charges and expenses,
including those of the Paying Agent, in connection with the exchange of the
Merger Consideration for the Certificates surrendered.
SECTION 3.03. Adjustment of the Merger Consideration. If, subsequent
to the date of this Agreement but prior to the Effective Time, the outstanding
shares of Company Common Stock shall have been changed into a different number
of shares or a different class as a result of a stock split, reverse stock
split, stock dividend, subdivision, reclassification, combination, exchange,
recapitalization or other similar transaction, the Merger Consideration shall be
appropriately adjusted.
ARTICLE IV
Representations and Warranties of the Company
Except as disclosed in the SEC Documents (as defined in Section
4.05) filed or publicly available prior to the date of this Agreement (the
"Filed SEC Documents") or set forth on the Disclosure Schedule delivered by the
Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule") and making reference to the particular subsection of this
Agreement to which exception is being taken, the Company represents and warrants
to Parent and Sub as follows:
SECTION 4.01. Organization, Standing and Corporate Power. Each of
the Company and its subsidiaries (as defined in Section 10.03) is a corporation
duly organized, validly existing and in good standing under the
<PAGE> 16
12
laws of the jurisdiction in which it is organized and has all requisite
corporate power and authority to carry on its business as now being conducted.
Each of the Company and its subsidiaries is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed individually or in the aggregate would
not have a material adverse effect (as defined in Section 10.03) on the Company.
The Company has delivered or made available to Parent complete and correct
copies of its Certificate of Incorporation and Amended and Restated By-Laws, in
each case as amended to the date hereof.
SECTION 4.02. Subsidiaries; Equity Interests. (a) Exhibit 21 to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997
includes all the subsidiaries of the Company. All the outstanding shares of
capital stock of, or other equity interests in, each such subsidiary have been
validly issued and are fully paid and nonassessable and are owned directly or
indirectly by the Company, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens") and free of any other restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). The outstanding capital stock of each
subsidiary was issued in compliance in all material respects with all applicable
Federal and state securities laws and regulations.
(b) Except for its interests in its subsidiaries, the Company does
not own, directly or indirectly, any capital stock, membership interest,
partnership interest, joint venture interest or other equity interest in any
person.
SECTION 4.03. Capital Structure. The authorized capital stock of the
Company consists of 50,000,000 shares of Company Common Stock and 10,000,000
shares of preferred stock, par value $.01 per share ("Preferred Stock"). At the
close of business on April 24, 1998, (i) 25,520,763 shares of Company Common
Stock and no shares of Preferred Stock were issued and outstanding, (ii) 18,845
shares of Company Common Stock were held by the Company in its treasury, (iii)
5,484,329 shares of Company Common Stock were reserved for issuance pursuant to
outstanding Stock Options under the Company Stock Plans (each as defined in
Section 7.04),
<PAGE> 17
13
(iv) 180,816 shares of Company Common Stock were reserved for issuance pursuant
to the Yurie Systems, Inc., Employee Stock Purchase Plan (the "ESPP") and (v)
191,374 shares of Company Common Stock were reserved for issuance pursuant to
the Yurie Systems, Inc. 401(k) Savings Plan (the "401(k) Plan"). Except as set
forth above, at the close of business on April 24, 1998, no shares of capital
stock or other voting securities of the Company were issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of the Company
are, and all shares which may be issued pursuant to the Company Stock Plans, the
ESPP and the 401(k) Plan will be, when issued in accordance with the terms
thereof, duly authorized, validly issued, fully paid and nonassessable and not
subject to or issued in violation of any purchase option, call option, right of
first refusal, preemptive right, subscription right or any similar right under
any provision of the DGCL, the Company's Certificate of Incorporation or By-laws
or any Contract (as defined in Section 4.04) to which the Company is a party or
otherwise bound. There are no bonds, debentures, notes or other indebtedness of
the Company having the right to vote (or convertible into securities having the
right to vote) on any matters on which stockholders of the Company may vote
("Voting Company Debt"). Except as set forth above, there are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements, or
undertakings of any kind to which the Company or any of its subsidiaries is a
party or by which any of them is bound (i) obligating the Company or any
subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other equity interests in, or any security
convertible into or exercisable for or exchangeable into any capital stock of or
other equity interest in, the Company or of any subsidiary or any Voting Company
Debt or (ii) obligating the Company or any subsidiary to issue, grant, extend or
enter into any such option, warrant, call, right, security, commitment,
Contract, arrangement or undertaking. The Company is not a party to any voting
agreement with respect to the voting of any of its securities. There are not any
outstanding contractual obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its subsidiaries. The outstanding capital stock of the Company
was issued in compliance with all applicable Federal and state securities laws
and regulations. The shares of Company Common Stock set forth in Exhibit A to
the Stockholders Agreement represent in excess of a majority of the outstanding
shares of Company Common Stock on a fully diluted basis.
<PAGE> 18
14
SECTION 4.04. Authority; Noncontravention. The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject only to, if required by law, approval of the Merger by an affirmative
vote of the holders of a majority of the Shares (the "Company Stockholder
Approval"), to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Company,
subject, in the case of this Agreement, only to the Company Stockholder Approval
if such approval is required by law. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms (except
insofar as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
The execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancelation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Liens in or
upon any of the properties or assets of the Company or any of its subsidiaries
under any provision of (i) the Certificate of Incorporation or the Amended and
Restated By-laws of the Company or the comparable organizational documents of
any of its subsidiaries, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, permit, concession, franchise,
license or other instrument (a "Contract") applicable to the Company or any of
its subsidiaries or any of their respective properties or assets that is
required to be filed as an exhibit to the SEC Documents or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any (A) statute, law, ordinance, rule or regulation or (B) judgment, order or
decree applicable to the Company or any of its subsidiaries or any of their
respective properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) have a material adverse effect on
the Company, (y) impair in any material respect the ability of the Company to
perform its obligations under this
<PAGE> 19
15
Agreement or (z) prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Federal,
state or local government or any court, administrative agency or commission or
other governmental authority or agency, domestic or foreign (a "Governmental
Entity"), is required by or with respect to the Company or any of its
subsidiaries in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the Merger or the transactions
contemplated by this Agreement, except for (1) the filing of a premerger
notification and report form by the Company under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (2) the filing
with the SEC and the Nasdaq Stock Market, Inc. of (A) the Schedule 14D-9, (B) a
proxy statement or information statement relating to the Company Stockholder
Approval, if such approval is required by law (as amended or supplemented from
time to time, the "Proxy Statement") and (C) such reports under Section 13(a) of
the Exchange Act as may be required in connection with this Agreement, the
Stockholders Agreement and the transactions contemplated by this Agreement and
the Stockholders Agreement, (3) the filing of the Certificate of Merger with the
Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business and
(4) such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a material adverse effect on the Company
or prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement.
SECTION 4.05. SEC Documents; Financial Statements. The Company has
filed all required reports, schedules, forms, statements and other documents
with the SEC since February 5, 1997 (the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933 (the "Securities Act"), or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none of the SEC
Documents at the time they were filed contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the extent
that information contained in any SEC Document has been revised or superseded by
a
<PAGE> 20
16
later-filed SEC Document, none of the SEC Documents contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles in the United States
("GAAP") (except, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC) applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly presented the financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments and the absence of footnotes). Except as set forth in the Filed SEC
Documents neither the Company nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
which individually or in the aggregate, would have a material adverse effect on
the Company.
SECTION 4.06. Information Supplied. None of the information supplied
or to be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9 or (iii) the
information to be filed by the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act (the "Information Statement")
will, in the case of the Offer Documents, the Schedule 14D-9 and the Information
Statement, at the respective times the Offer Documents, the Schedule 14D-9 and
the Information Statement are filed with the SEC or first published, sent or
given to the Company's stockholders, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Schedule 14D-9 and the
Information Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Sub specifically for inclusion or incorporation by
reference therein.
<PAGE> 21
17
SECTION 4.07. Absence of Certain Changes or Events. Since the date
of the most recent audited financial statements included in the Filed SEC
Documents, the Company and its subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice, and there
has not been (i) any material adverse change (as defined in Section 10.03) in
the Company, (ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
the Company's capital stock, (iii) any split, combination or reclassification of
any of its capital stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for shares of
its capital stock, (iv) (w) any granting by the Company or any of its
subsidiaries to any director or officer of the Company or its subsidiaries of
any increase in compensation, except in the ordinary course of business
consistent with prior practice or as was required under employment agreements or
stock option agreements in effect as of the date of the most recent audited
financial statements included in the Filed SEC Documents, (x) any granting by
the Company or any of its subsidiaries to any director or officer of any stock
options, except as was required under employment agreements in effect as of the
date of the most recent audited financial statements included in the Filed SEC
Documents, (y) any granting by the Company or any of its subsidiaries to any
officer of any increase in severance or termination pay, except as was required
under any employment, severance or termination agreements, plans or arrangements
in effect as of the date of the most recent audited financial statements
included in the Filed SEC Documents or (z) any entry by the Company or any of
its subsidiaries into any employment, severance or termination agreement with
any director or officer, (v) any damage, destruction or loss, whether or not
covered by insurance, that individually or in the aggregate would have a
material adverse effect on the Company, (vi) any material change in accounting
methods, principles or practices from those applied in the preparation of the
most recent audited financial statements included in the Filed SEC Documents,
except insofar as may have been required by a change in GAAP, or (vii) any tax
election that individually or in the aggregate would have a material adverse
effect on the Company.
SECTION 4.08. Litigation. There is no suit, action or proceeding
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its subsidiaries as to which there is a reasonable
<PAGE> 22
18
likelihood of an adverse determination that individually or in the aggregate
would have a material adverse effect on the Company, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against, or, to the knowledge of the Company, investigation by any
Governmental Entity involving, the Company or any of its subsidiaries that
individually or in the aggregate would have a material adverse effect on the
Company.
SECTION 4.09. Contracts. As of the date hereof, there are no
contracts or agreements that are of a nature required to be filed as an exhibit
under the Exchange Act and the rules and regulations promulgated thereunder.
Neither the Company nor any of its subsidiaries is in violation of nor in
default under (nor does there exist any condition which upon the passage of time
or the giving of notice or both would cause such a violation of or default
under) any lease, permit, concession, franchise, license or any other contract,
agreement, arrangement or understanding to which it is a party or by which it or
any of its properties or assets is bound, except for violations or defaults that
individually or in the aggregate would not have a material adverse effect on the
Company. As of the date hereof, the Company is not bound by any contract,
agreement, arrangement or understanding with any affiliate of the Company that
is currently in effect other than (i) agreements that are disclosed in the Filed
SEC Documents or (ii) not of a nature required to be disclosed in the SEC
Documents. The Company is not a party to or otherwise bound by any agreement or
covenant not to compete or by any agreement or covenant restricting in any
material respect the development, marketing or distribution of the Company's
products and services.
SECTION 4.10. Compliance with Laws. (a) Each of the Company and its
subsidiaries is in compliance with all applicable statutes, laws, ordinances,
regulations, rules, judgments, decrees and orders of any Governmental Entity
(collectively, "Legal Provisions") applicable to its business or operations,
except for instances of possible noncompliance that individually or in the
aggregate would not have a material adverse effect on the Company or prevent or
materially delay the consummation of the Merger or the transactions contemplated
by this Agreement. Each of the Company and its subsidiaries has in effect all
applicable Federal, state, local and foreign governmental approvals,
authorizations, certificates, filings, franchises, licenses, notices, permits
and rights, including all authorizations required under Environmental Laws (as
hereinafter defined)
<PAGE> 23
19
("Permits"), required for each of the Company and its subsidiaries to own, lease
or operate its properties and assets and to carry on its business as now
conducted, and there has occurred no default under, or violation of, any such
Permit, except in each case for the lack of such Permits and for defaults under,
or violations of, such Permits, which lack, default or violation individually or
in the aggregate would not have a material adverse effect on the Company.
(b) The term "Environmental Laws" means any Federal, state or local
statute, ordinance, rule, regulation, permit, license, judgment, order, decree
or injunction relating to: (A) Releases (as defined in 42 U.S.C. ss. 9601(22))
or threatened Releases of Hazardous Material (as hereinafter defined) into the
environment, (B) the generation, treatment, storage, disposal, use, handling,
manufacturing, transportation or shipment of Hazardous Material or (C) the
health or safety of employees in the workplace environment. The term "Hazardous
Material" means (1) hazardous substances (as defined in 42 U.S.C. ss.9601(14)),
(2) petroleum, including crude oil and any fractions thereof, (3) natural gas,
synthetic gas and any mixtures thereof, (4) asbestos and/or asbestos containing
material, (5) PCBs or materials containing PCBs and (6) any material regulated
as a medical waste or infectious waste.
(c) To the knowledge of the Company, during the period of ownership
or operation by the Company and its subsidiaries of any of their current owned
or leased properties, there have been no Releases of Hazardous Material by the
Company or any of its subsidiaries in, on, under or affecting such properties or
any surrounding site, and, to the knowledge of the Company, neither the Company
nor any of its subsidiaries has disposed of any Hazardous Material in a manner
that has led, or could reasonably be anticipated to lead, to a Release, except
in each case for those which individually or in the aggregate would not have a
material adverse effect on the Company. The Company and its subsidiaries have
not received any written notice of, or entered into any order, settlement or
decree relating to: (A) any violation of any Environmental Laws or the institu
tion or pendency of any suit, action, claim, proceeding or, to the knowledge of
the Company, investigation by any Governmental Entity or any third party in
connection with any alleged violation of Environmental Laws, (B) the response to
or remediation of Hazardous Material at or arising from any of the Company's
properties or any subsidiary's properties or (C) payment for, response to or
remediation of Hazardous Material at or arising from any of
<PAGE> 24
20
the Company's properties or any subsidiary's properties, except in each case for
any such notices, orders, settlements or decrees which individually or in the
aggregate would not have a material adverse effect on the Company.
SECTION 4.11. Absence of Changes in Benefit Plans; Labor Relations.
Since the date of the most recent audited financial statements included in the
Filed SEC Documents, there has not been any adoption or amendment (or any
agreement to adopt or amend) in any material respect, other than as required by
law, by the Company or any of its subsidiaries of any employment contract,
collective bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or former
employee, officer or director of the Company or any subsidiary (collectively,
"Benefit Plans"). There exist no material employment, consulting, severance,
termination or indemnification agreements, arrangements or understandings
between the Company or any of its subsidiaries, and any current or former
employee, officer or director of the Company. There are no collective bargaining
or other labor union agreements to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound. Since
January 1, 1997, neither the Company nor any of its subsidiaries has encountered
any labor union organizing activity, nor had any actual or threatened employee
strikes, work stoppages, slowdowns or lockouts.
SECTION 4.12. ERISA Compliance. (a) Schedule 4.12(a) to the Company
Disclosure Schedule contains a list of all "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) (sometimes referred to herein as "Pension
Plans"),"employee welfare benefit plans" (as defined in Section 3(1) of ERISA)
and all other Benefit Plans maintained, or contributed to, by the Company or any
of its subsidiaries or any person or entity that, together with the Company and
its subsidiaries, is treated as a single employer under Section 414(b), (c), (m)
or (o) of the Internal Revenue Code of 1986, as amended (the "Code") (the
Company and each such other person or entity, a "Commonly Controlled Entity")
for the benefit of any current or former employees, officers or directors of the
Company or any of its subsidiaries. The Company has made available to
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21
Parent true, complete and correct copies of (1) each Benefit Plan (or, in the
case of any unwritten Benefit Plans, descriptions thereof), (2) the most recent
annual report on Form 5500 filed with the Internal Revenue Service with respect
to each Benefit Plan (if any such report was required), (3) the most recent
summary plan description for each Benefit Plan for which such summary plan
description is required and (4) each trust agreement and group annuity contract
relating to any Benefit Plan. Each Benefit Plan has been administered in
material compliance with its terms. The Company, each of its subsidiaries and
all the Benefit Plans are all in material compliance with applicable provisions
of ERISA and the Code.
(b) All Pension Plans have been the subject of determination letters
from the Internal Revenue Service to the effect that such Pension Plans are
qualified and exempt from Federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, and no such determination letter has been revoked nor
has any event occurred since the date of its most recent determination letter or
application therefor that would adversely affect its qualification.
(c) Neither the Company, nor any of its subsidiaries, nor any
Commonly Controlled Entity has maintained, contributed or been obligated to
contribute to any Benefit Plan that is subject to Title IV of ERISA.
(d) Schedule 4.12(d) to the Company Disclosure Schedule lists all
outstanding Stock Options as of April 24, 1998, showing for each such option:
(1) the number of shares issuable, (2) the number of vested and unvested shares,
(3) the date of grant and (4) the exercise price.
(e) Except as provided by this Agreement, no employee of the Company
or any of its subsidiaries will be entitled to any additional compensation or
benefits or any acceleration of the time of payment or vesting of any
compensation or benefits (other than the acceleration of vesting of Stock
Options in accordance with the terms of the Company Stock Plans as in existence
on the date hereof) under any Benefit Plan as a result of the transactions
contemplated by this Agreement.
(f) The deduction of any amount payable pursuant to the terms of the
Benefit Plans will not be subject to disallowance under Section 162(m) of the
Code.
SECTION 4.13. Taxes. Each of the Company and its subsidiaries has
filed all material tax returns and reports
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22
required to be filed by it and has paid, or established adequate reserves for,
all material taxes required to be paid by it. No deficiencies for any taxes have
been proposed, asserted or assessed against the Company, and no requests for
waivers of the time to assess any such taxes are pending. The Federal income tax
returns of the Company and each of its subsidiaries consolidated in such returns
have been examined by and settled with the United States Internal Revenue
Service for all years through the year ended December 31, 1992. The statute of
limitations on assessment or collection of any Federal income taxes due from the
Company or any of its subsidiaries has expired for all taxable years of the
Company or such subsidiaries through the year ended December 31, 1992. As used
in this Agreement, "taxes" shall include all Federal, state, local and foreign
income, property, sales, excise and other taxes, tariffs or governmental charges
of any nature whatsoever (including all interest, penalties and additions
imposed with respect to such amounts).
SECTION 4.14. No Excess Parachute Payments. No amount that could be
received (whether in cash or property or the vesting of property) as a result of
any of the transactions contemplated by this Agreement by any employee, officer
or director of the Company or any of its subsidiaries who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.28OG-1) under any employment, severance or termination agreement, other
compensation arrangement or Benefit Plan currently in effect would be an "excess
parachute payment" (as such term is defined in Section 28OG(b)(1) of the Code).
No such person is entitled to receive any additional payment from the Company or
any of its subsidiaries, the Surviving Corporation or any other person (a
"Parachute Gross-Up Payment") in the event that the excise tax of Section
4999(a) of the Code is imposed on such person. The Board of Directors of the
Company has not granted to any officer, director or employee of the Company any
right to receive any Parachute Gross-Up Payment.
SECTION 4.15. Intellectual Property. (a) The Company and its
subsidiaries own, or are validly licensed or otherwise have the right to use,
all patents, patent rights, trademarks, trade secrets, trade names, service
marks, copyrights and other proprietary intellectual property rights and
computer programs which are material to the conduct of the business of the
Company (collectively, the "Intellectual Property Rights"), and the Company will
continue to own or be validly licensed or otherwise have the right to use such
Intellectual Property Rights immediately
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23
after the Effective Time. No claim of infringement of any Intellectual Property
Rights of any third party has been brought or, to the Company's knowledge,
asserted against the Company or any of its subsidiaries in respect of the
operation of the Company's or any subsidiary's business. To the knowledge of the
Company, no person is infringing the rights of the Company or any subsidiary
with respect to any Intellectual Property Rights that, individually or in the
aggregate, would have a material adverse effect on the Company. Neither the
Company nor any subsidiary has licensed, or otherwise granted, to any third
party, any material rights in or to any Intellectual Property Rights.
(b) To the Company's knowledge, each employee, agent, consultant or
contractor who has materially contributed to or materially participated in the
creation or development of any copyrightable, patentable or trade secret
material on behalf of the Company, any of its subsidiaries or any predecessor in
interest thereto either: (i) is a party to a "work-for-hire" agreement under
which the Company or such subsidiary is deemed to be the original owner/author
of all property rights therein; or (ii) has executed an assignment or an
agreement to assign in favor of the Company, such subsidiary or such predecessor
in interest, as applicable, all right, title and interest in such material.
SECTION 4.16. State Takeover Statutes. The Board of Directors of the
Company has approved the Offer, the Merger, this Agreement and the Stockholders
Agreement and such approval is sufficient to render inapplicable to the Offer,
the Merger, this Agreement, the Stockholders Agreement and the transactions
contemplated by this Agreement and the Stockholders Agreement the provisions of
Section 203 of the DGCL to the extent, if any, such Section is applicable to the
Offer, the Merger, this Agreement, the Stockholders Agreement and the
transactions contemplated by this Agreement and the Stockholders Agreement. To
the Company's knowledge, no other state takeover statute or similar statute or
regulation applies to or purports to apply to the Offer, the Merger, this
Agreement, the Stockholders Agreement or the transactions contemplated by this
Agreement or the Stockholders Agreement.
SECTION 4.17. Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than BT Alex. Brown
Incorporated, the fees and expenses of which will be paid by the Company, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
and the
<PAGE> 28
24
Stockholders Agreement based upon arrangements made by or on behalf of the
Company. The Company has furnished to Parent true and complete copies of all
agreements under which any such fees or expenses are payable and all
indemnification and other agreements related to the engagement of the persons to
whom such fees are payable.
SECTION 4.18. Opinion of Financial Advisor. The Company has received
the opinion of BT Alex. Brown Incorporated, dated the date hereof, to the effect
that, as of such date, the consideration to be received in the Offer and the
Merger by the Company's stockholders is fair to the Company's stockholders from
a financial point of view, a signed copy of which opinion will be promptly
delivered to Parent.
ARTICLE V
Representations and Warranties
of Parent and Sub
Parent and Sub represent and warrant to the Company as follows:
SECTION 5.01. Organization, Standing and Corporate Power. Each of
Parent and Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
all requisite corporate power and authority to carry on its business as now
being conducted. Each of Parent and Sub is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed individually or in the aggregate would
not have a material adverse effect on Parent. Parent has delivered to the
Company complete and correct copies of its Certificate of Incorporation and
By-Laws and the Certificate of Incorporation and By-Laws of Sub, in each case as
amended to the date hereof.
SECTION 5.02. Authority; Noncontravention. Parent and Sub have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate action on
the part of
<PAGE> 29
25
Parent and Sub. This Agreement has been duly executed and delivered by Parent
and Sub, and constitutes a valid and binding obligation of each such party,
enforceable against each such party in accordance with its terms (except insofar
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
The execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancelation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Lien upon any
of the properties or assets of Parent or Sub under, any provision of (i) the
Certificate of Incorporation or By-Laws of Parent or Sub, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Parent or Sub
or their respective properties or assets that is required to be filed as an
exhibit to Parent's filings with the SEC under the Exchange Act or (iii) subject
to the governmental filings and other matters referred to in the following
sentence, any (A) statute, law, ordinance, rule or regulation or (B) judgment,
order or decree applicable to Parent or Sub or their respective properties or
assets, other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights or Liens that individually or in the aggregate
would not (x) have a material adverse effect on Parent, (y) impair in any
material respect the ability of each of Parent and Sub to perform its
obligations under this Agreement, as the case may be, or (z) prevent or
materially delay the consummation of any of the transactions contemplated by
this Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Parent or Sub in connection with the execution and delivery
of this Agreement by Parent and Sub or the consummation by Parent and Sub of the
transactions contemplated by this Agreement, except for (1) the filing of a
premerger notification and report form under the HSR Act, (2) the filing with
the SEC of (A) the Offer Documents and (B) such reports under Sections 13(a),
13(d) and 16(a) of the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (3) the filing of
the Certificate of Merger with the Delaware Secretary of State and appropriate
documents
<PAGE> 30
26
with the relevant authorities of other states in which the Company is qualified
to do business and (4) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the "blue sky"
laws of various states, the failure of which to be obtained or made would not,
individually or in the aggregate, have a material adverse effect on Parent or
prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement.
SECTION 5.03. Information Supplied. None of the information supplied
or to be supplied by Parent or Sub specifically for inclusion or incorporation
by reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC or first published, sent or given to the Company's
stockholders, or, in the case of the Proxy Statement, at the time the Proxy
Statement is first mailed to the Company's stockholders or at the time of the
Stockholders Meeting (as defined in Section 7.01), contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Offer Documents
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that (other than
with respect to the Proxy Statement) no representation or warranty is made by
Parent or Sub with respect to statements made or incorporated by reference
therein based on information supplied by the Company specifically for inclusion
or incorporation by reference therein.
SECTION 5.04. Interim Operations of Sub. Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby, has engaged in
no other business activities and has conducted its operations only as
contemplated hereby.
SECTION 5.05. Brokers. No broker, investment banker, financial
advisor or other person, other than Goldman, Sachs & Co., the fees and expenses
of which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Sub.
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27
SECTION 5.06. Financing. At the expiration of the Offer and the
Effective Time, Parent and Sub will have available all the funds necessary for
the acquisition of all Shares pursuant to the Offer and to perform their
respective obligations under this Agreement, including payment in full for all
shares of Company Common Stock validly tendered into the Offer or outstanding at
the Effective Time.
ARTICLE VI
Covenants
SECTION 6.01. Covenants of the Company. (a) Conduct of the Business
by the Company. Except for matters set forth in Schedule 6.01 of the Company
Disclosure Schedule or otherwise expressly permitted by this Agreement, until
the earlier of termination of this Agreement or the consummation of the Offer,
the Company shall, and shall cause its subsidiaries to, carry on their
respective businesses in the ordinary course consistent with the manner as
heretofore conducted and, to the extent consistent therewith, use commercially
reasonable efforts to (x) preserve intact their current business organization,
(y) keep available the services of their current officers and employees and (z)
preserve their relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them. In addition, and
without limiting the generality of the foregoing, except for matters set forth
in Schedule 6.01 of the Company Disclosure Schedule or otherwise expressly
permitted by this Agreement, until the earlier of termination of this Agreement
or the consummation of the Offer, the Company shall not, and shall not permit
any of its subsidiaries to, without Parent's prior written consent:
(i) other than dividends and distributions by a direct or indirect
wholly owned subsidiary of the Company to its parent, (x) declare, set
aside or pay any dividends on, or make any other distributions (whether in
cash, stock or property), in respect of, any of its capital stock, (y)
split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock (other than the
issuance of shares of Company Common Stock upon the exercise of Stock
Options outstanding on the date of this Agreement and in accordance with
their present terms) or (z) purchase, redeem or otherwise acquire any
shares of capital stock
<PAGE> 32
28
of the Company or any of its subsidiaries or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares
of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the
issuance of shares of Company Common Stock upon the exercise of Stock
Options outstanding on the date of this Agreement and in accordance with
their present terms and other than the issuance of shares of Company
Common Stock pursuant to the terms of the 401(k) Plan and the ESPP to the
extent of the share amounts set forth in Schedule 6.01(a)(ii) of the
Company Disclosure Schedule);
(iii) amend its Certificate of Incorporation, Amended and Restated
By-laws or other comparable charter or organizational documents;
(iv) acquire or agree to acquire (including, without limitation, by
merger, consolidation or acquisition of stock or assets) any business,
including through the acquisition of any interest in any corporation,
partnership, joint venture, association or other business organization or
division thereof;
(v) sell, lease, license, mortgage or otherwise encumber or
otherwise dispose of any of its properties or assets, other than in the
ordinary course of business consistent with past practice;
(vi) (y) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its subsidiaries, or guarantee any debt securities of another
person, other than short-term bank financing in the ordinary course of
business consistent with past practice or (z) make any loans, advances or
capital contributions to, or investments in, any other person, other than
in the ordinary course of business consistent with past practice;
(vii) except as disclosed on Schedule 6.01(a)(vii) to the Company
Disclosure Schedule, make or agree to make any new capital expenditure or
expenditures, other
<PAGE> 33
29
than in the ordinary course of business consistent with past practice;
(viii) except as required to comply with applicable law or
agreements, plans or arrangements existing on the date hereof, (A) adopt,
enter into, terminate or amend any employment contract, collective
bargaining agreement or Benefit Plan, (B) increase in any manner the
compensation or fringe benefits of, or pay any bonus to, any director,
officer or employee (except for normal increases of cash compensation or
cash bonuses to individuals (and not across-the-board actions) in the
ordinary course of business consistent with past practice), (C) pay any
benefit not provided for under any Benefit Plan or any other benefit plan
or arrangement of the Company or its subsidiaries, (D) increase in any
manner the severance or termination pay of any officer or employee, (E)
enter any employment, consulting, severance, termination or
indemnification agreement, arrangement or understanding with any current
or former employee, officer or director, (F) except as permitted in clause
(B), grant any awards under any bonus, incentive, performance or other
compensation plan or arrangement or Benefit Plan (including the grant of
stock options, stock appreciation rights, stock based or stock related
awards, performance units or restricted stock or the removal of existing
restrictions in any Benefit Plans or agreements or awards made
thereunder), (G) take any action to fund or in any other way secure the
payment of compensation or benefits under any employee plan, agreement,
contract or arrangement or Benefit Plan or (H) take any action to
accelerate the vesting of, or cash out rights associated with, any Stock
Options (except that appropriate action shall be taken to accelerate the
vesting of all Stock Options outstanding as of the date hereof under the
Data Labs, Inc. 1996 Stock Option Plan as of the consummation of the
Offer);
(ix) enter into any agreement of a nature that would be required to
be filed as an exhibit to Form 10-K under the Exchange Act, other than
contracts for the sale of the Company's products in the ordinary course of
business;
(x) except as required by GAAP, make any material change in
accounting methods, principles or practices;
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30
(xi) make any material tax election or enter into any settlement or
compromise with respect to any material income tax liability; or
(xii) authorize any of, or commit or agree to take any of, the
foregoing actions.
SECTION 6.02. No Solicitation. (a) The Company shall not, nor shall
it permit any of its subsidiaries to, nor shall it authorize or permit any of
its officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative or agent retained by it or
any subsidiary to, directly or indirectly, (i) solicit, initiate or knowingly
encourage the submission of any Takeover Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any nonpublic information with respect to, or take any other action
designed or reasonably likely to facilitate any inquiries or the making of any
proposal that constitutes any Takeover Proposal. For purposes of this Agreement,
"Takeover Proposal" means any inquiry, proposal or offer from any person
relating to any direct or indirect acquisition or purchase of a substantial
amount of assets of the Company and its subsidiaries, taken as a whole (other
than the purchase of the Company's products in the ordinary course of business),
or more than a 20% interest in the total voting securities of the Company or any
of its subsidiaries or any tender offer or exchange offer that if consummated
would result in any person beneficially owning 20% or more of any class of
equity securities of the Company or any of its subsidiaries or any merger,
consolidation, business combination, sale of all or substantially all of its
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its subsidiaries, other than the transactions
contemplated by this Agreement.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent, the approval or recommendation by such Board of
Directors or such committee of the Offer, the Merger, this Agreement or the
Stockholders Agreement, (ii) approve or recommend, or propose publicly to
approve or recommend, any Takeover Proposal or (iii) cause the Company to enter
into any letter of intent, agreement in principle, acquisition agreement or
other similar agreement related to any Takeover Proposal.
<PAGE> 35
31
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.02, the Company shall promptly advise
Parent orally and in writing of any inquiry with respect to a Takeover Proposal,
request for nonpublic information (except in the ordinary course of business and
not in connection with a possible Takeover Proposal) or of any Takeover Proposal
known to it, the material terms and conditions of such inquiry, request or
Takeover Proposal and the identity of the person making such inquiry, request or
Takeover Proposal. The Company will promptly inform Parent of any change in the
status and details (including amendments or proposed amendments) of any such
inquiry, request or Takeover Proposal.
(d) Nothing contained in this Agreement shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14d-9 or Rule 14e-2(a) promulgated under the Exchange Act; provided however,
neither the Company nor its Board of Directors nor any committee thereof shall
withdraw or modify, or propose to withdraw or modify, its position with respect
to the Offer, the Merger, or this Agreement or approve or recommend, or propose
to approve or recommend, a Takeover Proposal.
SECTION 6.03. Other Actions. The Company shall not take any action
that would reasonably be expected to result in (i) any of the representations
and warranties of the Company set forth in this Agreement that are qualified as
to materiality becoming untrue, (ii) any of such representations and warranties
that are not so qualified becoming untrue in any material respect or (iii) any
of the Offer Conditions not being satisfied.
ARTICLE VII
Additional Agreements
SECTION 7.01. Company Stockholder Approval; Preparation of Proxy
Statement. (a) If the Company Stockholder Approval is required by law, the
Company shall, as soon as practicable following the expiration of the Offer,
duly call, give notice of, convene and hold a meeting of its stockholders (the
"Stockholders Meeting") for the purpose of obtaining the Company Stockholder
Approval. The Company shall, through its Board of Directors, recommend to its
stockholders that the Company Stockholder Approval be given. Notwithstanding the
foregoing, if Sub or any other
<PAGE> 36
32
subsidiary of Parent shall acquire at least 90% of the outstanding Shares, the
parties shall take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the expiration of the Offer
without a Stockholders Meeting in accordance with Section 253 of the DGCL.
(b) If the Company Stockholder Approval is required by law, the
Company shall, as soon as practicable following the expiration of the Offer,
prepare and file a preliminary Proxy Statement with the SEC and shall use its
best efforts to respond to any comments of the SEC or its staff and to cause the
Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable after responding to all such comments to the satisfaction of the
staff. No filing of, or amendment or supplement to, the Proxy Statement will be
made by the Company without providing Parent the opportunity to review and
comment thereon. The Company shall notify Parent promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and will supply Parent with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or the Merger. If
at any time prior to the Stockholders Meeting there shall occur any event or
information that should be set forth in an amendment or supplement to the Proxy
Statement, so that the Proxy Statement would not include any misstatement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, the Company shall promptly prepare and mail to its stockholders and
file with the SEC such an amendment or supplement. The Company shall not mail
any Proxy Statement or any amendment or supplement thereto, to which Parent
reasonably objects.
(c) Parent agrees to cause all Shares purchased pursuant to the
Offer and all other Shares owned by Parent or any subsidiary of Parent to be
voted in favor of the Company Stockholder Approval.
SECTION 7.02. Access to Information. The Company shall, and shall
cause each of its subsidiaries to, afford to Parent and to the officers,
employees, accountants, counsel and other representatives of Parent reasonable
access, during normal business hours during the period prior to the Effective
Time, to all their properties, books,
<PAGE> 37
33
contracts, commitments and records and, during such period, the Company shall,
and shall cause each of its subsidiaries to, make available promptly to Parent
upon request (a) a copy of each report, schedule, registration statement and
other document filed or received by it during such period pursuant to the
requirements of the federal or state securities laws or the federal tax laws, or
state, local or foreign tax laws and (b) all other information concerning its
business, properties and personnel as Parent may reasonably request (including
the Company's outside accountants' work papers). Except as otherwise agreed to
by the Company, and notwithstanding termination of this Agreement, the terms of
the Confidentiality Agreement dated April 2, 1998, between Parent and the
Company (the "Confidentiality Agreement") shall apply to all information about
the Company which has been furnished under this Agreement by the Company to
Parent or Sub.
SECTION 7.03. Reasonable Efforts. (a) Upon and subject to the terms
and subject to the conditions set forth in this Agreement, each of the parties
agrees to use all reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the Offer, the
Merger and the other transactions contemplated by this Agreement and the
Stockholders Agreement, including using reasonable efforts to take the following
actions: (i) the taking of all reasonable acts necessary to cause the Offer
Conditions to be satisfied, (ii) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to avoid an action or proceeding by any Governmental Entity, (iii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iv) the defending of any lawsuits or other legal proceedings, whether judicial
or administrative, challenging this Agreement or the Stockholders Agreement or
the consummation of the transactions contemplated hereby or thereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed and (v) the execution and delivery
of any additional instruments necessary to consum mate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement and the
Stockholders Agreement. In connection with and without limiting the foregoing,
but subject to the terms and conditions hereof,
<PAGE> 38
34
the Company and its Board of Directors shall, if any state takeover statute or
similar statute or regulation is or becomes applicable to the Offer, the Merger,
this Agreement, the Stockholders Agreement or any other transactions
contemplated by this Agreement or the Stockholders Agreement, use all reasonable
efforts to ensure that the Offer, the Merger and the other transactions
contemplated by this Agreement or the Stockholders Agreement may be consummated
as promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the Offer, the
Merger, this Agreement and the Stockholders Agreement and the other transactions
contemplated by this Agreement and the Stockholders Agreement.
(b) The Company shall give prompt notice to Parent, and Parent shall
give prompt notice to the Company, of (i) any representation or warranty made by
it contained in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or warranty that
is not so qualified becoming untrue or inaccurate in any material respect or
(ii) the failure by it to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
SECTION 7.04. Company Stock Options. (a) As soon as practicable
following the date of this Agreement, the Board of Directors of the Company (or,
if appropriate, any committee administering the Company Stock Plans, as defined
below) shall adopt such resolutions or take such other actions, if any, as may
reasonably be required to effect the following:
(i) adjust the terms of all outstanding options to purchase Company
Common Stock (the "Stock Options") granted under any plan or arrangement
providing for the grant of options to purchase Company Common Stock to
current or former directors, officers, employees or consultants of the
Company or its subsidiaries (the "Company Stock Plans"), whether vested
pursuant to Section 6.01(a)(viii)(H) or otherwise vested by their terms
(including as a result of the consummation of the transactions
contemplated hereby), as necessary to provide that, at the consummation of
the Offer, each Stock Option outstanding immediately prior to the
<PAGE> 39
35
consummation of the Offer shall be amended and converted into an option to
acquire, on the same terms and conditions as were applicable under the
Stock Option, the number of shares of common stock of Parent ("Parent
Common Stock") determined by multiplying the number of shares of Company
Common Stock subject to such Stock Option by a fraction (the "Conversion
Fraction"), the numerator of which is $35.00 and the denominator of which
is the average of the high and low sales prices of Parent Common Stock as
reported by the New York Stock Exchange for three (3) trading days
immediately preceding (but not including) the date of the consummation of
the Offer, rounded down to the nearest whole share, at a price per share
of Parent Common Stock equal to (A) the exercise price per share of
Company Common Stock subject to such Stock Option immediately prior to the
consummation of the Offer divided by (B) the Conversion Fraction (each, as
so adjusted, an "Adjusted Option"), rounded up to the nearest
one-hundredth of a cent; and
(ii) make such other changes to the Company Stock Plans as Parent
and the Company may agree are appropriate to give effect to the foregoing
and the Merger.
(b) The adjustments provided herein with respect to any Stock
Options that are "incentive stock options" as defined in Section 422 of the Code
shall be and are intended to be effected in a manner which is consistent with
Section 424(a) of the Code.
(c) Upon the consummation of the Offer, by virtue of the
transactions contemplated hereby and without the need of any further corporate
action, Parent shall assume the Company Stock Plans, with the result that all
obligations of the Company under the Company Stock Plans, including with respect
to Stock Options outstanding at the consummation of the Offer shall be
obligations of Parent following the consummation of the Offer.
(d) As soon as practicable following the consummation of the Offer,
Parent shall prepare and file with the SEC a registration statement on Form S-8
(or another appropriate form) registering a number of shares of Parent Common
Stock equal to the number of shares subject to the Adjusted Options. Such
registration statement shall be kept effective (and the current status of the
prospectus or prospectuses required thereby shall be maintained) at least for so
long as any Adjusted Options may remain outstanding.
<PAGE> 40
36
(e) As soon as practicable following the consummation of the Offer,
Parent shall deliver to the holders of Stock Options appropriate notices setting
forth such holders' rights pursuant to the respective Company Stock Plans and
the agreements evidencing the grants of such Stock Options and that such Stock
Options and agreements shall be assumed by Parent and shall continue in effect
on the same terms and conditions currently applicable to such Stock Options
(subject to the adjustments required by this Section 7.04). From and after the
consummation of the Offer, and for a period no less than three months following
the Merger, Parent and the Company shall take any necessary actions to provide
that holders of Adjusted Options may elect, in accordance with reasonable
procedures established by Parent from time to time, to transact a "cashless
exercise procedure" in respect of their Adjusted Options.
(f) A holder of an Adjusted Option may exercise such Adjusted Option
in whole or in part in accordance with its terms by delivering a properly
executed notice of exercise to Parent, together with the consideration therefor
and the Federal withholding tax information, if any, required in accordance with
the related Company Stock Plan.
(g) Except as otherwise contemplated by this Section 7.04 or Section
6.01(a)(viii)(H) and except to the extent required under the respective terms of
the Stock Options, all terms and conditions with respect to Stock Options
awarded under the Company Stock Plans or any other plan, program or arrangement
of the Company or any of its subsidiaries, to the extent that such terms and
conditions shall not have already lapsed, shall remain in full force and effect
with respect to such options after giving effect to the Merger and the
assumption by Parent as set forth above.
(h) Upon consummation of the Offer, in accordance with the terms of
the ESPP, the ESPP and all options outstanding thereunder shall automatically
terminate and each participant thereunder will be paid the outstanding balance
of payroll deductions that are in his or her account thereunder at such time.
SECTION 7.05. Employee Matters. (a) General. Upon the consummation
of the Offer, Parent (and the Company) shall, or Parent shall cause Sub to, (i)
employ each person who is an employee of the Company and its subsidiaries
immediately prior to the consummation of the Offer, other than those individuals
who are covered by retention agreements being entered into as of the date hereof
with
<PAGE> 41
37
Parent and the Company (the "Company Employees"), at the same base pay as in
effect immediately prior to the consummation of the Offer, and (ii) provide
benefits substantially similar in the aggregate to current Company benefits, or
provide Company Employees who continue to be employed by the Company or Sub with
the employee benefit plans and compensation provided by Parent to similarly
situated employees in the Data Networking Systems division. Parent shall, or
shall cause the Surviving Corporation to, grant to the Company Employees
(including those individuals covered by the retention agreements referred to
above) credit for purposes of determining eligibility to participate and vesting
in Parent's or the Surviving Corporation's employee benefit plans for service
with the Company and its subsidiaries. Parent shall waive any and all
pre-existing condition limitations and exclusions and waiting periods that may
otherwise apply to the Company Employees (including those individuals covered by
the retention agreements referred to above) under the benefit plans of Parent
and its affiliates, and Parent shall cause such Company Employees to receive
full credit for amounts paid or accrued towards any deductible or copayment
requirements incurred during the current plan year.
(b) Gross-Up Payments. (i) In the event it shall be determined that
in connection with the transactions contemplated by this Agreement, any payment,
acceleration of vesting or distribution of any type to or for the benefit of any
Company Employee listed on Schedule 7.05(b) to the Company Disclosure Schedule,
whether paid or payable or distributed or distributable pursuant to any Benefit
Plan or otherwise (the "Total Payments"), would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties with respect to
such excise tax (such excise tax, together with any such interest and penalties,
are collectively referred to as the "Excise Tax"), then such Company Employee
shall be entitled to receive from Parent an additional payment (a "Gross-Up
Payment") in an amount such that after payment by such Company Employee of all
taxes (including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, such Company
Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Total Payments.
(ii) As a result of uncertainty in the application of Section 4999
of the Code at the time of the initial determination of the Gross-Up Payment
hereunder, it is possible that Gross-Up Payments not made by Parent should have
been made (an "Underpayment"), or that Gross-Up
<PAGE> 42
38
Payments will have been made by Parent which should not have been made (an
"Overpayment"). In either such event, the amount of the Underpayment or
Overpayment that has occurred shall be determined as soon as practicable. In the
case of an Underpayment, the amount of such Underpayment shall be promptly paid
by Parent to or for the benefit of the applicable Company Employee. In the case
of an Overpayment, the applicable Company Employee shall, at the direction and
expense of Parent, take such steps as are reasonably necessary (including the
filing of returns and claims for refund), follow reasonable instructions from,
and procedures established by, Parent, and otherwise reasonably cooperate with
Parent to correct such Overpayment; provided, however, that (A) a Company
Employee shall not in any event be obligated to return to Parent an amount
greater than the net after-tax portion of the Overpayment that he has retained
or has recovered as a refund from the applicable taxing authorities and (B) this
provision shall be interpreted in a manner consistent with the intent of the
foregoing provisions, which is to make the Company Employee whole, on an
after-tax basis, from the application of the Excise Tax, it being understood
that the correction of an Overpayment may result in the Company Employee
repaying to Parent an amount which is less than the Overpayment.
SECTION 7.06. Directors. Promptly upon the acceptance for payment
of, and payment for, Shares by Sub pursuant to the Offer, Sub shall be entitled
to designate such number of directors on the Board of Directors of the Company
as will give Sub, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Company's Board of Directors equal to the product of (i)
the total number of directors on the Company's Board of Directors and (ii) the
percentage that the number of Shares purchased by Sub in the Offer bears to the
number of Shares outstanding, and the Company shall, at such time, cause Sub's
designees to be so elected by its existing Board of Directors; provided,
however, that in the event that Sub's designees are elected to the Board of
Directors of the Company, until the Effective Time such Board of Directors shall
have at least two directors who are directors of the Company on the date of this
Agreement and who are not officers of the Company or any of its subsidiaries
(the "Independent Directors") and; provided further that, in such event, if the
number of Independent Directors shall be reduced below two for any reason
whatsoever, the remaining Independent Director shall designate a person to fill
such vacancy who shall be deemed to be an Independent Director for purposes of
this Agreement or, if no Independent Directors then remain, the other directors
of the Company on
<PAGE> 43
39
the date hereof shall designate two persons to fill such vacancies who shall not
be officers or affiliates of the Company or any of its subsidiaries, or officers
or affiliates of Parent or any of its subsidiaries, and such persons shall be
deemed to be Independent Directors for purposes of this Agreement. Subject to
applicable law, the Company shall take all action requested by Parent necessary
to effect any such election, including mailing to its stockholders the
Information Statement containing the information required by Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, and the Company agrees
to make such mailing with the mailing of the Schedule 14D-9 (provided that Sub
shall have provided to the Company on a timely basis all information required to
be included in the Information Statement with respect to Sub's designees). In
connection with the foregoing, the Company will promptly, at the option of
Parent, either increase the size of the Company's Board of Directors and/or
obtain the resignation of such number of its current directors as is necessary
to enable Sub's designees to be elected or appointed to, and to constitute a
majority of the Company's Board of Directors as provided above.
SECTION 7.07. Fees and Expenses. All fees and expenses incurred in
connection with the Offer, the Merger, this Agreement, the Stockholders
Agreement and the transactions contemplated by this Agreement and the
Stockholders Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Offer or the Merger is consummated.
SECTION 7.08. Indemnification. (a) From and after the consummation
of the Offer, Parent will, and will cause the Surviving Corporation to, fulfill
and honor in all respects the obligations of the Company pursuant to (i) each
indemnification agreement in effect at such time between the Company and each
person who is or was a director or officer of the Company at or prior to the
Effective Time and (ii) any indemnification provisions under the Company's
Certificate of Incorporation or Amended and Restated By-laws as each is in
effect on the date hereof (the persons to be indemnified pursuant to the
agreements or provisions referred to in clauses (i) and (ii) of this Section
7.08(a) shall be referred to as, collectively, the "Indemnified Parties"). The
Certificate of Incorporation and By-laws of the Surviving Corporation shall
contain the provisions with respect to indemnification and exculpation from
liability set forth in the Company's Certificate of Incorporation and By-laws on
the date of this Agreement, which provisions shall not be amended, repealed or
otherwise modified for a
<PAGE> 44
40
period of six years after the Effective Time in any manner that would adversely
affect the rights thereunder of any Indemnified Party.
(b) This Section 7.08 shall survive the consummation of the Merger,
is intended to be for the benefit of, and enforceable by, the Company, Parent,
the Surviving Corporation and each Indemnified Party and such Indemnified
Party's heirs and representatives, and shall be binding on all successors and
assigns of Parent and the Surviving Corporation.
SECTION 7.09. Certain Litigation. The Company agrees that it shall
not settle any litigation commenced after the date hereof against the Company or
any of its directors by any stockholder of the Company relating to the Offer,
the Merger, this Agreement or the Stockholders Agreement without the prior
written consent of Parent, which consent shall not be unreasonably withheld. The
Company shall give Parent the opportunity to participate in the defense or
settlement of any Stockholder litigation against the Company and its directors
relating to the transactions contemplated by this Agreement and the Option
Agreement. In addition, the Company shall not voluntarily cooperate with any
third party that may hereafter seek to restrain or prohibit or otherwise oppose
the Offer, the Merger or the transactions contemplated by the Stockholders
Agreement and shall cooperate with Parent and Sub to resist any such effort to
restrain or prohibit or otherwise oppose the Offer, the Merger or the
transactions contemplated by the Stockholders Agreement.
ARTICLE VIII
Conditions
SECTION 8.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction or waiver prior to the Closing Date of the following
conditions:
(a) Company Stockholder Approval. If required by applicable law, the
Company Stockholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or
permanent injunction
<PAGE> 45
41
or other order issued by any court of competent jurisdiction or other
Governmental Entity or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that
each of the parties shall have used reasonable efforts to prevent the
entry of any such injunction or other order and to appeal as promptly as
possible any injunction or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for
payment and paid for Shares pursuant to the Offer.
ARTICLE IX
Termination and Amendment
SECTION 9.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the terms
of this Agreement by the stockholders of the Company (provided, however, that if
the Shares are purchased pursuant to the Offer, neither Parent nor Sub may in
any event terminate this Agreement):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if Sub shall not have accepted for payment any Shares
pursuant to the Offer prior to October 9, 1998; provided, however,
that the right to terminate this Agreement pursuant to this Section
9.01(b)(i) shall not be available to (1) Parent, if Sub shall have
breached its obligations under the second to the last sentence of
Section 1.01(a) or (2) any party whose failure to perform any of its
obligations under this Agreement results in the failure of any such
condition or if the failure of such condition results from facts or
circumstances that constitute a willful breach of representation or
warranty under this Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment
<PAGE> 46
42
of, or payment for, Shares pursuant to the Offer or the Merger and
such order, decree or ruling or other action shall have become final
and nonappealable;
(c) by Parent or Sub prior to the purchase of Shares pursuant to the
Offer in the event of a breach or failure to perform by the Company of any
representation, warranty, covenant or other agreement contained in this
Agreement which (i) would give rise to the failure of a condition set
forth in paragraph (e) or (f) of Exhibit A and (ii) cannot be cured, or
has not been cured within 30 days after the Company receives written
notice from Parent of such breach or failure to perform; or
(d) by the Company in the event of a material breach or failure to
perform in any material respect by Parent or Sub of any representation,
warranty, covenant or other agreement contained in this Agreement which
cannot be cured, or has not been cured within 30 days after Parent or Sub
receives written notice from the Company of such breach or failure to
perform.
SECTION 9.02. Effect of Termination. (a) In the event of a
termination of this Agreement by either the Company or Parent or Sub as provided
in Section 9.01, this Agreement shall forthwith become void and there shall be
no liability or obligation on the part of Parent, Sub or the Company or their
respective officers or directors, except with respect to the last sentence of
Section 1.02(c), Section 4.18, Section 5.05, the last sentence of Section 7.02,
Section 7.07, this Section 9.02 and Article X; provided, however, that nothing
herein shall relieve any party for liability for any wilful breach hereof.
(b) In the event of a termination pursuant to Section 9.01(a) or (b)
of this Agreement or the failure otherwise to consummate the Offer by October 9,
1998, Parent shall, or shall cause an affiliate to, purchase available products
of the Company in the aggregate amount of at least (i) $50 million during the
first 12 month period from the earlier of (x) October 9, 1998 or (y) the date of
such termination and (ii) $100 million during the succeeding 12 month period, in
each case, on an approximately level order basis throughout the period pursuant
to the Company's standard form of purchase agreement and subject to the terms
(including price and applicable discounts) and conditions contained in the
Agreement No. LFM017D between Parent and the Company (the "Purchase
Commitment"). Each of the
<PAGE> 47
43
Company and the Parent shall use their best efforts to agree upon the type of
available products and to schedule their delivery consistent with the Company's
operations in the ordinary course but the failure to agree upon the products to
be purchased and sold pursuant to this proviso shall not change Parent's
obligation to purchase products of the Company in such amounts in such periods.
Notwithstanding the foregoing, Parent shall have the right to terminate the
Purchase Commitment at any time upon delivery of written notice to the Company
following a Change of Control (as defined below) of the Company. Such
termination shall not affect issued and open purchase orders. A "Change of
Control" of the Company shall mean: (1) the acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3) and 14(d)(2) of the
Exchange Act) (a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 30% or more of the then outstanding
shares of Company Common Stock; (2) individuals who, as of the date hereof,
constitute the board of directors (or any successor body performing similar
functions) of the Company (the "Board", and as constituted on the date hereof
the "Incumbent Board") cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for election by such party's
shareholders, was approved by a vote of at least two-thirds of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board; (3) consummation of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (each, a "Business Combination"),
unless, following such Business Combination, the individuals and entities who
were the beneficial owners of the Company Common Stock outstanding immediately
prior to such Business Combination beneficially own, immediately after
consummation of such Business Combination, more than 75% of the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities of the corporation resulting from such Business Combination;
or (4) consummation of the acquisition of a company or the assets and
liabilities of a company if the individuals and entities who were beneficial
owners of the Company Common Stock immediately prior to such acquisition would
fail to own, directly or indirectly, more than 75% of the Company Common Stock
after the acquisition.
SECTION 9.03. Amendment. This Agreement may be amended by the
parties hereto, by duly authorized action taken, at any time before or after
obtaining the Company
<PAGE> 48
44
Stockholder Approval, but, after the purchase of Shares pursuant to the Offer,
no amendment shall be made which decreases the Merger Consideration and, after
the Company Stockholder Approval, no amendment shall be made which by law
requires further approval by such stockholders without obtaining such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. Following the election or
appointment of Sub's designees pursuant to Section 7.06 and prior to the
Effective Time, the affirmative vote of a majority of the Independent Directors
then in office shall be required by the Company to (i) amend or terminate this
Agreement by the Company, (ii) exercise or waive any of the Company's rights or
remedies under this Agreement, (iii) extend the time for performance of Parent
and Sub's respective obligations under this Agreement or (iv) take any action to
amend or otherwise modify the Company's Certificate of Incorporation or Amended
and Restated By-laws (or similar governing instruments of the Company's
subsidiaries) in violation of Section 7.08.
SECTION 9.04. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, subject to Section
9.03, (i) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
ARTICLE X
Miscellaneous
SECTION 10.01. Nonsurvival of Representations, Warranties and
Agreements. None of the representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time or, in the case of the Company, shall survive the acceptance for payment
of, and payment for, Shares by Sub pursuant to the Offer. This Section 10.01
shall not limit any covenant
<PAGE> 49
45
or agreement of the parties which by its terms contemplates performance after
the Effective Time, including Section 7.08.
SECTION 10.02. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed), sent by overnight courier (providing proof of
delivery) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent or Sub, to
Lucent Technologies Inc.
600 Mountain Avenue
Room 6A 311
Murray Hill, NJ 07974
Attention: Pamela F. Craven
Vice President--Law
Telecopy No.: Separately supplied
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attention: Robert I. Townsend, III, Esq.
Telecopy No.: Separately supplied
and
<PAGE> 50
46
(b) if to the Company, to
Yurie Systems, Inc.
8301 Professional Place
Landover, MD 20785
Attention: Secretary
Telecopy No.: Separately supplied
with copies to:
John J. McDonnell, Esq.
7315 Wisconsin Avenue, Suite 245E
Bethesda, MD 20814
Telecopy No.: Separately supplied
and
Fried, Frank, Harris, Shriver & Jacobson
1001 Pennsylvania Avenue
Suite 800
Washington, D.C. 20004-2505
Attention: Richard A. Steinwurtzel, Esq.
Telecopy No.: Separately supplied
SECTION 10.03. Interpretation. When a reference is made in this
Agreement to an Article or a Section, such reference shall be to an Article or a
Section of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The phrase
"made available" in this Agreement shall mean that the information referred to
has been made available if requested by the party to whom such information is to
be made available. As used in this Agreement, the term "subsidiary" of any
person means another person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient to elect at
least a majority of its Board of Directors or other governing body (or, if there
are no such voting interests, 50% or more of the equity interests of which) is
owned directly or indirectly by such first person. As used in this Agreement,
"material adverse change" or
<PAGE> 51
47
"material adverse effect" means, when used in connection with the Company or
Parent, as the case may be, any change or effect that is materially adverse to
the business, properties, assets, liabilities, financial condition or results of
operations of either the Company and its subsidiaries or Parent and its
subsidiaries, as the case may be, in each case taken as a whole, other than
changes or effects to (i) occurrences relating to the economy in general or such
entity's industry in general and not specifically relating to such entity, (ii)
the loss of personnel, customers or suppliers or the delay or cancellation of
orders for the Company's products or similar occurrences caused by or arising
out of the announcement of this Agreement and the transactions contemplated
hereby or (iii) in the case of the Company, litigation brought or threatened
against the Company or any member of its Board of Directors in respect of this
Agreement, the Offer or the Merger (other than litigation brought or threatened
by a Governmental Entity).
SECTION 10.04. Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
SECTION 10.05. Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the other agreements, contracts, documents and instruments
referred to herein) and the Confidentiality Agreement (a) constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Sections 7.04 and 7.08 hereof, are not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.
SECTION 10.06. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware without
regard to any applicable conflicts of law principles.
SECTION 10.07. Publicity. Except as otherwise required by law
(including Rule 14d-9 promulgated under the Exchange Act), court process or the
rules of the NYSE (with respect to Parent or Sub) or the Nasdaq National Market
(with respect to the Company) or as contemplated or provided elsewhere herein,
for so long as this Agreement is in
<PAGE> 52
48
effect, neither the Company nor Parent shall, or shall permit any of its
subsidiaries to, issue or cause the publication of any press release or other
public announcement with respect to the transactions contemplated by this
Agreement without the consent of the other party, which consent shall not be
unreasonably withheld.
SECTION 10.08. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned subsidiary of Parent. Subject
to the preceding sentence but without relieving any party hereof of any
obligation hereunder, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns.
SECTION 10.09. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the partes shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in any Delaware state court,
this being in addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of any court of the United States located in the
State of Delaware or of any Delaware state court in the event any dispute arises
out of this Agreement or the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court and (c) agrees that it
will not bring any action relating to this Agreement or the transactions
contemplated by this Agreement in any court other than a court of the United
States located in the State of Delaware or a Delaware state court.
SECTION 10.10. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and
<PAGE> 53
49
effect. Upon such determination that any term other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by applicable law
in an acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
<PAGE> 54
50
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
LUCENT TECHNOLOGIES INC.
by /s/ William T. O'Shea
--------------------------
Name: William T. O'Shea
Title: Vice President
REINDEER ACQUISITION, INC.,
by /s/ Paul D. Diczok
--------------------------
Name: Paul D. Diczok
Title: Vice President
YURIE SYSTEMS, INC.
by /s/ Jeong H. Kim
--------------------------
Name: Jeong H. Kim
Title: CEO and Chairman
<PAGE> 55
EXHIBIT A
Conditions of the Offer
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered pursuant
to the Offer unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer such number of Shares that would constitute
at least a majority of the outstanding Shares (determined on a fully diluted
basis for all outstanding stock options and any other rights to acquire Shares
on the date of purchase) (the "Minimum Condition") and (ii) any waiting period
under the HSR Act applicable to the purchase of Shares pursuant to the Offer
shall have expired or been terminated. Furthermore, Sub shall not be required to
accept for payment or, subject as aforesaid, to pay for any Shares not
theretofore accepted for payment or paid for, and may, in accordance with
Section 9.01, terminate this Agreement or amend the Offer with the consent of
the Company, if, upon the scheduled expiration date of the Offer (as extended,
if required, pursuant to the second to the last sentence of Section 1.01(a)) and
before the acceptance of such Shares for payment or the payment therefor, any of
the following conditions exists and is continuing and does not result
principally from the breach by Parent or Sub of any of their obligations under
this Agreement:
(a) there shall be instituted or pending by any Governmental Entity
any suit, action or proceeding (i) challenging the acquisition by Parent
or Sub of any Shares under the Offer, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or the performance of
any of the other transactions contemplated by this Agreement or the
Stockholders Agreement or seeking to obtain from the Company, Parent or
Sub any damages that are material in relation to the Company and its
subsidiaries taken as a whole, (ii) seeking to prohibit or materially
limit the ownership or operation by the Company, Parent or any of Parent's
subsidiaries of a material portion of the business or assets of the
Company or Parent and its subsidiaries, taken as a whole, or to compel the
Company or Parent to dispose of or hold separate any material portion of
the business or assets of the Company or Parent and its subsidiaries,
taken as a
<PAGE> 56
2
whole, in each case as a direct result of the Offer or any of the other
transactions contemplated by this Agreement or the Stockholders Agreement
or (iii) seeking to impose material limitations on the ability of Parent
or Sub to acquire or hold, or exercise full rights of ownership of, any
Shares to be accepted for payment pursuant to the Offer including, without
limitation, the right to vote such Shares on all matters properly
presented to the stockholders of the Company or (iv) seeking to prohibit
Parent or any of its subsidiaries from effectively controlling in any
material respect any material portion of the business or operations of the
Company;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, by any Governmental Entity or court, other than
the application to the Offer or the Merger of applicable waiting periods
under the HSR Act, that would result in any of the consequences referred
to in clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred any material adverse change with
respect to the Company since the date of this Agreement;
(d) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall not be
true and correct or any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in
each case at the date of this Agreement and at the scheduled or extended
expiration of the Offer;
(e) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed or
complied with by it under this Agreement, which failure to perform or
comply cannot be cured, or has not been cured within 30 business days
after the Company receives written notice from Parent of such breach or
failure to perform; or
(f) this Agreement shall have been terminated in accordance with its
terms;
<PAGE> 57
3
which, in the good faith judgment of Parent or Sub, in its sole discretion, make
it inadvisable to proceed with such acceptance of Shares for payment or the
payment therefor.
The foregoing conditions are for the sole benefit of Parent and Sub
and (except for the Minimum Condition) may, subject to the terms of this
Agreement, be waived by Parent and Sub in whole or in part at any time and from
time to time in their sole discretion. The failure by Parent or Sub at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time. Terms used but not defined herein
shall have the meanings assigned to such terms in the Agreement to which this
Exhibit A is a part.
<PAGE> 58
EXHIBIT B
Certificate of Incorporation
of the Surviving Corporation
As of the Effective Time, the Certificate of Incorporation of the
Surviving Corporation shall be amended by deleting Articles FIRST through TENTH
thereof in their entirety and replacing them with the following:
FIRST: The name of the corporation (hereinafter called the
"corporation") is Yurie Systems, Inc.
SECOND: The address, including street, number, city, and county, of
the registered office of the corporation in the State of Delaware is 1013 Centre
Road, Wilmington, Delaware, County of New Castle; and the name of the registered
agent of the corporation in the State of Delaware at such address is Corporation
Service Company.
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is one thousand, with a par value of $.01 per
share. All such shares are of one class and are shares of Common Stock.
FIFTH: The name and the mailing address of the
incorporator are as follows:
NAME MAILING ADDRESS
Janet E. O'Rourke 600 Mountain Avenue
Room 3C503
Murray Hill, New Jersey 07974
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between
this corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of ss. 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for this
corporation under
<PAGE> 59
2
the provisions of ss. 279 of Title 8 of the Delaware Code order a meeting of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing three
fourths in value of the creditors or class of creditors and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.
EIGHTH: For the management of the business and for the conduct of
the affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be
fixed by, or in the manner provided in, the Bylaws. The phrase "whole
Board" and the phrase "total number of directors" shall be deemed to have
the same meaning, to wit, the total number of directors which the
corporation would have if there were no vacancies. No election of
directors need be by written ballot.
2. After the original or other Bylaws of the corporation have been
adopted, amended, or repealed, as the case may be, in accordance with the
provisions of ss. 109 of the General Corporation Law of the State of
Delaware, and, after the corporation has received any payment for any of
its stock, the power to adopt, amend, or repeal the Bylaws of the
corporation may be exercised by the Board of Directors of the corporation;
provided, however, that any provision for the classification of directors
of the corporation for staggered terms pursuant to the provisions of
subsection (d) of ss. 141 of the General Corporation Law of the State of
Delaware shall be set forth in an initial Bylaw or in a Bylaw adopted by
the stockholders
<PAGE> 60
3
entitled to vote of the corporation unless provisions for such
classification shall be set forth in this certificate of incorporation.
3. Whenever the corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder thereof to
notice of, and the right to vote at, any meeting of stockholders. Whenever
the corporation shall be authorized to issue more than one class of stock,
no outstanding share of any class of stock which is denied voting power
under the provisions of the certificate of incorporation shall entitle the
holder thereof to the right to vote at any meeting of stockholders except
as the provisions of paragraph (2) of subsection (b) of ss. 242 of the
General Corporation Law of the State of Delaware shall otherwise require;
provided, that no share of any such class which is otherwise denied voting
power shall entitle the holder thereof to vote upon the increase or
decrease in the number of authorized shares of said class.
NINTH: The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the provisions of
paragraph (7) of subsection (b) of ss. 102 of the General Corporation Law
of the State of Delaware, as the same may be amended and supplemented.
TENTH: The corporation shall, to the fullest extent permitted by the
provisions of ss. 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and
all persons whom it shall have power to indemnify under said section from
and against any and all of the expenses, liabilities, or other matters
referred to in or covered by said section, and the indemnification
provided for herein shall not be deemed exclusive of any other rights to
which those indemnified may be entitled under any Bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in an official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a
director, officer, employee, or agent and shall inure to the benefit of
the heirs, executors, and administrators of such a person.
ELEVENTH: From time to time any of the provisions of this
certificate of incorporation may be amended,
<PAGE> 61
4
altered, or repealed, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted in the
manner and at the time prescribed by said laws, and all rights at any time
conferred upon the stockholders of the corporation by this certificate of
incorporation are granted subject to the provisions of this Article
ELEVENTH.
<PAGE> 1
EXHIBIT (C)(2)
CONFORMED COPY
STOCKHOLDERS AGREEMENT dated as of April 27, 1998, among
LUCENT TECHNOLOGIES INC., a Delaware corporation ("Parent"),
REINDEER ACQUISITION, INC., a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), and the persons
listed on Exhibit A hereto (each a "Stockholder", and,
collectively, the "Stockholders").
WHEREAS, Parent, Sub and Yurie Systems, Inc., a Delaware corporation
(the "Company"), propose to enter into an Agreement and Plan of Merger dated as
of the date hereof (as the same may be amended or supplemented, the "Merger
Agreement") providing for (i) the making of a cash tender offer (as such offer
may be amended from time to time as permitted under the Merger Agreement, the
"Offer") by Sub for all the outstanding shares of Common Stock, par value $.01
per share, of the Company ("Company Common Stock") and (ii) the merger of Sub
with and into the Company (the "Merger");
WHEREAS, each Stockholder is the record and beneficial owner of the
number of shares of Company Common Stock set forth opposite such Stockholder's
name on Exhibit A hereto; such shares of Company Common Stock, as such shares
may be adjusted by stock dividend, stock split, recapitalization, combination or
exchange of shares, merger, consolidation, reorganization or other change or
transaction of or by the Company, together with shares of Company Common Stock
that may be acquired after the date hereof by such Stockholder, including shares
of Company Common Stock issuable upon the exercise of options or warrants to
purchase Company Common Stock (as the same may be adjusted as aforesaid), being
collectively referred to herein as the "Shares"; and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Sub have requested that the Stockholders enter into
this Agreement.
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the
<PAGE> 2
2
Merger Agreement, and in consideration of the premises and the representations,
warranties and agreements contained herein, the parties agree as follows:
1. Purchase and Sale of Shares. Sub hereby agrees to purchase, and
each Stockholder hereby severally and not jointly agrees to sell, all such
Stockholder's Shares at a price per Share equal to the Offer Price (as defined
in the Merger Agreement), subject only to the condition (which may be waived
only by Sub in its sole discretion) that Sub shall have accepted for payment and
paid for shares of Company Common Stock pursuant to the Offer (the "Purchase").
The closing of the Purchase shall be effected by each Stockholder tendering all
such Stockholder's Shares into the Offer, and by Sub accepting for payment and
paying for such Shares pursuant to the terms of the Offer. In addition, if for
any reason any Stockholder's Shares are not purchased in the Offer and either
(i) other shares of Company Common Stock are purchased in the Offer or (ii) the
Offer is not consummated due to a failure of the Minimum Condition (as defined
in the Merger Agreement), Sub shall purchase, and each Stockholder shall sell,
all such Stockholder's Shares at a price per Share equal to the Offer Price
within five business days following the expiration of the Offer at a time and
place to be mutually agreed to between Sub and such Stockholder. In furtherance
of the foregoing, each Stockholder hereby severally and not jointly agrees that
it shall tender its Shares into the Offer.
2. Representations and Warranties of the Stockholders. Except as set
forth under the caption "Stockholders Agreement" on the Company Disclosure
Schedule (as defined in the Merger Agreement), each Stockholder hereby,
severally and not jointly, represents and warrants to Parent and Sub as follows:
(a) Authority. The Stockholder has all requisite power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by the Stockholder. This Agreement has been duly
executed and delivered by the Stockholder and, assuming this Agreement
constitutes a valid and binding obligation of Parent and Sub, constitutes
a valid and binding obligation of the Stockholder enforceable against the
Stockholder in accordance with its terms
<PAGE> 3
3
(except insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, or by principles governing the availability
of equitable remedies). Except for the expiration or termination of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and informational filings with the
Securities and Exchange Commission, neither the execution, delivery or
performance of this Agreement by the Stockholder nor the consummation by
the Stockholder of the transactions contemplated hereby will require any
filing with, or permit, authorization, consent or approval of, any
Federal, state or local government or any court, tribunal, administrative
agency or commission or other domestic governmental or regulatory
authority or agency (a "Governmental Entity").
(b) Conflicting Instruments; No Transfer. Except as disclosed under
the caption "Stockholders Agreement Disclosure Schedule" in the Company
Disclosure Schedule, neither the execution, delivery or perform ance of
this Agreement by the Stockholder nor the consummation by the Stockholder
of the transactions contemplated hereby will result in a violation or
breach of, or constitute (with or without due notice or lapse of time or
both) a default under, be in conflict with, or give rise to any right of
termination, amendment, cancelation or acceleration under, or result in
the creation of any pledge, claim, lien, charge, encumbrance or security
interest of any kind or nature whatsoever (a "Lien") upon any of the
properties or assets of the Stockholder under, any of the terms,
conditions or provisions of any contract, agreement or other instrument,
or any judgment, injunction, order, decree, law, regulation or arrangement
to which the Stockholder is a party or by which the Stockholder or any of
the Stockholder's properties or assets, including the Stockholder's
Shares, may be bound, except for any breach, violation, conflict, default,
conflict or Lien which, individually or in the aggregate, would not impair
or affect the Stockholder's ability to sell, or to deliver his proxy for,
the Shares according to the terms of this Agreement and to approve the
Merger Agreement and the transactions contemplated thereby.
<PAGE> 4
4
(c) The Shares. The Stockholder's Shares and the certificates
representing such Shares are now, and at all times during the term hereof
will be, held by such Stockholder, or by a nominee or custodian for the
benefit of such Stockholder, and the Stockholder has good and marketable
title to such Shares and will deliver such Shares, free and clear of any
Liens, proxies, voting trusts or agreements, understandings or
arrangements, except, in the case of Jeong H. Kim, as set forth in the
Brody Option (as defined below) and except for any such Liens or proxies
arising hereunder. The Stockholder owns of record or beneficially no
shares of Company Common Stock other than such Stockholder's Shares.
(d) Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on
behalf of such Stockholder.
(e) Merger Agreement. The Stockholder understands and acknowledges
that Parent is entering into, and causing Sub to enter into, the Merger
Agreement in reliance upon the Stockholder's execution and delivery of
this Agreement.
3. Representations and Warranties of Parent and Sub. Parent and Sub
hereby jointly and severally represent and warrant to the Stockholders as
follows:
(a) Authority. Parent and Sub have the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance
of this Agreement by Parent and Sub and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and Sub. This Agreement
has been duly executed and delivered by Parent and Sub and, assuming this
Agreement constitutes a valid and binding obligation of the Stockholders,
constitutes a valid and binding obligation of Parent and Sub enforceable
in accordance with its terms (except insofar as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally, or
<PAGE> 5
5
by principles governing the availability of equitable remedies).
(b) Securities Act. The Shares will be acquired in compliance with,
and Sub will not offer to sell or otherwise dispose of any Shares so
acquired by it in violation of the registration requirements of, the
Securities Act of 1933, as amended.
(c) Financing. Sub has, or will have at the time that any payment is
required to be made to any Stockholder hereunder, the funds necessary to
make such payment to such Stockholder.
4. Covenants of the Stockholders. Each Stockholder, severally and
not jointly, agrees as follows:
(a) The Stockholder shall not, except as contemplated by the terms
of this Agreement, (i) sell, transfer, pledge, assign or otherwise dispose
of, or enter into any contract, option or other arrangement (including any
profit sharing arrangement) or understanding with respect to the sale,
transfer, pledge, assignment or other disposition of, the Shares
(including any options or warrants to purchase Company Common Stock) to
any person other than Sub or Sub's designee, (ii) enter into any voting
arrangement, whether by proxy, voting agreement, voting trust,
power-of-attorney or otherwise, with respect to the Shares or (iii) take
any other action that would in any way restrict, limit or interfere with
the performance of its obligations hereunder or the transactions
contemplated hereby.
(b) Until the Merger is consummated or the Merger Agreement is
terminated, the Stockholder shall not, nor shall the Stockholder permit
any investment banker, financial adviser, attorney, accountant or other
representative or agent of the Stockholder to, directly or indirectly (i)
solicit, initiate or encourage (including by way of furnishing nonpublic
information), or take any other action designed or reasonably likely to
facilitate, any inquiries or the making of any proposal which constitutes
any Takeover Proposal (as defined in the Merger Agreement) or (ii)
participate in any discussions or negotiations regarding any Takeover
Proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by an
investment
<PAGE> 6
6
banker, financial advisor, attorney, accountant or other representative or
agent of the Stockholder shall be deemed to be a violation of this Section
4(b) by the Stockholder.
(c) At any meeting of Stockholders of the Company called to vote
upon the Merger and the Merger Agreement or at any adjournment thereof or
in any other circumstances upon which a vote, consent or other approval
(including by written consent) with respect to the Merger and the Merger
Agreement is sought`, each Stockholder shall, including by initiating a
written consent solicitation if requested by Parent, vote (or cause to be
voted) such Stockholder's Shares in favor of the Merger, the adoption by
the Company of the Merger Agreement and the approval of the other
transactions contemplated by the Merger Agreement. At any meeting of
Stockholders of the Company or at any adjournment thereof or in any other
circumstances upon which the Stockholder's vote, consent or other approval
is sought, such Stockholder shall vote (or cause to be voted) such
Stockholder's Shares against (i) any merger agreement or merger (other
than the Merger Agreement and the Merger), consolidation, combination,
sale of substantial assets, reorganization, recapitalization, dissolution,
liquidation or winding up of or by the Company or any other Takeover
Proposal (collectively, "Alternative Transactions") or (ii) any amendment
of the Company's Certificate of Incorporation or Amended and Restated
By-laws or other proposal or transaction involving the Company or any of
its subsidiaries, which amendment or other proposal or transaction would
in any manner impede, frustrate, prevent or nullify the Merger, the Merger
Agreement or any of the other transactions contemplated by the Merger
Agreement (collectively, "Frustrating Transactions").
(d) Jeong H. Kim ("Kim") hereby irrevocably instructs Sub and the
Paying Agent (as defined in the Merger Agreement), following consummation
of the Offer, to pay directly to Kenneth D. Brody ("Brody"), in a manner
to be provided in writing to the Paying Agent by Brody, an amount equal to
the product of (i) the difference between (A) the Offer Price and (B) $4
and (ii) the number of shares of Company Common Stock subject to the
Equity Incentive Agreement dated July 1, 1996 between Brody and Kim (the
"Brody Option"), less any applicable tax withholding requirements, and to
pay to Kim an aggregate amount equal to the product of
<PAGE> 7
7
$4.00 and such number of shares, with respect to such shares (it being
understood and agreed that this irrevocable instruction does not conflict
with or alter Brody's rights under the Brody Option in any respect).
5. Additional Agreements of Designated Stockholders. Each
Stockholder listed on Exhibit A with an asterisk next to his name (each, a
"Designated Stockholder") owns validly issued and outstanding options to acquire
a number of shares of Company Common Stock as set forth opposite his name on
Exhibit A attached hereto. Each Designated Stockholder hereby agrees with Parent
that, if so requested by Parent at any time and from time to time when Parent
reasonably believes the number of outstanding Shares is less than a majority of
the outstanding shares of Company Common Stock on a fully diluted basis, each
such Designated Stockholder will exercise such number of options as are
sufficient, after giving effect to the exercises, to ensure that the number of
outstanding Shares continue at all times to represent a majority of the
outstanding Shares of the Company Common Stock on a fully diluted basis. Any
shares of Company Common Stock received by the Designated Stockholder upon any
such exercise shall automatically at such time become "Shares" for all purposes
hereunder.
6. Grant of Irrevocable Proxy; Appointment of Proxy. (a) Each
Stockholder hereby irrevocably grants to, and appoints, Pamela F. Craven and
Paul D. G. Diczok, and any other individual who shall hereafter be designated by
Parent, and each of them, such Stockholder's proxy and attorney-in-fact (with
full power of substitution), for and in the name, place and stead of such
Stockholder, to vote such Stockholder's Shares, or grant a consent or approval
in respect of such Shares, at any meeting of Stockholders of the Company or at
any adjournment thereof or in any other circumstances upon which their vote,
consent or other approval is sought, in favor of the Merger, the adoption by the
Company of the Merger Agreement and the approval of the other transactions
contemplated by the Merger Agreement and against any Alternative Transaction or
Frustrating Transaction.
(b) Each Stockholder represents that any proxies heretofore given in
respect of such Stockholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.
(c) Each Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 6 is given in
<PAGE> 8
8
connection with the execution of the Merger Agreement, and that such irrevocable
proxy is given to secure the performance of the duties of such Stockholder under
this Agreement. Such Stockholder hereby further affirms that the irrevocable
proxy is coupled with an interest and may under no circumstances be revoked,
subject to Section 10. Such Stockholder hereby ratifies and confirms all that
such irrevocable proxy may lawfully do or cause to be done by virtue hereof.
Such irrevocable proxy is executed and intended to be irrevocable in accordance
with the provisions of Section 218 of the Delaware General Corporation Law. Such
irrevocable proxy shall be valid until the later to occur of (i) eleven months
from the date hereof or (ii) the termination of this Agreement pursuant to
Section 10.
7. Further Assurances. Each Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Sub may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement and to vest the power to vote
such Stockholder's Shares as contemplated by Section 6. Parent and Sub jointly
and severally agree to use reasonable efforts to take, or cause to be taken, all
actions necessary to comply promptly with all legal requirements that may be
imposed with respect to the transactions contemplated by this Agreement
(including legal requirements of the HSR Act).
8. Indemnification. (a) General. Parent agrees that if any
Stockholder is made a party or threatened to be made a party to any action, suit
or proceeding, whether civil, criminal, administrative or investigative, to the
extent arising out of or pertaining to such Stockholder solely in his capacity
as a stockholder of the Company (in accordance with Section 13) and arising out
of or related to this Agreement or the transactions contemplated hereby but
excluding any such action, suit or proceeding that is based on facts or
circumstances that, if true as of the date hereof, would constitute a breach of
such Stockholder's representations, warranties or covenants contained in this
Agreement (a "Proceeding"), such Stockholder shall be indemnified and held
harmless by Parent to the fullest extent authorized by Delaware law, as the same
exists or may hereafter be amended, against all Expenses (as hereinafter
defined) incurred or suffered by such Stockholder that are directly related to
such Proceeding. Such indemnification
<PAGE> 9
9
shall inure to the benefit of his heirs, executors and administrators.
(b) Expenses. As used in this Agreement, the term "Expenses" shall
include damages, losses, judgments, liabilities, fines, penalties, settlements,
costs, the reasonable attorneys' fees of one counsel who is reasonably
satisfactory to Parent for all Stockholders and any other expenses reasonably
incurred in connection with a Proceeding.
(c) Enforcement. If a claim or request under this Section 8 is not
paid by Parent or on its behalf, within thirty (30) days after a written claim
or request has been received by Parent, any Stockholder may at any time
thereafter bring suit against Parent to recover the unpaid amount of the claim
or request and if successful in whole or in part, the Stockholder shall be
entitled to be paid also the expenses of prosecuting such suit. All obligations
for indemnification under this Section 8 shall be subject to, and paid in
accordance with, applicable Delaware law.
(d) Partial Indemnification. If any Stockholder is entitled under
this Section 8 to indemnification by Parent for a portion of any Expenses, but
not, however, for the total amount thereof, Parent shall indemnify such
Stockholder for such portion of such Expenses to which such Stockholder is
entitled.
(e) Notice of Claim. Each Stockholder shall promptly deliver to
Parent notice of any claim made against him for which indemnification will or
could be sought under this Agreement, but the failure of such Stockholder to
deliver such notice shall not relieve Parent of any liability Parent may have to
the Stockholder except to the extent that Parent is prejudiced thereby. In
addition, each Stockholder shall deliver to Parent such information and
cooperate with Parent as Parent may reasonably require and as shall be within
such Stockholder's power and at such time and places as are reasonably
convenient for the Stockholder.
(f) Defense of Claim. With respect to any Proceeding as to which the
Stockholder notifies Parent of the commencement thereof:
(i) Parent will be entitled to participate therein at its own
expense.
<PAGE> 10
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(ii) Except as otherwise provided below, to the extent that it may
wish, Parent will be entitled to assume the defense thereof. The
Stockholders also shall collectively have the right to employ one separate
counsel, reasonably satisfactory to Parent, in such action, suit or
proceeding if counsel for the Stockholders reasonably concludes that
failure to do so would involve a conflict of interest between Parent and
the Stockholders, and under such circumstances the reasonable fees and
expense of such counsel shall be at the expense of Parent.
(iii) Parent shall not be liable to indemnify the Stockholder under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent.
(g) Non-exclusivity. The right to indemnification and the payment of
Expenses incurred in defending a Proceeding conferred in this Section 8 shall
not be exclusive of any other right which any Stockholder may otherwise have.
9. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns. Each Stockholder agrees that this
Agreement and the obligations of such Stockholder hereunder shall attach to such
Stockholder's Shares and shall be binding upon any person or entity to which
legal or beneficial ownership of such Shares shall pass, whether by operation of
law or otherwise, including without limitation such Stockholder's heirs,
guardians, administrators or successors.
10. Termination. This Agreement, and all rights and obligations of
the parties hereunder, shall terminate upon the earlier of (a) the date upon
which the Merger Agreement is terminated pursuant to Article IX thereof and (b)
the date that Parent or Sub shall have purchased and paid for all the
Stockholders' Shares pursuant to Section 1. Notwithstanding the foregoing,
Sections 8, 9, 10, 12, 13, 14 and 15 shall survive any termination of this
Agreement.
<PAGE> 11
11
11. Stop Transfer. The Company agrees with, and covenants to, Parent
and Sub that the Company shall not register the transfer of any certificate
representing any Stockholder's Shares unless such transfer is made in accordance
with the terms of this Agreement.
12. General Provisions.
(a) Payments. All payments required to be made to any party to this
Agreement shall be made by wire transfer of immediately available funds to
an account designated by such party at least one trading day prior to such
payment.
(b) Expenses. Except as expressly set forth herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
(c) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(d) Notice. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed), sent by overnight courier (providing proof of
delivery) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) if to Parent, to
Lucent Technologies Inc.
600 Mountain Avenue
Room 6A 311
Murray Hill, NJ 07974
Attention: Pamela F. Craven
Vice President--Law
Telecopy No: Separately Supplied
<PAGE> 12
12
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attention: Robert I. Townsend, III, Esq.
Telecopy No: Separately Supplied
and
(ii) if to a Stockholder, to the address set forth under the name
of such Stockholder on Exhibit A hereto
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
1001 Pennsylvania Avenue, N.W.
Suite 800
Washington, D.C. 20004-2505
Attention: Richard A. Steinwurtzel
Telecopy No: Separately Supplied
(e) Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include", "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".
(f) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed
by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
(g) Entire Agreement; No Third-Party Beneficiaries. This Agreement
and the Merger Agreement (including the documents and instruments referred
to herein and therein) (i) constitute the entire agreement and supersede
all prior agreements and understandings,
<PAGE> 13
13
both written and oral, among the parties with respect to the subject
matter hereof and (ii) are not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
(h) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law principles.
(i) Publicity. Except as otherwise required by law (including Rule
14d-9 promulgated under the Securities Exchange Act of 1934), court
process or the rules of the New York Stock Exchange (with respect to
Parent and Sub) or the Nasdaq National Market (with respect to the
Company) a national securities exchange or as contemplated or provided in
the Merger Agreement, for so long as this Agreement is in effect, none of
the Company, each of Stockholders or Parent shall, nor shall Parent or the
Company permit any of its subsidiaries to, issue or cause the publication
of any press release or other public announcement with respect to the
transactions contemplated by this Agreement or the Merger Agreement
without the consent of the other parties.
13. Stockholder Capacity. No person executing this Agreement who is
or becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his or her capacity as such director or
officer. Each Stockholder signs solely in his or her capacity as the record
holder and beneficial owner of, or the trustee of a trust whose beneficiaries
are the beneficial owners of, such Stockholder's Shares and nothing herein shall
limit or affect any actions taken by a Stockholder in its capacity as an officer
or director of the Company to the extent specifically permitted by the Merger
Agreement.
14. Jurisdiction; Consent to Service of Process. (a) Each of the
parties to this Agreement hereby irrevocably and unconditionally submits, for
itself and its property, to the jurisdiction and venue of any Delaware State
court, or any Federal court of the United States of America sitting in the
District of Delaware and any appellate court from any such court, in any suit,
action or proceeding arising out of or relating to this Agreement, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all claims
in respect of any
<PAGE> 14
14
such suit, action or proceeding may be heard and determined in such Delaware
State court, or, to the extent permitted by law, by removal or otherwise, in
such Federal court. It shall be a condition precedent to each party's right to
bring any such suit, action or proceeding that such suit, action or proceeding,
in the first instance, be brought in such Delaware State court or, to the extent
permitted by law, by removal or otherwise, in such Federal court. If such
Delaware State court, or such Federal court refuses to accept jurisdiction with
respect thereto, such suit, action or proceeding may be brought in any other
court with jurisdiction. No party to this Agreement may move to (i) transfer any
such suit, action or proceeding from such Delaware State court (other than to
remove or district to such Federal court), or from such Federal court sitting in
the District of Delaware to another jurisdiction or district, (ii) consolidate
any such suit, action or proceeding brought in such Delaware State court, or any
Federal court with a suit, action or proceeding in another jurisdiction or
district or (iii) dismiss any such suit, action or proceeding brought in such
Delaware State court, or any Federal court sitting in the District of Delaware
for the purpose of bringing the same in another jurisdiction. Each party agrees
that a final judgment in any such suit, action or proceeding shall be conclusive
and may be enforced in any other jurisdiction by suit on the judgment or in any
other manner provided by law.
(b) Each party to this Agreement hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any Delaware State court, or any Federal court sitting in the District of
Delaware. Each party hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such suit,
action or proceeding in any such court and further waives the right to object,
with respect to such suit, action or proceeding, that such court does not have
jurisdiction over such party.
15. Performance by Sub. Parent covenants and agrees for the benefit
of the Stockholders that it shall cause Sub to perform in full each obligation
of Sub set forth in this Agreement.
16. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the
<PAGE> 15
15
provisions of this Agreement were not performed in accordance with its specific
terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this Agreement
in any court of the United States located in the State of Delaware or any
Delaware State court, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto waives
any right to trial by jury with respect to any claim or proceeding related to or
arising out of this Agreement or any of the transactions contemplated hereby.
<PAGE> 16
16
IN WITNESS WHEREOF, each of Parent and Sub has caused this Agreement
to be signed by its officer thereunto duly authorized and each Stockholder has
signed this Agreement, all as of the date first written above.
LUCENT TECHNOLOGIES INC.
By /s/ William T. O'Shea
---------------------------------
Name: William T. O'Shea
Title: Vice President
REINDEER ACQUISITION, INC.
By /s/ Paul D. Diczok
---------------------------------
Name: Paul D. Diczok
Title: Vice President
STOCKHOLDERS
/s/ Kwok L. Li
---------------------------------
Name: Kwok L. Li
/s/ Kwok L. Li
---------------------------------
Name: Linsang Partners LLC
By: Kwok L. Li, Chairman
/s/ Felice Li
---------------------------------
Name: Felice Li
/s/ Barton Y. Shigemura
---------------------------------
Name: Barton Y. Shigemura
<PAGE> 17
17
/s/ Jeong H. Kim
--------------------------------
Name: Jeong H. Kim
/s/ Harry J. Carr
--------------------------------
Name: Harry J. Carr
/s/ Cynthia Kim
--------------------------------
Name: Cynthia Kim
ACKNOWLEDGED AND AGREED
TO AS TO SECTION 11 AS OF
THE DATE FIRST WRITTEN ABOVE:
YURIE SYSTEMS, INC.
By /s/ Jeong H. Kim
---------------------------
<PAGE> 18
EXHIBIT A
<TABLE>
<CAPTION>
Number of
Record and
Name and Address of Beneficial Number of Shares
Stockholder Shares Underlying Options
- ------------------- ---------- ------------------
<S> <C> <C>
Jeong H. Kim 13,287,400(1)
9724 Sorrell Ave.
Potomac, MD 20859
Cynthia Kim 200(2)
9724 Sorrell Ave.
Potomac, MD 20859
Kwok L. Li & Felice Li 20,000
12400 Ellen Court
Silver Spring, MD 20904
Felice Li 950,000
12400 Ellen Court
Silver Spring, MD 20904
Linsang Partners LLC 2,200,000
12400 Ellen Court
Silver Spring, MD 20904
*Barton Y. Shigemura 6,000 990,000
5391 Blackhawk Dr.
Danville, CA 94506
*Harry J. Carr 1,000,000
4005 Featherstone Pl.
Alexandria, VA 22304
</TABLE>
(1) 687,400 of the Shares are subject to the Brody Option, which Dr. Kim cannot
agree to tender.
(2) Dr. Kim disclaims beneficial ownership of the shares held by his spouse.
<PAGE> 1
EXHIBIT (C)(3)
CONFORMED COPY
RETENTION AGREEMENT dated as of April 27, 1998, among
LUCENT TECHNOLOGIES INC., a Delaware corporation ("Parent"),
REINDEER ACQUISITION, INC., a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), YURIE SYSTEMS,
INC., a Delaware corporation (the "Company"), THE BANK OF NEW
YORK, a New York chartered banking corporation, as Escrow
Agent (the "Escrow Agent"), and JEONG H. KIM (the "Employee").
WHEREAS, Parent, Sub and the Company propose to enter into an
Agreement and Plan of Merger dated as of the date hereof (as the same may be
amended or supplemented, the "Merger Agreement") providing for (i) the making of
a cash tender offer (as such offer may be amended from time to time as permitted
under the Merger Agreement, the "Offer") by Sub for all the outstanding shares
of common stock, par value $.01 per share, of the Company ("Company Common
Stock") and (ii) the merger of Sub with and into the Company (the "Merger");
WHEREAS, the Employee is the record and beneficial
owner of the Shares (as defined below);
WHEREAS, upon consummation of the Offer (the "Effectiveness Date"),
Parent desires that the Employee become an officer of Parent and the Employee
has agreed to be an officer of Parent for a period of three years from and after
the Effectiveness Date in accordance with this Agreement (the "Term");
WHEREAS, pursuant to this Agreement, the Employee agrees that, on
the Effectiveness Date, the Employee will deposit a certain number of shares of
common stock, par value $.01 per share, of Parent ("Parent Common Stock") into
escrow with the Escrow Agent, as collateral to pay Liquidated Damages (as
defined below) to Parent as provided in this Agreement; and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Sub have requested that the Employee enter into
this Agreement.
<PAGE> 2
2
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, the parties agree
as follows:
ARTICLE I
Certain Definitions
SECTION 1.01. Definitions. Capitalized terms used but not defined
herein shall have the meaning assigned to such terms in the Merger Agreement. In
addition, capitalized terms used herein shall have the following meanings set
forth in this Article I or elsewhere in this Agreement:
(a) The term "Affiliate" shall mean an "affiliate" of Parent,
including the Surviving Corporation, as such term is defined in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended.
(b) The term "Cause" shall mean:
(i) the Employee wilfully fails to substantially perform his duties
with Parent or any Affiliate for a period of at least thirty (30) days
after receiving notice thereof from Parent in writing specifically
identifying the manner in which Parent believes the Employee has wilfully
failed to substantially perform his duties; provided, however, that, to
the extent the Employee within such 30-day period pursues a cure to such
wilful failure and continues pursuing such a cure, such wilful failure
shall not constitute "Cause" if it is cured within 60 days following
receipt of the original notice referred to above; provided further that,
such wilful failure shall not constitute "Cause" unless the Employee shall
have been provided an opportunity to discuss such notice and its contents
with the immediate supervisor of the Employee's immediate supervisor
within 15 days following the Employee's receipt of such notice;
(ii) the Employee is convicted of a felony involving moral turpitude
that adversely affects his ability to perform his duties with Parent or
that would injure Parent or any Affiliate (including its reputation); or
(iii) the Employee commits a wilful, serious act intending to enrich
himself at the expense of Parent or any Affiliate.
<PAGE> 3
3
(c) "Disability" shall mean the Employee's inability to render the
services required by his employment with Parent by reason of a physical or
mental disability for a period of six months.
(d) The term "Escrow Amount" shall mean an amount equal to 15% of
the product of (i) the aggregate number of Shares of the Employee outstanding at
the time of the expiration of the Offer and (ii) the Offer Price.
(e) The term "Escrowed Funds" shall mean (i) the dividends and
distributions to be distributed pursuant to Section 3.03 and (ii) any amounts to
be distributed pursuant to Section 4.03.
(f) The term "Good Reason" shall mean (i) an adverse change in the
Employee's title or a significant adverse change in the Employee's
responsibilities (including reporting responsibilities); (ii) a reduction in the
Employee's base salary or any failure to pay the Employee any compensation or
benefits to which he is entitled promptly following receipt by Parent of written
notice thereof from the Employee; (iii) requiring the Employee to be based at
any location outside a 30-mile radius from the Washington, D.C. metropolitan
area, except for reasonably required travel on Parent's business; (iv) the
failure by Parent to ensure that the Employee is eligible to partici pate in all
benefit plans generally made available to officers of Parent; (v) any material
breach by Parent of any provision of this Agreement that has not been cured
within 30 days following receipt by Parent of written notice thereof from the
Employee specifically identifying such material breach; (vi) any purported
termination of the Employee's employment for Cause which does not comply with
the terms of this Agreement; or (vii) the failure of Parent to obtain an
agreement from any successor or assign of Parent to assume and agree to perform
this Agreement.
(g) The term "Liquidated Damages" shall mean the agreed amount set
forth in Section 4.03 to compensate Parent for the damages it will suffer if,
prior to the end of the Term, (i) the Employee terminates his employment with
Parent or an Affiliate other than for Good Reason or (ii) Parent terminates the
Employee's employment for Cause.
(h) The term "Notice" shall mean (i) a written notice to the Escrow
Agent, signed by Parent and the Employee or (ii) an order of any court of
competent jurisdiction.
<PAGE> 4
4
(i) The term "Shares" means such number of shares of Company Common
Stock set forth opposite the Employee's name on Schedule A attached hereto, as
such shares may be adjusted by stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company, together with shares of
Company Common Stock that may be acquired after the date hereof by the Employee,
including shares of Company Common Stock issuable upon the exercise of options
or warrants to purchase Company Common Stock.
(j) The term "Taxes" shall mean all Federal, state and local,
domestic and foreign, income, franchise, security, value-added, ad valorem,
transfer, withholding and other taxes, including taxes based on or measured by
gross receipts, profits, sales, use or occupation, tariffs, levies, impositions,
assessments or governmental charges of any nature whatsoever, including any
interest, penalties or additions with respect thereto.
(k) The term "Tax Return" shall mean all returns, reports or forms,
including information returns, with respect to Taxes.
ARTICLE II
Position and Term of Employment
Subject to earlier termination as contemplated in this Agreement,
the Term of the Employee's employment with Parent shall be for a period of three
years commencing on the Effectiveness Date. The Employee shall be an officer of
Parent, shall have the position of Vice President--Carrier Networks Product
Group of the Data Networking Systems Division of Parent and shall report to
President, Data Networking Systems. The Employee shall receive a base salary at
the rate of $200,000 per annum. The Employee shall be eligible to participate in
all incentive plans generally made available to officers of Parent. The Employee
shall also be eligible to participate in all benefit plans generally made
available to officers of Parent and will receive a detailed package describing
all such benefit plans promptly following the date hereof.
<PAGE> 5
5
ARTICLE III
Creation of Escrow;
The Escrowed Shares
SECTION 3.01. Creation of Escrow. Over the five business days on and
after the Effectiveness Date, the Employee shall use the entire Escrow Amount to
purchase shares of Parent Common Stock in open market brokerage transactions.
The Employee hereby agrees to transfer to the Escrow Agent all such shares of
Parent Common Stock (the "Escrowed Shares") as they are purchased. The Employee
has executed the attached irrevocable order to purchase the Escrowed Shares as
soon as practicable over the five business days on and after the Effectiveness
Date. The Escrow Agent hereby agrees to accept the Escrowed Shares and hold the
same in escrow pursuant to the terms of this Agreement.
SECTION 3.02. Escrowed Shares Generally. The Escrow Agent hereby
agrees that the Escrowed Shares held hereunder shall be held on behalf of and
for the account of the Employee, to the extent not forfeited to Parent as
required hereunder.
SECTION 3.03. Dividends and Distributions. The Escrow Agent shall,
as promptly as practicable upon receipt of any cash dividends or distributions
on such Escrowed Shares, distribute such cash dividends or distributions to the
Employee. Notwithstanding the foregoing, no distribution shall be made by the
Escrow Agent after Parent shall have informed the Escrow Agent in writing (with
a copy to the Employee) of a Termination (as defined below).
SECTION 3.04. Voting Rights. The Employee shall have right to vote
the Escrowed Shares on any matter upon which shares of Parent Common Stock are
entitled to vote.
ARTICLE IV
Release of Escrow;
Forfeiture of Escrow
SECTION 4.01. Quarterly Distributions to the Employee. The Escrow
Agent shall deliver one-twelfth of the Employee's Escrowed Shares to the
Employee, on the last day of each three month period with the first delivery
commencing on August 31, 1998, unless Parent shall have informed the Escrow
Agent in writing (with a copy to the Employee) of a Termination.
<PAGE> 6
6
SECTION 4.02. Release of Escrow to the Employee. (a) If (i) the
Employee terminates his employment for Good Reason or (ii) Parent terminates the
employment of Employee other than for Cause, then in either case Parent shall
deliver a Notice to such effect to the Escrow Agent and to the Employee and the
Escrow Agent shall forthwith release and deliver the Escrowed Shares (and any
other property then held in escrow) to the Employee.
(b) If the Employee dies or suffers a Disability, the Escrow Agent
shall, as promptly as practicable upon receipt of a Notice (signed only by
Parent) delivered by Parent to such effect (and Parent hereby agrees to deliver
such Notice to the Escrow Agent), deliver all the remaining Escrowed Shares (and
any other property then held in escrow) to the Employee, the legal
representative of the Employee's estate or other designee.
SECTION 4.03. Forfeiture of Escrow. (a) If either (i) the Employee
elects to terminate his employment with Parent other than for Good Reason or
(ii) the Employee is terminated by Parent for Cause (each, a "Termination"),
then Parent shall deliver a Notice to the Escrow Agent and to the Employee
stating that a Termination has occurred. Upon such event, the Employee shall
have no other rights under this Agreement.
(b) Upon receipt of a Notice set forth in subsection (a) of this
Section 4.03, the Escrow Agent shall as promptly as practicable sell the
Escrowed Shares then in escrow, on behalf of the Employee, for cash in open
market brokerage transactions. The Escrow Agent shall then deliver the cash
proceeds so received (and any other property then held in escrow) to Parent.
Such cash proceeds shall constitute Liquidated Damages payable to Parent to
compensate Parent for its damages due to the Termination.
ARTICLE V
Termination of Employment Arrangements
SECTION 5.01. The Employee and Parent agree that, effective as of
the Effectiveness Date, the Employment Agreement between the Employee and the
Company (the "Employment Agreement") shall be terminated and of no further force
and effect, and no termination or other amount otherwise payable or benefit
otherwise provided to the Employee pursuant to the Employment Agreement shall be
payable in connection with the termination contemplated by this Section 5.01.
<PAGE> 7
7
ARTICLE VI
The Escrow Agent
SECTION 6.01. General. (a) The Escrow Agent shall not deal with the
Escrowed Funds and/or the Escrowed Shares except in accordance with (i) this
Agreement, (ii) written instructions given in conformity with this Agreement or
(iii) instructions agreed to in writing by Parent and the Employee. The Escrow
Agent shall not be bound in any way by the Merger Agreement or by any agreement
or contract between the Employee and Parent (whether or not the Escrow Agent has
knowledge thereof), it being understood that the Escrow Agent's only duties and
responsibilities shall be to hold and distribute the Escrowed Funds and to hold,
distribute and/or sell the Escrowed Shares in accordance with the terms of this
Agreement. The Escrow Agent shall not be responsible for any loss resulting from
holding or selling the Escrowed Shares in accordance with the terms of this
Agreement. The Escrow Agent makes no representations and has no responsibility
as to the validity, genuineness or sufficiency of any of the documents or
instruments included in the subject matter of the escrow. The Escrow Agent may
rely and shall be protected in relying upon any Notice, resolution, certificate,
opinion, request, communication, demand, receipt or other paper or document in
good faith believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(b) The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith, except in those cases where the Escrow Agent has
been guilty of negligence or willful misconduct. In the administration of the
escrow account hereunder, the Escrow Agent may execute any of its powers and
perform its duties hereunder directly or through agents or attorneys and may
consult with counsel, accountants and other skilled persons to be selected and
retained by it. The Escrow Agent shall not be liable for anything done, suffered
or omitted in good faith by it in accordance with the advice or opinion of any
such counsel, accountants or other skilled persons.
(c) Parent hereby agrees to indemnify the Escrow Agent for, and to
hold it harmless against, any loss, liability or expense arising out of or in
connection with this Agreement and the carrying out of its duties hereunder,
including the costs and expenses of defending itself against any claim of
liability, except in those cases where the Escrow Agent has been guilty of
negligence or willful misconduct.
<PAGE> 8
8
(d) Schedule A hereto lists the Federal tax identification number
for the Employee.
(e) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions, claims or demands from
any party hereto which, in its opinion, conflict with any of the provisions of
this Agreement, it shall be entitled to refrain from taking any action and its
sole obligation shall be to keep safely all property held in escrow until it
shall be directed otherwise in writing by all of the other parties hereto or by
a final order or judgment of a court of competent jurisdiction.
(f) Any corporation into which the Escrow Agent in its individual
capacity may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Escrow Agent in its individual capacity shall be a party, or any corporation to
which substantially all the corporate trust business of the Escrow Agent in its
individual capacity may be transferred, shall be the Escrow Agent under this
Agreement without further act.
SECTION 6.02. Fees. The Escrow Agent's fees and expenses in acting
hereunder (including the reasonable fees, expenses and disbursements of its
counsel), as set forth in writing between Parent and the Escrow Agent prior to
the Effectiveness Date, shall be paid by Parent.
SECTION 6.03. Resignation. The Escrow Agent or any successor Escrow
Agent hereunder may resign by giving 30 days' prior written notice of
resignation to Parent and the Employee, and such resignation shall be effective
from the date specified in such notice. In case the office of Escrow Agent shall
become vacant for any reason, and within 10 days after receiving any such notice
of resignation, Parent shall appoint a bank or trust company that is not an
Affiliate having capital and undivided surplus (as reflected in its latest
publicly available certified financial statements) of not less than $50 million
and having an office in New York, New York, as successor Escrow Agent hereunder
(a "Successor Escrow Agent") by an instrument or instruments in writing
delivered to such Successor Escrow Agent, the retiring Escrow Agent and the
Employee, whereupon such Successor Escrow Agent shall succeed to all the rights
and obligations of the retiring Escrow Agent as if this Agreement were
originally executed by such Successor Escrow Agent, and the retiring Escrow
Agent shall duly transfer and deliver to such Successor Escrow Agent any
Escrowed Funds and Escrowed Shares in the form held by it hereunder at such
<PAGE> 9
9
time. If a Successor Escrow Agent has not been appointed or has not accepted
such appointment by the end of the 30-day period, the retiring Escrow Agent may
apply to a court of competent jurisdiction for the appointment of a Successor
Escrow Agent or other appropriate relief. The costs, expenses and reasonable
attorneys fees that the retiring Escrow Agent incurs in connection with such a
proceeding shall be paid by Parent.
SECTION 6.04 Dispute Resolution. In the event of any dispute between
or conflicting claims by or among the Parent and the Employee and/or any other
person or entity with respect to the Escrowed Funds or the Escrowed Shares, the
Escrow Agent shall be entitled, in its reasonable discretion, to refuse to
comply with any and all claims, demands or instructions with respect to such
Escrowed Funds or Escrowed Shares so long as such dispute or conflict shall
continue, and the Escrow Agent shall not be or become liable in any way to
Parent or the Employee for the Escrow Agent's failure or refusal to comply with
such conflicting claims, demands or instructions, except to the extent under the
circumstances such failure would constitute negligence or willful misconduct on
the part of the Escrow Agent. The Escrow Agent shall be entitled to refuse to
act until, at its reasonable discretion, either such conflicting or adverse
claims or demands shall have been finally determined in a court of competent
jurisdiction or settled between the conflicting parties as evidenced in writing,
reasonably satisfactory to the Escrow Agent, or the Escrow Agent shall have
received security or an indemnity satisfactory to the Escrow Agent sufficient to
save the Escrow Agent harmless from and against any and all loss, liability or
expense which the Escrow Agent may incur by reason of the Escrow Agent's acting.
The Escrow Agent may in addition elect to commence an interpleader action or
seek other judicial relief or orders as the Escrow Agent may deem necessary.
ARTICLE VII
Representations and Warranties
SECTION 7.01. Representations and Warranties of the Employee. The
Employee hereby represents and warrants to Parent as follows:
(a) Authority. The Employee has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby
<PAGE> 10
10
have been duly authorized by the Employee. This Agreement has been duly executed
and delivered by the Employee and, assuming this Agreement constitutes a valid
and binding obligation of Parent, constitutes a valid and binding obligation of
the Employee enforceable against the Employee in accordance with its terms
(except insofar as enforce ability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, or by principles governing the availability of equitable
remedies). Neither the execution, delivery or performance of this Agreement by
the Employee nor the consummation by the Employee of the transactions
contemplated hereby will (i) require any filing with, or permit, authorization,
consent or approval of, any Governmental Entity, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default under, or give rise to any right of termination, amendment, cancelation
or acceleration under, or result in the creation of any Lien upon any of the
properties or assets of the Employee under, any of the terms, conditions or
provisions of any Contract to which the Employee is a party or by which the
Employee or any of the Employee's properties or assets, including the Employee's
Shares, may be bound or (iii) violate any judgment, order, writ, preliminary or
permanent injunction or decree or any statute, law, ordinance, rule or
regulation of any Governmental Entity applicable to the Employee or any of the
Employee's properties or assets, including the Employee's Shares.
(b) Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contem plated by
this Agreement based upon arrangements made by or on behalf of the Employee.
SECTION 7.02. Representation and Warranty of Parent. Parent hereby
represents and warrants to the Employee as follows:
(a) Authority. Parent has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by Parent. This Agreement has been duly executed and delivered by
Parent and, assuming this Agreement constitutes a valid and binding obligation
of the Employee, constitutes a valid and binding obligation of Parent
enforceable against Parent in accordance with its
<PAGE> 11
11
terms (except insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, or by principles governing the availability of equitable
remedies).
ARTICLE VIII
Miscellaneous
SECTION 8.01. Expenses. Each of Parent and the Employee shall pay
its or his own costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby.
SECTION 8.02. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been given if
delivered personally or sent by registered or certified mail (return receipt
requested), postage prepaid, to the parties to this Agreement at the following
addresses or at such other address for a party as shall be specified by like
notice:
To the Employee:
Jeong H. Kim
9724 Sorrell Avenue
Potomac, MD 20859
To Parent or Sub:
Lucent Technologies Inc.
600 Mountain Avenue
Room 6A 311
Murray Hill, NJ 07974
Attention: Pamela F. Craven
Vice President--Law
To the Escrow Agent:
The Bank of New York
101 Barclay Street
12 East
Insurance Trust and Escrow Unit
New York, NY 10286
Attention: Sharia Jones-Bey
<PAGE> 12
12
All such notices and communications shall be deemed to have been received on the
date of delivery if personally delivered or on the third business day after the
mailing thereof except with respect to the Escrow Agent such date will be the
date of actual receipt.
SECTION 8.03. Assignability. The right of the Employee to receive
distributions of the Escrowed Shares shall not be assignable, except that, in
the event of the death of the Employee, such rights may be assigned by bequest
or to the executor or administrator of his estate. This Agreement shall inure to
the benefit of and shall be binding upon the parties hereto and their respective
successors, but shall not be assignable by any party without the prior written
consent of the other parties.
SECTION 8.04. Liquidated Damages. Parent and the Employee
acknowledge that it will be difficult, and that it may be time-consuming or
impossible, to estimate damages resulting from a Termination prior to the end of
the Term. Accordingly, Parent and the Employee agree that, in connection with
any such event, any amount of cash from the sale of the Escrowed Shares upon a
Termination shall be liquidated damages resulting from such Termination, and
Parent shall be entitled to receive such amount.
SECTION 8.05. Taxes. (a) The parties hereto agree that (i) unless
and until distributed to Parent, the Escrowed Funds and the Escrowed Shares
shall be treated for all Tax purposes as property of the Employee and (ii) all
income in respect of the Escrowed Funds and the Escrowed Shares shall be treated
for all Tax purposes as income of the Employee. The Employee hereby agrees, to
the extent permitted by law, to report for all Tax purposes (including in
connection with any Tax Return) the Escrowed Funds, the Escrowed Shares and any
income in respect thereof in a manner that is consistent with the foregoing.
(b) The Employee and Parent believe that the delivery to the
Employee of any Escrowed Shares pursuant to Article IV will not cause the
Employee to realize income for Federal and state income Tax purposes, and the
Employee and Parent agree to prepare all Tax Returns in a manner consistent with
this belief.
SECTION 8.06. No Mitigation. The Employee shall not be required to
mitigate the amount of any payment or distribution provided for in this
Agreement by seeking other employment or otherwise, and no such payment or
distribution shall be offset or reduced by the amount of any compensation
<PAGE> 13
13
or benefits provided to the Employee in any subsequent employment.
SECTION 8.07. Effectiveness; Termination. Notwithstanding anything
to the contrary contained herein, this Agreement shall become effective only
upon the Effectiveness Date and shall be null and void and of no further force
and effect at any time the Merger Agreement is terminated in accordance with its
terms prior to the Effectiveness Date. Except for Sections 6.01 and 6.02 hereof
which shall survive the termination of this Agreement, this Agreement will
terminate and be of no further force and effect once all of the Escrowed Shares
and all Escrowed Funds have been distributed shall have been paid in accordance
with the terms hereof.
SECTION 8.08. Entire Agreement. With respect to the Escrow Agent,
this Agreement constitutes, and, with respect to the other parties hereto, this
Agreement and the Merger Agreement (and the other agreements contemplated
therein) constitute, the entire agreement between the parties with respect to
the subject matter hereof and supersede all prior agreements and undertakings,
written and oral.
SECTION 8.09. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York without
regard to any applicable conflicts of law principles.
SECTION 8.10. Article and Section Headings. The article, section and
other headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
SECTION 8.11. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be a single agreement.
SECTION 8.12. Amendment; No Waivers. This Agreement may not be
amended or modified except (a) by an instrument in writing signed by the
Employee, Parent and the Escrow Agent or (b) by a waiver in accordance with the
following sentence. Any party hereto may (i) extend the time for the performance
of any obligation or other act of any other parties hereto or (ii) waive
compliance with any agreement or condition contained herein. Any such extension
or waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby. Any waiver of any term or condition shall
not be construed
<PAGE> 14
14
as a waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this Agreement. The
failure of any party at any time to require performance of any provision hereof
shall in no manner affect its right at a later time to enforce the same. No
waiver by any party of any breach of any term contained in this Agreement shall
be deemed to be or construed as a further or continuing waiver of any such
breach in any subsequent instance or waiver of any breach of any other term
contained in this Agreement.
SECTION 8.13. Jurisdiction; Consent to Service of Process. (a) Each
of the parties to this Agreement hereby irrevocably and unconditionally submits,
for itself and its property, to the jurisdiction and venue of any New York State
court sitting in the County of New York, or any Federal court of the United
States of America sitting in the Southern District of New York and any appellate
court from any such court, in any suit, action or proceeding arising out of or
relating to this Agreement, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such suit, action
or proceeding may be heard and determined in such New York State court, or, to
the extent permitted by law, by removal or otherwise, in such Federal court. It
shall be a condition precedent to each party's right to bring any such suit,
action or proceeding that such suit, action or proceeding, in the first
instance, be brought in such New York State court or, to the extent permitted by
law, by removal or otherwise, in such Federal court. If such New York State
court or such Federal court refuses to accept jurisdiction with respect thereto,
such suit, action or proceeding may be brought in any other court with
jurisdiction. No party to this Agreement may move to (i) transfer any such suit,
action or proceeding from such New York State court (other than to remove to
such Federal court), or from any Federal court sitting in the Southern District
of New York to another jurisdiction or district, (ii) consolidate any such suit,
action or proceeding brought in such New York State court or such Federal court
with a suit, action or proceeding in another jurisdiction or district or (iii)
dismiss any such suit, action or proceeding brought in such New York State court
or such Federal court for the purpose of bringing the same in another
jurisdiction. Each party agrees that a final judgment in any such suit, action
or proceeding shall be conclusive and may be enforced in any other jurisdiction
by suit on the judgment or in any other manner provided by law.
(b) Each party to this Agreement hereby irrevocably and
unconditionally waives, to the fullest
<PAGE> 15
15
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement in any New York State court sitting in the
County of New York, or any Federal court sitting in the Southern District of New
York. Each party hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such suit,
action or proceeding in any such court and further waives the right to object,
with respect to such suit, action or proceeding, that such court does not have
jurisdiction over such party.
SECTION 8.14. Severability. If any term or provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nonetheless remain in full force and effect so long as the economic and legal
substance of the transactions contem plated by this Agreement is not affected in
any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this Agreement
be consummated as originally contemplated to the fullest extent possible.
SECTION 8.15. Further Assurances. Each of the Employee and Parent
agree to execute and deliver, upon the written request of any party hereto, any
and all such further instruments and documents as reasonably appropriate for the
purpose of obtaining the full benefits of this Agreement.
<PAGE> 16
15
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed as of the date first written above.
LUCENT TECHNOLOGIES INC.
by
/s/ William T. O'Shea
----------------------------
Name: William T. O'Shea
Title: Vice President
REINDEER ACQUISITION, INC.
by
/s/ Paul D. Diczok
----------------------------
Name: Paul D. Diczok
Title: Vice President
THE BANK OF NEW YORK,
as Escrow Agent,
by
/s/ Sharia Jones-Bey
----------------------------
Name: Sharia Jones Bey
Title: Assistant Treasurer
JEONG H. KIM
/s/ Jeong H. Kim
----------------------------
Name: Jeong H. Kim
<PAGE> 17
16
YURIE SYSTEMS, INC.
by
/s/ Jeong H. Kim
----------------------------
Name: Jeong H. Kim
Title: Chairman & CEO
<PAGE> 18
17
Schedule A
<TABLE>
<CAPTION>
Name, Address and TIN Number of Shares of
of the Employee Company Common Stock
- --------------- --------------------
<S> <C>
Jeong H. Kim 13,287,400
9724 Sorrell Avenue
Potomac, MD 20859
</TABLE>
<PAGE> 1
EXHIBIT (C)(4)
CONFORMED COPY
RETENTION AGREEMENT dated as of April 27, 1998, among
LUCENT TECHNOLOGIES INC., a Delaware corporation ("Parent"),
REINDEER ACQUISITION, INC., a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), YURIE SYSTEMS,
INC., a Delaware corporation (the "Company"), THE BANK OF NEW
YORK, a New York chartered banking corporation, as Escrow
Agent (the "Escrow Agent"), and KWOK L. LI (the "Consultant").
WHEREAS, Parent, Sub and the Company propose to enter into an
Agreement and Plan of Merger dated as of the date hereof (as the same may be
amended or supplemented, the "Merger Agreement") providing for (i) the making of
a cash tender offer (as such offer may be amended from time to time as permitted
under the Merger Agreement, the "Offer") by Sub for all the outstanding shares
of common stock, par value $.01 per share, of the Company ("Company Common
Stock") and (ii) the merger of Sub with and into the Company (the "Merger");
WHEREAS, the Consultant is the record and beneficial owner of the
Shares (as defined below);
WHEREAS, upon consummation of the Offer (the "Effectiveness Date"),
Parent desires that the Consultant become a consultant of Parent and the
Consultant has agreed to be a consultant of Parent for a period of three years
from and after the Effectiveness Date in accordance with this Agreement (the
"Term");
WHEREAS, pursuant to this Agreement, the Consultant agrees that, on
the Effectiveness Date, the Consultant will deposit a certain number of shares
of common stock, par value $.01 per share, of Parent ("Parent Common Stock")
into escrow with the Escrow Agent, as collateral to pay Liquidated Damages (as
defined below) to Parent as provided in this Agreement; and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Sub have requested that the Consultant enter into
this Agreement.
<PAGE> 2
2
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, the parties agree
as follows:
ARTICLE I
Certain Definitions
SECTION 1.01. Definitions. Capitalized terms used but not defined
herein shall have the meaning assigned to such terms in the Merger Agreement. In
addition, capitalized terms used herein shall have the following meanings set
forth in this Article I or elsewhere in this Agreement:
(a) The term "Affiliate" shall mean an "affiliate" of Parent,
including the Surviving Corporation, as such term is defined in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended.
(b) The term "Cause" shall mean:
(i) the Consultant wilfully fails to substantially perform his
duties with Parent or any Affiliate for a period of at least thirty (30)
days after receiving notice thereof from Parent in writing specifically
identifying the manner in which Parent believes the Consultant has
wilfully failed to substantially perform his duties; provided, however,
that, to the extent the Consultant within such 30-day period pursues a
cure to such wilful failure and continues pursuing such a cure, such
wilful failure shall not constitute "Cause" if it is cured within 60 days
following receipt of the original notice referred to above; provided
further that, such wilful failure shall not constitute "Cause" unless the
Consultant shall have been provided an opportunity to discuss such notice
and its contents with the immediate supervisor of the Consultant's
immediate supervisor within 15 days following the Consultant's receipt of
such notice;
(ii) the Consultant is convicted of a felony involving moral
turpitude that adversely affects his ability to perform his duties with
Parent or that would injure Parent or any Affiliate (including its
reputation); or
(iii) the Consultant commits a wilful, serious act intending to
enrich himself at the expense of Parent or any Affiliate.
<PAGE> 3
3
(c) "Disability" shall mean the Consultant's inability to render the
services required by his consultancy with Parent by reason of a physical or
mental disability for a period of six months.
(d) The term "Escrow Amount" shall mean an amount equal to 15% of
the product of (i) the aggregate number of Shares of the Consultant and his
affiliates outstanding at the time of the expiration of the Offer and (ii) the
Offer Price.
(e) The term "Escrowed Funds" shall mean (i) the dividends and
distributions to be distributed pursuant to Section 3.03 and (ii) any amounts to
be distributed pursuant to Section 4.03.
(f) The term "Good Reason" shall mean (i) an adverse change in the
Consultant's title or a significant adverse change in the Consultant's
responsibilities (including reporting responsibilities); (ii) a reduction in the
Consultant's consulting fee or any failure to pay the Consultant any
compensation to which he is entitled promptly following receipt by Parent of
written notice thereof from the Consultant; (iii) requiring the Consultant to be
based at any location outside a 30-mile radius from the Washington, D.C.
metropolitan area, except for reasonably required travel on Parent's business;
(iv) any material breach by Parent of any provision of this Agreement that has
not been cured within 30 days following receipt by Parent of written notice
thereof from the Consultant specifically identifying such material breach; (v)
any purported termination of the Consultant's consultancy for Cause which does
not comply with the terms of this Agreement; or (vi) the failure of Parent to
obtain an agreement from any successor or assign of Parent to assume and agree
to perform this Agreement.
(g) The term "Liquidated Damages" shall mean the agreed amount set
forth in Section 4.03 to compensate Parent for the damages it will suffer if,
prior to the end of the Term, (i) the Consultant terminates his consultancy with
Parent or an Affiliate other than for Good Reason or (ii) Parent terminates the
Consultant's consultancy for Cause.
(h) The term "Notice" shall mean (i) a written notice to the Escrow
Agent, signed by Parent and the Consultant or (ii) an order of any court of
competent jurisdiction.
<PAGE> 4
4
(i) The term "Shares" means such number of shares of Company Common
Stock set forth opposite the Consultant's name on Schedule A attached hereto, as
such shares may be adjusted by stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company, together with shares of
Company Common Stock that may be acquired after the date hereof by the
Consultant, including shares of Company Common Stock issuable upon the exercise
of options or warrants to purchase Company Common Stock.
(j) The term "Taxes" shall mean all Federal, state and local,
domestic and foreign, income, franchise, security, value-added, ad valorem,
transfer, withholding and other taxes, including taxes based on or measured by
gross receipts, profits, sales, use or occupation, tariffs, levies, impositions,
assessments or governmental charges of any nature whatsoever, including any
interest, penalties or additions with respect thereto.
(k) The term "Tax Return" shall mean all returns, reports or forms,
including information returns, with respect to Taxes.
ARTICLE II
Position and Term of Consultancy
Subject to earlier termination as contemplated in this Agreement,
the Term of the Consultant's consultancy with Parent shall be for a period of
three years commencing on the Effectiveness Date. The Consultant shall be a
consultant to Parent and shall report to Vice President--Carrier Networks
Products Group of the Data Networking Systems Division of Parent. The Consultant
shall receive a consulting fee at the rate of $150,000 per annum.
Parent, Sub and the Company acknowledge that the Consultant is
Chairman and, with Linsang Partners, LLC (of which he is majority owner),
majority stockholder of Splitrock Services, Inc. ("Splitrock"). Splitrock
provides communications services specifically configured to meet the needs of
large network users, and is building a major network to provide expanded service
to such network users, including Internet carriers. Linsang also has a minority
investment in Removable Media Solutions, Inc. ("RMSI"), of Rancho Cordova,
California, which manufactures and sells data storage products. Neither
Splitrock, RMSI or any other company in which Linsang may invest is or will be
in the
<PAGE> 5
5
business of design, development, production, manufacture or marketing of
multi-service access equipment. The above-described activities and investments
relating to Splitrock, Linsang and RMSI require the expenditure of very
substantial amounts of the time of the Consultant, and the Consultant's
obligations hereunder shall not obligate him to devote more than one-half of his
efforts to his obligations hereunder. The Consultant may perform his obligations
hereunder in whole or in part through Linsang, so long as he remains majority
owner and principal officer of Linsang.
ARTICLE III
Creation of Escrow;
The Escrowed Shares
SECTION 3.01. Creation of Escrow. Over the five business days on and
after the Effectiveness Date, the Consultant shall use the entire Escrow Amount
to purchase shares of Parent Common Stock in open market brokerage transactions.
The Consultant hereby agrees to transfer to the Escrow Agent all such shares of
Parent Common Stock (the "Escrowed Shares") as they are purchased. The
Consultant has executed the attached irrevocable order to purchase the Escrowed
Shares as soon as practicable over the five business days on and after the
Effectiveness Date. The Escrow Agent hereby agrees to accept the Escrowed Shares
and hold the same in escrow pursuant to the terms of this Agreement.
SECTION 3.02. Escrowed Shares Generally. The Escrow Agent hereby
agrees that the Escrowed Shares held hereunder shall be held on behalf of and
for the account of the Consultant, to the extent not forfeited to Parent as
required hereunder.
SECTION 3.03. Dividends and Distributions. The Escrow Agent shall,
as promptly as practicable upon receipt of any cash dividends or distributions
on such Escrowed Shares, distribute such cash dividends or distributions to the
Consultant. Notwithstanding the foregoing, no distribution shall be made by the
Escrow Agent after Parent shall have informed the Escrow Agent in writing (with
a copy to the Consultant) of a Termination (as defined below).
SECTION 3.04. Voting Rights. The Consultant shall have right to vote
the Escrowed Shares on any matter upon which shares of Parent Common Stock are
entitled to vote.
<PAGE> 6
6
ARTICLE IV
Release of Escrow;
Forfeiture of Escrow
SECTION 4.01. Quarterly Distributions to the Consultant. The Escrow
Agent shall deliver one-twelfth of the Consultant's Escrowed Shares to the
Consultant, on the last day of each three month period with the first delivery
commencing on August 31, 1998, unless Parent shall have informed the Escrow
Agent in writing (with a copy to the Consultant) of a Termination.
SECTION 4.02. Release of Escrow to the Consultant. (a) If (i) the
Consultant terminates his consultancy for Good Reason or (ii) Parent terminates
the consultancy of Consultant other than for Cause, then in either case Parent
shall deliver a Notice to such effect to the Escrow Agent and to the Consultant
and the Escrow Agent shall forthwith release and deliver the Escrowed Shares
(and any other property then held in escrow) to the Consultant.
(b) If the Consultant dies or suffers a Disability, the Escrow Agent
shall, as promptly as practicable upon receipt of a Notice (signed only by
Parent) delivered by Parent to such effect (and Parent hereby agrees to deliver
such Notice to the Escrow Agent), deliver all the remaining Escrowed Shares (and
any other property then held in escrow) to the Consultant, the legal
representative of the Consultant's estate or other designee.
SECTION 4.03. Forfeiture of Escrow. (a) If either (i) the Consultant
elects to terminate his consultancy with Parent other than for Good Reason or
(ii) the Consultant is terminated by Parent for Cause (each, a "Termination"),
then Parent shall deliver a Notice to the Escrow Agent and to the Consultant
stating that a Termination has occurred. Upon such event, the Consultant shall
have no other rights under this Agreement.
(b) Upon receipt of a Notice set forth in subsection (a) of this
Section 4.03, the Escrow Agent shall as promptly as practicable sell the
Escrowed Shares then in escrow, on behalf of the Consultant, for cash in open
market brokerage transactions. The Escrow Agent shall then deliver the cash
proceeds so received (and any other property then held in escrow) to Parent.
Such cash proceeds shall constitute Liquidated Damages payable to Parent to
compensate Parent for its damages due to the Termination.
<PAGE> 7
7
ARTICLE V
Termination of Employment Arrangements
SECTION 5.01. The Consultant and Parent agree that, effective as of
the Effectiveness Date, the Employment Agreement between the Consultant and the
Company (the "Employment Agreement") shall be terminated and of no further force
and effect, and no termination or other amount otherwise payable or benefit
otherwise provided to the Consultant pursuant to the Employment Agreement shall
be payable in connection with the termination contemplated by this Section 5.01.
ARTICLE VI
The Escrow Agent
SECTION 6.01. General. (a) The Escrow Agent shall not deal with the
Escrowed Funds and/or the Escrowed Shares except in accordance with (i) this
Agreement, (ii) written instructions given in conformity with this Agreement or
(iii) instructions agreed to in writing by Parent and the Consultant. The Escrow
Agent shall not be bound in any way by the Merger Agreement or by any agreement
or contract between the Consultant and Parent (whether or not the Escrow Agent
has knowledge thereof), it being understood that the Escrow Agent's only duties
and responsibilities shall be to hold and distribute the Escrowed Funds and to
hold, distribute and/or sell the Escrowed Shares in accordance with the terms of
this Agreement. The Escrow Agent shall not be responsible for any loss resulting
from holding or selling the Escrowed Shares in accordance with the terms of this
Agreement. The Escrow Agent makes no representations and has no responsibility
as to the validity, genuineness or sufficiency of any of the documents or
instruments included in the subject matter of the escrow. The Escrow Agent may
rely and shall be protected in relying upon any Notice, resolution, certificate,
opinion, request, communication, demand, receipt or other paper or document in
good faith believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(b) The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith, except in those cases where the Escrow Agent has
been guilty of negligence or willful misconduct. In the administration of the
escrow account hereunder, the Escrow Agent may execute any of its powers and
perform its duties hereunder directly or through
<PAGE> 8
8
agents or attorneys and may consult with counsel, accountants and other skilled
persons to be selected and retained by it. The Escrow Agent shall not be liable
for anything done, suffered or omitted in good faith by it in accordance with
the advice or opinion of any such counsel, accountants or other skilled persons.
(c) Parent hereby agrees to indemnify the Escrow Agent for, and to
hold it harmless against, any loss, liability or expense arising out of or in
connection with this Agreement and the carrying out of its duties hereunder,
including the costs and expenses of defending itself against any claim of
liability, except in those cases where the Escrow Agent has been guilty of
negligence or willful misconduct.
(d) Schedule A hereto lists the Federal tax identification number
for the Consultant.
(e) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions, claims or demands from
any party hereto which, in its opinion, conflict with any of the provisions of
this Agreement, it shall be entitled to refrain from taking any action and its
sole obligation shall be to keep safely all property held in escrow until it
shall be directed otherwise in writing by all of the other parties hereto or by
a final order or judgment of a court of competent jurisdiction.
(f) Any corporation into which the Escrow Agent in its individual
capacity may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Escrow Agent in its individual capacity shall be a party, or any corporation to
which substantially all the corporate trust business of the Escrow Agent in its
individual capacity may be transferred, shall be the Escrow Agent under this
Agreement without further act.
SECTION 6.02. Fees. The Escrow Agent's fees and expenses in acting
hereunder (including the reasonable fees, expenses and disbursements of its
counsel), as set forth in writing between Parent and the Escrow Agent prior to
the Effectiveness Date, shall be paid by Parent.
SECTION 6.03. Resignation. The Escrow Agent or any successor Escrow
Agent hereunder may resign by giving 30 days' prior written notice of
resignation to Parent and the Consultant, and such resignation shall be
effective from the date specified in such notice. In case
<PAGE> 9
9
the office of Escrow Agent shall become vacant for any reason, and within 10
days after receiving any such notice of resignation, Parent shall appoint a bank
or trust company that is not an Affiliate having capital and undivided surplus
(as reflected in its latest publicly available certified financial statements)
of not less than $50 million and having an office in New York, New York, as
successor Escrow Agent hereunder (a "Successor Escrow Agent") by an instrument
or instruments in writing delivered to such Successor Escrow Agent, the retiring
Escrow Agent and the Consultant, whereupon such Successor Escrow Agent shall
succeed to all the rights and obligations of the retiring Escrow Agent as if
this Agreement were originally executed by such Successor Escrow Agent, and the
retiring Escrow Agent shall duly transfer and deliver to such Successor Escrow
Agent any Escrowed Funds and Escrowed Shares in the form held by it hereunder at
such time. If a Successor Escrow Agent has not been appointed or has not
accepted such appointment by the end of the 30-day period, the retiring Escrow
Agent may apply to a court of competent jurisdiction for the appointment of a
Successor Escrow Agent or other appropriate relief. The costs, expenses and
reasonable attorneys fees that the retiring Escrow Agent incurs in connection
with such a proceeding shall be paid by Parent.
SECTION 6.04 Dispute Resolution. In the event of any dispute between
or conflicting claims by or among the Parent and the Consultant and/or any other
person or entity with respect to the Escrowed Funds or the Escrowed Shares, the
Escrow Agent shall be entitled, in its reasonable discretion, to refuse to
comply with any and all claims, demands or instructions with respect to such
Escrowed Funds or Escrowed Shares so long as such dispute or conflict shall
continue, and the Escrow Agent shall not be or become liable in any way to
Parent or the Consultant for the Escrow Agent's failure or refusal to comply
with such conflicting claims, demands or instructions, except to the extent
under the circumstances such failure would constitute negligence or willful
misconduct on the part of the Escrow Agent. The Escrow Agent shall be entitled
to refuse to act until, at its reasonable discretion, either such conflicting or
adverse claims or demands shall have been finally determined in a court of
competent jurisdiction or settled between the conflicting parties as evidenced
in writing, reasonably satisfactory to the Escrow Agent, or the Escrow Agent
shall have received security or an indemnity satisfactory to the Escrow Agent
sufficient to save the Escrow Agent harmless from and against any and all loss,
liability or expense which the Escrow Agent may incur by reason of the Escrow
Agent's acting. The Escrow Agent may in addition elect to
<PAGE> 10
10
commence an interpleader action or seek other judicial relief or orders as the
Escrow Agent may deem necessary.
ARTICLE VII
Representations and Warranties
SECTION 7.01. Representations and Warranties of the Consultant. The
Consultant hereby represents and warrants to Parent as follows:
(a) Authority. The Consultant has all requisite power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Consultant. This Agreement has been duly executed and
delivered by the Consultant and, assuming this Agreement constitutes a valid and
binding obligation of Parent, constitutes a valid and binding obligation of the
Consultant enforceable against the Consultant in accordance with its terms
(except insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, or by principles governing the availability of equitable
remedies). Neither the execution, delivery or performance of this Agreement by
the Consultant nor the consummation by the Consultant of the transactions
contemplated hereby will (i) require any filing with, or permit, authorization,
consent or approval of, any Governmental Entity, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default under, or give rise to any right of termination, amendment, cancelation
or acceleration under, or result in the creation of any Lien upon any of the
properties or assets of the Consultant under, any of the terms, conditions or
provisions of any Contract to which the Consultant is a party or by which the
Consultant or any of the Consultant's properties or assets, including the
Consultant's Shares, may be bound or (iii) violate any judgment, order, writ,
preliminary or permanent injunction or decree or any statute, law, ordinance,
rule or regulation of any Governmental Entity applicable to the Consultant or
any of the Consultant's properties or assets, including the Consultant's Shares.
(b) Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contem-
<PAGE> 11
11
plated by this Agreement based upon arrangements made by or on behalf of the
Consultant.
SECTION 7.02. Representation and Warranty of Parent. Parent hereby
represents and warrants to the Consultant as follows:
(a) Authority. Parent has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by Parent. This Agreement has been duly executed and delivered by
Parent and, assuming this Agreement constitutes a valid and binding obligation
of the Consultant, constitutes a valid and binding obligation of Parent
enforceable against Parent in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
ARTICLE VIII
Miscellaneous
SECTION 8.01. Expenses. Each of Parent and the Consultant shall pay
its or his own costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby.
SECTION 8.02. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been given if
delivered personally or sent by registered or certified mail (return receipt
requested), postage prepaid, to the parties to this Agreement at the following
addresses or at such other address for a party as shall be specified by like
notice:
To the Consultant:
Kwok L. Li
12400 Ellen Court
Silver Spring, MD 20904
To Parent and Sub:
Lucent Technologies Inc.
<PAGE> 12
12
600 Mountain Avenue
Room 6A 311
Murray Hill, NJ 07974
Attention: Pamela F. Craven
Vice President--Law
To the Escrow Agent:
The Bank of New York
101 Barclay Street
12 East
Insurance Trust and Escrow Unit
New York, NY 10286
Attention: Sharia Jones-Bey
All such notices and communications shall be deemed to have been received on the
date of delivery if personally delivered or on the third business day after the
mailing thereof except with respect to the Escrow Agent such date will be the
date of actual receipt.
SECTION 8.03. Assignability. The right of the Consultant to receive
distributions of the Escrowed Shares shall not be assignable, except that, in
the event of the death of the Consultant, such rights may be assigned by bequest
or to the executor or administrator of his estate. This Agreement shall inure to
the benefit of and shall be binding upon the parties hereto and their respective
successors, but shall not be assignable by any party without the prior written
consent of the other parties.
SECTION 8.04. Liquidated Damages. Parent and the Consultant
acknowledge that it will be difficult, and that it may be time-consuming or
impossible, to estimate damages resulting from a Termination prior to the end of
the Term. Accordingly, Parent and the Consultant agree that, in connection with
any such event, any amount of cash from the sale of the Escrowed Shares upon a
Termination shall be liquidated damages resulting from such Termination, and
Parent shall be entitled to receive such amount.
SECTION 8.05. Taxes. (a) The parties hereto agree that (i) unless
and until distributed to Parent, the Escrowed Funds and the Escrowed Shares
shall be treated for all Tax purposes as property of the Consultant and (ii) all
income in respect of the Escrowed Funds and the Escrowed Shares shall be treated
for all Tax purposes as income of the Consultant. The Consultant hereby agrees,
to the extent
<PAGE> 13
13
permitted by law, to report for all Tax purposes (including in connection with
any Tax Return) the Escrowed Funds, the Escrowed Shares and any income in
respect thereof in a manner that is consistent with the foregoing.
(b) The Consultant and Parent believe that the delivery to the
Consultant of any Escrowed Shares pursuant to Article IV will not cause the
Consultant to realize income for Federal and state income Tax purposes, and the
Consultant and Parent agree to prepare all Tax Returns in a manner consistent
with this belief.
SECTION 8.06. No Mitigation. The Consultant shall not be required to
mitigate the amount of any payment or distribution provided for in this
Agreement by seeking other employment or consultancies or otherwise, and no such
payment or distribution shall be offset or reduced by the amount of any
compensation or benefits provided to the Consultant in any subsequent employment
or consultancy.
SECTION 8.07. Effectiveness; Termination. Notwithstanding anything
to the contrary contained herein, this Agreement shall become effective only
upon the Effectiveness Date and shall be null and void and of no further force
and effect at any time the Merger Agreement is terminated in accordance with its
terms prior to the Effectiveness Date. Except for Sections 6.01 and 6.02 hereof
which shall survive the termination of this Agreement, this Agreement will
terminate and be of no further force and effect once all of the Escrowed Shares
and all Escrowed Funds have been distributed shall have been paid in accordance
with the terms hereof.
SECTION 8.08. Entire Agreement. With respect to the Escrow Agent,
this Agreement constitutes, and, with respect to the other parties hereto, this
Agreement and the Merger Agreement (and the other agreements contemplated
therein) constitute, the entire agreement between the parties with respect to
the subject matter hereof and supersede all prior agreements and undertakings,
written and oral.
SECTION 8.09. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York without
regard to any applicable conflicts of law principles.
SECTION 8.10. Article and Section Headings. The article, section and
other headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
<PAGE> 14
14
SECTION 8.11. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be a single agreement.
SECTION 8.12. Amendment; No Waivers. This Agreement may not be
amended or modified except (a) by an instrument in writing signed by the
Consultant, Parent and the Escrow Agent or (b) by a waiver in accordance with
the following sentence. Any party hereto may (i) extend the time for the
performance of any obligation or other act of any other parties hereto or (ii)
waive compliance with any agreement or condition contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or a
subsequent waiver of the same term or condition, or a waiver of any other term
or condition, of this Agreement. The failure of any party at any time to require
performance of any provision hereof shall in no manner affect its right at a
later time to enforce the same. No waiver by any party of any breach of any term
contained in this Agreement shall be deemed to be or construed as a further or
continuing waiver of any such breach in any subsequent instance or waiver of any
breach of any other term contained in this Agreement.
SECTION 8.13. Jurisdiction; Consent to Service of Process. (a) Each
of the parties to this Agreement hereby irrevocably and unconditionally submits,
for itself and its property, to the jurisdiction and venue of any New York State
court sitting in the County of New York, or any Federal court of the United
States of America sitting in the Southern District of New York and any appellate
court from any such court, in any suit, action or proceeding arising out of or
relating to this Agreement, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such suit, action
or proceeding may be heard and determined in such New York State court, or, to
the extent permitted by law, by removal or otherwise, in such Federal court. It
shall be a condition precedent to each party's right to bring any such suit,
action or proceeding that such suit, action or proceeding, in the first
instance, be brought in such New York State court or, to the extent permitted by
law, by removal or otherwise, in such Federal court. If such New York State
court or such Federal court refuses to accept jurisdiction with respect thereto,
such suit, action or proceeding may be brought in any other court with
jurisdiction. No party to this Agreement may move to (i) transfer any such suit,
action or proceeding from such
<PAGE> 15
15
New York State court (other than to remove to such Federal court), or from any
Federal court sitting in the Southern District of New York to another
jurisdiction or district, (ii) consolidate any such suit, action or proceeding
brought in such New York State court or such Federal court with a suit, action
or proceeding in another jurisdiction or district or (iii) dismiss any such
suit, action or proceeding brought in such New York State court or such Federal
court for the purpose of bringing the same in another jurisdiction. Each party
agrees that a final judgment in any such suit, action or proceeding shall be
conclusive and may be enforced in any other jurisdiction by suit on the judgment
or in any other manner provided by law.
(b) Each party to this Agreement hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any New York State court sitting in the County of New York, or any Federal court
sitting in the Southern District of New York. Each party hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such suit, action or proceeding in any such court
and further waives the right to object, with respect to such suit, action or
proceeding, that such court does not have jurisdiction over such party.
SECTION 8.14. Severability. If any term or provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nonetheless remain in full force and effect so long as the economic and legal
substance of the transactions contem plated by this Agreement is not affected in
any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this Agreement
be consummated as originally contemplated to the fullest extent possible.
SECTION 8.15. Further Assurances. Each of the Consultant and Parent
agree to execute and deliver, upon the written request of any party hereto, any
and all such further instruments and documents as reasonably appropriate
<PAGE> 16
16
for the purpose of obtaining the full benefits of this Agreement.
<PAGE> 17
17
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed as of the date first written above.
LUCENT TECHNOLOGIES INC.
by
/s/ William T. O'Shea
------------------------------
Name: William T. O'Shea
Title: Vice President
REINDEER ACQUISITION, INC.
by
/s/ Paul D. Diczok
------------------------------
Name: Paul D. Diczok
Title: Vice President
THE BANK OF NEW YORK,
as Escrow Agent,
by
/s/ Sharia Jones-Bey
------------------------------
Name: Sharia Jones-Bey
Title: Assistant Treasurer
KWOK L. LI
/s/ Kwok L. Li
------------------------------
Name: Kwok L. Li
<PAGE> 18
18
YURIE SYSTEMS, INC.
by
/s/ Jeong H. Kim
------------------------------
Name: Jeong H. Kim
Title: Chairman & CEO
<PAGE> 19
19
Consented and agreed to as of the date hereof:
LINSANG PARTNERS LLC
by
/s/ Kwok L. Li
-------------------------
Name: Kwok L. Li
Title: Chairman
<PAGE> 20
Schedule A
<TABLE>
<CAPTION>
Name, Address and TIN Number of Shares of
of the Consultant Company Common Stock
<S> <C>
Kwok L. Li 20,000 1/
12400 Ellen Court
Silver Spring, MD 20904 950,000 2/
2,200,000 3/
</TABLE>
- ----------
1. Held jointly by Kwok L. Li and Felice Li.
2. Held by Felice Li.
3. Held through Linsang Partners LLC.
<PAGE> 1
EXHIBIT (C)(5)
CONFORMED COPY
RETENTION AGREEMENT dated as of April 27, 1998, among
LUCENT TECHNOLOGIES INC., a Delaware corporation ("Parent"),
REINDEER ACQUISITION, INC., a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), YURIE SYSTEMS,
INC., a Delaware corporation (the "Company"), THE BANK OF NEW
YORK, a New York chartered banking corporation, as Escrow
Agent (the "Escrow Agent"), and HARRY J. CARR (the
"Employee").
WHEREAS, Parent, Sub and the Company propose to enter into an
Agreement and Plan of Merger dated as of the date hereof (as the same may be
amended or supplemented, the "Merger Agreement") providing for (i) the making of
a cash tender offer (as such offer may be amended from time to time as permitted
under the Merger Agreement, the "Offer") by Sub for all the outstanding shares
of common stock, par value $.01 per share, of the Company ("Company Common
Stock") and (ii) the merger of Sub with and into the Company (the "Merger");
WHEREAS, the Employee is the record and beneficial owner of the
Shares (as defined below) set forth on Schedule A, if any, and the holder of the
Options (as defined below);
WHEREAS, upon consummation of the Offer (the "Effectiveness Date"),
Parent desires that the Employee become an officer of Parent and the Employee
has agreed to be an officer of Parent for a period of three years from and after
the Effectiveness Date in accordance with this Agreement (the "Term");
WHEREAS, pursuant to this Agreement, the Employee agrees that, on
the Effectiveness Date, if the Employee then owns any Shares the Employee will
deposit a certain number of shares of common stock, par value $.01 per share, of
Parent ("Parent Common Stock") into escrow with the Escrow Agent, as collateral
to pay Liquidated Damages (as defined below) to Parent as provided in this
Agreement; and
WHEREAS, pursuant to this Agreement, the Employee agrees that in
connection with the roll-over of Options into options ("Parent Options") to
acquire shares of Parent Common Stock in accordance with Section 7.04 of the
Merger Agreement, on the Effectiveness Date the Adjusted Options (as defined
below) will continue to be made subject to
<PAGE> 2
2
vesting requirements in connection with the performance of services to Parent in
accordance with this Agreement; and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Sub have requested that the Employee enter into
this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, the parties agree
as follows:
ARTICLE I
Certain Definitions
SECTION 1.01. Definitions. Capitalized terms used but not defined
herein shall have the meaning assigned to such terms in the Merger Agreement. In
addition, capitalized terms used herein shall have the following meanings set
forth in this Article I or elsewhere in this Agreement:
(a) The term "Adjusted Options" shall mean an amount equal to 20% of
the Parent Options held by the Employee at the Effective Time.
(b) The term "Affiliate" shall mean an "affiliate" of Parent,
including the Surviving Corporation, as such term is defined in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended.
(c) The term "Cause" shall mean:
(i) the Employee wilfully fails to substantially perform his duties
with Parent or any Affiliate for a period of at least thirty (30) days
after receiving notice thereof from Parent in writing specifically
identifying the manner in which Parent believes the Employee has wilfully
failed to substantially perform his duties; provided, however, that, to
the extent the Employee within such 30-day period pursues a cure to such
wilful failure and continues pursuing such a cure, such wilful failure
shall not constitute "Cause" if it is cured within 60 days following
receipt of the original notice referred to above; provided further that,
such wilful failure shall not constitute "Cause" unless the Employee shall
have been provided an opportunity to discuss such notice and its contents
with the immediate supervisor of the Employee's
<PAGE> 3
3
immediate supervisor within 15 days following the Employee's receipt of such
notice;
(ii) the Employee is convicted of a felony involving moral turpitude
that adversely affects his ability to perform his duties with Parent or
that would injure Parent or any Affiliate (including its reputation); or
(iii) the Employee commits a wilful, serious act intending to enrich
himself at the expense of Parent or any Affiliate.
(d) "Disability" shall mean the Employee's inability to render the
services required by his employment with Parent by reason of a physical or
mental disability for a period of six months.
(e) The term "Escrow Amount" shall mean an amount equal to 15% of
the product of (i) the aggregate number of Shares of the Employee outstanding at
the time of the expiration of the Offer and (ii) the Offer Price.
(f) The term "Escrowed Funds" shall mean (i) the dividends and
distributions to be distributed pursuant to Section 3.03 and (ii) any amounts to
be distributed pursuant to Section 4.03.
(g) The term "Good Reason" shall mean (i) an adverse change in the
Employee's title or a significant adverse change in the Employee's
responsibilities (including reporting responsibilities); (ii) a reduction in the
Employee's base salary or any failure to pay the Employee any compensation or
benefits to which he is entitled promptly following receipt by Parent of written
notice thereof from the Employee; (iii) requiring the Employee to be based at
any location outside a 30-mile radius from the Washington, D.C. metropolitan
area, except for reasonably required travel on Parent's business; (iv) the
failure by Parent to ensure that the Employee is eligible to partici pate in all
benefit plans generally made available to officers of Parent; (v) any material
breach by Parent of any provision of this Agreement that has not been cured
within 30 days following receipt by Parent of written notice thereof from the
Employee specifically identifying such material breach; (vi) any purported
termination of the Employee's employment for Cause which does not comply with
the terms of this Agreement; or (vii) the failure of Parent to obtain an
agreement from any successor or assign of Parent to assume and agree to perform
this Agreement.
<PAGE> 4
4
(h) The term "Liquidated Damages" shall mean the agreed amount set
forth in Section 4.03(a) to compensate Parent for the damages it will suffer if,
prior to the end of the Term, (i) the Employee terminates his employment with
Parent or an Affiliate other than for Good Reason or (ii) Parent terminates the
Employee's employment for Cause.
(i) The term "Notice" shall mean (i) a written notice to the Escrow
Agent, signed by Parent and the Employee or (ii) an order of any court of
competent jurisdiction.
(j) The term "Option" shall mean such number of options to purchase
the number of shares of Company Common Stock set forth opposite the Employee's
name on Schedule A attached hereto, as such options may be adjusted by stock
dividend, stock split, recapitalization, combination or exchange of options,
merger, consolidation, reorganization or other change or transaction of or by
the Company, together with options to purchase Company Common Stock that may be
acquired after the date hereof by the Employee, including options to purchase
Company Common Stock issuable pursuant to the Company Stock Plans (as the same
may be adjusted as aforesaid), as adjusted or amended pursuant to the Merger
Agreement.
(k) The term "Shares" means such number of shares, if any, of
Company Common Stock set forth opposite the Employee's name on Schedule A
attached hereto, as such shares may be adjusted by stock dividend, stock split,
recapitalization, combination or exchange of shares, merger, consolidation,
reorganization or other change or transaction of or by the Company, together
with shares of Company Common Stock that may be acquired after the date hereof
by the Employee, including shares of Company Common Stock issuable upon the
exercise of options or warrants to purchase Company Common Stock.
(l) The term "Taxes" shall mean all Federal, state and local,
domestic and foreign, income, franchise, security, value-added, ad valorem,
transfer, withholding and other taxes, including taxes based on or measured by
gross receipts, profits, sales, use or occupation, tariffs, levies, impositions,
assessments or governmental charges of any nature whatsoever, including any
interest, penalties or additions with respect thereto.
(m) The term "Tax Return" shall mean all returns, reports or forms,
including information returns, with respect to Taxes.
<PAGE> 5
5
ARTICLE II
Position and Term of Employment
Subject to earlier termination as contemplated in this Agreement,
the Term of the Employee's employment with Parent shall be for a period of three
years commencing on the Effectiveness Date. The Employee shall be an officer of
Parent, shall have the position of Vice President--Chief Operating Officer of
the Wide Area Networks Access Business Unit of the Data Networking Systems
Division of Parent and shall report to the Vice President--Carrier Networks
Product Group of the Data Networking Systems Division. The Employee shall
receive a base salary at the rate of $200,000 per annum. The Employee shall be
eligible to participate in all incentive plans generally made available to
officers of Parent. The Employee shall also be eligible to participate in all
benefit plans generally made available to officers of Parent and will receive a
detailed package describing all such benefit plans promptly following the date
hereof.
ARTICLE III
Creation of Escrow;
The Escrowed Shares;
Vesting of Adjusted Options
SECTION 3.01. Creation of Escrow. Over the five business days on and
after the Effectiveness Date, the Employee shall use the entire Escrow Amount to
purchase shares of Parent Common Stock in open market brokerage transactions.
The Employee hereby agrees to transfer to the Escrow Agent all such shares of
Parent Common Stock (the "Escrowed Shares") as they are purchased. The Employee
has executed the attached irrevocable order to purchase the Escrowed Shares as
soon as practicable over the five business days on and after the Effectiveness
Date. The Escrow Agent hereby agrees to accept the Escrowed Shares and hold the
same in escrow pursuant to the terms of this Agreement.
SECTION 3.02. Escrowed Shares Generally. The Escrow Agent hereby
agrees that the Escrowed Shares held hereunder shall be held on behalf of and
for the account of the Employee, to the extent not forfeited to Parent as
required hereunder.
SECTION 3.03. Dividends and Distributions. The Escrow Agent shall,
as promptly as practicable upon receipt of any cash dividends or distributions
on such Escrowed
<PAGE> 6
6
Shares, distribute such cash dividends or distributions to the Employee.
Notwithstanding the foregoing, no distribution shall be made by the Escrow Agent
after Parent shall have informed the Escrow Agent in writing (with a copy to the
Employee) of a Termination (as defined below).
SECTION 3.04. Voting Rights. The Employee shall have right to vote
the Escrowed Shares on any matter upon which shares of Parent Common Stock are
entitled to vote.
SECTION 3.05. Re-vesting of Adjusted Options; Other Terms. The
Employee hereby agrees that the Adjusted Options will not vest as of the
consummation of the Offer, but will be subject to a modified vesting schedule as
described in Article IV. No other term of this Agreement shall affect any other
term or condition applicable to the Adjusted Options and, therefore, the terms
and conditions applicable to such Adjusted Options (as provided in the Yurie
Systems, Inc. Amended and Restated 1996 Nonstatutory Stock Option Plan and any
agreement pursuant thereto) shall remain in full force and effect. Parent shall
take any and all actions necessary to assure that this modified vesting of the
Adjusted Options shall be an exempt transaction under Section 16(b) of the
Securities Exchange Act of 1934, as amended.
ARTICLE IV
Release of Escrow; Vesting of
Adjusted Options; Forfeiture
of Escrow and Adjusted Options
SECTION 4.01. Quarterly Distributions and Vesting. (a) The Escrow
Agent shall deliver one-twelfth of the Employee's Escrowed Shares to the
Employee, on the last day of each three month period with the first delivery
commencing on August 31, 1998, unless Parent shall have informed the Escrow
Agent in writing (with a copy to the Employee) of a Termination.
(b) Subject to Sections 4.02 and 4.03, the Employee's rights to
one-twelfth of the Adjusted Options shall vest on the last day of each three
month period with the first such vesting date being August 31, 1998, for an
aggregate of twelve substantially equivalent quarterly vesting increments,
provided that the Employee as of such date is an employee of Parent or any
Affiliate in good standing.
SECTION 4.02. Release of Escrow to the Employee; Acceleration of
Vesting of Adjusted Options. If (i) the
<PAGE> 7
7
Employee terminates his employment for Good Reason or (ii) Parent terminates the
employment of Employee other than for Cause or (iii) the Employee dies or
suffers a Disability, then in each case:
(a) Parent shall deliver a Notice to such effect to the Escrow
Agent and to the Employee and the Escrow Agent shall forthwith release and
deliver the Escrowed Shares (and any other property then held in escrow)
to the Employee or in the event of the Employee's death, to the legal
representative of the Employee's estate or other designee; and
(b) the vesting of the Adjusted Options shall be accelerated,
and all such Adjusted Options shall thereafter be immediately vested and
exercisable.
SECTION 4.03. Forfeiture of Escrow and Adjusted Options. If either
(i) the Employee elects to terminate his employment with Parent other than for
Good Reason or (ii) the Employee is terminated by Parent for Cause (each, a
"Termination"), then in either case:
(a) Parent shall deliver a Notice to the Escrow Agent and to
the Employee stating that a Termination has occurred. Upon such event, the
Employee shall have no other rights under this Agreement. Upon receipt of
such a Notice, the Escrow Agent shall as promptly as practicable sell the
Escrowed Shares then in escrow, on behalf of the Employee, for cash in
open market brokerage trans actions. The Escrow Agent shall then deliver
the cash proceeds so received (and any other property then held in escrow)
to Parent. Such cash proceeds shall constitute Liquidated Damages payable
to Parent to compensate Parent for its damages due to the Termination; and
(b) the Employee's rights in all remaining unvested Adjusted
Options shall be forfeited, and such unvested Adjusted Options shall be
cancelled. Parent shall promptly deliver a notice of such event to the
Employee.
ARTICLE V
Termination of Employment Arrangements
SECTION 5.01. The Employee and Parent agree that, effective as of
the Effectiveness Date, the Employment Agreement between the Employee and the
Company (the "Employment Agreement") shall be terminated and of no
<PAGE> 8
8
further force and effect, and no termination or other amount otherwise payable
or benefit otherwise provided to the Employee pursuant to the Employment
Agreement shall be payable in connection with the termination contemplated by
this Section 5.01. The parties agree that the termination of the Employment
Agreement shall not result in the acceleration of the vesting of, or otherwise
modify the term, the exercisability or other provisions of, the Options.
ARTICLE VI
The Escrow Agent
SECTION 6.01. General. (a) The Escrow Agent shall not deal with the
Escrowed Funds and/or the Escrowed Shares except in accordance with (i) this
Agreement, (ii) written instructions given in conformity with this Agreement or
(iii) instructions agreed to in writing by Parent and the Employee. The Escrow
Agent shall not be bound in any way by the Merger Agreement or by any agreement
or contract between the Employee and Parent (whether or not the Escrow Agent has
knowledge thereof), it being understood that the Escrow Agent's only duties and
responsibilities shall be to hold and distribute the Escrowed Funds and to hold,
distribute and/or sell the Escrowed Shares in accordance with the terms of this
Agreement. The Escrow Agent shall not be responsible for any loss resulting from
holding or selling the Escrowed Shares in accordance with the terms of this
Agreement. The Escrow Agent makes no representations and has no responsibility
as to the validity, genuineness or sufficiency of any of the documents or
instruments included in the subject matter of the escrow. The Escrow Agent may
rely and shall be protected in relying upon any Notice, resolution, certificate,
opinion, request, communication, demand, receipt or other paper or document in
good faith believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(b) The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith, except in those cases where the Escrow Agent has
been guilty of negligence or willful misconduct. In the administration of the
escrow account hereunder, the Escrow Agent may execute any of its powers and
perform its duties hereunder directly or through agents or attorneys and may
consult with counsel, accountants and other skilled persons to be selected and
retained by it. The Escrow Agent shall not be liable for anything done, suffered
or omitted in good faith by it in accordance with the advice or opinion of any
such counsel, accountants or other skilled persons.
<PAGE> 9
9
(c) Parent hereby agrees to indemnify the Escrow Agent for, and to
hold it harmless against, any loss, liability or expense arising out of or in
connection with this Agreement and the carrying out of its duties hereunder,
including the costs and expenses of defending itself against any claim of
liability, except in those cases where the Escrow Agent has been guilty of
negligence or willful misconduct.
(d) Schedule A hereto lists the Federal tax identification number
for the Employee.
(e) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions, claims or demands from
any party hereto which, in its opinion, conflict with any of the provisions of
this Agreement, it shall be entitled to refrain from taking any action and its
sole obligation shall be to keep safely all property held in escrow until it
shall be directed otherwise in writing by all of the other parties hereto or by
a final order or judgment of a court of competent jurisdiction.
(f) Any corporation into which the Escrow Agent in its individual
capacity may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Escrow Agent in its individual capacity shall be a party, or any corporation to
which substantially all the corporate trust business of the Escrow Agent in its
individual capacity may be transferred, shall be the Escrow Agent under this
Agreement without further act.
SECTION 6.02. Fees. The Escrow Agent's fees and expenses in acting
hereunder (including the reasonable fees, expenses and disbursements of its
counsel), as set forth in writing between Parent and the Escrow Agent prior to
the Effectiveness Date, shall be paid by Parent.
SECTION 6.03. Resignation. The Escrow Agent or any successor Escrow
Agent hereunder may resign by giving 30 days' prior written notice of
resignation to Parent and the Employee, and such resignation shall be effective
from the date specified in such notice. In case the office of Escrow Agent shall
become vacant for any reason, and within 10 days after receiving any such notice
of resignation, Parent shall appoint a bank or trust company that is not an
Affiliate having capital and undivided surplus (as reflected in its latest
publicly available certified financial statements) of not less than $50 million
and having an office in New York, New York, as successor Escrow Agent hereunder
(a "Successor Escrow Agent") by an instrument or instruments in writing
delivered to such Successor Escrow
<PAGE> 10
10
Agent, the retiring Escrow Agent and the Employee, whereupon such Successor
Escrow Agent shall succeed to all the rights and obligations of the retiring
Escrow Agent as if this Agreement were originally executed by such Successor
Escrow Agent, and the retiring Escrow Agent shall duly transfer and deliver to
such Successor Escrow Agent any Escrowed Funds and Escrowed Shares in the form
held by it hereunder at such time. If a Successor Escrow Agent has not been
appointed or has not accepted such appointment by the end of the 30-day period,
the retiring Escrow Agent may apply to a court of competent jurisdiction for the
appointment of a Successor Escrow Agent or other appropriate relief. The costs,
expenses and reasonable attorneys fees that the retiring Escrow Agent incurs in
connection with such a proceeding shall be paid by Parent.
SECTION 6.04 Dispute Resolution. In the event of any dispute between
or conflicting claims by or among the Parent and the Employee and/or any other
person or entity with respect to the Escrowed Funds or the Escrowed Shares, the
Escrow Agent shall be entitled, in its reasonable discretion, to refuse to
comply with any and all claims, demands or instructions with respect to such
Escrowed Funds or Escrowed Shares so long as such dispute or conflict shall
continue, and the Escrow Agent shall not be or become liable in any way to
Parent or the Employee for the Escrow Agent's failure or refusal to comply with
such conflicting claims, demands or instructions, except to the extent under the
circumstances such failure would constitute negligence or willful misconduct on
the part of the Escrow Agent. The Escrow Agent shall be entitled to refuse to
act until, at its reasonable discretion, either such conflicting or adverse
claims or demands shall have been finally determined in a court of competent
jurisdiction or settled between the conflicting parties as evidenced in writing,
reasonably satisfactory to the Escrow Agent, or the Escrow Agent shall have
received security or an indemnity satisfactory to the Escrow Agent sufficient to
save the Escrow Agent harmless from and against any and all loss, liability or
expense which the Escrow Agent may incur by reason of the Escrow Agent's acting.
The Escrow Agent may in addition elect to commence an interpleader action or
seek other judicial relief or orders as the Escrow Agent may deem necessary.
<PAGE> 11
11
ARTICLE VII
Representations and Warranties
SECTION 7.01. Representations and Warranties of the Employee. The
Employee hereby represents and warrants to Parent as follows:
(a) Authority. The Employee has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Employee. This Agreement has been duly executed and delivered
by the Employee and, assuming this Agreement constitutes a valid and binding
obligation of Parent, constitutes a valid and binding obligation of the Employee
enforceable against the Employee in accordance with its terms (except insofar as
enforce ability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
Neither the execution, delivery or performance of this Agreement by the Employee
nor the consummation by the Employee of the transactions contemplated hereby
will (i) require any filing with, or permit, authorization, consent or approval
of, any Governmental Entity, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
under, or give rise to any right of termination, amendment, cancelation or
acceleration under, or result in the creation of any Lien upon any of the
properties or assets of the Employee under, any of the terms, conditions or
provisions of any Contract to which the Employee is a party or by which the
Employee or any of the Employee's properties or assets, including the Employee's
Shares (if any) and Options, may be bound or (iii) violate any judgment, order,
writ, preliminary or permanent injunction or decree or any statute, law,
ordinance, rule or regulation of any Governmental Entity applicable to the
Employee or any of the Employee's properties or assets, including the Employee's
Shares (if any) and Options.
(b) Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Employee.
<PAGE> 12
12
SECTION 7.02. Representation and Warranty of Parent. Parent hereby
represents and warrants to the Employee as follows:
(a) Authority. Parent has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by Parent. This Agreement has been duly executed and delivered by
Parent and, assuming this Agreement constitutes a valid and binding obligation
of the Employee, constitutes a valid and binding obligation of Parent
enforceable against Parent in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
ARTICLE VIII
Miscellaneous
SECTION 8.01. Expenses. Each of Parent and the Employee shall pay
its or his own costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby.
SECTION 8.02. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been given if
delivered personally or sent by registered or certified mail (return receipt
requested),
<PAGE> 13
13
postage prepaid, to the parties to this Agreement at the following addresses or
at such other address for a party as shall be specified by like notice:
To the Employee:
Harry J. Carr
4005 Featherstone Pl.
Alexandria, VA 22304
To Parent or Sub:
Lucent Technologies Inc.
600 Mountain Avenue
Room 6A 311
Murray Hill, NJ 07974
Attention: Pamela F. Craven
Vice President--Law
To the Escrow Agent:
The Bank of New York
101 Barclay Street
12 East
Insurance Trust and Escrow Unit
New York, NY 10286
Attention: Sharia Jones-Bey
All such notices and communications shall be deemed to have been received on the
date of delivery if personally delivered or on the third business day after the
mailing thereof.
SECTION 8.03. Assignability. The right of the Employee to (i)
receive distributions of the Escrowed Shares and (ii) the Adjusted Options,
shall in each case not be assignable, except that, in the event of the death of
the Employee, such rights may be assigned by bequest or to the executor or
administrator of his estate. This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective successors, but
shall not be assignable by any party without the prior written consent of the
other parties.
SECTION 8.04. Liquidated Damages. Parent and the Employee
acknowledge that it will be difficult, and that it may be time-consuming or
impossible, to estimate damages resulting from a Termination prior to the end of
the Term. Accordingly, Parent and the Employee agree that, in connection with
any such event, any amount of cash from the sale of the Escrowed Shares upon a
Termination shall be
<PAGE> 14
14
liquidated damages resulting from such Termination, and Parent shall be entitled
to receive such amount.
SECTION 8.05. Taxes. (a) The parties hereto agree that (i) unless
and until distributed to Parent, the Escrowed Funds and the Escrowed Shares
shall be treated for all Tax purposes as property of the Employee and (ii) all
income in respect of the Escrowed Funds and the Escrowed Shares shall be treated
for all Tax purposes as income of the Employee. The Employee hereby agrees, to
the extent permitted by law, to report for all Tax purposes (including in
connection with any Tax Return) the Escrowed Funds, the Escrowed Shares and any
income in respect thereof in a manner that is consistent with the foregoing.
(b) The Employee and Parent believe that the delivery to the
Employee of any Escrowed Shares pursuant to Article IV will not cause the
Employee to realize income for Federal and state income Tax purposes, and the
Employee and Parent agree to prepare all Tax Returns in a manner consistent with
this belief.
SECTION 8.06. No Mitigation. The Employee shall not be required to
mitigate the amount of any payment or distribution provided for in this
Agreement by seeking other employment or otherwise, and no such payment or
distribution shall be offset or reduced by the amount of any compensation or
benefits provided to the Employee in any subsequent employment.
SECTION 8.07. Effectiveness; Termination. Notwithstanding anything
to the contrary contained herein, this Agreement shall become effective only
upon the Effectiveness Date and shall be null and void and of no further force
and effect at any time the Merger Agreement is terminated in accordance with its
terms prior to the Effectiveness Date. Except for Sections 6.01 and 6.02 hereof
which shall survive the termination of this Agreement, this Agreement will
terminate and be of no further force and effect once (i) all of the Escrowed
Shares and all Escrowed Funds have been distributed and paid in accordance with
the terms hereof and (ii) all Adjusted Options have vested.
SECTION 8.08. Entire Agreement. With respect to the Escrow Agent,
this Agreement constitutes, and, with respect to the other parties hereto, this
Agreement and the Merger Agreement (and the other agreements contemplated
therein) constitute the entire agreement between the parties with respect to the
subject matter hereof and supersede all prior agreements and undertakings,
written and oral.
<PAGE> 15
15
SECTION 8.09. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York without
regard to any applicable conflicts of law principles.
SECTION 8.10. Article and Section Headings. The article, section and
other headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
SECTION 8.11. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be a single agreement.
SECTION 8.12. Amendment; No Waivers. This Agreement may not be
amended or modified except (a) by an instrument in writing signed by the Escrow
Agent (only if the Employee owns Escrowed Shares), Employee and Parent or (b) by
a waiver in accordance with the following sentence. Any party hereto may (i)
extend the time for the performance of any obligation or other act of any other
parties hereto or (ii) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby. Any
waiver of any term or condition shall not be construed as a waiver of any
subsequent breach or a subsequent waiver of the same term or condition, or a
waiver of any other term or condition, of this Agreement. The failure of any
party at any time to require performance of any provision hereof shall in no
manner affect its right at a later time to enforce the same. No waiver by any
party of any breach of any term contained in this Agreement shall be deemed to
be or construed as a further or continuing waiver of any such breach in any
subsequent instance or waiver of any breach of any other term contained in this
Agreement.
SECTION 8.13. Jurisdiction; Consent to Service of Process. (a) Each
of the parties to this Agreement hereby irrevocably and unconditionally submits,
for itself and its property, to the jurisdiction and venue of any New York State
court sitting in the County of New York, or any Federal court of the United
States of America sitting in the Southern District of New York and any appellate
court from any such court, in any suit, action or proceeding arising out of or
relating to this Agreement, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such suit, action
or proceeding may be heard and determined in such New York State court, or, to
the extent permitted by law, by removal or otherwise, in such Federal court. It
shall be a condition precedent to each party's right to bring any such
<PAGE> 16
16
suit, action or proceeding that such suit, action or proceeding, in the first
instance, be brought in such New York State court or, to the extent permitted by
law, by removal or otherwise, in such Federal court. If such New York State
court or such Federal court refuses to accept jurisdiction with respect thereto,
such suit, action or proceeding may be brought in any other court with
jurisdiction. No party to this Agreement may move to (i) transfer any such suit,
action or proceeding from such New York State court (other than to remove to
such Federal court), or from any Federal court sitting in the Southern District
of New York to another jurisdiction or district, (ii) consolidate any such suit,
action or proceeding brought in such New York State court or such Federal court
with a suit, action or proceeding in another jurisdiction or district or (iii)
dismiss any such suit, action or proceeding brought in such New York State court
or such Federal court for the purpose of bringing the same in another
jurisdiction. Each party agrees that a final judgment in any such suit, action
or proceeding shall be conclusive and may be enforced in any other jurisdiction
by suit on the judgment or in any other manner provided by law.
(b) Each party to this Agreement hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any New York State court sitting in the County of New York, or any Federal court
sitting in the Southern District of New York. Each party hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such suit, action or proceeding in any such court
and further waives the right to object, with respect to such suit, action or
proceeding, that such court does not have jurisdiction over such party.
SECTION 8.14. Severability. If any term or provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nonetheless remain in full force and effect so long as the economic and legal
substance of the transactions contem plated by this Agreement is not affected in
any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this Agreement
be consummated as originally contemplated to the fullest extent possible.
<PAGE> 17
17
SECTION 8.15. Further Assurances. Each of the Employee and Parent
agree to execute and deliver, upon the
<PAGE> 18
18
written request of any party hereto, any and all such further instruments and
documents as reasonably appropriate for the purpose of obtaining the full
benefits of this Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed as of the date first written above.
LUCENT TECHNOLOGIES INC.
by
/s/ William T. O'Shea
------------------------
Name: William T. O'Shea
Title: Vice President
REINDEER ACQUISITION, INC.
by
/s/ Paul D. Diczok
------------------------
Name: Paul D. Diczok
Title: Vice President
HARRY J. CARR
/s/ Harry J. Carr
-----------------------------
Name: Harry J. Carr
<PAGE> 19
19
YURIE SYSTEMS, INC.
by
/s/ Jeong H. Kim
----------------------
Name: Jeong H. Kim
Title: Chairman & CEO
THE BANK OF NEW YORK,
as Escrow Agent
by
/s/ Sharia Jones-Bey
----------------------
Name: Sharia Jones-Bey
Title: Assistant Treasurer
<PAGE> 20
20
Schedule A
<TABLE>
<CAPTION>
Name, Address
and TIN of the Number of Number of
Employee Shares Options
- ------------------- ------------ --------------
<S> <C> <C>
Harry J. Carr 0 1,000,000
4005 Featherstone Pl.
Alexandria, VA 22304
</TABLE>
<PAGE> 1
EXHIBIT (C)(6)
CONFORMED COPY
RETENTION AGREEMENT dated as of April 27, 1998, among
LUCENT TECHNOLOGIES INC., a Delaware corporation ("Parent"),
REINDEER ACQUISITION, INC., a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), YURIE SYSTEMS,
INC., a Delaware corporation (the "Company"), THE BANK OF NEW
YORK, a New York chartered banking corporation, as Escrow
Agent (the "Escrow Agent"), and BARTON Y. SHIGEMURA (the
"Employee").
WHEREAS, Parent, Sub and the Company propose to enter into an
Agreement and Plan of Merger dated as of the date hereof (as the same may be
amended or supplemented, the "Merger Agreement") providing for (i) the making of
a cash tender offer (as such offer may be amended from time to time as permitted
under the Merger Agreement, the "Offer") by Sub for all the outstanding shares
of common stock, par value $.01 per share, of the Company ("Company Common
Stock") and (ii) the merger of Sub with and into the Company (the "Merger");
WHEREAS, the Employee is the record and beneficial owner of the
Shares (as defined below) set forth on Schedule A, if any, and the holder of the
Options (as defined below);
WHEREAS, upon consummation of the Offer (the "Effectiveness Date"),
Parent desires that the Employee become an employee of Parent and the Employee
has agreed to be an employee of Parent for a period of three years from and
after the Effectiveness Date in accordance with this Agreement (the "Term");
WHEREAS, pursuant to this Agreement, the Employee agrees that, on
the Effectiveness Date, if the Employee then owns any Shares the Employee will
deposit a certain number of shares of common stock, par value $.01 per share, of
Parent ("Parent Common Stock") into escrow with the Escrow Agent, as collateral
to pay Liquidated Damages (as defined below) to Parent as provided in this
Agreement; and
WHEREAS, pursuant to this Agreement, the Employee agrees that in
connection with the roll-over of Options into options ("Parent Options") to
acquire shares of Parent Common Stock in accordance with Section 7.04 of the
Merger Agreement, on the Effectiveness Date the Adjusted Options (as defined
below) will continue to be made subject to
<PAGE> 2
2
vesting requirements in connection with the performance of services to Parent in
accordance with this Agreement; and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Sub have requested that the Employee enter into
this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, the parties agree
as follows:
ARTICLE I
Certain Definitions
SECTION 1.01. Definitions. Capitalized terms used but not defined
herein shall have the meaning assigned to such terms in the Merger Agreement. In
addition, capitalized terms used herein shall have the following meanings set
forth in this Article I or elsewhere in this Agreement:
(a) The term "Adjusted Options" shall mean an amount equal to 20% of
the Parent Options held by the Employee at the Effective Time.
(b) The term "Affiliate" shall mean an "affiliate" of Parent,
including the Surviving Corporation, as such term is defined in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended.
(c) The term "Cause" shall mean:
(i) the Employee wilfully fails to substantially perform his duties
with Parent or any Affiliate for a period of at least thirty (30) days
after receiving notice thereof from Parent in writing specifically
identifying the manner in which Parent believes the Employee has wilfully
failed to substantially perform his duties; provided, however, that, to
the extent the Employee within such 30-day period pursues a cure to such
wilful failure and continues pursuing such a cure, such wilful failure
shall not constitute "Cause" if it is cured within 60 days following
receipt of the original notice referred to above; provided further that,
such wilful failure shall not constitute "Cause" unless the Employee shall
have been provided an opportunity to discuss such notice and its contents
with the immediate supervisor of the Employee's
<PAGE> 3
3
immediate supervisor within 15 days following the Employee's receipt of
such notice;
(ii) the Employee is convicted of a felony involving moral turpitude
that adversely affects his ability to perform his duties with Parent or
that would injure Parent or any Affiliate (including its reputation); or
(iii) the Employee commits a wilful, serious act intending to enrich
himself at the expense of Parent or any Affiliate.
(d) "Disability" shall mean the Employee's inability to render the
services required by his employment with Parent by reason of a physical or
mental disability for a period of six months.
(e) The term "Escrow Amount" shall mean an amount equal to 15% of
the product of (i) the aggregate number of Shares of the Employee outstanding at
the time of the expiration of the Offer and (ii) the Offer Price.
(f) The term "Escrowed Funds" shall mean (i) the dividends and
distributions to be distributed pursuant to Section 3.03 and (ii) any amounts to
be distributed pursuant to Section 4.03.
(g) The term "Good Reason" shall mean (i) an adverse change in the
Employee's title or a significant adverse change in the Employee's
responsibilities (including reporting responsibilities); (ii) a reduction in the
Employee's base salary or any failure to pay the Employee any compensation or
benefits to which he is entitled promptly following receipt by Parent of written
notice thereof from the Employee; (iii) requiring the Employee to be based at
any location outside a 30-mile radius from the Washington, D.C. metropolitan
area, except for reasonably required travel on Parent's business; (iv) the
failure by Parent to ensure that the Employee is eligible to partici pate in all
benefit plans generally made available to Parent employees of his level; (v) any
material breach by Parent of any provision of this Agreement that has not been
cured within 30 days following receipt by Parent of written notice thereof from
the Employee specifically identifying such material breach; (vi) any purported
termination of the Employee's employment for Cause which does not comply with
the terms of this Agreement; or (vii) the failure of Parent to obtain an
agreement from any successor or assign of Parent to assume and agree to perform
this Agreement.
<PAGE> 4
4
(h) The term "Liquidated Damages" shall mean the agreed amount set
forth in Section 4.03(a) to compensate Parent for the damages it will suffer if,
prior to the end of the Term, (i) the Employee terminates his employment with
Parent or an Affiliate other than for Good Reason or (ii) Parent terminates the
Employee's employment for Cause.
(i) The term "Notice" shall mean (i) a written notice to the Escrow
Agent, signed by Parent and the Employee or (ii) an order of any court of
competent jurisdiction.
(j) The term "Option" shall mean such number of options to purchase
the number of shares of Company Common Stock set forth opposite the Employee's
name on Schedule A attached hereto, as such options may be adjusted by stock
dividend, stock split, recapitalization, combination or exchange of options,
merger, consolidation, reorganization or other change or transaction of or by
the Company, together with options to purchase Company Common Stock that may be
acquired after the date hereof by the Employee, including options to purchase
Company Common Stock issuable pursuant to the Company Stock Plans (as the same
may be adjusted as aforesaid), as adjusted or amended pursuant to the Merger
Agreement.
(k) The term "Shares" means such number of shares, if any, of
Company Common Stock set forth opposite the Employee's name on Schedule A
attached hereto, as such shares may be adjusted by stock dividend, stock split,
recapitalization, combination or exchange of shares, merger, consolidation,
reorganization or other change or transaction of or by the Company, together
with shares of Company Common Stock that may be acquired after the date hereof
by the Employee, including shares of Company Common Stock issuable upon the
exercise of options or warrants to purchase Company Common Stock.
(l) The term "Taxes" shall mean all Federal, state and local,
domestic and foreign, income, franchise, security, value-added, ad valorem,
transfer, withholding and other taxes, including taxes based on or measured by
gross receipts, profits, sales, use or occupation, tariffs, levies, impositions,
assessments or governmental charges of any nature whatsoever, including any
interest, penalties or additions with respect thereto.
(m) The term "Tax Return" shall mean all returns, reports or forms,
including information returns, with respect to Taxes.
<PAGE> 5
5
ARTICLE II
Position and Term of Employment
Subject to earlier termination as contemplated in this Agreement,
the Term of the Employee's employment with Parent shall be for a period of three
years commencing on the Effectiveness Date. The Employee shall be an employee of
Parent, shall have the position of Vice President of Sales and Marketing for the
Wide Area Networks Access Business Unit of the Data Networking Systems Division
of Parent and shall report to the Vice President--Chief Operating Officer of the
Wide Area Networks Access Business Unit of the Data Networking Systems Division.
The Employee shall receive a base salary at the rate of $150,000 per annum. The
Employee shall be eligible to participate in all incentive plans generally made
available Parent employees of his level. The Employee shall also be eligible to
participate in all benefit plans generally made available to Parent employees of
his level and will receive a detailed package describing all such benefit plans
promptly following the date hereof.
ARTICLE III
Creation of Escrow;
The Escrowed Shares;
Vesting of Adjusted Options
SECTION 3.01. Creation of Escrow. Over the five business days on and
after the Effectiveness Date, the Employee shall use the entire Escrow Amount to
purchase shares of Parent Common Stock in open market brokerage transactions.
The Employee hereby agrees to transfer to the Escrow Agent all such shares of
Parent Common Stock (the "Escrowed Shares") as they are purchased. The Employee
has executed the attached irrevocable order to purchase the Escrowed Shares as
soon as practicable over the five business days on and after the Effectiveness
Date. The Escrow Agent hereby agrees to accept the Escrowed Shares and hold the
same in escrow pursuant to the terms of this Agreement.
SECTION 3.02. Escrowed Shares Generally. The Escrow Agent hereby
agrees that the Escrowed Shares held hereunder shall be held on behalf of and
for the account of the Employee, to the extent not forfeited to Parent as
required hereunder.
<PAGE> 6
6
SECTION 3.03. Dividends and Distributions. The Escrow Agent shall,
as promptly as practicable upon receipt of any cash dividends or distributions
on such Escrowed Shares, distribute such cash dividends or distributions to the
Employee. Notwithstanding the foregoing, no distribution shall be made by the
Escrow Agent after Parent shall have informed the Escrow Agent in writing (with
a copy to the Employee) of a Termination (as defined below).
SECTION 3.04. Voting Rights. The Employee shall have right to vote
the Escrowed Shares on any matter upon which shares of Parent Common Stock are
entitled to vote.
SECTION 3.05. Re-vesting of Adjusted Options; Other Terms. The
Employee hereby agrees that the Adjusted Options will not vest as of the
consummation of the Offer, but will be subject to a modified vesting schedule as
described in Article IV. No other term of this Agreement shall affect any other
term or condition applicable to the Adjusted Options and, therefore, the terms
and conditions applicable to such Adjusted Options (as provided in the Yurie
Systems, Inc. Amended and Restated 1996 Nonstatutory Stock Option Plan and any
agreement pursuant thereto) shall remain in full force and effect. Parent shall
take any and all actions necessary to assure that this modified vesting of the
Adjusted Options shall be an exempt transaction under Section 16(b) of the
Securities Exchange Act of 1934, as amended.
ARTICLE IV
Release of Escrow; Vesting of
Adjusted Options; Forfeiture
of Escrow and Adjusted Options
SECTION 4.01. Quarterly Distributions and Vesting. (a) The Escrow
Agent shall deliver one-twelfth of the Employee's Escrowed Shares to the
Employee, on the last day of each three month period with the first delivery
commencing on August 31, 1998, unless Parent shall have informed the Escrow
Agent in writing (with a copy to the Employee) of a Termination.
(b) Subject to Sections 4.02 and 4.03, the Employee's rights to
one-twelfth of the Adjusted Options shall vest on the last day of each three
month period with the first such vesting date being August 31, 1998, for an
aggregate of twelve substantially equivalent quarterly vesting increments,
provided that the Employee as of such date is an employee of Parent or any
Affiliate in good standing.
<PAGE> 7
7
SECTION 4.02. Release of Escrow to the Employee; Acceleration of
Vesting of Adjusted Options. If (i) the Employee terminates his employment for
Good Reason or (ii) Parent terminates the employment of Employee other than for
Cause or (iii) the Employee dies or suffers a Disability, then in each case:
(a) Parent shall deliver a Notice to such effect to the Escrow
Agent and to the Employee and the Escrow Agent shall forthwith release and
deliver the Escrowed Shares (and any other property then held in escrow)
to the Employee or in the event of the Employee's death, to the legal
representative of the Employee's estate or other designee; and
(b) the vesting of the Adjusted Options shall be accelerated,
and all such Adjusted Options shall thereafter be immediately vested and
exercisable.
SECTION 4.03. Forfeiture of Escrow and Adjusted Options. If either
(i) the Employee elects to terminate his employment with Parent other than for
Good Reason or (ii) the Employee is terminated by Parent for Cause (each, a
"Termination"), then in either case:
(a) Parent shall deliver a Notice to the Escrow Agent and to
the Employee stating that a Termination has occurred. Upon such event, the
Employee shall have no other rights under this Agreement. Upon receipt of
such a Notice, the Escrow Agent shall as promptly as practicable sell the
Escrowed Shares then in escrow, on behalf of the Employee, for cash in
open market brokerage trans actions. The Escrow Agent shall then deliver
the cash proceeds so received (and any other property then held in escrow)
to Parent. Such cash proceeds shall constitute Liquidated Damages payable
to Parent to compensate Parent for its damages due to the Termination; and
(b) the Employee's rights in all remaining unvested Adjusted
Options shall be forfeited, and such unvested Adjusted Options shall be
cancelled. Parent shall promptly deliver a notice of such event to the
Employee.
ARTICLE V
Termination of Employment Arrangements
<PAGE> 8
8
SECTION 5.01. The Employee and Parent agree that, effective as of
the Effectiveness Date, the employment relationship between the Employee and the
Company (the "Employment Agreement") shall be terminated, and no termination or
other amount otherwise payable or benefit otherwise provided to the Employee
shall be payable in connection with the termination contemplated by this Section
5.01. The parties agree that the termination of such employment relationship
shall not result in the acceleration of the vesting of, or otherwise modify the
term, the exercisability or other provisions of, the Options.
ARTICLE VI
The Escrow Agent
SECTION 6.01. General. (a) The Escrow Agent shall not deal with the
Escrowed Funds and/or the Escrowed Shares except in accordance with (i) this
Agreement, (ii) written instructions given in conformity with this Agreement or
(iii) instructions agreed to in writing by Parent and the Employee. The Escrow
Agent shall not be bound in any way by the Merger Agreement or by any agreement
or contract between the Employee and Parent (whether or not the Escrow Agent has
knowledge thereof), it being understood that the Escrow Agent's only duties and
responsibilities shall be to hold and distribute the Escrowed Funds and to hold,
distribute and/or sell the Escrowed Shares in accordance with the terms of this
Agreement. The Escrow Agent shall not be responsible for any loss resulting from
holding or selling the Escrowed Shares in accordance with the terms of this
Agreement. The Escrow Agent makes no representations and has no responsibility
as to the validity, genuineness or sufficiency of any of the documents or
instruments included in the subject matter of the escrow. The Escrow Agent may
rely and shall be protected in relying upon any Notice, resolution, certificate,
opinion, request, communication, demand, receipt or other paper or document in
good faith believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(b) The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith, except in those cases where the Escrow Agent has
been guilty of negligence or willful misconduct. In the administration of the
escrow account hereunder, the Escrow Agent may execute any of its powers and
perform its duties hereunder directly or through agents or attorneys and may
consult with counsel, accountants and other skilled persons to be selected and
retained by it. The Escrow Agent shall not be liable for anything done, suffered
or omitted in good faith by it in
<PAGE> 9
9
accordance with the advice or opinion of any such counsel, accountants or other
skilled persons.
(c) Parent hereby agrees to indemnify the Escrow Agent for, and to
hold it harmless against, any loss, liability or expense arising out of or in
connection with this Agreement and the carrying out of its duties hereunder,
including the costs and expenses of defending itself against any claim of
liability, except in those cases where the Escrow Agent has been guilty of
negligence or willful misconduct.
(d) Schedule A hereto lists the Federal tax identification number
for the Employee.
(e) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions, claims or demands from
any party hereto which, in its opinion, conflict with any of the provisions of
this Agreement, it shall be entitled to refrain from taking any action and its
sole obligation shall be to keep safely all property held in escrow until it
shall be directed otherwise in writing by all of the other parties hereto or by
a final order or judgment of a court of competent jurisdiction.
(f) Any corporation into which the Escrow Agent in its individual
capacity may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Escrow Agent in its individual capacity shall be a party, or any corporation to
which substantially all the corporate trust business of the Escrow Agent in its
individual capacity may be transferred, shall be the Escrow Agent under this
Agreement without further act.
SECTION 6.02. Fees. The Escrow Agent's fees and expenses in acting
hereunder (including the reasonable fees, expenses and disbursements of its
counsel), as set forth in writing between Parent and the Escrow Agent prior to
the Effectiveness Date, shall be paid by Parent.
SECTION 6.03. Resignation. The Escrow Agent or any successor Escrow
Agent hereunder may resign by giving 30 days' prior written notice of
resignation to Parent and the Employee, and such resignation shall be effective
from the date specified in such notice. In case the office of Escrow Agent shall
become vacant for any reason, and within 10 days after receiving any such notice
of resignation, Parent shall appoint a bank or trust company that is not an
Affiliate having capital and undivided surplus (as reflected in its latest
publicly available certified financial statements) of not less than $50 million
and having an
<PAGE> 10
10
office in New York, New York, as successor Escrow Agent hereunder (a "Successor
Escrow Agent") by an instrument or instruments in writing delivered to such
Successor Escrow Agent, the retiring Escrow Agent and the Employee, whereupon
such Successor Escrow Agent shall succeed to all the rights and obligations of
the retiring Escrow Agent as if this Agreement were originally executed by such
Successor Escrow Agent, and the retiring Escrow Agent shall duly transfer and
deliver to such Successor Escrow Agent any Escrowed Funds and Escrowed Shares in
the form held by it hereunder at such time. If a Successor Escrow Agent has not
been appointed or has not accepted such appointment by the end of the 30-day
period, the retiring Escrow Agent may apply to a court of competent jurisdiction
for the appointment of a Successor Escrow Agent or other appropriate relief. The
costs, expenses and reasonable attorneys fees that the retiring Escrow Agent
incurs in connection with such a proceeding shall be paid by Parent.
SECTION 6.04 Dispute Resolution. In the event of any dispute between
or conflicting claims by or among the Parent and the Employee and/or any other
person or entity with respect to the Escrowed Funds or the Escrowed Shares, the
Escrow Agent shall be entitled, in its reasonable discretion, to refuse to
comply with any and all claims, demands or instructions with respect to such
Escrowed Funds or Escrowed Shares so long as such dispute or conflict shall
continue, and the Escrow Agent shall not be or become liable in any way to
Parent or the Employee for the Escrow Agent's failure or refusal to comply with
such conflicting claims, demands or instructions, except to the extent under the
circumstances such failure would constitute negligence or willful misconduct on
the part of the Escrow Agent. The Escrow Agent shall be entitled to refuse to
act until, at its reasonable discretion, either such conflicting or adverse
claims or demands shall have been finally determined in a court of competent
jurisdiction or settled between the conflicting parties as evidenced in writing,
reasonably satisfactory to the Escrow Agent, or the Escrow Agent shall have
received security or an indemnity satisfactory to the Escrow Agent sufficient to
save the Escrow Agent harmless from and against any and all loss, liability or
expense which the Escrow Agent may incur by reason of the Escrow Agent's acting.
The Escrow Agent may in addition elect to commence an interpleader action or
seek other judicial relief or orders as the Escrow Agent may deem necessary.
<PAGE> 11
11
ARTICLE VII
Representations and Warranties
SECTION 7.01. Representations and Warranties of the Employee. The
Employee hereby represents and warrants to Parent as follows:
(a) Authority. The Employee has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Employee. This Agreement has been duly executed and delivered
by the Employee and, assuming this Agreement constitutes a valid and binding
obligation of Parent, constitutes a valid and binding obligation of the Employee
enforceable against the Employee in accordance with its terms (except insofar as
enforce ability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
Neither the execution, delivery or performance of this Agreement by the Employee
nor the consummation by the Employee of the transactions contemplated hereby
will (i) require any filing with, or permit, authorization, consent or approval
of, any Governmental Entity, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
under, or give rise to any right of termination, amendment, cancelation or
acceleration under, or result in the creation of any Lien upon any of the
properties or assets of the Employee under, any of the terms, conditions or
provisions of any Contract to which the Employee is a party or by which the
Employee or any of the Employee's properties or assets, including the Employee's
Shares (if any) and Options, may be bound or (iii) violate any judgment, order,
writ, preliminary or permanent injunction or decree or any statute, law,
ordinance, rule or regulation of any Governmental Entity applicable to the
Employee or any of the Employee's properties or assets, including the Employee's
Shares (if any) and Options.
(b) Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Employee.
<PAGE> 12
12
SECTION 7.02. Representation and Warranty of Parent. Parent hereby
represents and warrants to the Employee as follows:
(a) Authority. Parent has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by Parent. This Agreement has been duly executed and delivered by
Parent and, assuming this Agreement constitutes a valid and binding obligation
of the Employee, constitutes a valid and binding obligation of Parent
enforceable against Parent in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
ARTICLE VIII
Miscellaneous
SECTION 8.01. Expenses. Each of Parent and the Employee shall pay
its or his own costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby.
SECTION 8.02. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been given if
delivered personally or sent by registered or certified mail (return receipt
requested),
<PAGE> 13
13
postage prepaid, to the parties to this Agreement at the following addresses or
at such other address for a party as shall be specified by like notice:
To the Employee:
Barton Y. Shigemura
5391 Blackhawk Dr.
Danville, CA 94506
To Parent or Sub:
Lucent Technologies Inc.
600 Mountain Avenue
Room 6A 311
Murray Hill, NJ 07974
Attention: Pamela F. Craven
Vice President--Law
To the Escrow Agent:
The Bank of New York
101 Barclay Street
12 East
Insurance Trust and Escrow Unit
New York, NY 10286
Attention: Sharia Jones-Bey
All such notices and communications shall be deemed to have been received on the
date of delivery if personally delivered or on the third business day after the
mailing thereof.
SECTION 8.03. Assignability. The right of the Employee to (i)
receive distributions of the Escrowed Shares and (ii) the Adjusted Options,
shall in each case not be assignable, except that, in the event of the death of
the Employee, such rights may be assigned by bequest or to the executor or
administrator of his estate. This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective successors, but
shall not be assignable by any party without the prior written consent of the
other parties.
SECTION 8.04. Liquidated Damages. Parent and the Employee
acknowledge that it will be difficult, and that it may be time-consuming or
impossible, to estimate damages resulting from a Termination prior to the end of
the Term. Accordingly, Parent and the Employee agree that, in connection with
any such event, any amount of cash from the sale of the Escrowed Shares upon a
Termination shall be
<PAGE> 14
14
liquidated damages resulting from such Termination, and Parent shall be entitled
to receive such amount.
SECTION 8.05. Taxes. (a) The parties hereto agree that (i) unless
and until distributed to Parent, the Escrowed Funds and the Escrowed Shares
shall be treated for all Tax purposes as property of the Employee and (ii) all
income in respect of the Escrowed Funds and the Escrowed Shares shall be treated
for all Tax purposes as income of the Employee. The Employee hereby agrees, to
the extent permitted by law, to report for all Tax purposes (including in
connection with any Tax Return) the Escrowed Funds, the Escrowed Shares and any
income in respect thereof in a manner that is consistent with the foregoing.
(b) The Employee and Parent believe that the delivery to the
Employee of any Escrowed Shares pursuant to Article IV will not cause the
Employee to realize income for Federal and state income Tax purposes, and the
Employee and Parent agree to prepare all Tax Returns in a manner consistent with
this belief.
SECTION 8.06. No Mitigation. The Employee shall not be required to
mitigate the amount of any payment or distribution provided for in this
Agreement by seeking other employment or otherwise, and no such payment or
distribution shall be offset or reduced by the amount of any compensation or
benefits provided to the Employee in any subsequent employment.
SECTION 8.07. Effectiveness; Termination. Notwithstanding anything
to the contrary contained herein, this Agreement shall become effective only
upon the Effectiveness Date and shall be null and void and of no further force
and effect at any time the Merger Agreement is terminated in accordance with its
terms prior to the Effectiveness Date. Except for Sections 6.01 and 6.02 hereof
which shall survive the termination of this Agreement, this Agreement will
terminate and be of no further force and effect once (i) all of the Escrowed
Shares and all Escrowed Funds have been distributed and paid in accordance with
the terms hereof and (ii) all Adjusted Options have vested.
SECTION 8.08. Entire Agreement. With respect to the Escrow Agent,
this Agreement constitutes, and, with respect to the other parties hereto, this
Agreement and the Merger Agreement (and the other agreements contemplated
therein) constitute the entire agreement between the parties with respect to the
subject matter hereof and supersede all prior agreements and undertakings,
written and oral.
<PAGE> 15
15
SECTION 8.09. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York without
regard to any applicable conflicts of law principles.
SECTION 8.10. Article and Section Headings. The article, section and
other headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
SECTION 8.11. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be a single agreement.
SECTION 8.12. Amendment; No Waivers. This Agreement may not be
amended or modified except (a) by an instrument in writing signed by the Escrow
Agent (only if the Employee owns Escrowed Shares), Employee and Parent or (b) by
a waiver in accordance with the following sentence. Any party hereto may (i)
extend the time for the performance of any obligation or other act of any other
parties hereto or (ii) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby. Any
waiver of any term or condition shall not be construed as a waiver of any
subsequent breach or a subsequent waiver of the same term or condition, or a
waiver of any other term or condition, of this Agreement. The failure of any
party at any time to require performance of any provision hereof shall in no
manner affect its right at a later time to enforce the same. No waiver by any
party of any breach of any term contained in this Agreement shall be deemed to
be or construed as a further or continuing waiver of any such breach in any
subsequent instance or waiver of any breach of any other term contained in this
Agreement.
SECTION 8.13. Jurisdiction; Consent to Service of Process. (a) Each
of the parties to this Agreement hereby irrevocably and unconditionally submits,
for itself and its property, to the jurisdiction and venue of any New York State
court sitting in the County of New York, or any Federal court of the United
States of America sitting in the Southern District of New York and any appellate
court from any such court, in any suit, action or proceeding arising out of or
relating to this Agreement, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such suit, action
or proceeding may be heard and determined in such New York State court, or, to
the extent permitted by law, by removal or otherwise, in such Federal court. It
shall be a condition precedent to each party's right to bring any such
<PAGE> 16
16
suit, action or proceeding that such suit, action or proceeding, in the first
instance, be brought in such New York State court or, to the extent permitted by
law, by removal or otherwise, in such Federal court. If such New York State
court or such Federal court refuses to accept jurisdiction with respect thereto,
such suit, action or proceeding may be brought in any other court with
jurisdiction. No party to this Agreement may move to (i) transfer any such suit,
action or proceeding from such New York State court (other than to remove to
such Federal court), or from any Federal court sitting in the Southern District
of New York to another jurisdiction or district, (ii) consolidate any such suit,
action or proceeding brought in such New York State court or such Federal court
with a suit, action or proceeding in another jurisdiction or district or (iii)
dismiss any such suit, action or proceeding brought in such New York State court
or such Federal court for the purpose of bringing the same in another
jurisdiction. Each party agrees that a final judgment in any such suit, action
or proceeding shall be conclusive and may be enforced in any other jurisdiction
by suit on the judgment or in any other manner provided by law.
(b) Each party to this Agreement hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any New York State court sitting in the County of New York, or any Federal court
sitting in the Southern District of New York. Each party hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such suit, action or proceeding in any such court
and further waives the right to object, with respect to such suit, action or
proceeding, that such court does not have jurisdiction over such party.
SECTION 8.14. Severability. If any term or provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nonetheless remain in full force and effect so long as the economic and legal
substance of the transactions contem plated by this Agreement is not affected in
any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this Agreement
be consummated as originally contemplated to the fullest extent possible.
<PAGE> 17
17
SECTION 8.15. Further Assurances. Each of the Employee and Parent
agree to execute and deliver, upon the
<PAGE> 18
18
written request of any party hereto, any and all such further instruments and
documents as reasonably appropriate for the purpose of obtaining the full
benefits of this Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed as of the date first written above.
LUCENT TECHNOLOGIES INC.
by
/s/ William T. O'Shea
---------------------------
Name: William T. O'Shea
Title: Vice President
REINDEER ACQUISITION, INC.
by
/s/ Paul D. Diczok
---------------------------
Name: Paul D. Diczok
Title: Vice President
BARTON Y. SHIGEMURA
/s/ Barton Y. Shigemura
---------------------------
Name: Barton Y. Shigemura
<PAGE> 19
19
YURIE SYSTEMS, INC.
by
/s/ Jeong H. Kim
----------------------
Name: Jeong H. Kim
Title: Chairman & CEO
THE BANK OF NEW YORK,
as Escrow Agent
by
/s/ Sharia Jones-Bey
--------------------------
Name: Sharia Jones-Bey
Title: Assistant Treasurer
<PAGE> 20
20
Schedule A
<TABLE>
<CAPTION>
Name, Address
and TIN of the Number of Number of
Employee Shares Options
- ---------------------- --------------- ---------------
<S> <C> <C>
Barton Y. Shigemura 6,000 990,000
5391 Blackhawk Dr.
Danville, CA 94506
</TABLE>
