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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
by and among
ANTEC CORPORATION,
BROADBAND PARENT CORPORATION
BROADBAND TRANSITION CORPORATION
NORTEL NETWORKS LLC
NORTEL NETWORKS INC.
and
ARRIS INTERACTIVE L.L.C.
Dated as of October 18, 2000
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TABLE OF CONTENTS
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ARTICLE I CERTAIN DEFINITIONS.................................................................................... 2
1.01. CERTAIN DEFINITIONS..................................................................................... 2
ARTICLE II THE MERGER, EFFECTS OF THE MERGER..................................................................... 9
2.01. THE MERGER.............................................................................................. 9
2.02. EFFECTIVE DATE AND EFFECTIVE TIME....................................................................... 10
2.03. TAX CONSEQUENCES........................................................................................ 10
ARTICLE III CONVERSION OF SHARES, EXCHANGE PROCEDURES............................................................ 10
3.01. CONVERSION OF SHARES.................................................................................... 10
3.02. RIGHTS AS STOCKHOLDERS, STOCK TRANSFERS................................................................. 11
3.03. EXCHANGE PROCEDURES..................................................................................... 11
3.04. STOCK OPTIONS AND OTHER STOCK PLANS; RESTRICTED STOCK................................................... 12
3.05. CLOSING................................................................................................. 14
ARTICLE IV THE CONTRIBUTION, EFFECTS OF THE CONTRIBUTION......................................................... 14
4.01. PAYMENTS RELATING TO EXISTING VENTURE LOAN AGREEMENT.................................................... 14
4.02. SATISFACTION OF EXISTING OBLIGATIONS.................................................................... 14
4.03. REDEMPTION.............................................................................................. 15
4.04. CONTRIBUTION............................................................................................ 15
4.05. EXISTING VENTURE OPERATING AGREEMENT.................................................................... 16
4.06. SECTION 351 EXCHANGE.................................................................................... 16
ARTICLE V ACTIONS PENDING TRANSACTIONS........................................................................... 16
5.01. FORBEARANCES OF THE COMPANY............................................................................. 16
5.02. FORBEARANCES OF NORTEL NETWORKS......................................................................... 18
ARTICLE VI REPRESENTATIONS AND WARRANTIES........................................................................ 20
6.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY; NEWCO AND TRANSITION..................................... 20
6.02. REPRESENTATIONS AND WARRANTIES OF NORTEL NETWORKS AND NORTEL NETWORKS LLC............................... 32
6.03. REPRESENTATIONS AND WARRANTIES OF EXISTING VENTURE...................................................... 35
ARTICLE VII COVENANTS............................................................................................ 37
7.01. REASONABLE BEST EFFORTS................................................................................. 37
7.02. STOCKHOLDER APPROVALS................................................................................... 37
7.03. REGISTRATION STATEMENT.................................................................................. 37
7.04. PRESS RELEASES.......................................................................................... 39
7.05. ACCESS; INFORMATION..................................................................................... 39
7.06. AFFILIATE AGREEMENTS.................................................................................... 40
7.07. TAKEOVER LAWS........................................................................................... 40
7.08. SHARES LISTED........................................................................................... 41
7.09. REGULATORY APPLICATIONS................................................................................. 41
7.10. INDEMNIFICATION......................................................................................... 42
7.11. CERTAIN EMPLOYEE BENEFIT MATTERS........................................................................ 43
7.12. ACCOUNTANTS' LETTERS.................................................................................... 43
7.13. NOTIFICATION OF CERTAIN MATTERS......................................................................... 43
7.14. CERTAIN TAX MATTERS..................................................................................... 44
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7.15. SUPPLEMENTAL INDENTURE.................................................................................. 44
7.16. VOTING OF SHARES........................................................................................ 44
7.17. FINANCING............................................................................................... 44
7.18. RESTRICTIONS ON THE COMPANY'S BUSINESS.................................................................. 45
7.19. EXISTING VENTURE EMPLOYEES ............................................................................. 45
7.20. NO SOLICITATION OR EMPLOYMENT BY NORTEL NETWORKS........................................................ 45
7.21. REMAINING ANCILLARY AGREEMENTS.......................................................................... 45
7.22. AMENDMENTS.............................................................................................. 46
7.23. COMPANY EMPLOYEE SAVINGS PLAN........................................................................... 46
ARTICLE VIII CONDITIONS TO CONSUMMATION OF THE TRANSACTIONS...................................................... 46
8.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER AND THE CONTRIBUTION......................... 46
8.02. CONDITIONS TO OBLIGATION OF THE COMPANY, TRANSITION AND NEWCO........................................... 47
8.03. CONDITIONS TO OBLIGATION OF NORTEL NETWORKS AND NORTEL NETWORKS LLC..................................... 48
8.04. WITHHOLDING............................................................................................. 50
ARTICLE IX TERMINATION........................................................................................... 50
9.01. TERMINATION............................................................................................. 50
9.02. EFFECT OF TERMINATION AND ABANDONMENT................................................................... 51
9.03. SURVIVAL................................................................................................ 51
9.04. RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE...................................................... 52
9.05. INDEMNIFICATION AND PAYMENT OF DAMAGES BY NEWCO, TRANSITION AND THE COMPANY............................. 52
9.06. INDEMNIFICATION AND PAYMENT OF DAMAGES BY NORTEL NETWORKS AND NORTEL NETWORKS LLC....................... 52
9.07. INDEMNIFICATION AND PAYMENT OF DAMAGES BY EXISTING VENTURE.............................................. 53
9.08. TIME LIMITATIONS........................................................................................ 53
9.09. LIMITATIONS ON AMOUNT - NEWCO, TRANSITION AND THE COMPANY............................................... 53
9.10. LIMITATION ON AMOUNT - NORTEL NETWORKS AND NORTEL NETWORKS LLC.......................................... 54
9.11. LIMITATION ON AMOUNT--EXISTING VENTURE.................................................................. 54
9.12. PROCEDURE OR INDEMNIFICATION - THIRD PARTY CLAIMS....................................................... 54
9.13. PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS............................................................ 55
ARTICLE X MISCELLANEOUS.......................................................................................... 55
10.01. AMENDMENT; EXTENSION; WAIVER........................................................................... 55
10.02. COUNTERPARTS........................................................................................... 56
10.03. GOVERNING LAW.......................................................................................... 56
10.04. EXPENSES............................................................................................... 56
10.05. NOTICES................................................................................................ 56
10.06. ENTIRE UNDERSTANDING................................................................................... 57
10.07. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES............................................................... 58
10.08. DISCLOSURE SCHEDULES................................................................................... 58
10.09. INTERPRETATION......................................................................................... 58
10.10. SEVERABILITY........................................................................................... 59
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization, dated as of October 18,
2000 (this "Agreement"), is by and among ANTEC CORPORATION, a corporation
organized under the laws of Delaware (the "Company"), BROADBAND PARENT
CORPORATION., a corporation organized under the laws of Delaware ("Newco"),
BROADBAND TRANSITION CORPORATION, a corporation organized under the laws of
Delaware ("Transition"), NORTEL NETWORKS INC., a corporation organized under
the laws of Delaware ("Nortel Networks"), NORTEL NETWORKS LLC, a limited
liability company organized under the laws of Delaware, and ARRIS INTERACTIVE
L.L.C., a limited liability company organized under the laws of Delaware
("Existing Venture").
WITNESSETH:
WHEREAS, Newco is a newly-formed wholly-owned subsidiary of the
Company and Transition is a newly-formed wholly-owned subsidiary of Newco;
WHEREAS, Nortel Networks LLC is an indirect wholly-owned subsidiary of
Nortel Networks;
WHEREAS, the Company owns an 18.75% interest in the Existing Venture,
and Nortel Networks LLC owns an 81.25% interest in the Existing Venture;
WHEREAS, the respective Boards of Directors of the Company, Newco and
Transition have determined that it is advisable and in the best interests of
their respective companies and their respective stockholders to consummate the
transactions provided for herein in which, subject to the terms and conditions
set forth herein, Transition will merge with and into the Company (the
"Merger"), so that the Company is the surviving corporation in the Merger and a
wholly-owned subsidiary of Newco and the stockholders of the Company will
receive shares of Newco common stock;
WHEREAS, the respective Boards of Directors or the Managing Member (as
applicable) of Nortel Networks, Nortel Networks LLC, the Company and Newco,
have determined that it is advisable and in the best interests of their
respective companies and their respective stockholders or members (as
applicable) that Nortel Networks LLC contribute its 81.25% interest in the
Existing Venture to Newco in exchange for (i) 33 million shares of Newco common
stock, $.01 par value per share (the "Newco Shares"), and (ii) cash as
described herein.
WHEREAS, the parties intend that for U.S. federal income tax purposes,
the Merger qualify as a "reorganization" within the meaning of Section 368(a)
of the Code (as defined herein) and that the Merger, taken together with the
Contribution, shall constitute an exchange under Section 351 of the Code;
WHEREAS, the parties intend that for U.S. federal income tax purposes,
the Contribution, taken together with the Merger, shall constitute an exchange
under Section 351 of the Code; and
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WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Transactions and also to
prescribe certain conditions to the Transactions.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01. Certain Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
"Affiliate" of a party shall mean a person or entity that directly, or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such party; provided, however, that the
Existing Venture shall not, for the purposes of this Agreement or any Ancillary
Agreement, be, or be deemed or construed to be, an affiliate of either (i) the
Company of any of its Affiliates or (ii) Nortel Networks or any of its
Affiliates.
"Agreement" shall have the meaning set forth in the first paragraph of
this Agreement.
"Ancillary Agreements" shall mean:
(i) Investor Rights Agreement among Newco, Nortel Networks and
Nortel Networks LLC dated as of the date hereof (the
"Investor Rights Agreement"), attached as Exhibit C;
(ii) Registration Rights Agreement between Newco and Nortel
Networks LLC (as such agreement may be modified in accordance
with that certain letter agreement, dated as of the date
hereof, among the Company, Newco and Nortel Networks LLC)
(the "Registration Rights Agreement"), attached as Exhibit D;
(iii) Sales Representative/Distribution Agreement between the
Existing Venture and Nortel Networks and/or the appropriate
Nortel Networks Affiliate (the "Sales
Representative/Distribution Agreement");
(iv) Transition Services Agreement between the Existing Venture
and Nortel Networks and/or the appropriate Nortel Networks
Affiliate (the "Transition Services Agreement");
(v) Intellectual Property Agreement between the Existing Venture
and Nortel Networks Limited (the "Intellectual Property
Agreement"), attached as Exhibit E;
(vi) Termination Agreement among Newco, Existing Venture the
Company, Nortel Networks, Nortel Networks LLC, and Nortel
Networks Limited, a Canadian corporation, dated as of the
date hereof (the "Termination Agreement"), attached as
Exhibit F;
(vii) Loaned Employee Agreement between Existing Venture and Nortel
Networks (the "Loaned Employee Agreement"), attached as
Exhibit G;
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(viii) Supply and Manufacturing Agreement between Newco and Nortel
Networks and/or the appropriate Nortel Networks Affiliates
(the "Supply and Manufacturing Agreement"); and
(ix) Development Agreement between the Existing Venture and Nortel
Networks and/or the appropriate Nortel Networks Affiliates
(the "Development Agreement").
"Business Day" shall mean each day on which banking institutions in
both of Toronto, Canada and New York, New York are not authorized or required
to close.
"Capitalization Date" shall have the meaning set forth in Section
6.01(b).
"Closing" shall have the meaning set forth in Section 3.05.
"Closing Date" shall have the meaning set forth in Section 3.05.
"Code" shall mean the U.S. Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the first paragraph of
this Agreement.
"Company Affiliate" shall have the meaning set forth in Section 7.06.
"Company Board" shall mean the Board of Directors of the Company.
"Company Certificate" shall mean the Restated Certificate of
Incorporation of the Company, as amended.
"Company Common Stock" shall have the meaning set forth in Section
3.01(b).
"Company Disclosure Schedule" shall have the meaning set forth in the
opening paragraph of Section 5.01.
"Company Equity Interests" shall have the meaning set forth in Section
6.01(c).
"Company Filed SEC Documents" shall have the meaning set forth in
Section 6.01(g).
"Company Financial Advisor" shall have the meaning set forth in
Section 6.01(l).
"Company Intellectual Property Rights" shall have the meaning set
forth in Section 6.01(p).
"Company Meeting" shall have the meaning set forth in Section 7.02.
"Company Plan" shall mean any Plan entered into or currently
maintained, sponsored, or contributed to by the Company or any of its
Subsidiaries or to which the Company or any such Subsidiary has any obligation
to contribute or with respect to which the Company or any of its Subsidiaries
may have any liability.
"Company Preferred Stock" shall have the meaning set forth in Section
6.01(b).
"Company Proxy Statement" shall have the meaning set forth in Section
7.03(a).
"Company Restricted Stock" shall have the meaning set forth in Section
3.04(d).
"Company SEC Documents" shall have the meaning set forth in Section
6.01(g).
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"Company Stock Option Plans" shall mean all of the following: the 2000
Stock Incentive Plan, the 2000 Mid-Level Stock Option Plan, the Amended and
Restated Employee Stock Purchase Plan, the 1997 Stock Incentive Plan, the
Amended and Restated Employee Stock Incentive Plan, the Company/Keptel Exchange
Options Plan, the ESP Stock Plan, the Company/TSX Exchange Options Plan and the
Director Stock Option Plan.
"Company Stock Options" shall have the meaning set forth in Section
3.04(a).
"Confidentiality Agreement" shall mean that certain confidentiality
agreement, dated May 9, 2000, by and between the Company and Nortel Networks,
which the parties hereby amend to extend the term to December 31, 2003.
"Contribution" shall have the meaning set forth in Section 4.04.
"Copyrights" shall have the meaning set forth in the definition of
Intellectual Property Rights.
"Costs" shall have the meaning set forth in Section 7.10(a).
"Damages" shall have the meaning set forth in Section 9.05.
"Deloitte" shall have the meaning set forth in Section 7.12.
"Development Agreement" shall have the meaning set forth in the
definition of Ancillary Agreements.
"DGCL" shall mean the General Corporation Law of the State of
Delaware.
"Effective Date" shall have the meaning set forth in Section 2.02.
"Effective Time" shall have the meaning set forth in Section 2.02.
"Environmental Laws" shall have the meaning set forth in Section
6.01(o).
"ERISA" shall mean the U.S. Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder.
"Exchange Act" shall mean the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Agent" shall have the meaning set forth in Section 3.03(a).
"Exchange Fund" shall have the meaning set forth in Section 3.03(a).
"Existing Venture" shall have the meaning set forth in the first
paragraph of this Agreement.
"Existing Venture Loan Agreement" shall mean the Secured Loan
Agreement among Nortel Networks LLC, the Company and the Existing Venture,
dated as of November 17, 1995, as amended as of February 27, 1998 and March 31,
1999, together with any and all pledge agreements, security agreements, and
other documents and instruments relating thereto.
"Existing Venture Operating Agreement" shall have the meaning set
forth in Section 4.05.
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"Existing Venture Plan" shall mean any Plan entered into or currently
maintained, sponsored, or contributed to by Nortel Networks or to which Nortel
Networks has any obligation to contribute or with respect to which Nortel
Networks may have any liability, in each case solely to the extent that
employees of the Existing Venture are eligible to participate in such Plan.
"Exon-Florio" shall have the meaning set forth in Section 6.01(r).
"E&Y" shall have the meaning set forth in Section 7.12.
"First Framework Agreement" shall mean that first framework agreement
dated as of November 17, 1995, among Nortel Networks, the Company, Systems
Integration Venture L.L.C. and Existing Venture, as amended by an agreement
dated February 27, 1998 by and among Nortel Networks, the Company and Existing
Venture.
"Governmental Authority" means any court, administrative agency or
commission or other foreign or domestic federal, state, provincial or local
governmental authority or instrumentality.
"HSR Act" shall have the meaning set forth in Section 6.01(r).
"Indemnified Party" shall mean any Person entitled to indemnification
under the terms of this Agreement.
"Indemnifying Party" shall mean any Person required to provide
indemnification under the terms of this Agreement.
"Indenture" shall have the meaning set forth in Section 7.15.
"Integrated Transaction" shall have the meaning set forth in Section
7.14.
"Integrated Transferor" shall have the meaning set forth in Section
7.14.
"Intellectual Property Agreement" shall have the meaning set forth in
the definition of Ancillary Agreements.
"Intellectual Property Rights" shall mean all proprietary, license and
other rights in and to: (A) trademarks, service marks, brand names, trade
dress, trade names, words, symbols, color schemes and other indications of
origin ("Trademarks"); (B) patents, patent applications (together, "Patents"),
inventors' certificates and invention disclosures; (C) trade secrets and other
confidential or non-public business information, including ideas, formulas,
compositions, discoveries and improvements, know-how, manufacturing and
production processes and techniques, and research and development information;
drawings, specifications, plans, proposals and technical data; analytical
models, investment and lending strategies and records, financial and other
products; financial, marketing and business data, pricing and cost information;
business and marketing plans and customer and supplier lists and information;
in each case whether patentable, copyrightable or not ("Trade Secrets"); (D)
computer programs and databases, in each case whether patentable, copyrightable
or not (collectively, "Software"), and all documentation therefor; (E) writings
and other works of authorship, including marketing materials, brochures,
training materials, including all copyrights and moral rights related to each
of the foregoing ("Copyrights"); (F) mask works; (G) rights to limit the use or
disclosure of confidential information by any Person; (H) domain names; (I)
URLs; (J) registrations of, and
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applications to register, any of the foregoing with any Governmental Authority
and any renewals or extensions thereof; (K) the goodwill associated with each
of the foregoing; and (L) any claims or causes of action arising out of or
related to any infringement or misappropriation of any of the foregoing; in
each case in any jurisdiction.
"Investor Rights Agreement" shall have the meaning set forth in the
definition of Ancillary Agreements.
"Knowledge" with respect to (A) Nortel Networks or Nortel Networks
LLC, or any of their respective Affiliates, shall mean solely the actual
conscious knowledge, with no additional inquiry (regardless of whether the
making of any such inquiry would be deemed reasonable under the circumstances),
of the individuals specified on Schedule 1.01(a); (B) the Company, Newco or
Transition, or any of their respective Affiliates, shall mean solely the
relevant knowledge, after reasonable inquiry in light of all of the
circumstances under which a representation or warranty is made (including, for
instance, the limited amount of time available in which to make inquiry) of the
individuals specified on Schedule 1.01(b); and (C) the Existing Venture, or any
of its Affiliates, shall mean solely the actual conscious knowledge, with no
additional inquiry (regardless of whether the making of any such inquiry would
be deemed reasonable under the circumstances), of the individuals specified on
Schedule 1.01(c).
"Legal Requirement" shall mean any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute or
treaty.
"Liens" shall mean any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"Loaned Employee Agreement" shall have the meaning set forth in the
definition of Ancillary Agreements.
"Material Adverse Effect" shall mean with respect to the referenced
Person, any change, circumstance or effect that (i) is or is reasonably likely
to be materially adverse to the business, condition (financial or otherwise) or
results of operations of such party and its Subsidiaries taken as a whole.
"Merger" shall have the meaning set forth in the recitals to this
Agreement.
"NASD" shall mean the Nasdaq Stock Market, Inc.
"New Certificates" shall have the meaning set forth in Section
3.03(a).
"Newco Cash Amount" shall mean the amount of (i) $213,200,000 plus
(ii) the Outstanding Loan Amount.
"Newco Common Stock" shall have the meaning set forth in Section
3.01(b).
"Newco Shares" shall have the meaning set forth in the recitals to
this Agreement.
"Nortel Networks" shall have the meaning set forth in the first
paragraph of this Agreement.
"Nortel Networks LLC" shall have the meaning set forth in the first
paragraph of this Agreement.
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"Nortel Networks Disclosure Schedule" shall have the meaning set forth
in the opening paragraph of Section 5.02.
"Old Certificates" shall have the meaning set forth in Section
3.03(a).
"Outside Closing Date" shall mean (i) if the Company Proxy Statement
and the Registration Statement are not required by the SEC to include therein
audited financial statements of the Existing Venture for periods prior to March
31, 1999 covering the assets and business contributed to the Existing Venture
by Nortel Networks LLC pursuant to the Asset Sale and Contribution Agreement
between them, dated as of March 31, 1999, then February 28, 2001, or (ii)
otherwise, April 30, 2001.
"Outstanding Loan Amount" shall have the meaning set forth in Section
4.01(a).
"Patents" shall have the meaning set forth in the definition of
Intellectual Property Rights.
"Person" or "person" shall mean any individual, bank, corporation,
limited liability company, partnership, association, joint-stock company,
business trust or unincorporated organization.
"Plan" shall mean any "employee benefit plan", within the meaning of
Section 3(3) of ERISA, whether or not subject to ERISA, and any employment,
consulting, termination, severance, retention, change in control, deferred or
incentive compensation, bonus, stock option or other equity based, vacation or
other fringe benefit, perquisite or compensation plan, program, policy,
arrangement, agreement or commitment, including foreign plans except for
foreign plans which are required to be maintained pursuant to applicable law.
"Previously Disclosed" by a party shall mean set forth in the related
section of its Disclosure Schedule.
"Registration Rights Agreement" shall have the meaning set forth in
the definition of Ancillary Agreements.
"Registration Statement" shall have the meaning set forth in Section
7.03(a).
"Regulatory Law" shall mean the Sherman Act, as amended, the Clayton
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and
all other federal, state and foreign, if any, statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines and other laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade or lessening of
competition through merger or acquisition.
"Rights" shall mean, with respect to any person, securities or
obligations convertible into or exercisable or exchangeable for, or giving any
other person any right to subscribe for or acquire, or any options, calls or
commitments relating to, or any stock appreciation right or other instrument
the value of which is determined in whole or in part by reference to the market
price or value of, shares of capital stock or other equity securities of such
person.
"Sales Representative/Assignment/Distribution Agreement" shall have
the meaning set forth in the definition of Ancillary Agreements.
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"Savings Plan" shall have the meaning set forth in Section 7.23.
"SEC" shall mean the United States Securities and Exchange Commission.
"Second Framework Agreement" shall mean the second framework agreement
among Nortel Networks, Nortel Networks LLC, the Company and Existing Venture
dated as of March 31, 1999.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Software" shall have the meaning set forth in the definition of
Intellectual Property Rights.
"Subsidiary" and "Significant Subsidiary" shall have the meanings
ascribed to them in Rule 1-02 of Regulation S-X of the SEC; provided, however,
that the Existing Venture shall not, for the purposes of this Agreement or any
Ancillary Agreement, be, or be deemed or construed to be, a Subsidiary of
either (i) the Company or any of its Affiliates or (ii) Nortel Networks or any
of its Affiliates.
"Supply and Manufacturing Agreement" shall have the meaning set forth
in the definition of Ancillary Agreements.
"Surviving Corporation" shall mean the Company, as the surviving
corporation in the Merger.
"Takeover Laws" shall have the meaning set forth in Section 6.01(n).
"Tax Returns" shall have the meaning set forth in Section 6.01(q).
"Taxes" shall mean all taxes, charges, fees, levies or other
assessments, however denominated, including, without limitation, all net
income, gross income, gross receipts, sales, use, ad valorem, goods and
services, capital, transfer, franchise, profits, license, withholding, payroll,
employment, employer health, excise, estimated, severance, stamp, occupation,
property or other taxes, custom duties, fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any taxing authority whether arising before,
on or after the Effective Date.
"Termination Agreement" shall have the meaning set forth in the
definition of Ancillary Agreements.
"Trade Secrets" shall have the meaning set forth in the definition of
Intellectual Property Rights.
"Trademarks" shall have the meaning set forth in the definition of
Intellectual Property Rights.
"Transactions" shall mean the transactions contemplated by this
Agreement and/or the Ancillary Agreements.
"Transition" shall have the meaning set forth in the first paragraph
of this Agreement.
"Transition Common Stock" shall have the meaning set forth in Section
3.01(a).
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"Transition Services Agreement" shall have the meaning set forth in
the definition of Ancillary Agreements.
"Treasury Shares" shall mean shares of the Company Common Stock held
by the Company or any of its Subsidiaries.
"U.S. GAAP" shall mean United States generally accepted accounting
principles.
"$" shall mean United States Dollar.
ARTICLE II
THE MERGER, EFFECTS OF THE MERGER
2.01. The Merger.
(a) Surviving Corporation. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the DGCL, at the
Effective Time, Transition will merge with and into the Company pursuant to
this Agreement. Following the Effective Time the separate corporate existence
of Transition shall cease and the Company shall survive and continue to exist
as a Delaware corporation (the "Surviving Corporation").
(b) Effectiveness and Effects of the Merger. Subject to the
satisfaction or waiver of the conditions set forth in Article VIII in
accordance with this Agreement, the Merger shall become effective upon the
occurrence of the filing in the office of the Secretary of State of the State
of Delaware of a certificate of merger in accordance with Section 251 of the
DGCL, or such later date and time as may be set forth in such certificate. The
Merger shall have the effects prescribed in the DGCL. Without limiting the
generality of the foregoing, and subject thereto, and unless stated otherwise
in this Agreement, at the Effective Time all the property, rights, privileges,
powers and franchises of the Company and Transition shall be vested in the
Surviving Corporation, and all debt, liabilities and duties of the Company and
Transition shall become the debt, liabilities and duties of the Surviving
Corporation.
(c) Certificate of Incorporation and By-Laws. The certificate
of incorporation and by-laws of Transition, as in effect immediately prior to
the Effective Time, but with the heading and Article 1 of the certificate of
incorporation amended to read: "The name of the Corporation is Arris
Corporation," and the by-laws shall be amended to reflect the name change, and
shall be those of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
(d) Officers and Directors of Surviving Corporation. The
officers of the Company as of the Effective Time shall be the officers of the
Surviving Corporation, until the earlier of their resignation or removal or
otherwise ceasing to be an officer or until their respective successors are
duly elected and qualified, as the case may be. The directors of Transition as
of the Effective Time shall be the directors of the Surviving Corporation until
the
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earlier of their resignation or removal or otherwise ceasing to be a director
or until their respective successors are duly elected and qualified, as the
case may be.
2.02. Effective Date and Effective Time. Subject to the
satisfaction or waiver (subject to applicable law) of the conditions set forth
in Article VIII in accordance with this Agreement, the parties shall cause the
effective date of the Merger (the "Effective Date") to occur on (i) the third
Business Day to occur after the last of the conditions set forth in Section
8.01 shall have been satisfied or waived in accordance with the terms of this
Agreement or (ii) such other date to which the parties may agree in writing.
The time on the Effective Date when the Merger shall become effective is
referred to as the "Effective Time."
2.03. Tax Consequences. It is intended that the Merger shall
qualify as a reorganization under Section 368(a) of the Code and that the
Merger, in conjunction with the Contribution, shall constitute an exchange
under Section 351 of the Code.
ARTICLE III
CONVERSION OF SHARES; EXCHANGE PROCEDURES
3.01. Conversion of Shares. Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the Merger and
without any action on the part of any party or stockholder:
(a) Conversion of Transition Common Stock. Each share of
common stock, par value $.01 per share, of Transition (the "Transition Common
Stock") issued and outstanding immediately prior to the Effective Time that is
owned by Newco shall remain outstanding and thereafter be deemed to be a fully
paid, non-assessable and validly issued share of Surviving Corporation common
stock, par value $.01 per share.
(b) Conversion of Company Common Stock. Each share of
common stock, par value $.01 per share, of the Company (the "Company Common
Stock") issued and outstanding immediately prior to the Effective Time (other
than shares of Company Common Stock to be canceled pursuant to Section 3.01(c))
shall become and be converted into the right to receive one share of Newco
common stock, par value $.01 per share ("Newco Common Stock"). All of the
shares of Company Common Stock converted into the right to receive Newco Common
Stock pursuant to this Article III, shall no longer be outstanding and shall
automatically be canceled and shall cease to exist as of the Effective Time.
(c) Treasury Shares. Each share of Company Common Stock
held by the Company or any wholly-owned Subsidiary of the Company as Treasury
Shares immediately prior to the Effective Time shall no longer be outstanding
and shall automatically be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
(d) Conversion of Newco Common Stock. Each share of
common stock, par value $.01 per share, of Newco issued and outstanding
immediately prior to the Effective Time
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that is owned by the Company shall no longer be outstanding and shall be
canceled and shall cease to exist as of the Effective Time.
3.02. Rights as Stockholders; Stock Transfers. At the Effective
Time, holders of Company Common Stock shall cease to be, and shall have no
rights as, stockholders of the Company, other than the right to receive any
dividend or other distribution with respect to such Company Common Stock with a
record date occurring prior to the Effective Time and the consideration
provided under this Article III. After the Effective Time, there shall be no
transfers on the stock transfer books of the Company or the Surviving
Corporation of shares of Company Common Stock.
3.03. Exchange Procedures.
(a) At or prior to the Effective Time, Newco shall
deposit, or shall cause to be deposited, with a bank or trust company having
(or whose parent has) net capital of not less than $100,000,000 (the "Exchange
Agent"), for the benefit of the holders of certificates formerly representing
shares of Company Common Stock ("Old Certificates"), for exchange in accordance
with this Article III, certificates representing the shares of Newco Common
Stock ("New Certificates") (such New Certificates being hereinafter referred to
as the "Exchange Fund") to be delivered pursuant to this Article III in
exchange for outstanding shares of Company Common Stock.
(b) As promptly as practicable after the Effective Date,
Newco shall send or cause the Exchange Agent to send or cause to be sent to
each former holder of record of shares (other than Treasury Shares) of Company
Common Stock immediately prior to the Effective Time transmittal materials for
use in exchanging such stockholder's Old Certificates for the consideration set
forth in this Article III. Newco shall cause the New Certificates representing
shares of Newco Common Stock into which a stockholder's shares of Company
Common Stock are converted at the Effective Time and any dividends or
distributions which such person shall be entitled to receive pursuant to this
Article III, to be delivered to such stockholder upon delivery to the Exchange
Agent of Old Certificates representing such shares of Company Common Stock (or,
pursuant to Section 3.03(f), a surety bond reasonably satisfactory to Newco and
the Exchange Agent, if any of such certificates are lost, stolen or destroyed)
owned by such stockholder. No interest will be paid in respect of dividends or
distributions which any such person shall be entitled to receive pursuant to
this Article III upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange
Agent nor any party hereto shall be liable to any former holder of Company
Common Stock for any amount delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(d) No dividends or other distributions with respect to
shares of Newco Common Stock with a record date occurring after the Effective
Time shall be paid to the holder of any unsurrendered Old Certificate
representing shares of Company Common Stock converted in the Merger into the
right to receive shares of Newco Common Stock until the holder thereof
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shall be entitled to receive New Certificates in exchange therefor in
accordance with this Article III. After becoming so entitled in accordance with
this Article III, the record holder thereof also shall be entitled to receive
any such dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of Newco Common Stock
such holder had the right to receive upon surrender of the Old Certificate, and
payment thereof shall be made promptly following the later of (i) the date on
which such holder shall become entitled to receive New Certificates and (ii)
the payment date with respect to such dividend or other distribution.
(e) Any portion of the Exchange Fund that remains
unclaimed by the stockholders of the Company for three months after the
Effective Time shall, upon demand by Newco, be paid or delivered to Newco. Any
stockholders of the Company who have not theretofore complied with this Article
III shall thereafter look only to Newco for delivery of the shares of Newco
Common Stock, and payment of unpaid dividends and distributions on the shares
of Newco Common Stock deliverable in respect of each share of Company Common
Stock such stockholder holds, as determined pursuant to this Agreement, in each
case, without any interest thereon.
(f) If any Old Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Old Certificate to be lost, stolen or destroyed and the posting
by such person of a bond in such reasonable amount as Newco may direct as
indemnity against any claim that may be made against it or the Surviving
Corporation with respect to such Old Certificate, Newco shall, in exchange for
such lost, stolen or destroyed Old Certificate, deliver or cause the Exchange
Agent to deliver a New Certificate in respect thereof pursuant to this Article
III.
3.04. Stock Options and Other Stock Plans; Restricted Stock.
(a) Effective at the Effective Time, each option to
purchase shares of Company Common Stock or stock units convertible into shares
of Company Common Stock (collectively, the "Company Stock Options") granted to
employees or directors of, or consultants or advisors to, the Company or any
Subsidiary thereof pursuant to the terms of the Company Stock Option Plans that
is outstanding immediately prior to the Effective Time shall be assumed by
Newco and deemed to constitute an option to acquire or a stock unit convertible
into, on substantially the same terms and conditions (including such terms
relating to the exercise price, vesting and exercisability of the Company Stock
Options and terms relating to adjustments for any stock dividend, subdivision,
reclassification, recapitalization, split, combination, exchange of shares or
similar transaction following such assumption) as were applicable under such
Company Stock Option immediately prior to the Effective Time, the same number
of shares of Newco Common Stock. The date of grant of each such Company Stock
Option shall be the date on which such Company Stock Option was originally
granted. As soon as reasonably practicable following the Effective Date, Newco
shall cause to be delivered to each holder of a Company Stock Option that has
been assumed by Newco pursuant to this Section 3.04 a notice stating that (x)
such Company Stock Option has been converted into an option to purchase shares
of Newco
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Common Stock, (y) such Company Stock Option has been assumed by Newco and shall
continue in effect subject to all of the terms and conditions applicable
thereto immediately prior to the Effective Time and (z) setting forth the
number of shares of Newco Common Stock covered by such Company Stock Option and
the per share option exercise price for such shares of Newco Common Stock. From
and after the Effective Time, Newco shall comply with the terms of each Company
Stock Option Plan pursuant to which the Company Stock Options were granted;
provided, that (i) the board of directors of Newco or an authorized committee
thereof shall succeed to the authorities and responsibilities of the Company
Board or any committee thereof under the Company Stock Option Plans; (ii) the
terms of the Company Stock Option Plans shall be amended as necessary to
reflect the assumption of the Company Stock Options contemplated hereunder; and
(iii) so long as it is not inconsistent with the foregoing, Newco, at its
election, may replace the Company Stock Options with options granted under a
new Newco plan.
(b) Prior to the Effective Date, the Company shall take
all necessary or appropriate action (including amending any of the Company
Stock Option Plans or making adjustments as permitted thereby) to effectuate
the assumption and conversion of the Company Stock Options by Newco and the
assignment to Newco of the authorities and responsibilities of the Company
Board or any committee thereof under the Company Stock Option Plans.
(c) Newco shall cause to be taken all corporate action
necessary to reserve for issuance a sufficient number of shares of Newco Common
Stock for delivery upon exercise of Company Stock Options in accordance with
this Section 3.04. As soon as reasonably practicable following the Effective
Date, Newco shall use its reasonable efforts to cause the shares of Newco
Common Stock subject to Company Stock Options to be registered under the
Securities Act pursuant to a registration statement on Form S-8 (or any
successor or other appropriate forms) and shall use its reasonable efforts to
cause the effectiveness of such registration statement (and current status of
the prospectus or prospectuses contained therein) to be maintained for so long
as Company Stock Options remain outstanding.
(d) Restricted Stock. If any shares of Company Common
Stock that are outstanding immediately prior to the Effective Time are unvested
or are subject to a repurchase option, risk of forfeiture or other condition
providing that such shares ("Company Restricted Stock") may be forfeited to or
repurchased by the Company upon termination or modification of the employment,
directorship or other relationship between the Company (and/or any Affiliate of
the Company) and the holder of such Company Restricted Stock under the terms of
any restricted stock agreement or other agreement with the Company (and/or the
relevant Affiliate of the Company) that does not by its terms provide that such
repurchase option, risk of forfeiture or other condition lapses upon
consummation of the Transactions, then the shares of Newco Common Stock issued
upon the conversion of such shares of Company Common Stock in the Merger will
continue to be unvested to the same extent and/or subject to the same
repurchase options, risks of forfeiture or other conditions (as applicable)
following the Effective Time, and the certificates representing such shares of
Newco Common Stock shall accordingly be marked with appropriate legends noting
such repurchase options, risks of forfeiture or other conditions.
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3.05. Closing. The closing of the Merger and the Contribution (the
"Closing") will take place at the offices of Troutman Sanders LLP, 600
Peachtree Street, N.E., Suite 5200, Atlanta, Georgia, at 11:00 A.M., Eastern
time, on the day on which all of the conditions listed in Section 8.01 are
satisfied or waived, to the extent that they may be waived, or at such other
date and time as the Company and Nortel Networks otherwise agree (the "Closing
Date").
ARTICLE IV
THE CONTRIBUTION; EFFECTS OF THE CONTRIBUTION
4.01. Payments Relating to Existing Venture Loan Agreement. In
connection with the Existing Venture Loan Agreement:
(a) at or prior to the Closing, the Company and Newco
shall provide or otherwise make available to the Existing Venture, in
immediately available U.S. funds, by wire transfer, the amount of outstanding
principal and accrued but unpaid interest under the Existing Venture Loan
Agreement, together with the amount of any other fees, charges and payments
payable by the Existing Venture under the Existing Venture Loan Agreement as of
the Closing Date, less the amount of any interest attributable to the first
$120,700,000 of such amount for the period from August 31, 2000 and until
December 31, 2000, but in no event to exceed $130,100,000 ( in the aggregate,
the "Outstanding Loan Amount");
(b) at the Closing, the Existing Venture shall pay to
Nortel Networks LLC, in immediately available U.S. funds, by wire transfer, the
Outstanding Loan Amount;
(c) at the Closing, Nortel Networks LLC shall pay to the
Company, in immediately available U.S. funds, by wire transfer, the portion of
the payment received by Nortel Networks LLC pursuant to Section 4.01(b) above
that is attributable to the Company's Optional Participating Interest and
Mandatory Participating Interest (as such terms are defined in the Existing
Venture Loan Agreement) actually purchased by the Company under the Existing
Venture Loan Agreement (the amount so payable by Nortel Networks LLC to the
Company, the "Participation Loan Amount"); and
(d) upon payment of the amounts set forth in Sections
4.01(b) and (c) above, the Existing Venture Loan Agreement shall terminate (as
set forth in greater detail in, and subject to, the Termination Agreement), and
no further amounts may be advanced thereunder.
4.02. Satisfaction of Existing Obligations.
(a) Between the date hereof and the Closing, the Company
and Nortel Networks shall keep their accounts payable to the Existing Venture
at least as current as they are on the date hereof.
(b) Immediately prior to the Closing, each of the Company
and Nortel Networks shall make such payments as are necessary to comply with
the payment terms of its
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obligations to the Existing Venture and, to the extent Nortel Networks elects
to do so to facilitate the payments described in paragraph (c) below, Nortel
Networks may prepay amounts that are not then due.
(c) To the extent that it has funds to do so immediately
prior to the Closing, (i) first, the Existing Venture will pay all outstanding
amounts to its creditors other than Nortel Networks and its Affiliates
(regardless of whether then due), and (ii) second, the Existing Venture shall
pay Nortel Networks and its Affiliates, in both cases paying the amounts that
have been outstanding the longest first.
(d) The phrase in paragraph (c) "funds to do so" shall
include cash on hand, funds generated from operations subsequent to the date
hereof including those that may previously have been used to reduce the amount
outstanding under the Existing Venture Loan Agreement (but not additional
borrowings under the Existing Venture Loan Agreement), and funds available
under the Company's new credit facility under the commitment letters attached
as Exhibit A to the extent that using such funds for such purpose will not
either (i) violate the terms of the Company's new credit facility, or (ii)
cause the Company's EBITDA leverage ratio to exceed 3.25 (as determined
pursuant to the Company's contemplated bank credit facility).
(e) Following the Closing, the remaining amounts due from
the Existing Venture to Nortel Networks and its Affiliates shall be paid
consistent with their terms.
4.03. Redemption
(a) At the Closing, after the actions described in
Section 4.01 but immediately prior to the actions described in Section 4.04,
the Existing Venture shall redeem a portion of Nortel Networks LLC's interest
in the Existing Venture, such portion to equal the fraction of Nortel Networks
LLC's total interest derived by dividing (i) $213,200,000 by (ii) the sum of
$213,200,000 plus the market value of the Newco Shares (based upon the average
closing price of the Company Common Stock on the Nasdaq National Market System
for the twenty trading days ending two Business Days prior to the Closing); and
(b) at the Closing, as the redemption price for the
redemption described in Section 4.03(a) above, the Existing Venture shall pay
Nortel Networks LLC $213,200,000 in immediately available U.S. funds, by wire
transfer to such bank(s) account(s) as shall be designated by Nortel Networks
LLC not less than two Business Days prior to the Closing.
4.04. Contribution. At the Closing, in exchange for Nortel Networks
LLC's remaining membership interest in the Existing Venture, free and clear of
any Liens, Newco shall (i) issue to Nortel Networks LLC the Newco Shares and
(ii) pay to Nortel Networks LLC the Newco Cash Amount, as follows (all such
transactions, collectively, the "Contribution"):
(a) Nortel Networks LLC shall transfer all of its
interest in the Existing Venture to Newco by delivering to Newco an executed
Instrument of Assignment and
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Assumption and thereafter delivering to Newco such other documents as Newco may
reasonably request to effect the transfer on the books and records of the
Existing Venture;
(b) Newco shall issue the Newco Shares to Nortel Networks
LLC, and shall deliver to Nortel Networks LLC one or more stock certificates in
the aggregate representing the Newco Shares in the name of Nortel Networks LLC
or such other subsidiary of Nortel Networks as Nortel Networks may specify in a
notice delivered to Newco not less than two Business Days prior to the Closing;
and
(c) at the Closing, Newco shall pay to Nortel Networks
LLC, in immediately available U.S. funds, by wire transfer to such bank(s)
account(s) as shall be designated by Nortel Networks LLC not less than two
Business Days prior to the Closing, the Newco Cash Amount.
4.05. Existing Venture Operating Agreement. If the Closing occurs,
the Company and Nortel Networks LLC agree to authorize, approve and ratify a
further amendment and restatement of the Amended and Restated Limited Liability
Company Agreement of the Existing Venture LLC, dated as of March 31, 1999 (the
"Existing Venture Operating Agreement"), which shall amend and restate the
Existing Venture Operating Agreement in its entirety effective as of the
Closing, in substantially the form attached as Exhibit H. In addition, (a) the
Existing Venture, Company and Nortel Networks LLC agree, effective as of the
Closing, to waive any provisions in the Existing Venture Agreement to
effectuate the Transactions, (b) the Company and Nortel Networks LLC hereby
direct the Existing Venture to do all that is necessary under any applicable
laws to effectuate such waiver and the Transactions, (c) Nortel Networks LLC
shall cause its representatives on the Members Committee of the Existing
Venture to resign upon the Closing without any liability to the Existing
Venture, and (d) the Company, Nortel Networks LLC and the Existing Venture
agree that, at all times after the execution hereof and prior to the Closing
(or, if earlier, termination of this Agreement in accordance with its terms),
the Existing Venture shall not, without prior approval by a majority vote of
the Representatives, (i) establish reserves in excess of $250,000 or (ii) fail
to pay its accounts payable (both existing and future) to the Company or Nortel
Networks or any of its Affiliates within 60 days of invoice.
4.06. Section 351 Exchange. It is intended that for U.S. federal
income tax purposes, the Contribution, taken together with the Merger, shall
constitute an exchange under Section 351 of the Code.
ARTICLE V
ACTIONS PENDING TRANSACTIONS
5.01. Forbearances of the Company. From the date hereof until the
Effective Time, except for the Transactions, or as set forth in Section 5.01 of
the Disclosure Schedule delivered by the Company to Nortel Networks prior to
the execution of this Agreement (the "Company Disclosure Schedule"), without
the prior written consent of Nortel Networks, the Company will not, and will
cause each of its Subsidiaries not to:
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(a) Ordinary Course. Conduct its business and the
business of its Subsidiaries other than in the ordinary and usual course,
consistent with past practice, in material compliance and in all material
respects with applicable laws and regulations or, to the extent consistent
therewith, fail to use reasonable efforts to preserve intact their business
organizations and assets and maintain their rights, franchises and existing
relations with customers, suppliers, employees and business associates, or take
any action that would adversely affect its ability to perform any of its
obligations under this Agreement in any material respects.
(b) Capital Stock. (i) Issue, sell, pledge, dispose of,
encumber or reclassify or otherwise modify the terms of, or authorize or
propose the issuance, sale, pledge, disposition, encumbrance or
reclassification or other modification of the terms of, any shares of its
capital stock or any Rights, or amend any of the terms of (including without
limitation the vesting of) any convertible securities, options or other Rights,
(ii) enter into any agreement with respect to the foregoing or (iii) permit any
additional shares of capital stock to become subject to new grants of employee,
director, consultant or advisor stock options, restricted stock awards, other
Rights or similar stock-based employee, director, consultant or advisor rights,
other than (x) the issuance of Company Common Stock (I) upon the exercise of
stock options outstanding as of the date hereof or issued in the ordinary and
usual course of business in accordance with the terms of the Company Stock
Option Plans, or (II) upon conversion of the notes under the Indenture, and (y)
issuances by a wholly-owned Subsidiary of the Company of capital stock to such
Subsidiary's parent.
(c) Dividends, Etc. (i) Make, declare, pay or set aside
for payment any dividend (other than dividends from the Company's Subsidiaries
to the Company or another Subsidiary of the Company) on or in respect of, or
declare or make any distribution on any shares of its capital stock or (ii)
except for any such transaction by a wholly-owned Subsidiary of the Company
which remains a wholly-owned Subsidiary after consummation of such transaction
(other than Newco), directly or indirectly adjust, split, combine, redeem,
reclassify, purchase, repurchase or otherwise acquire, any shares of the
capital stock of the Company or any of its Subsidiaries.
(d) Acquisitions and Dispositions. (i) Acquire all or any
portion of the equity securities or interests, assets, business or properties
of any other entity for aggregate consideration in excess of $25,000,000 for
all transactions, or (ii) sell all or substantially all, or any material
portion, of its assets, business or properties (other than sales of goods and
services to distributors and customers in the ordinary and usual course of
business), or (iii) agree to enter into any merger, consolidation or other
business combination.
(e) Indebtedness. Incur any indebtedness for borrowed
money or guarantee any such indebtedness of another Person, issue or sell any
debt securities or options, warrants, calls or other rights to acquire any debt
securities of the Company or any of its Subsidiaries, or enter into any
arrangement having the economic effect of any of the foregoing, other than in
the ordinary and usual course of business, consistent with past practice.
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(f) License or Distribution Agreements. Enter into any
exclusive agreement or arrangement with respect to the licensing or distribution
of any Intellectual Property or products of the Company or any of its
Subsidiaries other than in the ordinary and usual course of business.
(g) Compensation. Pay any special bonus or special
remuneration to any of its directors or officers.
(h) Amendments. Amend the Company, Newco or Transition
certificate of incorporation or by-laws, except that Newco may amend the Newco
certificate of incorporation to contain terms identical to the Company's
certificate of incorporation as in effect on the date hereof except that there
shall be 325,000,000 authorized shares of stock and except that Newco's name
shall be changed to "Arris Corporation".
(i) Adverse Actions. (i) Take any action while knowing
that such action would, or is reasonably likely to, prevent or impede either the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code and an exchange under Section 351 of the Code or the Contribution
from qualifying as an exchange under Section 351 of the Code; or (ii) knowingly
take any action that is intended or is reasonably likely to result in (A) any of
its representations and warranties set forth in this Agreement being or becoming
untrue at any time, (B) any of the conditions to the Transactions set forth in
Article VIII not being satisfied or satisfaction of any such condition being
materially delayed or (C) a violation of any provision of this Agreement except,
in each case, as may be required by applicable law.
(j) Agreements. Agree or commit to do anything prohibited
by the above paragraphs (a) through (i).
5.02 Forbearances of Nortel Networks. From the date hereof until
the Effective Time, except for the Transactions, or as set forth in Section 5.02
of Nortel Networks' Disclosure Schedule delivered by Nortel Networks to the
Company prior to the execution of this Agreement (the "Nortel Networks
Disclosure Schedule"), without the prior written consent of the Company, Nortel
Networks will not, and will cause each of its Subsidiaries, including Nortel
Networks LLC, not to:
(a) Adverse Actions. (i) Take any action while knowing
that such action would, or is reasonably likely to, prevent or impede the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of the
Code and an exchange under Section 351 of the Code or the Contribution from
qualifying as an exchange under Section 351 of the Code; or (ii) knowingly take
any action that is intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or becoming
untrue at any time, (B) any of the conditions to the Transactions set forth in
Article VIII not being satisfied or satisfaction of any such condition being
materially delayed or (C) a violation of any provision of this Agreement except,
in each case, as may be required by applicable law.
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(b) Existing Venture.
(i) Ordinary Course. Permit the Existing Venture
to conduct its business other than in accordance with the Existing Venture
Operating Agreement, in the ordinary and usual course, consistent with past
practice, in material compliance and in all material respects with applicable
laws and regulations or, to the extent consistent therewith, fail to use
reasonable efforts to preserve intact its business organizations and assets and
maintain its rights, franchises and existing relations with customers,
suppliers, employees and business associates, or take any action that would
adversely affect its ability to perform any of its obligations under this
Agreement in any material respects.
(ii) Distributions. Permit the Existing Venture
to make any distributions to members (provided that the foregoing shall not
apply to royalty payments, or other payments under commercial agreements, by the
Existing Venture) except as part of the payment provided for in Section 4.01(b)
hereof.
(iii) Adverse Actions. (A) Permit the Existing
Venture to take any action while knowing that such action would, or is
reasonably likely to, prevent or impede either the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code and an exchange
under Section 351 of the Code or the Contribution from qualifying as an exchange
under Section 351 of the Code; or (B) knowingly take any action that is intended
or is reasonably likely to result in (I) any of its representations and
warranties set forth in this Agreement being or becoming untrue at any time,
(II) any of the conditions to the Transactions set forth in Article VIII not
being satisfied or satisfaction of any such condition being materially delayed
or (III) a violation of any provision of this Agreement except, in each case, as
may be required by applicable law.
(iv) Indebtedness. Permit the Existing Venture to
incur any indebtedness for borrowed money or guarantee any such indebtedness of
another Person, issue or sell any debt securities or options, warrants, calls or
other rights to acquire any debt securities of the Existing Venture, or enter
into any arrangement having the economic effect of any of the foregoing, other
than in the ordinary and usual course of business, consistent with past
practice.
(v) License or Distribution Agreements. Permit
the Existing Venture to enter into any exclusive agreement or arrangement with
respect to the licensing or distribution of any Intellectual Property or
products of the Existing Venture other than in the usual and ordinary course of
business.
(vi) Compensation. Permit the Existing Venture to
pay any special bonus or special remuneration to any of its directors (or
persons serving in similar capacity) or officers.
(vii) Agreements. Permit the Existing Venture to
agree or commit to do anything prohibited by the above subparagraphs (i) and
(vi).
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01. Representations and Warranties of the Company, Newco and
Transition. Except as set forth in the Company Disclosure Schedule (each section
of which qualifies the correspondingly numbered representation and warranty or
covenant to the extent specified therein), the Company hereby represents and
warrants to Nortel Networks as follows:
(a) Organization, Standing and Authority. Each of the
Company, Newco and Transition is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, and
is duly qualified to do business and is in good standing in the states of the
United States and foreign jurisdictions where its ownership or leasing of
property or assets or the conduct of its business requires it to be so
qualified, except where the failure to be so qualified and in good standing does
not have and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company, Newco or Transition. Each
of the Company, Newco and Transition has in effect all federal, state, local and
foreign governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as it is now conducted,
except where the failure to have in effect such authorizations does not have,
and would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on the Company, Newco or Transition. Each of the
Company, Newco and Transition has made available to Nortel Networks a complete
and correct copy of its certificate of incorporation and by-laws, each as
amended and in full force and effect as of the date of this Agreement, and each
of the Company, Newco and Transition is not in violation of any provision
thereof.
(b) Shares.
(i) The authorized capital stock of the Company
consists of (A) 150,000,000 shares of Company Common Stock of which 38,093,366
shares were issued and outstanding as of September 30, 2000 (the "Capitalization
Date"), and (B) 5,000,000 shares of preferred stock, par value $1.00 per share
("Company Preferred Stock"), of which no shares were issued or outstanding as of
the Capitalization Date. Since the Capitalization Date, there have been no
issuances of shares of the capital stock of the Company other than issuances
permitted by Section 5.01(b).
(ii) All issued and outstanding shares of Company
Common Stock have been duly authorized and validly issued, in compliance with
all applicable federal, state and foreign securities laws, and are fully paid
and nonassessable, and no class of capital stock of the Company is entitled to
preemptive rights.
(iii) There were outstanding at the Capitalization
Date no Rights to acquire capital stock from the Company other than (A) Rights
to acquire up to 4,791,667 shares of Company Common Stock upon conversion of
notes issued under the Indenture, and (B)
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Company Stock Options. Section 6.01(b)(iii) of the Company Disclosure Schedule
sets forth for all Company Stock Options (and all shares of Company Common Stock
issued pursuant to restricted stock awards made under any Company Plan)
outstanding at the Capitalization Date a true and complete list of the
following: their holders, their date of grant (or award), the number of shares
of Company Common Stock for which they are exercisable (or, with respect to
restricted stock awards, the number of shares awarded), and their exercise price
as currently in effect. No Rights to acquire capital stock from the Company have
been issued or granted, and no restricted stock awards have been made, since the
Capitalization Date other than issuances not prohibited by Section 5.01(b).
(iv) The Newco Shares when issued as contemplated
by Articles III and IV hereof will be duly authorized, validly issued, in
compliance with all applicable federal, state and foreign securities laws, and
fully paid and non-assessable.
(c) Subsidiaries.
(i) Section 6.01(c)(i) of the Company Disclosure
Schedule sets forth a list as of the date hereof of all of the Company's
Significant Subsidiaries, together with their jurisdiction of organization.
Unless otherwise described therein, the Company owns, directly or indirectly,
beneficially and of record 100% of the issued and outstanding voting securities
of each such Subsidiary (other than directors' qualifying shares, if any). No
equity securities of any of the Company's Subsidiaries are or may become
required to be issued (other than to the Company or its wholly owned
Subsidiaries) by reason of any Rights, and there are no contracts, commitments,
understandings or arrangements by which any of such Subsidiaries is bound to
sell or otherwise transfer any shares of capital stock of any such Subsidiaries
(other than to the Company or its wholly owned Subsidiaries). In addition,
Section 6.01(c)(i) of the Company Disclosure Schedule lists as of the date of
this Agreement each corporation, partnership, limited liability company or
similar entity with respect to which, as of the date of this Agreement, the
Company or any Subsidiary of the Company owns more than 5% but less than a
majority of the voting equity or similar voting interest or any interest
convertible into, or exchangeable or exercisable for, more than 5% but less than
a majority of the voting equity or similar voting interest and which interest is
carried on the Company's most recent financial statements (or if not held as of
the date thereof, would be carried on the Company's financial statements if
prepared as of the date hereof) at a value in excess of $1,000,000
(collectively, the "Company Equity Interests"). All of the shares of capital
stock of each of the Subsidiaries of the Company and all the Company Equity
Interests held by the Company (including, without limitation, the Company's
limited liability company interest in the Existing Venture) and each Subsidiary
of the Company are fully paid and non-assessable and are owned by the Company or
such Subsidiary free and clear of any Liens. Other than with respect to the
Existing Venture, there are no material outstanding contractual obligations of
the Company or any of its Subsidiaries to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in any
entity in which the Company or any Subsidiary of the Company owns a Company
Equity Interest.
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(ii) Each of the Company's Significant
Subsidiaries has been duly organized and is validly existing in good standing
under the laws of the jurisdiction of its organization. Each of such
Subsidiaries is duly qualified to do business and in good standing in the
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and each has in effect all federal,
state, local and foreign governmental authorizations necessary for it to own or
lease its properties and assets and to carry on its business as it is now
conducted, except where the failure to be so duly qualified and in good standing
or to have in effect all federal, state, local, and foreign governmental
authorizations does not have, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
(iii) All Subsidiaries of the Company, other than
the Significant Subsidiaries of the Company, if taken together and combined in a
single Subsidiary of the Company, would not constitute a Significant Subsidiary
of the Company.
(d) Corporate Power. Each of the Company, Newco, and
Transition has the corporate power and authority to carry on its business as it
is now being conducted and to own all its properties and assets; and each such
party has the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and each Ancillary Agreement to which it is a
party and to consummate the Transactions.
(e) Corporate Authority.
(i) Subject, in the case of the consummation of
the Merger, to receipt of the requisite approval and adoption of the "agreement
of merger" (as such term is used in Section 251 of the DGCL) contained in this
Agreement and the Merger by the holders of a majority of the outstanding shares
of Company Common Stock entitled to vote thereon, the Company Board having
unanimously adopted a resolution approving such "agreement of merger" and
declaring its advisability, with Mr. John Ian Craig abstaining, this Agreement,
the Ancillary Agreements and the Transactions have been duly authorized by all
necessary corporate action of the Company, Newco and Transition and their
respective Boards of Directors (assuming that neither Nortel Networks nor Nortel
Networks LLC is an "interested stockholder" of the Company, Newco or Transition
under Section 203 of the DGCL immediately before the execution and delivery of
this Agreement), prior to the date hereof (which action has not been rescinded
or modified in any way). The execution and delivery of this Agreement and the
Ancillary Agreements by the Company, Newco and Transition and the consummation
by the Company, Newco and Transition of the Transactions have been duly
authorized by the respective Boards of Directors of the Company, Newco and
Transition and by the Company as the sole shareholder of Newco and by Newco as
the sole shareholder of Transition. No other corporate proceedings on the part
of Newco or Transition are necessary to authorize this Agreement and the
Transactions.
(ii) Each of this Agreement and the Ancillary
Agreements is, or in the event that such Ancillary Agreement is to be entered
into at Closing, will be, a legal, valid and
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<PAGE> 26
binding agreement of the Company, Newco and Transition (to the extent that it is
a party thereto), enforceable in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles, whether considered at law or in equity).
(f) No Defaults. Subject to receipt of the regulatory
approvals, and expiration of the waiting periods, referred to in Section 6.01(r)
and required filings under federal and state securities or other laws, the
execution, delivery and performance of this Agreement and the Ancillary
Agreements and the consummation of the Transactions by the Company, Newco and
Transition (to the extent that they are a party thereto), do not and will not
(i) constitute a breach or violation of, or a default under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of the Company or Newco or Transition or to
which the Company or Newco or Transition or any of their respective properties
or assets are subject or bound, (ii) constitute a breach or violation of, or a
default under, the articles or certificate of incorporation or by-laws of the
Company or Newco or Transition or (iii) require any consent or approval under
any such law, rule, regulation, judgment, decree, order, governmental permit or
license, agreement, indenture or instrument, except in the case of (i) and
(iii), where such breach, violation or default or the failure to obtain such
consents or approvals would not in the aggregate have a Material Adverse Effect
on the Company, Newco or Transition and would not prevent or impair the Company,
Newco or Transition's ability to consummate the Transactions. Section 6.01(f) of
the Company Disclosure Schedule contains a list of all consents of third parties
required under any material agreement to be obtained by the Company, Newco or
Transition prior to, or as a result of, the consummation of the Transactions.
(g) Financial Reports and SEC Documents.
(i) Except as set forth in Section 6.01(g) of
the Company Disclosure Schedule, with respect to the periods since December 31,
1997, the Company and its Subsidiaries have filed all reports and statements,
together with any amendments required to be made thereto, that were required to
be filed with the SEC.
(ii) The Company's Annual Reports on Form 10-K
for the fiscal years ended December 31, 1998 and 1999, its Quarterly Report on
Form 10-Q for the period ended June 30, 2000, and all other reports,
registration statements, definitive proxy statements or information statements
filed or to be filed by it or any of its Subsidiaries subsequent to December 31,
1996, under the Securities Act, or under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act, in the form filed, or to be filed (collectively, the "Company
SEC Documents"), with the SEC, as of the date filed (or, with respect to a
document filed prior to the date of this Agreement and amended or superseded by
a subsequent filing prior to the date of this Agreement, then on the date of
such filing as so amended or superseded) (A) complied or will comply in all
material respects as to form with the applicable requirements under the
Securities Act or the Exchange Act, as the case may be; and (B) did not and will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or
23
<PAGE> 27
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and each of the balance sheets contained
in or incorporated by reference into any such Company SEC Document (including
the related notes and schedules thereto) fairly presents and will fairly present
the financial position of the entity or entities to which it relates as of its
date, and each of the statements of income and changes in stockholders' equity
and cash flows or equivalent statements in such Company SEC Documents (including
any related notes and schedules thereto) fairly presents and will fairly present
the results of operations, changes in stockholders' equity and changes in cash
flows, as the case may be, of the entity or entities to which it relates for the
periods to which they relate, in each case in accordance with U.S. GAAP
consistently applied during the periods involved and Regulation S-X of the SEC,
except in each case as may be noted therein, subject to normal year-end audit
adjustments in the case of unaudited statements.
(iii) Since June 30, 2000, the Company has not
incurred any liabilities (whether absolute, accrued, contingent or otherwise)
that are of a nature that would be required to be disclosed on a balance sheet
of the Company or the footnotes related thereto all prepared in conformity with
U.S. GAAP, except (x) liabilities as set forth in the Company SEC Documents
filed prior to the date of this Agreement (the "Company Filed SEC Documents")
and (y) other liabilities incurred in the ordinary course of business consistent
with past practice which do not have, and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
(h) Litigation. No litigation, claim or other proceeding
before any Governmental Authority or arbitrator that is pending or, to the
Company's Knowledge, threatened against the Company or any of its Subsidiaries,
Newco or Transition would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company, Newco or Transition. Except
as disclosed on Section 6.01(h) of the Company Disclosure Schedule, no
litigation, claim or other proceeding before any Governmental Authority or
arbitrator is pending or, to the Company's Knowledge, threatened against the
Company or any of its Subsidiaries, Newco or Transition which, if determined
adversely to the Company or any such Subsidiary, Newco or Transition would
reasonably be expected to result in a loss of more than $5,000,000 or the
imposition of any material restrictions on the business of the Company, Newco or
Transition.
(i) Compliance with Laws. Each of the Company, Newco and
Transition:
(i) is in compliance with all applicable
federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable thereto or to the employees
conducting such businesses, except where failure to so comply does not have, and
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company, Newco or Transition;
(ii) has all permits, licenses, authorizations,
orders and approvals of, and has made all filings, applications and
registrations with, all Governmental Authorities that
24
<PAGE> 28
are required in order to permit them to conduct their businesses as presently
conducted or proposed to be conducted, and all such permits, licenses,
certificates of authority, orders and approvals are in full force and effect
and, to its Knowledge, no suspension or cancellation of any of them is
threatened, except for (x) failures to hold such permits, licenses,
authorizations, orders and approvals and (y) failures to make such filings,
applications and registrations, which do not have, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company, Newco or Transition (provided that clauses (x) and (y) shall not
apply to any permits, licenses, authorizations, orders and approvals of, or
filings, applications and registrations with, the Securities and Exchange
Commission); and
(iii) has received since December 31, 1999, no
written notification or communication from any Governmental Authority, nor do
they have Knowledge of any earlier issued notification or communication which
has not been resolved, (A) asserting that the Company or any of its
Subsidiaries, Newco or Transition is not in compliance with any of the statutes,
regulations or ordinances which such Governmental Authority enforces or (B)
threatening to revoke any license, franchise, permit or governmental
authorization.
(j) Material Contracts; Defaults. Except for this
Agreement, the Ancillary Agreements and those agreements and other documents
filed as exhibits to the Company Filed SEC Documents, as of the date of this
Agreement, neither the Company nor any of its Subsidiaries is a party to or
bound by (i) any "material contract" within the meaning of Item 601(b)(10) of
the SEC's Regulation S-K or (ii) any non-competition agreement or other
agreement or arrangement that restricts the Company, Newco or Transition from
competing in any line of business. Neither the Company nor Newco nor Transition
is in default under any such "material contract" or non-competition or other
agreement or arrangement, or under any other material contract, agreement,
commitment, arrangement, lease, insurance policy or other instrument to which it
is a party, by which its respective assets, business, or operations may be bound
or affected, and there has not occurred any event that, with the lapse of time
or the giving of notice or both, would constitute such a default.
(k) Effect on Other Contracts. The execution, delivery
and performance by the Company, Newco and Transition of this Agreement and the
Ancillary Agreements, and the consummation of the Transactions, will not result
in (i) an acceleration of, vesting of, or other modification of the terms of,
any Right (including, without limitation, outstanding options granted under any
Company Plan) or restricted stock award, (ii) the acceleration or coming due of
any liability or obligation of the Company of any of its Subsidiaries, (iii) the
incurrence by the Company or any of its Subsidiaries of any additional charge,
cost or expense under any agreement or other contractual arrangement with any
third party, or (iv) any other increase in the liabilities and obligations of,
or any diminution of the rights of, the Company or any of its Subsidiaries under
any such agreement or arrangement, in each case other than as set forth on
Section 6.01(k) of the Company Disclosure Schedule.
(l) No Brokers. No action has been taken by the Company,
Newco or Transition, or any of their respective officers, directors or
employees, that would give rise to any valid claim against any party hereto for
a brokerage commission, finder's fee or other like
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<PAGE> 29
payment with respect to the transactions contemplated by this Agreement,
excluding fees to be paid to Donaldson, Lufkin & Jenrette (the "Company
Financial Advisor") pursuant to the Company's written agreement with such firm,
a true and complete copy of which has been furnished to Nortel Networks prior to
the date of this Agreement.
(m) Employee Benefits; Employee Relations.
(i) Section 6.01(m)(i) of the Company Disclosure
Schedule contains a complete and correct list of each material Company Plan.
With respect to each material Company Plan, true and complete copies have been
provided to Nortel Networks of the Plan document or agreement, including any
amendments thereto, or, with respect to any material Company Plan that is not in
writing, a description thereof and, to the extent applicable, the three (3) most
recent required Internal Revenue Service Form 5500, including all schedules
thereto, the most recent qualification determination and any communications to
or from any Governmental Authority, including a written description of any oral
communication.
(ii) Each Company Plan has been operated and
administered, and is, in compliance with its terms and all applicable Legal
Requirements (including ERISA and the Code and any regulations thereunder).
There are no actions, suits, claims or governmental audits (other than routine
claims for benefits in the ordinary course) pending or, to the Knowledge of the
Company, threatened with respect to any Company Plan.
(iii) Except as set forth in Section 6.01(m)(iii)
of the Company Disclosure Schedule, no Company Plan is, and neither the Company
nor any Subsidiary thereof contributes to or has any liability or obligation
with respect to any Plan that is, (A) a multi-employer plan within the meaning
of Section 4001(a)(3) of ERISA, (B) any single employer plan or other pension
plan subject to Title IV or Section 302 of ERISA or Section 412 of the Code or
(C) a multiple employer plan within the meaning of Section 4063 or 4064 of
ERISA.
(iv) Each Company Plan that is intended to
qualify under Section 401(a) and/or 401(k) of the Code so qualifies and its
trust is exempt from taxation under Section 501(a) of the Code. The Company and
its Subsidiaries have timely paid all material contributions, premiums and
expenses payable to or in respect of each Company Plan under the terms thereof
and in accordance with applicable Legal Requirements, including ERISA and the
Code, and, to the extent any such contributions, premiums or expenses are not
yet due, the liability therefor has been properly and adequately accrued on the
Company's financial statements included in its Quarterly Report on Form 10-Q for
the period ended June 30, 2000, as required under GAAP.
(v) Neither the Company nor any of its
Subsidiaries has incurred, either directly or indirectly (including as a result
of an indemnification obligation), any liability (other than for benefits
accrued under any Company Plan) under or pursuant to any provision of Title I or
IV of ERISA or the penalty, excise tax or joint and several liability provisions
of the Code relating to employee benefit plans, and no event, transaction or
condition has occurred,
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<PAGE> 30
exists or is expected to occur which could reasonably be expected to result in
any such liability to the Company, any of its Subsidiaries or, after the
Effective Time, Surviving Corporation or any of its affiliates.
(vi) Except as set forth in Section 6.01(m)(vi)
of the Company's Disclosure Schedule, neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, either
alone or in combination with another event (whether contingent or otherwise)
will (A) entitle any current or former employee, consultant, officer or director
of the Company or any of its Subsidiaries to any increased or modified benefit
or payment; (B) increase the amount of compensation due to any such employee,
consultant, officer or director; (C) accelerate the vesting, payment or funding
of any compensation, stock-based benefit, incentive or other benefit; (D) result
in any "parachute payment" under Section 280G of the Code (whether or not such
payment is considered to be reasonable compensation for services rendered); or
(E) cause any compensation to fail to be deductible under Section 162(m), or any
other provision of the Code or any similar foreign Legal Requirements.
(vii) Except as set forth in Section 6.01(m)(vii)
of the Company Disclosure Schedule, (A) no collective bargaining agreement
exists that is binding on the Company or its Subsidiaries; (B) no proceeding has
been instituted with any Governmental Authority for the purpose of obtaining
recognition of a bargaining representative with respect to such employees; (C)
there is no labor strike, slow down or work stoppage pending, or to the
Knowledge of the Company, threatened against the Company or its Subsidiaries and
there are no pending or threatened claims, disputes, controversies, grievances
or proceedings relating to any prospective, current or former employee or group
of such employees of the Company or its Subsidiaries alleging a material breach
or material violation of an employment-related Legal Requirement; (D) the
Company and its Subsidiaries are in material compliance with applicable
employment-related Legal Requirements; and (E) to the Knowledge of the Company,
no organizing activity has been undertaken or is threatened with respect to any
employees of the Company or its Subsidiaries;
(viii) To the Knowledge of the Company all
individuals who are performing or have performed consulting or other services
for the Company or any of its Subsidiaries, whether as consultants, independent
contractors, agents or otherwise, are or were correctly classified by the
Company as either "independent contractors" or "employees" as the case may be,
and, at the Effective Date, will qualify for such classification. There are no
pending, or to the Knowledge of the Company, threatened material claims,
disputes, controversies, grievances or proceedings against the Company or any of
its Subsidiaries relating to any such individual.
(n) Takeover Laws. The Company Board has validly approved
this Agreement, and the transactions contemplated hereby (including the Merger)
for purposes of Section 203 of the DGCL. Except for Section 203 of the DGCL
(which has been rendered inapplicable), no "moratorium," "control share," "fair
price" or other anti-takeover laws and
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<PAGE> 31
regulations of any state (collectively, "Takeover Laws") are applicable to the
Merger or the other transactions contemplated by this Agreement.
(o) Environmental Matters.
(i) As used in this Agreement, "Environmental
Laws" means all applicable local, state, provincial, federal and foreign
environmental, health and safety laws (including common law) and regulations in
effect on the date of this Agreement, relating to the protection of human health
and safety as affected by exposure to pollutants, contaminants, or hazardous or
toxic wastes, substances or materials or the protection of the environment
including, without limitation, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation, and Liability Act, the Clean
Water Act, the Clean Air Act, Toxic Substances Control Act, and the Occupational
Safety and Health Act, each as amended, regulations promulgated thereunder, and
state counterparts.
(ii) (x) Currently and during the last five
years, neither the conduct or operations of the Company or any of its
Subsidiaries, nor any condition of any property presently or previously owned,
leased or operated by any of them, materially violates or violated any
Environmental Laws and (y) no condition exists or has existed, and no event has
occurred, with respect to any of them or any such property that is reasonably
likely to result in any material liability under any Environmental Laws on the
part of the Company, Newco or Transition. Neither the Company nor any of its
Subsidiaries has received any notice, or has any reason to believe that it will
receive a notice, from any Governmental Authority or third party alleging that
the Company or any of its Subsidiaries, or the operation or condition of any
property ever owned, leased, operated, held as collateral or held as a fiduciary
by any of them, are or were in material violation of or otherwise are alleged to
have material liability under any Environmental Laws, including, but not limited
to, responsibility (or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, radioactive materials or hazardous
or toxic wastes, substances or materials (collectively, "Hazardous Materials")
at, on, beneath, or originating from any such property, or at any off-site
location where the Company or any of its Subsidiaries disposed or arranged (by
contract, agreement or otherwise) for the disposal of such Hazardous Materials.
(iii) None of the property currently owned, leased
or operated by the Company or by its Subsidiaries is subject to, or as a result
of the Transactions would be subject to, (i) the New Jersey Industrial Site
Recovery Act or any other state or local Environmental Laws which would impose
restrictions on the Transactions, such as notice, disclosure or advance approval
requirements, or (ii) any material Liens under any Environmental Laws.
(p) Intellectual Property.
(i) Except as set forth in Section 6.01(p)(i) of
the Company Disclosure Schedule, the Company and its Subsidiaries own or are
licensed to use all material Intellectual Property Rights currently used in the
business or products of the Company or its Subsidiaries or
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<PAGE> 32
necessary to conduct the business of (or manufacture or sell the products of)
the Company and its Subsidiaries as currently conducted or currently anticipated
to be conducted (the "Company Intellectual Property Rights"). Each material item
of Company Intellectual Property Rights will be owned or available for use by
Company and Subsidiaries immediately following the Merger on substantially
identical terms and conditions as it was immediately prior to the Merger.
(ii) The Company and its Subsidiaries have good
and valid title to all material Company Intellectual Property Rights owned by
any of them and valid and enforceable license rights to all Company Intellectual
Property Rights used under license, free and clear, of all Liens, and other than
as set forth in Section 6.01(p)(ii) of the Company Disclosure Schedule. All
material Company Intellectual Property Rights are in full force and effect and
will remain in full force and effect immediately following the Effective Time.
(iii) The Company and its Subsidiaries have a
practice to secure, and have secured, from all consultants and contractors who
contribute or have contributed to the creation or development of Company
Intellectual Property Rights valid written assignments by such persons to the
Company and its Subsidiaries of the rights to such contributions the Company and
its Subsidiaries do not already own by operation of law. The Company and its
Subsidiaries have taken reasonable and appropriate steps to protect and preserve
the confidentiality of all of their Trade Secrets and to protect the proprietary
nature of each other item of Company Intellectual Property Rights. Except as set
forth in Section 6.01(p)(iii) of the Company Disclosure Schedule, there are no,
and the Company has no claims for, unauthorized uses, disclosures or
infringements of any material Company Intellectual Property Rights, and
disclosures to any Person of Trade Secrets that comprise any part of the Company
Intellectual Property Rights has been pursuant to the terms of a written
agreement with such Person, and all use by the Company and its Subsidiaries of
Trade Secrets owned by another Person has been pursuant to the terms of a
written agreement with such Person or is otherwise lawful. Except as set forth
in Section 6.01(p)(iii) of the Company Disclosure Schedule, to the Company's
Knowledge, all uses by other Persons of Company Intellectual Property Rights
have been pursuant to the terms of a written Contract. Except as set forth in
Section 6.01(p)(iii) of the Company Disclosure Schedule, neither the Company
Intellectual Property Rights nor the use or other exploitation thereof by the
Company or its Subsidiaries (or any consultant, contractor or employee of the
Company and its Subsidiaries who contributes to or has contributed to or
participated in the creation or development of material Company Intellectual
Property Rights) in the conduct of their business as is currently conducted or
proposed to be conducted, nor any product or service of the Company or its
Subsidiaries, infringes on, misappropriates, breaches or violates any third
party Intellectual Property Rights.
(iv) Except as set forth in Section 6.01(p)(iv)
of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries: (A) has been notified or is otherwise aware of any actual or
threatened adverse proceeding of any Person pertaining to any challenge to the
scope, validity or enforceability of, or the Company's ownership of, any of the
material Company Intellectual Property Rights or (B) is the subject of any claim
of infringement or misappropriation by the Company or any of its Subsidiaries of
any third party Intellectual Property Rights.
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(q) Tax Matters.
(i) (A) All returns, declarations, reports,
estimates, information returns and statements required to be filed on or before
the Effective Date under federal, state, local or any foreign tax laws ("Tax
Returns") with respect to it or any of its Subsidiaries, have been or will be
timely filed, or requests for extensions have been timely filed and have not
expired, except where a failure or failures to so file would not, individually
or in the aggregate, be expected to be material; (B) all material Tax Returns
filed by the Company are complete and accurate in all material respects; (C) all
Taxes due and payable (without regard to whether such Taxes have been assessed)
have been paid or adequate reserves have been established for the payment of
such Taxes unless a failure to do so involved less than $5,000,000 and all such
failures did not exceed $5,000,000 in the aggregate; (D) the proper and accurate
amounts have been withheld from all employees (and timely paid to the
appropriate Governmental Authority or set aside in an account for such purposes)
for all periods through the Effective Date in compliance in all material
respects with all Tax withholding provisions of applicable federal, state, local
and foreign laws (including, without limitation, income, social security, and
employment tax withholding for all types of compensation); (E) neither the
Company nor any of its Subsidiaries is a party to any tax sharing or similar
agreement or any agreement pursuant to which it or any of its Subsidiaries has
an obligation to indemnify any party (other than it or one of its Subsidiaries)
with respect to Taxes; (F) all Taxes due with respect to completed and settled
examinations or concluded litigation relating to the Company or any of its
Subsidiaries have been paid in full or adequate reserves have been established
for the payment thereof; and (G) no audit or examination or refund litigation
with respect to any Tax Return is pending or threatened.
(ii) The Company, Newco and Transition have no
reason to believe that any conditions exist that might prevent or impede the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code and as an exchange under Section 351 of the Code or the
Contribution, taken together with the Merger, from being treated as an exchange
under Section 351 of the Code.
(iii) Neither the Company nor any Subsidiary has
any actual or potential liability for any Taxes of any person (other than the
Company and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
similar provision of federal, state, local, or foreign law), or as a transferee
or successor, by contract, or otherwise.
(iv) Except as set forth in Section 6.02(q)(iv)
of the Company Disclosure Schedule, neither the Company nor any Subsidiary is or
has ever been a member of a group of corporations with which it has filed (or
been required to file) consolidated, combined or unitary Tax Returns, other than
a group of which only the Company and the Subsidiaries are or were members.
(v) Neither the Company nor any Subsidiary has
undergone a change in its method of accounting resulting in a material
adjustment to its taxable income pursuant to Section 481(a) of the Code.
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(vi) Except with regard to the Merger and other
transactions contemplated by this Agreement, neither Newco nor the Company
currently has any plan or intention to liquidate, merge with another entity
(including each other) or otherwise cease to exist, to transfer any of the
assets thereof other than in the ordinary course of business, to transfer any
interest in the Existing Venture or cause the Existing Venture to liquidate,
merge with another entity or otherwise cease to exist, or to transfer any of the
assets thereof other than in the ordinary course of business. As of the date of
consummation of the transactions contemplated by this Agreement, Newco and the
Company have no plan or intention to engage in a transaction that (i) would be
an Integrated Transaction (as defined in Section 7.14 hereof) and (ii) would
cause Nortel Networks LLC and the stockholders of the Company immediately before
the transactions contemplated by this Agreement and any Integrated Transferors
(as defined in Section 7.14 hereof) not to be in control (within the meaning of
Section 368(c) of the Code) of Newco immediately after the transactions
contemplated by this Agreement.
(r) Regulatory Approvals. No consents or approvals of, or
filings or registrations with, any Governmental Authority or instrumentality are
necessary to consummate the Merger except (i) as may be required under, and
other applicable requirements of, the Hart-Scott Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), the Competition Act (Canada) and
antitrust or other competition laws of other jurisdictions; (ii) the filing with
the SEC of the Company Proxy Statement and the filing and declaration of
effectiveness of the Registration Statement; (iii) the filing of a certificate
of merger with the Secretary of State of the State of Delaware pursuant to the
DGCL; (iv) such filings as are required to be made or approvals as are required
to be obtained under the securities or "Blue Sky" laws of various states in
connection with the issuance of shares of Newco Common Shares Stock in the
Transactions; and (v) as may be required under Section 721 of the U.S. Defense
Production Act of 1950, as amended, and the rules promulgated thereunder
("Exon-Florio") and the rules and regulations promulgated by the U.S. Department
of Defense.
(s) Fairness Opinion. The Company Financial Advisor has
delivered its opinion to the Company Board that the consideration payable by the
Company in respect of the Contribution is fair, from a financial point of view,
to the holders of Company Common Stock and such opinion has not been withdrawn.
(t) No Material Adverse Effect. Since June 30, 2000, and
until the date hereof, the Company, Newco and Transition have conducted their
respective businesses each in the ordinary course (excluding the incurrence of
reasonable and customary liabilities related to this Agreement and the
transactions contemplated hereby). Since June 30, 2000, and until the date
hereof, no event has occurred or circumstance arisen that, individually or taken
together with all other facts, circumstances and events (described in any
paragraph of Section 6.01 or otherwise), has had or is reasonably likely to have
a Material Adverse Effect with respect to the Company, Newco or Transition.
(u) Financing Commitment Letters. The financing
commitment letters previously delivered by the Company to Nortel Networks are
true and correct, have not been
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amended or rescinded as of the date hereof, and the Company has no reason to
believe that it would not be able to close on the financing referenced in such
commitment letters on the terms set forth therein. Such commitment letters are
attached as Exhibit A.
6.02. Representations and Warranties of Nortel Networks and Nortel
Networks LLC. Except as set forth in the Nortel Networks Disclosure Schedule
(each section of which qualifies the correspondingly numbered representation and
warranty or covenant to the extent specified therein), Nortel Networks and
Nortel Networks LLC hereby represent and warrant to the Company as follows:
(a) Organization, Standing and Authority. Each of Nortel
Networks and Nortel Networks LLC (x) is a corporation or limited liability
company duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, and (y) is duly qualified to do business
and, as applicable, is in good standing in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or assets or
the conduct of its business requires it to be so qualified, except where the
failure to be duly organized, validly existing, in good standing, or duly
qualified does not have and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Nortel Networks
or Nortel Networks LLC. Each of Nortel Networks and Nortel Networks LLC has in
effect all federal, provincial, state, local and foreign governmental
authorizations necessary for it to own or lease its properties and assets and to
carry on its business as it is now conducted, except where failure to have in
effect such authorizations does not have and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Nortel
Networks or Nortel Networks LLC.
(b) Corporate Power. Each of Nortel Networks and Nortel
Networks LLC has the corporate or limited liability company (as applicable)
power and authority to carry on its business as it is now being conducted and to
own all its properties and assets; and each of Nortel Networks and Nortel
Networks LLC has the corporate or limited liability company (as applicable)
power and authority to execute, deliver and perform its obligations under this
Agreement and each Ancillary Agreement to which it is a party and to consummate
the Transactions.
(c) Corporate Authority.
(i) This Agreement, the Ancillary Agreements and
the Transactions have been duly authorized and approved by all necessary
corporate action of Nortel Networks and Nortel Networks LLC and their respective
Board of Directors and Managing Member prior to the date hereof (which action
has not been rescinded or modified in any way). The execution and delivery of
this Agreement and the Ancillary Agreements by Nortel Networks and Nortel
Networks LLC and the consummation by Nortel Networks and Nortel Networks LLC of
the Transactions have been duly authorized by all requisite corporate or limited
liability company (as applicable) action on the parts of Nortel Networks and
Nortel Networks LLC. No other
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corporate proceedings on the parts of Nortel Networks and Nortel Networks LLC
are necessary to authorize this Agreement and the Transactions.
(ii) Each of this Agreement and the Ancillary
Agreements is, or in the event that such Ancillary Agreement is to be entered
into at Closing, will be a legal, valid and binding agreement of each of Nortel
Networks and Nortel Networks LLC (to the extent that it is a party thereto),
enforceable in accordance with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles, whether considered
at law or in equity).
(d) No Defaults. Subject to receipt of the regulatory
approvals, and expiration of the waiting periods, referred to in Section
6.02(h), the execution, delivery and performance of this Agreement and the
Ancillary Agreements and the consummation of the Transactions by Nortel Networks
and Nortel Networks LLC (to the extent that they are a party thereto), do not
and will not (i) constitute a material breach or violation of, or a material
default under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture or instrument of Nortel
Networks or Nortel Networks LLC or to which Nortel Networks or Nortel Networks
LLC or any of their respective properties or assets are subject or bound, (ii)
constitute a breach or violation of, or a default under, the articles or
certificate of incorporation or by-laws of Nortel Networks or certificate of
formation or operating agreement of Nortel Networks LLC, or (iii) require any
consent or approval under any such material law, rule, regulation, judgment,
decree, order, governmental permit or license, agreement, indenture or
instrument, except in the case of (i) and (iii), where such breach, violation or
default or the failure to obtain such consents or approvals would not in the
aggregate have a Material Adverse Effect on Nortel Networks or Nortel Networks
LLC and would not prevent or materially impair Nortel Networks or Nortel
Networks LLC's ability to consummate the Transactions. Section 6.02(d) of the
Nortel Networks Disclosure Schedule contains a list of all consents of third
parties required under any material agreement to be obtained by Nortel Networks
or Nortel Networks LLC prior to, or as a result of, the consummation of the
Transactions.
(e) Investment Intent. Nortel Networks LLC is acquiring
the Newco Shares for its own account and not with a view of their distribution
within the meaning of Section 2(11) of the Securities Act.
(f) Litigation. Except as previously disclosed, no
litigation, claim or other proceeding before any Governmental Authority
specifically intended to enjoin or otherwise adversely affect the Transactions
is pending or, to Nortel Networks or Nortel Networks LLC's Knowledge, threatened
against Nortel Networks or any of its Subsidiaries.
(g) No Brokers. No action has been taken by it that would
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, excluding fees to be paid by Nortel Networks to
J. P. Morgan Securities Inc.
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(h) Regulatory Approvals. Provided that either (A) the
Company and its Subsidiaries have no assets in Canada, or (B) the Company and
its Subsidiaries have (x) assets in Canada of less than 35 million Canadian
Dollars, and (y) Canada-based revenues of less than 35 million Canadian Dollars,
no consents or approvals of, or filings or registrations with, any Governmental
Authority or with any third party are necessary for Nortel Networks and Nortel
Networks LLC to consummate the Merger except for (i) as may be required under,
and other applicable requirements of, the HSR Act, the Competition Act (Canada),
and antitrust or other competition laws of other individual countries in Europe;
(ii) the filing with the SEC of the Company Proxy Statement in definitive form
and the filing and declaration of effectiveness of the Registration Statement;
(iii) the filing of a certificate of merger with the Secretary of State of the
State of Delaware pursuant to the DGCL; (iv) such filings as are required to be
made or approvals as are required to be obtained under the securities or "Blue
Sky" laws of various states in connection with the issuance of Newco Common
Shares in the Transactions; and (v) as may be required under Exon-Florio and the
rules and regulations promulgated by the U.S. Department of Defense; and (iv)
such filings and actions as may be required under the New Jersey Industrial Site
Recover Act and its implementing regulations.
(i) Title to Existing Venture Interest. Nortel Networks
LLC has good and valid title to its Interest (as such term is defined in the
Existing Venture Operating Agreement), free and clear of all liens.
(j) Existing Venture Employee Benefits; Employee
Relations.
(i) As of the date hereof, the employees of
Existing Venture are set forth in Section 6.02(j)(i) of the Nortel Networks
Disclosure Schedule (at the request of the Company, Nortel Networks will update
Section 6.02(j)(i) of the Nortel Networks Disclosure Schedule from time to time
beginning with the date hereof through the Closing).
(ii) Section 6.02(j)(ii) of the Nortel Networks
Disclosure Schedule contains a complete and correct list of each Existing
Venture Plan. Except as set forth in Section 6.02(j)(ii) of the Nortel Networks
Disclosure Schedule, with respect to each Existing Venture Plan, true and
complete copies have been provided to the Company of the Plan document or
agreement, including any amendments thereto, or, with respect to any Existing
Venture Plan that is not in writing, a description thereof and, to the extent
applicable, the three (3) most recent required Internal Revenue Service Form
5500, including all schedules thereto, the most recent qualification
determination and any communications to or from any Governmental Authority,
including a written description of any oral communication.
(iii) Each Existing Venture Plan has been operated
and administered, and is, in compliance with its terms and all applicable Legal
Requirements (including ERISA and the Code and any regulations thereunder).
There are no actions, suits, claims or governmental audits (other than routine
claims for benefits in the ordinary course) pending or, to the Knowledge of
Nortel Networks and Nortel Networks LLC, threatened with respect to any Existing
Venture Plan.
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(iv) Except as set forth in Section 6.02(j)(iv)
of the Nortel Networks Disclosure Schedule, no Existing Venture Plan is, and
Existing Venture does not contribute to or have any liability or obligation with
respect to any Plan that is, (A) a multi-employer plan within the meaning of
Section 4001(a)(3) of ERISA, (B) any single employer plan or other pension plan
subject to Title IV or Section 302 of ERISA or Section 412 of the Code or (C) a
multiple employer plan within the meaning of Section 4063 or 4064 of ERISA.
Except as set forth in Section 6.02(j)(iv) of the Nortel Networks Disclosure
Schedule, Existing Venture neither is nor has been a party to any collective
bargaining or other collective labor agreement or understanding.
(v) Each Existing Venture Plan that is intended
to qualify under Section 401(a) and/or 401(k) of the Code so qualifies and its
trust is exempt from taxation under Section 501(a) of the Code. Existing Venture
has timely paid all material contributions, premiums and expenses payable to or
in respect of each Existing Venture Plan under the terms thereof and in
accordance with applicable Legal Requirements, including ERISA and the Code,
and, to the extent any such contributions, premiums or expenses are not yet due,
the liability therefor has been properly and adequately accrued on Existing
Venture's financial statements, as may be required under U.S. GAAP.
(vi) Existing Venture has not incurred either
directly or indirectly (including as a result of an indemnification obligation),
any liability (other than for benefits accrued under any Existing Venture Plan),
under or pursuant to any provision of Title I or IV of ERISA or the penalty,
excise tax or joint and several liability provisions of the Code relating to
employee benefit plans with respect to any Existing Venture Plan, and no event,
transaction or condition has occurred, exists or is expected to occur which
could reasonably be expected to result in any such liability to Existing Venture
or any of its affiliates under any Existing Venture Plan.
(vii) To the Knowledge of Nortel Networks and
Nortel Networks LLC, all individuals who are performing or have performed
consulting or other services for Existing Venture, whether as consultants,
independent contractors, agents or otherwise, are or were correctly classified
by Existing Venture as either "independent contractors" or "employees" as the
case may be, and, at the Effective Date, will qualify for such classification.
Except as set forth in Section 6.02(j)(vii) of the Nortel Networks Disclosure
Schedule, there are no pending or, to the knowledge of Nortel Networks and
Nortel Networks LLC, threatened material claims, disputes, controversies,
grievances or proceedings against the Existing Venture relating to any such
individual.
6.03. Representations and Warranties of Existing Venture. Except as
set forth in the Existing Venture Disclosure Schedule (each section of which
qualifies the correspondingly numbered representation and warranty or covenant
to the extent specified therein), Existing Venture hereby represents and
warrants to the Company as follows:
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(a) Existing Venture Financial Reports. Existing Venture
has provided the Company with the following financial statements: (i) audited
consolidated balance sheets and statements of income, changes in members' equity
and cash flow as of and for the fiscal years ended December 31, 1997, 1998 and
1999 for Existing Venture, including the report thereon of Deloitte & Touche
LLP, independent certified public accountants (the "Existing Venture Audited
Financial Statements"), and (ii) unaudited consolidated balance sheets and
statements of income, changes in members' equity and cash flow (the "Most Recent
Existing Venture Financial Statements") as of and for the period ended September
30, 2000 for Existing Venture. The Existing Venture Audited Financial Statements
(including the notes thereto) have been prepared in accordance with U.S. GAAP
applied on a consistent basis throughout the period covered thereby, present
fairly the financial condition of Existing Venture as of such dates and the
results of operations of Existing Venture for such periods, are correct and
complete in all material respects, and are consistent with the books and records
of Existing Venture. Except where failure to do so does not have, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Existing Venture, the Most Recent Financial Statements
were prepared in a manner consistent with the way in which the Existing Venture
Audited Financial Statements were prepared, are consistent with the Existing
Venture's corporate books and records, present fairly the financial condition of
the Existing Venture as of such date and the results of operations of the
Existing Venture for such period, and are correct and complete in all material
respects (in each case subject to normal year-end adjustments and lack footnotes
and other presentation items).
(b) Existing Venture Compliance with Laws. Existing
Venture, to the Knowledge of Existing Venture:
(i) is in compliance with all applicable
federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable thereto or to the employees
conducting such businesses, except where failure to so comply does not have, and
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Existing Venture;
(ii) has all permits, licenses, authorizations,
orders and approvals of, and has made all filings, applications and
registrations with, all Governmental Authorities that are required in order to
permit it to conduct its business substantially as presently conducted, and all
such permits, licenses, certificates of authority, orders and approvals are in
full force and effect and, to its Knowledge, no suspension or cancellation of
any of them is threatened, except for (x) failures to hold such permits,
licenses, authorizations, orders and approvals and (y) failures to make such
filings, applications, and registrations, which do not have, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Existing Venture; and
(iii) has received since December 31, 1999, no
written notification or communication from any Governmental Authority (A)
asserting that Existing Venture is not in compliance with any of the statutes,
regulations or ordinances which such Governmental Authority enforces or (B)
threatening to revoke any license, franchise, permit or governmental
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authorization, in either event as would have, or would reasonably be expected to
have a Material Adverse Effect on Existing Venture.
ARTICLE VII
COVENANTS
Each of the Company, Transition and Newco hereby covenants to and
agrees with Nortel Networks, and each of Nortel Networks and Nortel Networks LLC
hereby covenants to and agrees with the Company, that:
7.01. Reasonable Best Efforts. Subject to the terms and conditions
of this Agreement, it shall use its reasonable best efforts in good faith to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or desirable (including obtaining any consents of third
parties required under any agreement to be obtained by it or its subsidiaries
prior to, or as a result of, the consummation of the Transactions so that such
agreement is not terminable as a result of the Transactions), or advisable under
applicable laws, so as to permit consummation of the Transactions as promptly as
practicable and otherwise to enable consummation of the Transactions and shall
cooperate fully with the other party hereto to that end. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purpose of this Agreement, to vest the Surviving Corporation with full
title to all properties, assets, rights, approvals, immunities and franchises of
any of the parties to the Merger, which parties consist, for the avoidance of
doubt, of Transition, Newco and the Company (as such rights may be affected by
this Agreement and the Ancillary Agreements), or to vest Newco with full title
to Nortel Networks LLC's interest in the Existing Venture (as such interest may
be affected by this Agreement and the Ancillary Agreements), the proper officers
and directors of each party to this Agreement and their respective Subsidiaries
shall take all such necessary action, at the sole expense of Newco, as may be
reasonably requested by Newco.
7.02. Stockholder Approvals. The Company shall take, in accordance
with this Agreement, applicable law, applicable NASD rules and its certificate
of incorporation and by-laws, all action necessary to convene an appropriate
meeting of stockholders of the Company to consider and vote upon the approval
and adoption of the "agreement of merger" (as such term is used in Section 251
of the DGCL) contained in this Agreement and the Transactions and any other
matters required to be approved by the Company's stockholders for consummation
of the Merger and the Contribution (including any adjournment or postponement,
(the "Company Meeting") as promptly as practicable within the time periods
therefor required by the certificate of incorporation and the by-laws of the
Company and applicable Legal Requirements. The Company Board, shall at all times
recommend such approval and shall take all reasonable lawful action to solicit
such approval by its stockholders.
7.03. Registration Statement.
(a) Each of Nortel Networks, Newco, Transition, Nortel
Networks LLC, the Existing Venture and the Company agrees to cooperate in the
preparation of a registration
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statement on Form S-4 (the "Registration Statement") to be filed by Newco with
the SEC in connection with the issuance of Newco Common Shares in the Merger
(including the proxy statement and prospectus and other proxy solicitation
materials of the Company constituting a part thereof (the "Company Proxy
Statement") and all related documents), including (to the extent the information
to be used in preparation of the same can be obtained without unreasonable
effort, it being agreed that having audits of LANcity financial statements
performed for periods prior to March 31, 1999, does not constitute unreasonable
effort provided that the underlying financial data is available to Nortel
Networks) through the provision of any necessary audited financial statements
with respect to the assets contributed to the Existing Venture pursuant to the
Asset Sale and Contribution Agreement between Nortel Networks LLC and the
Existing Venture dated as of March 31, 1999. The Registration Statement and the
Company Proxy Statement shall comply as to form in all material respects with
the applicable provisions of the Securities Act and the Exchange Act and the
rules and regulations thereunder. Provided the other party has cooperated as
required above, the Company agrees to file the Company Proxy Statement in
preliminary form with the SEC as promptly as practicable, and Newco agrees to
file the Registration Statement with the SEC as promptly as practicable after
any SEC comments with respect to the preliminary Company Proxy Statement are
resolved or at such earlier time as Newco may elect. Each of Nortel Networks,
Newco, Transition, Nortel Networks LLC and the Company shall, as promptly as
practicable after receipt thereof, provide copies of any written comments
received from the SEC with respect to the Registration Statement and the Company
Proxy Statement, as the case may be, to the other party, and advise the other
party of any oral comments with respect to the Registration Statement or the
Company Proxy Statement received from the SEC. Each of Nortel Networks, Newco,
Transition, Nortel Networks LLC and the Company agrees to use reasonable best
efforts to cause the Registration Statement to be declared effective under the
Securities Act as promptly as practicable after filing thereof, and the Company
agrees to mail the Company Proxy Statement to its shareholders as promptly as
practicable after the Registration Statement is declared effective. Newco also
agrees to use reasonable efforts to obtain all necessary state securities law or
"Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement. The Company agrees to furnish to Newco all
information concerning the Company, its Subsidiaries, officers, directors and
stockholders as may be reasonably requested in connection with the foregoing.
(b) Each of Nortel Networks, the Existing Venture and the
Company agrees, as to itself and its Subsidiaries, that none of the information
supplied or to be supplied by it for inclusion or incorporation by reference in
(i) the Registration Statement will, at the time the Registration Statement and
each amendment or supplement thereto, if any, becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) the Company Proxy Statement and any
amendment or supplement thereto will, at the date of mailing to stockholders and
at the time of the Company Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading.
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(c) Newco agrees to advise Nortel Networks, promptly after
Newco receives notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, of the issuance
of any stop order or the suspension of the qualification of the shares of Newco
Common Stock for offering or sale in any jurisdiction, of the initiation or
threat of any proceeding for any such purpose, or of any request by the SEC for
the amendment or supplement of the Registration Statement or for additional
information.
(d) Nortel Networks shall be entitled to participate in all
oral, and to provide prior comments on and receive copies of all written
communications with the SEC with regard to inclusion (or lack thereof) in the
Registration Statement and/or the Company Proxy Statement of audited financial
statements of the Existing Venture for periods prior to March 31, 1999 covering
the assets and business contributed to the Existing Venture by Nortel Networks
LLC pursuant to the Asset Sale and Contribution Agreement between them, dated as
of March 31, 1999. To the extent that Nortel Networks so elects, Nortel
Networks' counsel shall have the right to direct the SEC communications process
with respect to the matters described in the preceding sentence and, to the
extent that Nortel Networks' counsel elects to exercise such right, the Company
and its counsel shall cooperate therewith.
7.04. Press Releases. Nortel Networks and the Company shall jointly
agree on an initial press release with respect to the Transactions. The Company
will not, without the prior approval of Nortel Networks, issue any other press
release or written statement for general circulation (including any written
statement circulated to employees, customers or other third parties) relating to
the Transactions contemplated hereby, except, based on the advice of counsel, as
otherwise required by applicable law or regulation or NASD rules and only after
consulting, or using its reasonable best efforts to consult, with Nortel
Networks.
7.05. Access; Information.
(a) Upon reasonable notice and subject to applicable laws
relating to the exchange of information, the Company and its Subsidiaries shall
afford to the officers, employees, counsel, accountants and other authorized
representatives of Nortel Networks, reasonable access, during normal business
hours throughout the period prior to the Effective Date, to all of its
properties, books, contracts, commitments and records and, during such period;
it shall furnish promptly to Nortel Networks (i) a copy of each material report,
schedule and other document filed by it pursuant to the requirements of federal
or state securities laws, and (ii) all other information concerning the
business, properties and personnel of it as Nortel Networks may reasonably
request; provided that such information may not be used for any purpose
unrelated to the consummation of the Transactions. The Company shall promptly
inform Nortel Networks of any material litigation, claim or other proceeding
before any court or other governmental authority that arises following the date
of this Agreement and any material development in any such existing material
litigation, claim or other proceeding. The Company and its Subsidiaries shall
not be required to provide access to or to disclose information where such
access or disclosure would contravene any law, rule, regulation, order,
judgment, decree or
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agreement. Nortel Networks and the Company shall make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply.
(b) Upon reasonable notice and subject to applicable laws
relating to the exchange of information, the Existing Venture shall afford to
the officers, employees, counsel, accountants and other authorized
representatives of the Company and Nortel Networks, reasonable access, during
normal business hours throughout the period prior to the Effective Date, to all
of its properties, books, contracts, commitments and records and, during such
period; it shall furnish promptly to the Company and Nortel Networks (i) a copy
of each material report, schedule and other document filed by it pursuant to the
requirements of federal or state securities laws, if any, and (ii) all other
information concerning the business, properties and personnel of it as the
Company may reasonably request; provided that such information may not be used
for any purpose unrelated to the consummation of the Transactions contemplated
by this Agreement. The Existing Venture shall promptly inform the Company and
Nortel Networks of any material litigation, claim or other proceeding before any
court or other governmental authority that arises following the date of this
Agreement and any material development in any such existing material litigation,
claim or other proceeding. The Existing Venture shall not be required to provide
access to or to disclose information where such access or disclosure would
contravene any law, rule, regulation, order, judgment, decree or agreement. The
Existing Venture, the Company and Nortel Networks shall make appropriate
substitute disclosure arrangements under circumstances in which the restrictions
of the preceding sentence apply.
(c) Subject to the requirements of applicable law, all
non-public information provided by the Company to Nortel Networks and Nortel
Networks to the Company and the Existing Venture pursuant to this Agreement or
otherwise will remain subject to the obligations of Nortel Networks and the
Company under the Confidentiality Agreement.
(d) No investigation by a party, pursuant to this Section 7.05
or otherwise, shall affect or be deemed to modify any representation or warranty
of the other party contained herein.
7.06. Affiliate Agreements. The Company shall use its reasonable
best efforts to cause each person who may be deemed to be an "affiliate" of it
(each, a "Company Affiliate") as that term is used in Rule 145 under the
Securities Act, to execute and deliver to Newco on or before the date of mailing
of the Company Proxy Statement (or, in the case of any person identified as a
possible Company Affiliate after such date, as promptly thereafter as possible)
an agreement in the form attached hereto as Exhibit B.
7.07. Takeover Laws. No party shall take any action that would cause
the Transactions contemplated by this Agreement to be subject to requirements
imposed by any Takeover Laws and each of them shall take all necessary steps
within its control to exempt (or ensure the continued exemption of), or minimize
the effect on, the Transactions contemplated by this Agreement from, or if
necessary challenge the validity or applicability of, any applicable Takeover
Laws, as now or hereafter in effect, including, without limitation, Section 203
of the
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DGCL or any other Takeover Laws that purport to apply to this Agreement or the
Transactions contemplated hereby.
7.08. Shares Listed. Newco shall use its reasonable best efforts to
list, prior to the Effective Date, on the Nasdaq, subject to official notice of
issuance, the Newco Shares and shares of Newco Common Stock to be issued to the
holders of Company Common Stock in the Merger and upon exercise of Company Stock
Options to be assumed by Newco by reason of the Merger.
7.09. Regulatory Applications.
(a) Nortel Networks and the Company and their respective
Subsidiaries shall cooperate and use their respective reasonable best efforts
(i) to prepare all documentation, to effect all filings (including, without
limitation, filings under the HSR Act and applicable antitrust or other
competition laws of other jurisdictions) and to obtain all permits, consents,
approvals and authorizations of all third parties (at the sole expense of the
Company and Newco with respect to non-governmental filings) and Governmental
Authorities necessary to consummate the Transactions contemplated by this
Agreement and (ii) to cause the Merger and the Contribution to be consummated as
expeditiously as reasonably practicable, including, without limitation, seeking
an early termination of the HSR Act waiting period; provided, however, that,
notwithstanding anything to the contrary in this Agreement, a failure by Nortel
Networks or any of its Subsidiaries to disclose, in response to any "second
request" under the HSR Act, any information which Nortel Networks deems, in good
faith due to the confidential and material nature of such information, to be
inappropriate for such disclosure shall not constitute, or be deemed to
constitute, a breach of this Section 7.09(a) if the relevant Governmental
Authority does not agree, prior to any such disclosure, to accord confidential
treatment to such information. Each of Nortel Networks and the Company shall
have the right to review in advance, and to the extent practicable each will
consult with the other, in each case subject to applicable laws relating to the
exchange of information, with respect to, all material written information
submitted to any third party or any Governmental Authority in connection with
the Transactions contemplated by this Agreement. In exercising the foregoing
right, each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party hereto agrees that it will consult with the other party
hereto with respect to the obtaining of all material permits, consents,
approvals and authorizations of all third parties and Governmental Authorities
necessary or advisable to consummate the Transactions contemplated by this
Agreement and each party will keep the other party apprised of the status of
material matters relating to completion of the Transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other
party with all information concerning itself, its Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with any filing, notice or application made by or on
behalf of such other party or any of its Subsidiaries to any third party or
Governmental Authority; provided, however that nothing in this Section 7.09(b)
shall require
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the release by Nortel Networks or Nortel Networks LLC of internal or otherwise
confidential information.
(c) In furtherance and not in limitation of the covenants of
the parties contained in Sections 7.09(a) and (b), if any objections are
asserted with respect to the Transactions contemplated by this Agreement under
any Regulatory Law or if any suit is instituted or threatened by any
Governmental Authority or any private party challenging any of the Transactions
contemplated by this Agreement as violative of any Regulatory Law, each of
Nortel Networks and the Company shall use its reasonable efforts to resolve any
such objections or challenge as such Governmental Authority or private party may
have to such Transactions under such Regulatory Law so as to permit consummation
of the Transactions contemplated by this Agreement, and if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Regulatory Law, each of
Nortel Networks and the Company shall cooperate in all respects with each other
and use its respective reasonable efforts to contest and resist any such action
or proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and prohibits, prevents or restricts consummation
of the Transactions contemplated by this Agreement. Notwithstanding the
foregoing or any other provision of this Agreement, nothing in this Section 7.09
shall limit a party's rights under Sections 8.01(b) and 9.01(d) so long as such
party has theretofore complied in all respects with its obligations under this
Section 7.09.
(d) Nothing contained in this Section 7.09 shall require the
Company or Newco or any of their respective Subsidiaries to sell or otherwise
dispose of, or to hold separately, or permit the sale or other disposition of,
any assets of Newco, the Company or their respective Subsidiaries, or require
Newco to refrain from exercising full authority over the Company and its
Subsidiaries after the Effective Time, whether as a condition to obtaining any
approval from a Governmental Authority or any other Person or for any other
reason.
7.10. Indemnification.
(a) Following the Effective Date and until the expiration of
any applicable statutory limitations period, Newco shall indemnify, defend and
hold harmless the present and former directors and officers of the Company and
its Subsidiaries (including the Existing Venture) (each, an "Indemnified Party")
against all costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively, "Costs") incurred
in connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the Transactions contemplated by this Agreement) to the fullest
extent that the Company is permitted to indemnify its directors and officers
under the laws of the State of Delaware, the Company Certificate and the
Company's by-laws as in effect on the date hereof (and Newco shall also advance
expenses as incurred to the fullest extent permitted under applicable law).
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(b) Any Indemnified Party wishing to claim indemnification
under Section 7.10(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify Newco thereof; provided,
that the failure so to notify shall not affect the obligations of Newco under
Section 7.10(a) unless and to the extent such failure materially increases
Newco's liability under such subsection (a).
(c) If Newco or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the continuing
or surviving entity of such consolidation or merger or shall transfer all or
substantially all of its assets to any entity, then and in each case, proper
provision shall be made so that the successors and assigns of Newco shall assume
the obligations set forth in this Section 7.10.
7.11. Certain Employee Benefit Matters.
To the extent applicable, Newco and the Company shall each
take such reasonable steps as are required to cause the disposition and
acquisition of equity securities (including derivative securities) pursuant to
Article III of this Agreement in connection with the consummation of the Merger
by each individual who is an officer or director of the Company to qualify for
exemption from Section 16(b) of the Exchange Act pursuant to Rule 16b-3(e)
promulgated under the Exchange Act.
7.12. Accountants' Letters. The Company shall use its reasonable
best efforts to cause to be delivered to Nortel Networks a letter of Ernst &
Young L.L.P., independent auditors ("E&Y"), and Nortel Networks shall use its
reasonable best efforts to cause to be delivered to the Company a letter of
Deloitte & Touche LLP, independent auditors ("Deloitte"), each dated a date
within two Business Days of the date on which the Registration Statement shall
become effective and addressed to such other party, and in form and substance
customary for "comfort" letters delivered by independent accountants in
accordance with Statement of Accounting Standards No. 72.
7.13. Notification of Certain Matters.
(a) Each of the Company and Nortel Networks shall give prompt
notice to the other of any fact, event or circumstance known to it that would
cause or constitute a material breach of any of its representations, warranties,
covenants or agreements contained herein.
(b) Nortel Networks shall promptly notify the Company, and the
Company shall promptly notify Nortel Networks, in writing, of any notice or
other communication from any regulatory authority or self-regulatory
organization in connection with the Transactions contemplated by this Agreement.
(c) Each of Nortel Networks and the Company shall promptly
notify the other of any fact, event or circumstance known to it that could
reasonably be expected to, individually or taken together with all other facts,
events and circumstances known to it, cause the Merger to
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fail to qualify as a "reorganization" within the meaning of Section 368(a) of
the Code or the Contribution to constitute an exchange under Section 351 of the
Code.
7.14. Certain Tax Matters.
(a) Each of Nortel Networks, Nortel Networks LLC, Newco and
the Company will use its reasonable best efforts to cause (i) the Merger to
constitute a reorganization within the meaning of Section 368(a) of the Code and
to constitute an exchange under Section 351 of the Code (including without
limitation by refraining from taking any action inconsistent with such treatment
of the Contribution and the Merger after the Closing), (ii) the Contribution to
constitute an exchange under Section 351 of the Code (including without
limitation by refraining from taking any action inconsistent with such treatment
of the Contribution and the Merger after the Closing), and (iii) to timely
satisfy, or cause to be timely satisfied, all applicable tax reporting and
filing requirements contained in the Code and with respect to the Merger and the
Contribution. For the avoidance of doubt, the provisions of this Section 7.14
shall survive Closing.
(b) Prior to or after the Effective Time, the Company will not
engage in a transaction that, by itself or in combination with other
transactions engaged in by the Company, (i) would be integrated with the
transactions contemplated by this Agreement for U.S. federal income tax purposes
(an "Integrated Transaction") and (ii) would cause Nortel Networks LLC and the
stockholders of the Company immediately before the transactions contemplated by
this Agreement and any Integrated Transferors (as defined below) not to be in
control (within the meaning of Section 368(c) of the Code) of Newco immediately
after the transactions contemplated by this Agreement. For purposes of this
Agreement, an "Integrated Transferor" includes any Person who receives shares of
Newco in an Integrated Transaction and would be treated as a transferor of
property to Newco in such transaction for purposes of Section 351 of the Code.
7.15. Supplemental Indenture. Newco shall enter into a Supplemental
Indenture to the Indenture (the "Indenture") dated as of May 8, 1998, between
the Company and The Bank of New York, required by Article V thereof as a result
of the Merger. Newco shall take appropriate steps to ensure that shares of Newco
Common Stock shall be issued, in accordance with the terms of such Indenture,
upon the conversion after the Effective Time of Notes issued under the
Indenture.
7.16. Voting of Shares. The Company shall use reasonable efforts to
obtain, prior to the effectiveness of the Registration Statement, a commitment
from the Company's officers and directors, other than Mr. John Ian Craig, and
AT&T to vote their shares in favor of the Transactions.
7.17. Financing. Each of the Company and Newco shall use reasonable
best efforts to close on the financing referenced in the commitment letters
described in Section 6.01(u) above.
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7.18. Restrictions on the Company's Business. The Company shall
provide Nortel Networks with written notice at least ten (10) days prior to the
Company's entering into any agreement or transaction that places a restriction
on the business of the Company (unless it is not able to give ten (10) days
prior notice in which event it will give as much notice as practicable) .
7.19. Existing Venture Employees. Company shall provide, at a
minimum, employment terms and conditions that are equal to, in all material
respects, those terms and conditions listed on Section 7.19 of the Company
Disclosure Schedule, and the attachments thereto, to Existing Venture employees.
If the Company, using all reasonable best efforts, is unable to provide any such
term or condition of employment, Nortel Networks and Company shall negotiate in
good faith the replacement of such term or condition. Not less than ten calendar
days prior to the Effective Date, Company shall provide evidence reasonably
satisfactory to Nortel Networks that any term or condition that is not in effect
as of the date hereof shall be in effect as of the Effective Time or, if later,
such time provided in Section 7.19 of the Company Disclosure Schedule.
7.20. No Solicitation or Employment by Nortel Networks. Unless
otherwise agreed by Company, during the twelve (12) month period immediately
following the Effective Date, Nortel Networks shall not solicit for employment
or hire any Existing Venture employees or former Existing Venture employees who
voluntarily terminate their employment with Existing Venture during such period;
provided, however, that nothing in this Section 7.20 shall prevent Nortel
Networks from (i) conducting generalized employment searches, by advertisements,
engaging firms to conduct searches, or by other means ("Employment Searches"),
that are not directed at such employees or former employees, or (ii) hiring any
such employees or former employees identified through such Employment Searches.
7.21. Remaining Ancillary Agreements. Each of the parties hereto
agrees to negotiate in good faith, prior to the Closing, the following
agreements:
(a) the Sales Representative/Distribution Agreement;
(b) the Transition Services Agreement;
(c) the Supply and Manufacturing Agreement; and
(d) the Development Agreement,
in each case containing terms consistent with the term sheet therefor attached
hereto as part of Exhibit I.
In the event that the parties thereto have not agreed upon the terms of any of
the foregoing agreements by five days before the Outside Closing Date, the
parties to the unresolved agreements shall submit to binding arbitration with
respect solely to the terms of the unresolved agreements in accordance with the
following provisions:
(i) The arbitration shall be conducted pursuant to the rules
of the American Arbitration Association ("AAA") before a single arbitrator based
upon written submissions and
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oral presentations but without any depositions or other discovery. The
arbitrator (A) shall be selected by AAA and shall be experienced in commercial
transactions and arrangements similar to those comprising the subject matter of
the arbitration, and (B) shall have no authority to resolve, or to bind the
parties with respect to, any matter or issue not specifically submitted to him
or her by the parties for arbitration hereunder. The arbitration shall be
conducted in New York, New York.
(ii) The arbitrator shall issue a written decision, which
decision shall be (A) no more favorable to the Existing Venture than the
Existing Venture's most generous written proposal prior to the commencement of
arbitration, and (B) no more favorable to each of the other parties than such
party's most generous written proposal prior to the arbitration.
(iii) The arbitrator's decision shall, to the greatest extent
practicable, be based on and incorporate the commercial practices followed by
the relevant parties, with respect to the subject matter being considered by the
arbitrator, prior to commencement of the arbitration.
(iv) Until the arbitrator's decision is rendered, the parties
shall continue conducting business consistent with their commercial practices
referenced in clause (iii) above.
7.22. Amendments. Newco shall amend the Newco certificate of
incorporation to contain terms identical to the Company's certificate of
incorporation as in effect on the date hereof except that there shall be
325,000,000 authorized shares of stock and except that Newco's name shall be
changed to "Arris Corporation".
7.23. Company Employee Savings Plan. The Company shall register its
Employee Savings Plan (the "Savings Plan") and interests thereunder with the SEC
on an appropriate registration statement under the Securities Act. The Company
shall take such steps as are reasonably necessary to close the Company Stock
Fund under the Savings Plan to any new investments until such registration
statement becomes effective and any required prospectus has been distributed to
all participants under the Savings Plan.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE TRANSACTIONS
8.01. Conditions to Each Party's Obligation to Effect the Merger and
the Contribution. The respective obligation of each of Nortel Networks, Nortel
Networks LLC, Newco, Transition and the Company to consummate the Merger and the
Contribution is subject to the fulfillment or written waiver by Nortel Networks,
Nortel Networks LLC, Newco, Transition and the Company prior to the Effective
Time of each of the following conditions:
(a) Stockholder Approvals. This "agreement of merger" (as that
term is used in Section 251 of the DGCL) and the Transactions (including,
without limitation, the Contribution) shall have been duly approved by the
requisite vote of the stockholders of the Company.
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(b) Regulatory Approvals. All regulatory approvals required to
consummate the Transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain any
conditions, restrictions or requirements which would reasonably be expected to
(i) following the Effective Time, have a Material Adverse Effect on Nortel
Networks or on Newco and its Subsidiaries, taken as a whole, or (ii) require the
Company or Newco to take any action that it is not required to take under
Section 7.09(d) hereof.
(c) No Injunction. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and enjoins or prohibits
consummation of the Merger or the Contribution.
(d) Registration Statement. The Registration Statement shall
have become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and be in
effect and no proceedings for that purpose shall have been initiated or
threatened by the SEC and not concluded or withdrawn.
(e) Listing. The shares of Newco Common Stock to be issued in
the Merger and as a part of the Contribution, upon exercise of Company Stock
Options to be assumed by Newco by reason of the Merger and upon conversion of
the Notes shall have received conditional approval for listing on the Nasdaq,
subject to official notice of issuance.
(f) Financing. The Company, Newco and Existing Venture shall
have obtained bank or other financing on terms no less favorable to Newco and
the Company than those described in Exhibit A hereto sufficient to make the
payments required by Sections 4.01(b) and 4.04(c).
8.02. Conditions to Obligation of the Company, Transition and Newco.
The obligation of the Company to consummate the Merger and the Contribution is
also subject to the fulfillment or written waiver by the Company prior to the
Effective Time of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Nortel Networks, Nortel Networks LLC and the Existing Venture set
forth in this Agreement (without giving effect to any standard, qualification or
exception contained therein with respect to materiality or Material Adverse
Effect) shall be true and correct, as of the date of this Agreement and as of
the Effective Date as though made on and as of the Effective Date (except that
representations and warranties that by their terms speak as of the date of this
Agreement or some other date shall be true and correct as of such date), except
as would not have or reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Nortel Networks, Nortel Networks LLC or
the Existing Venture, and the Company shall have received a certificate, dated
the Effective Date, signed on behalf of Nortel Networks by an appropriate
officer of Nortel Networks to such effect.
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(b) Performance of Obligations. Nortel Networks and Nortel
Networks LLC shall have performed in all material respects (without giving
effect to any standard, qualification or exception contained therein with
respect to materiality or Material Adverse Effect) all obligations required to
be performed by them under this Agreement at or prior to the Effective Time, and
the Company shall have received a certificate, dated the Effective Date, signed
on behalf of Nortel Networks by an appropriate officer of Nortel Networks to
such effect.
(c) Opinion of the Company's Counsel. The Company shall have
received an opinion of Troutman Sanders LLP, counsel to the Company, dated the
Effective Date, to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, the Merger constitutes a reorganization
within the meaning of Section 368(a) of the Code, and taken together with the
Contribution will constitute an exchange under Section 351 of the Code and,
accordingly, without taking into consideration any aspects of the Transactions
other than those set forth in this Agreement (and not the Ancillary Agreements),
(i) no gain or loss will be recognized by the Company, Transition or Newco as a
result of the Merger and (ii) no gain or loss will be recognized by a
stockholder of the Company who receives Newco Shares in exchange for shares of
Company Common Stock, except with respect to cash received in lieu of fractional
share interests. In rendering its opinion, such counsel may require and rely
upon customary and reasonable representations contained in letters from the
Company, Transition, Nortel Networks, Nortel Networks LLC and Newco.
(d) No Action Seeking Injunction. No Governmental Authority of
competent jurisdiction shall have brought an action or proceeding seeking to
enjoin or prohibit consummation, or require the unwinding, of the Merger, or to
impose substantial penalties as a result of the Merger, which action or
proceeding is reasonably likely to succeed.
(e) Opinion of Nortel Networks' Secretary. The Company shall
have received an opinion of Nortel Networks' Secretary or Assistant Secretary
(which may, if Nortel Networks so elects, be based on an opinion of another
attorney, including an employee of Nortel Networks or one of its Affiliates,
reasonably satisfactory to the Company), dated the Effective Date, in form and
substance satisfactory to the Company and its counsel as to (i) with respect to
each of Nortel Networks and Nortel Networks LLC, (A) its valid existence and
good standing, and (B) its company and corporate power and authority to execute,
deliver and perform this Agreement and the Ancillary Agreements (to the extent
Nortel Networks or Nortel Networks LLC is a party thereto), (ii) the sufficiency
of the form of Instrument of Assignment and Assumption; and (iii) due and valid
authorization, and the valid and binding nature, of this Agreement and the
Ancillary Agreements.
8.03. Conditions to Obligation of Nortel Networks and Nortel
Networks LLC. The obligations of Nortel Networks and Nortel Networks LLC to
consummate the Contribution are also subject to the fulfillment or written
waiver by Nortel Networks and Nortel Networks LLC prior to the Effective Time of
each of the following conditions:
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(a) Representations and Warranties. All representations and
warranties of the Company, Newco and Transition set forth in this Agreement
(without giving effect to any standard, qualification or exception contained
therein with respect to materiality or Material Adverse Effect) shall be true
and correct, as of the date of this Agreement and as of the Effective Date as
though made on and as of the Effective Date (except that representations and
warranties that by their terms speak as of the date of this Agreement or some
other date shall be true and correct as of such date), except as would not have
or reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company, Newco or Transition; and Nortel Networks shall
have received a certificate, dated the Effective Date, signed on behalf of the
Company by the Chief Executive Officer or the Chief Financial Officer of the
Company to such effect.
(b) Performance of Obligations. The Company, Newco and
Transition shall have performed in all material respects (without giving effect
to any standard, qualification or exception contained therein with respect to
materiality or Material Adverse Effect) all obligations required to be performed
by them under this Agreement at or prior to the Effective Time, and Nortel
Networks shall have received a certificate, dated the Effective Date, signed on
behalf of the Company by the Chief Executive Officer or the Chief Financial
Officer of the Company to such effect.
(c) Opinion of Nortel Networks' Counsel. Nortel Networks shall
have received an opinion of Hale and Dorr LLP, counsel to Nortel Networks, dated
the Effective Date, to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion, the Contribution will constitute an
exchange under Section 351 of the Code. In rendering its opinion, such counsel
may require and rely upon customary and reasonable representations contained in
letters from the Company, Newco, Transition, Nortel Networks and Nortel Networks
LLC.
(d) Opinion of the Company's Counsel. Nortel Networks shall
have received an opinion of Troutman Sanders LLP, counsel to the Company, dated
the Effective Date, in form and substance reasonably satisfactory to Nortel
Networks and its counsel, as to (i) with respect to each of the Company,
Transition and Newco, (A) its due organization, valid existence and good
standing, and (B) its corporate power and authority to execute, deliver and
perform this Agreement and the Ancillary Agreements; (ii) the due authorization
and valid issuance of the Newco Shares; (iii) the due and valid authorization,
and the valid and binding nature, of this Agreement and the Ancillary
Agreements; (iv) the non-contravention of the Company's, Newco's and Nortel
Networks' charter and by-laws and applicable laws customarily opined on with
respect to transactions similar to the Transactions (other than securities laws)
as a result of the execution, delivery and performance of this Agreement and, to
the extent any of them is a party thereto, the Ancillary Agreements; and (v) the
effectiveness of the Merger.
(e) No Action Seeking Injunction. No Governmental Authority of
competent jurisdiction shall have brought an action or proceeding seeking to
enjoin or prohibit consummation, or require the unwinding, of the Merger or the
Contribution, or to impose
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substantial penalties as a result of the Merger or the Contribution, which
action or proceeding is reasonably likely to succeed.
8.04. Withholding. To the extent required by applicable U.S., state,
local or foreign laws, the parties to this Agreement agree and acknowledge that
Company and Newco shall withhold Taxes from the amounts otherwise required to be
paid or delivered to Nortel Networks, Nortel Networks LLC and their
Subsidiaries. If Nortel Networks, Nortel Networks LLC or their Subsidiaries
desire to avail themselves of an exemption from the otherwise applicable
withholding laws, or a reduced withholding rate, then Nortel Networks, Nortel
Networks LLC or their Subsidiaries shall be obligated to obtain and furnish to
Company and Newco, as the case may be, such appropriate certificates,
affidavits, rulings from Governmental Authorities, or other documents necessary
to establish or qualify for such exemption or reduced rate. Company and Newco
shall reasonably cooperate with Nortel Networks, Nortel Networks LLC and their
Subsidiaries in this regard. Nortel Networks, Nortel Networks LLC and their
Subsidiaries hereby agree to indemnify Company and Newco for any Costs that
arise from a failure to withhold Taxes, which failure was based on a good faith
interpretation of the law.
ARTICLE IX
TERMINATION
9.01. Termination. This Agreement may be terminated, and the Merger
and the Contribution may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time,
by the mutual consent of Nortel Networks and the Company.
(b) Breach. At any time prior to the Effective Time
(i) by Nortel Networks, in the event of either:(x) a
breach by the Company, Newco or Transition of any representation or warranty
contained herein which would result in the non-satisfaction of the conditions
set forth in Section 8.03(a), which breach is not capable of being cured or has
not been cured within 10 calendar days after the giving of written notice to the
breaching party of such breach; or (y) a material breach by the Company, Newco
or Transition of any of the covenants or agreements contained herein, which
breach is not capable of being cured or has not been cured within 10 calendar
days after the giving of written notice to the breaching party of such breach.
Without limiting the foregoing, for all purposes of this Agreement, any breach
of the agreements contained in the first sentence of Section 7.02 shall
constitute a breach which is not capable of being cured.
(ii) by the Company, in the event of either: (x) a breach
by Nortel Networks, Nortel Networks LLC or Existing Venture of any
representation or warranty contained herein which would result in the
non-satisfaction of the conditions set forth in Section 8.02(a), which breach is
not capable of being cured or has not been cured within 10 calendar days after
the giving of written notice to the breaching party of such breach; or (y) a
material breach by
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Nortel Networks, Nortel Networks LLC or Existing Venture of any of the covenants
or agreements contained herein, which breach is not capable of being cured or
has not been cured within 10 calendar days after the giving of written notice to
the breaching party of such breach.
(c) Delay. At any time prior to the Effective Time, by Nortel
Networks or the Company, if its respective Board of Directors so determines, in
the event that the Transactions are not consummated by the Outside Closing Date
except to the extent that the failure of the Transactions then to be consummated
arises out of or results from the knowing action or inaction of the party
seeking to terminate pursuant to this Section 9.01(c) which action or inaction
is in violation of its obligations under this Agreement.
(d) No Approval.
(i) By the Company or Nortel Networks in the event the
approval of any Governmental Authority required for consummation of the Merger
and the other Transactions shall have been denied by final non-appealable action
of such Governmental Authority.
(ii) By Nortel Networks in the event any required
approval of a Governmental Authority contains any final nonappealable
conditions, restrictions or requirements which would reasonably be expected to
(A) following the Effective Time, have a Material Adverse Effect on Nortel
Networks or Newco or (B) require Nortel Networks, Nortel Networks LLC, and Newco
to take any action that it is not required to take under Section 7.09(d) hereof.
(iii) By the Company or Nortel Networks in the event any
required approval of a Governmental Authority contains any final, nonappealable
conditions, restrictions or requirements which would reasonably be expected to,
following the Effective Time, have a Material Adverse Effect on Newco or require
Newco to take any action that it is not required to take under Section 7.09(d)
hereof.
(iv) By Nortel Networks or the Company in the event the
approval of the Company's stockholders required by Section 8.01(a) herein is not
obtained at the Company Meeting by reason of the failure to obtain the requisite
vote required by Section 8.01(a).
9.02. Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Transactions pursuant
to this Article IX, no party to this Agreement (nor any of their respective
officers, directors or agents) shall have any liability or further obligation to
any other party hereunder except that termination shall not relieve a party from
liability for any willful breach of this Agreement.
9.03. Survival. All representations, warranties, covenants, and
obligations in this and any other certificate or document delivered pursuant to
this Agreement will survive the Effective Time or, unless this Agreement is
terminated pursuant to Section 9.01(a), the date of termination;
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provided, however, that in the event of a termination pursuant to Section
9.01(a), the obligations set forth under Sections 4.07 and 10.04 shall survive
such termination.
9.04. Right to Indemnification Not Affected by Knowledge. The right
to indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Effective Time, with respect to the
accuracy or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation (except to the extent that such representation,
warranty, covenant or obligation is expressly qualified by reference to such
Knowledge). The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages, or other remedy based on such representations, warranties, covenants,
and obligations.
9.05. Indemnification and Payment of Damages by Newco, Transition
and the Company. Newco, Transition and the Company, jointly and severally, will
indemnify and hold harmless Nortel Networks, Nortel Networks LLC and their
controlling persons and Affiliates for, and will pay to such Indemnified Parties
the amount of, any loss, liability, claim, damage (including incidental and
consequential damages), expense (including costs of investigation and defense
and reasonable attorneys' fees) or diminution of value, whether or not involving
a third-party claim (collectively, "Damages"), arising, directly or indirectly,
from or in connection with:
(a) any breach of any representation or warranty made by
Newco, Transition or the Company in this Agreement or any other certificate or
document delivered by any of them pursuant to this Agreement;
(b) any breach by Newco, Transition or the Company of any
covenant or obligation of any of them in this Agreement; or
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with by Newco, Transition or the
Company (or any Person acting on their behalf) in connection with any of the
Transactions.
The remedies provided in this Section 9.05 will not be exclusive of or limit any
other remedies that may be available to Nortel Networks or Nortel Networks LLC
or the other Indemnified Parties.
9.06. Indemnification and Payment of Damages by Nortel Networks and
Nortel Networks LLC. Nortel Networks and Nortel Networks LLC, jointly and
severally, will indemnify and hold harmless Newco, Transition and the Company
and their controlling persons and Affiliates for, and will pay to such
Indemnified Parties the amount of, any Damages arising, directly or indirectly,
from or in connection with:
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(a) any breach of any representation or warranty made Nortel
Networks or Nortel Networks LLC in this Agreement or any other certificate or
document delivered by any of them pursuant to this Agreement;
(b) any breach by Nortel Networks or Nortel Networks LLC of
any covenant or obligation of any of them in this Agreement;
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with by Nortel Networks or Nortel
Networks LLC (or any Person acting on their behalf) in connection with any of
the Transactions; or
(d) if the Closing occurs, 81.25% of the Damages resulting
from any breach of any representation or warranty made by Existing Venture in
this Agreement or any other certificate or document delivered by it pursuant to
this Agreement.
The remedies provided in this Section 9.06 will not be exclusive of or limit any
other remedies that may be available to Newco, Transition or the Company or the
other Indemnified Parties.
9.07. Indemnification and Payment of Damages by Existing Venture. If
the Closing does not occur, Existing Venture will indemnify and hold harmless
Newco, Transition and the Company and their controlling persons and Affiliates
for, and will pay to such Indemnified Parties the amount of, 81.25% of any
Damages arising, directly and indirectly, from or in connection with any breach
of any representation or warranty made by Existing Venture in this Agreement or
any certificate or document delivered by it pursuant to this Agreement.
9.08. Time Limitations. If the Effective Time occurs, an
Indemnifying Party will have no liability (for indemnification or otherwise)
with respect to any representation or warranty, or covenant or obligation to be
performed and complied with prior to the Effective Time, other than those in
Sections 6.01(b), 6.01(m), 6.01(o), 6.01(q), 6.02(i), and 6.02(j) unless on or
before the second anniversary of the Effective Date the Indemnified Party
notifies Indemnifying Party of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by the Indemnified Party; a
claim with respect to Section 6.01(b), 6.01(m), 6.01(o), 6.01(q), 6.02(i) and
6.02(j), or a claim for indemnification or reimbursement not based upon any
representation or warranty or any covenant or obligation to be performed and
complied with prior to the Closing Date, may be made at any time.
9.09. Limitations on Amount - Newco, Transition, and the Company.
Newco, Transition and the Company will have no liability (for indemnification
or, except with respect to claims based on fraud, otherwise) with respect to the
matters described in 9.05 until the total of all Damages with respect to such
matters exceeds $10,000,000 (at which point Newco, Transition and the Company
shall become liable for the aggregate Damages and not just the amount in excess
of $10,000,000). However, this Section 9.09 will not apply to any intentional
breach by
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Newco, Transition or the Company of any covenant or obligation, and Newco,
Transition and the Company will be jointly and severally liable for all Damages
with respect to such breaches.
9.10. Limitations on Amount - Nortel Networks and Nortel Networks
LLC. Nortel Networks and Nortel Networks LLC will have no liability (for
indemnification or, except with respect to claims based on fraud, otherwise)
with respect to the matters described in Section 9.06 until the total of all
Damages with respect to such matters exceeds $10,000,000 (at which point Nortel
Networks and Nortel Networks LLC shall become liable for the aggregate Damages
and not just the amount in excess of $10,000,000); provided that the aggregate
amount payable (i) by Nortel Networks and/or Nortel Networks LLC pursuant to
Section 9.06(d) and/or (ii) by the Existing Venture pursuant to Section 9.07 (in
any combination) shall in no event exceed $215,000,000. However, this Section
9.10 will not apply to any intentional breach by either Nortel Networks or
Nortel Networks LLC of any covenant or obligation, and Nortel Networks or Nortel
Networks LLC will be jointly and severally liable for all Damages with respect
to such breaches.
9.11. Limitations on Amount--Existing Venture. Neither Nortel
Networks (or any of its Subsidiaries) nor the Existing Venture will have any
liability (for indemnification or, except with respect to claims based on fraud,
otherwise) with respect to matters described in Section 9.06(d) or 9.07 until
the total of Damages with respect to such matters exceeds $10,000,000 (at which
point the Existing Venture shall become liable for the aggregate Damages and not
just the amount in excess of $10,000,000); provided that the aggregate amount
payable (i) by Nortel Networks and/or Nortel Networks LLC pursuant to Section
9.06(e) and/or (ii) by the Existing Venture pursuant to Section 9.07 (in any
combination) shall in no event exceed $215,000,000. However, this Section 9.11
will not apply to any intentional breach by Existing Venture of any covenant or
obligation.
9.12. Procedure for Indemnification - Third Party Claims.
(a) Promptly after receipt by an Indemnified Party under
Section 9.05 or 9.06 of notice of the making of any claim or the commencement of
any proceeding against it, such Indemnified Party will, if a claim is to be made
against an Indemnifying Party under such Section, give notice to the
Indemnifying Party of such claim or proceeding, but the failure to notify the
Indemnifying Party will not relieve the Indemnifying Party of any liability that
it may have to any Indemnified Party, except to the extent that the Indemnifying
Party demonstrates that the defense of such action is prejudiced by the
Indemnifying Party's failure to give such notice.
(b) If any proceeding referred to in Section 9.10(a) is
brought against an Indemnified Party and it gives notice to the Indemnifying
Party of the commencement of such proceeding, the Indemnifying Party will be
entitled to participate in such proceeding and, to the extent that it wishes, to
assume the defense of such proceeding with counsel satisfactory to the
Indemnified Party and, after notice from the Indemnifying Party to the
Indemnified Party of its election to assume the defense of such proceeding, the
Indemnifying Party will not, as long as it diligently conducts such defense, be
liable to the Indemnified Party under Section 9.05 or 9.06
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for any fees of other counsel or any other expenses with respect to the defense
of such proceeding, in each case subsequently incurred by the Indemnified Party
in connection with the defense of such proceeding, other than reasonable costs
of investigation. If the Indemnifying Party assumes the defense of a proceeding,
(i) it will be conclusively established for purposes of this Agreement that the
claims made in that proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be effected
by the Indemnifying Party without the Indemnified Party's consent unless (A)
there is no finding or admission of any violation of applicable law or any
violation of the rights of any Person and no effect on any other claims that may
be made against the Indemnified Party, and (B) the sole relief provided is
monetary Damages that are paid in full by the Indemnifying Party; and (iii) the
Indemnified Party will have no liability with respect to any compromise or
settlement of such claims effected without its consent. If notice is given to an
Indemnifying Party of the commencement of any proceeding and the Indemnifying
Party does not, within ten days after the Indemnified Party's notice is given,
give notice to the Indemnified Party of its election to assume the defense of
such proceeding, the Indemnifying Party will be bound by any determination made
in such proceeding or any compromise or settlement effected by the Indemnified
Party.
(c) Notwithstanding the foregoing, if an Indemnified Party
determines in good faith that there is a reasonable probability that a
proceeding may adversely affect it or its Affiliates other than as a result of
monetary Damages for which it would be entitled to indemnification under this
Agreement, the Indemnified Party may, by notice to the Indemnifying Party,
assume the exclusive right to defend, compromise, or settle such proceeding, in
all cases at the expense of Indemnifying Party, but the Indemnifying Party will
not be bound by any determination of a proceeding so defended or any compromise
or settlement effected without its consent (which may not be unreasonably
withheld).
(d) The parties hereto hereby consent to the non-exclusive
jurisdiction of any court in which a proceeding is brought against any
Indemnified Party for purposes of any claim that an Indemnified Party may have
under this Agreement with respect to such proceeding or the matters alleged
therein, and agree that process may be served on their with respect to such a
claim anywhere in the world.
9.13. Procedure for Indemnification - Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
ARTICLE X
MISCELLANEOUS
10.01. Amendment; Extension; Waiver.
(a) Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the
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Merger by the stockholders of the Company; provided, however, that after any
approval of the Transactions contemplated by this Agreement by the stockholders
of the Company, there may not be, without further approval of such stockholders,
any amendment of this Agreement which by law requires such further approval by
such stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
(b) Prior to the Effective Time, the parties hereto, Newco,
the Company and Transition, as one party, and Nortel Networks and Nortel
Networks LLC, as one party, by action taken or authorized by their respective
Boards of Directors or Managing Member, as the case may be, may, to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (iii) waive compliance by the other party
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, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
10.02. Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to constitute an
original but all of which when taken together shall constitute one and the same
instrument.
10.03. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Delaware, without
regard to the conflict of law principles thereof.
10.04. Expenses. Except as otherwise provided herein or in the
Registration Rights Agreement, each party hereto will bear all expenses incurred
by it in connection with this Agreement and the transactions contemplated
hereby, except that SEC filing fees payable to the extent necessary to
consummate the Transactions plus up to $75,000 of the printing and mailing
expenses relating to the Transactions (specifically excluding, for the avoidance
of doubt, any exercise of rights granted under the Registration Rights
Agreement) actually and reasonably incurred and paid by the Company and its
Affiliates shall be shared equally between the Company and Nortel Networks, and
any such expenses and fees in excess of the above amount shall be borne solely
by the Company.
10.05. Notices. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or three Business Days after being
mailed by registered or certified mail (return receipt requested) or one
Business Day after being delivered by overnight courier to such party at its
address set forth below or such other address as such party may specify by
notice to the parties hereto.
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If to Nortel Networks or Nortel Networks LLC, to:
Nortel Networks Inc.
200 Athens Way
Nashville, Tennessee 37228
Attn: Legal Department
With a copy to:
Nortel Networks Inc.
2221 Lakeside Boulevard
Richardson, Texas 75082
Attn: Robert Fishman
Fax: (972) 684-3888
With a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention: Dimitri P. Racklin
Fax: (617) 526-5000
Phone: (617) 526-6748
If to the Company, Newco or Transition to:
ANTEC Corporation
11450 Technology Circle
Duluth, Georgia 30097
Attention: Lawrence Margolis
Fax: (678) 473-8470
With a copy to:
Troutman Sanders LLP
600 Peachtree Street
Suite 5200
Atlanta, GA 30308
Attention: W. Brinkley Dickerson, Jr.
Fax: 404-885-3900
Phone: 404-885-3000
10.06. Entire Understanding. This Agreement (including the Disclosure
Schedules), the Ancillary Agreements and the Confidentiality Agreement represent
the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and thereby supersede
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any and all other oral or written agreements (other than the Confidentiality
Agreement) heretofore made.
10.07. Assignment; No Third Party Beneficiaries. Neither this
Agreement, nor any of the rights, interests or obligations 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; provided, however, that (i) Nortel
Networks LLC may, at any time prior to the Effective Time, transfer its Interest
(as such term is defined in the Existing Venture Operating Agreement) to any
other direct or indirect wholly-owned Subsidiary of Nortel Networks, with no
need for consent or approval of any other party hereto (other than Nortel
Networks), and (ii) in the event of such transfer, the transferee of the
Interest shall be substituted for Nortel Networks LLC herein and in each
Ancillary Agreement to which Nortel Networks LLC is, or is intended to be, a
party, as if such transferee were an original party hereto and thereto, mutatis
mutandis. 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. Nothing in this Agreement expressed or
implied, is intended to confer upon any person, other than the parties hereto or
their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
10.08. Disclosure Schedules.
(a) The inclusion of any matter on the disclosures made on the
Company and Nortel Networks Schedules (collectively, the "Disclosure Schedules")
with respect to any representation or warranty will not be deemed an admission
by any party that such listed matter is material or that such listed matter has
or would have a Material Adverse Effect on the Company, Newco or Transition or a
Material Adverse Effect on Nortel Networks or Nortel Networks LLC, as
applicable.
(b) The Disclosure Schedules shall be deemed to constitute an
integral part of this Agreement and to modify the respective representations,
warranties, covenants or agreements of the parties contained herein to the
extent that such representations, warranties, covenants or agreements expressly
refer to the applicable Disclosure Schedule. Anything to the contrary contained
herein or in the Disclosure Schedules notwithstanding, any and all statements,
representations, warranties, or disclosures set forth in the Disclosure
Schedules delivered on or before the date hereof shall be deemed to have been
made on and as of the date hereof. From time to time prior to the Closing, the
parties shall promptly supplement or amend the Disclosure Schedules with respect
to any matter, condition or occurrence hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be listed
or described in the Disclosure Schedules. No supplement or amendment shall be
deemed to cure any breach or any representation or warranty made in this
Agreement or have any effect for the purpose of determining satisfaction of the
conditions set forth in this Agreement.
10.09. Interpretation. When a reference is made in this Agreement to
Articles, Sections, Exhibits or Disclosure Schedules, such reference shall be to
and Article or Section of, or Exhibit
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or Disclosure Schedule to, this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference purposes
only and are not part 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". Any reference to "herein" or
"hereof" or similar terms shall refer to the agreement as a whole rather than to
the individual paragraph, Section or Article.
10.10. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as it is enforceable.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
ANTEC CORPORATION
By: /s/ Lawrence A. Margolis
---------------------------------------------
Name: Lawrence A. Margolis
Title: Executive Vice President
NORTEL NETWORKS INC.
By: /s/ Steve Pusey
---------------------------------------------
Name: Steve Pusey
Title: President Local Internet
BROADBAND PARENT CORPORATION
By: /s/ Lawrence A. Margolis
---------------------------------------------
Name: Lawrence A. Margolis
Title: Vice President and Secretary
BROADBAND TRANSITION
CORPORATION
By: /s/ Lawrence A. Margolis
---------------------------------------------
Name: Lawrence A. Margolis
Title: Vice President and Secretary
<PAGE> 64
NORTEL NETWORKS LLC
By: /s/ Steve Pusey
---------------------------------------------
Name: Steve Pusey
Title: President Local Internet of Nortel
Networks Inc., Managing Member of
Nortel Networks LLC
ARRIS INTERACTIVE L.L.C.
By: /s/ Oscar Rodriguez
---------------------------------------------
Name: Oscar Rodriguez
Title: President and COO
