<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 31, 2000
REGISTRATION NO. 333-30240
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
JDS UNIPHASE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3674 94-2579683
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
JDS UNIPHASE CORPORATION
163 BAYPOINTE PARKWAY
SAN JOSE, CALIFORNIA 95134
(408) 434-1800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MICHAEL C. PHILLIPS, ESQ.
SENIOR VICE PRESIDENT, BUSINESS DEVELOPMENT AND
GENERAL COUNSEL
JDS UNIPHASE CORPORATION
163 BAYPOINTE PARKWAY
SAN JOSE, CALIFORNIA 95134
(408) 434-1800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
WITH COPIES TO:
<TABLE>
<S> <C>
JOHN W. CAMPBELL, III, ESQ. LARRY W. SONSINI, ESQ.
MORRISON & FOERSTER LLP DANIEL R. MITZ, ESQ.
425 MARKET STREET WILSON SONSINI GOODRICH & ROSATI
SAN FRANCISCO, CALIFORNIA 94105-2482 PROFESSIONAL CORPORATION
(415) 268-7000 650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
(650) 493-9300
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
Upon consummation of the merger described herein.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement number for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2
[E-TEK LOGO]
TO THE STOCKHOLDERS OF E-TEK DYNAMICS, INC.
A MERGER PROPOSAL -- YOUR VOTE IS VERY IMPORTANT
On January 17, 2000, E-TEK Dynamics' board of directors unanimously
approved an agreement to merge E-TEK with a newly formed, wholly owned
subsidiary of JDS Uniphase Corporation and become a wholly owned subsidiary of
JDS Uniphase Corporation.
In the merger, each share of your E-TEK common stock will be exchanged for
2.2 shares of JDS Uniphase common stock. JDS Uniphase common stock is listed on
the Nasdaq Stock Market's National Market under the trading symbol "JDSU," and
on May 22, 2000, JDS Uniphase common stock closed at $85.31 per share.
We will hold a special meeting of our stockholders to vote on whether to
approve the merger agreement. The merger cannot be completed unless the holders
of a majority of E-TEK common stock outstanding and entitled to vote at the
special meeting approve the merger agreement. YOUR VOTE IS VERY IMPORTANT.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED SELF-ADDRESSED STAMPED ENVELOPE
OR, IF APPLICABLE, FOLLOW THE TELEPHONE OR INTERNET VOTING INSTRUCTIONS AT THE
BOTTOM OF THE PROXY CARD. Returning the proxy or voting by telephone or the
Internet does not deprive you of your right to attend the meeting and to vote
your shares in person.
AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS UNANIMOUSLY DETERMINED
THE MERGER TO BE FAIR TO YOU AND IN YOUR BEST INTERESTS AND DECLARED THE MERGER
ADVISABLE. E-TEK'S BOARD OF DIRECTORS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND RECOMMENDS ITS ADOPTION BY YOU.
This proxy statement-prospectus provides you with information concerning
JDS Uniphase and the merger. Please give all of the information contained in the
proxy statement-prospectus your careful attention. IN PARTICULAR, YOU SHOULD
CAREFULLY CONSIDER THE DISCUSSION IN THE SECTION ENTITLED "RISK FACTORS" ON PAGE
29 OF THIS PROXY STATEMENT-PROSPECTUS.
We appreciate your interest in E-TEK and consideration of this matter.
/s/ Michael J. Fitzpatrick]
Michael J. Fitzpatrick
President and Chief Executive Officer
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THE SHARES OF JDS UNIPHASE COMMON STOCK TO BE ISSUED IN
CONNECTION WITH THE MERGER OR DETERMINED WHETHER THIS PROXY STATEMENT-PROSPECTUS
IS ADEQUATE OR ACCURATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This proxy statement-prospectus is dated May 31, 2000 and was first mailed
to stockholders on or about May 31, 2000.
<PAGE> 3
[E-TEK LOGO]
E-TEK DYNAMICS, INC.
1865 LUNDY AVENUE
SAN JOSE, CALIFORNIA 95131
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Date: June 28, 2000
Time: 8:00 a.m., PST
Place: E-TEK Dynamics, Inc.
1865 Lundy Avenue
San Jose, California 95131
To the stockholders of E-TEK Dynamics:
A special meeting of stockholders of E-TEK Dynamics, Inc. will be held on
June 28, 2000 at the principal offices of E-TEK, 1865 Lundy Avenue, San Jose,
California 95131 at 8:00 a.m. PST. At the meeting you will be asked:
1. To consider and vote upon a proposal to adopt the Agreement and
Plan of Reorganization and Merger, dated as of January 17, 2000, by and
among JDS Uniphase Corporation, Rainbow Acquisition, Inc., a wholly owned
subsidiary of JDS Uniphase, and E-TEK Dynamics, Inc. Under the merger
agreement, Rainbow Acquisition will merge with and into E-TEK and E-TEK
will survive the merger as a wholly owned subsidiary of JDS Uniphase. In
the merger, holders of outstanding shares of common stock of E-TEK will
receive 2.2 shares of common stock of JDS Uniphase for each share of E-TEK
common stock they hold. The exchange ratio of 2.2 gives effect to the
two-for-one stock split of JDS Uniphase common stock effected as to JDS
Uniphase stockholders of record on March 2, 2000. Adoption of the merger
agreement will also constitute approval of the merger and the other
transactions contemplated by the merger agreement.
2. To transact such other business as may properly come before the
special meeting or any adjournment of the special meeting.
The attached proxy statement-prospectus contains a more complete
description of these items of business. Only holders of record of E-TEK common
stock at the close of business on May 22, 2000, the record date, are entitled to
vote on the matters listed in this notice of special meeting. Any action may be
taken on any of the foregoing proposals at the special meeting on the date
specified above or on any date to which the special meeting may properly be
postponed or adjourned. You may vote in person at the E-TEK special meeting even
if you have returned a proxy or voted by telephone or Internet.
By Order of the Board of Directors
of E-TEK Dynamics, Inc.
/s/ William N. Gerson
William N. Gerson
Corporate Secretary
May 31, 2000
San Jose, California
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE
AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED SELF-ADDRESSED STAMPED
ENVELOPE OR, IF APPLICABLE, FOLLOW THE TELEPHONE OR INTERNET VOTING INSTRUCTIONS
AT THE BOTTOM OF THE PROXY CARD.
<PAGE> 4
WHERE YOU CAN FIND MORE INFORMATION
This proxy statement-prospectus includes information that has not been
delivered or presented to you but is "incorporated by reference," which means
that JDS Uniphase and E-TEK disclose information to you by referring you to
another document filed separately with the SEC. The information incorporated by
reference is considered a part of this proxy statement-prospectus, except for
any information superseded by information provided in this proxy
statement-prospectus. This proxy statement-prospectus incorporates by reference
the documents listed below, which contain important information.
JDS Uniphase and E-TEK are also incorporating by reference any additional
documents that each files with the SEC as required by the Securities Exchange
Act of 1934 between the date of this proxy statement-prospectus and the date of
the special meeting of E-TEK stockholders.
The following documents, which were filed by E-TEK with the SEC, are
incorporated by reference into this proxy statement-prospectus:
- E-TEK's Annual Report on Form 10-K for the fiscal year ended June 30,
1999;
- E-TEK's Quarterly Report on Form 10-Q for the quarter ended April 1,
2000;
- E-TEK's Quarterly Report on Form 10-Q for the quarter ended January 1,
2000;
- E-TEK's Quarterly Report on Form 10-Q for the quarter ended October 2,
1999;
- E-TEK's Current Report on Form 8-K filed on January 19, 2000;
- E-TEK's Current Report on Form 8-K filed on September 1, 1999;
- E-TEK's Current Report on Form 8-K/A filed on July 30, 1999; and
- E-TEK's Current Report on Form 8-K filed on July 7, 1999.
The following documents, which have been filed by JDS Uniphase with the
SEC, are incorporated by reference into this proxy statement-prospectus:
- JDS Uniphase's Annual Report on Form 10-K/A for the fiscal year ended
June 30, 1999;
- JDS Uniphase's Annual Report on Form 10-K for the fiscal year ended June
30, 1999;
- JDS Uniphase's Quarterly Report on Form 10-Q for the quarter ended March
31, 2000;
- JDS Uniphase's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1999;
- JDS Uniphase's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999;
- JDS Uniphase's Current Report on Amendment No. 3 to Form 8-K/A filed on
May 31, 2000;
- JDS Uniphase's Current Report on Amendment No. 2 to Form 8-K/A filed on
May 22, 2000;
- JDS Uniphase's Current Report on Form 8-K filed on February 17, 2000;
- JDS Uniphase's Current Report on Amendment No. 1 to Form 8-K/A filed on
February 10, 2000;
- JDS Uniphase's Current Report on Form 8-K filed on January 28, 2000;
- JDS Uniphase's Current Report on Form 8-K filed on January 18, 2000;
- JDS Uniphase's Current Report on Form 8-K/A filed on November 30, 1999;
- JDS Uniphase's Current Report on Form 8-K filed on November 5, 1999;
- JDS Uniphase's Current Report on Form 8-K/A filed on November 3, 1999;
- JDS Uniphase's Current Report on Form 8-K filed on October 4, 1999;
- JDS Uniphase's Current Report on Form 8-K filed on July 12, 1999; and
- the description of JDS Uniphase common stock contained in JDS Uniphase's
Registration Statement on Form 8-A filed on November 15, 1993, and any
amendment or report filed for the purpose of updating such description.
1
<PAGE> 5
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH JDS UNIPHASE OR E-TEK HAVE REFERRED YOU. NEITHER JDS UNIPHASE NOR E-TEK
HAS AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT.
You can obtain copies of the documents and information incorporated by
reference into this proxy statement-prospectus from JDS Uniphase or E-TEK upon
request, without charge, not including exhibits to documents, unless those
exhibits are specifically incorporated by reference into this proxy
statement-prospectus. Any person can make a request for information orally or in
writing. ANY REQUEST FOR DOCUMENTS SHOULD BE MADE BY JUNE 21, 2000 TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS.
<TABLE>
<S> <C>
REQUESTS FOR DOCUMENTS RELATING TO REQUESTS FOR DOCUMENTS RELATING TO JDS
E-TEK SHOULD BE DIRECTED TO: UNIPHASE SHOULD BE DIRECTED TO:
E-TEK Dynamics, Inc. JDS Uniphase Corporation
1865 Lundy Avenue 163 Baypointe Parkway
San Jose, California 95131 San Jose, California 95134
Attention: Investor Relations Attention: Investor Relations (408)
(408) 546-4608 434-1800
</TABLE>
We each file reports, proxy statements and other information with the SEC.
Copies of our reports, proxy statements and other information may be inspected
and copied at the public reference facilities maintained by the SEC at:
<TABLE>
<S> <C> <C>
Judiciary Plaza Citicorp Center Seven World Trade Center
Room 1024 500 West Madison Street 13th Floor
450 Fifth Street, N.W. Suite 1400 New York, New York
Washington, D.C. 20549 Chicago, Illinois 60661 10048
</TABLE>
Reports, proxy statements and other information concerning E-TEK and JDS
Uniphase may also be inspected at:
The National Association of Securities Dealers, Inc.
1735 K Street, N.W.
Washington, D.C. 20006
You can also obtain copies of these materials by mail at prescribed rates
from the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549 or by calling the SEC at (800) SEC-0330. The SEC
maintains a website that contains reports, proxy statements and other
information regarding JDS Uniphase and E-TEK at http://www.sec.gov.
JDS Uniphase has filed a registration statement on Form S-4 under the
Securities Act of 1933 with the SEC with respect to JDS Uniphase common stock to
be issued to E-TEK stockholders in the merger. This proxy statement-prospectus
constitutes the prospectus of JDS Uniphase filed as part of the registration
statement. This proxy statement-prospectus does not contain all of the
information set forth in the registration statement because parts of the
registration statement are omitted in accordance with the rules and regulations
of the SEC. The registration statement and its exhibits are available for
inspection and copying as described above.
If you have any questions about the merger, please call E-TEK Investor
Relations at (408) 546-4608. You may also call JDS Uniphase Investor Relations
at (408) 434-1800.
2
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 5
SUMMARY OF THE PROXY STATEMENT-PROSPECTUS................... 7
The Companies............................................. 7
Summary of the Transaction................................ 8
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF E-TEK.... 14
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF JDS
UNIPHASE.................................................. 15
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
FINANCIAL STATEMENTS AND UNAUDITED PRO FORMA COMPARATIVE
PER SHARE DATA............................................ 16
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
FINANCIAL STATEMENTS OF JDS UNIPHASE AND E-TEK............ 21
COMPARATIVE PER SHARE DATA.................................. 26
COMPARATIVE PER SHARE MARKET PRICE DATA..................... 27
RISK FACTORS................................................ 29
RISKS RELATED TO THE MERGER................................. 29
RISKS RELATED TO JDS UNIPHASE WHICH WILL INCLUDE E-TEK
FOLLOWING THE COMPLETION OF THE MERGER.................... 32
THE SPECIAL MEETING OF E-TEK STOCKHOLDERS................... 44
Purpose of the Special Meeting.............................. 44
Stockholder Record Date for the Special Meeting............. 44
Vote of E-TEK Stockholders Required for Adoption of the
Merger Agreement.......................................... 44
Proxies..................................................... 44
Availability of Accountants................................. 45
Solicitation of Proxies..................................... 46
THE MERGER.................................................. 47
Background of the Merger.................................... 47
Reasons for the Transaction................................. 49
Recommendation of E-TEK's Board of Directors................ 51
Opinion of E-TEK's Financial Advisor........................ 53
Interests of Directors and Officers in the Merger........... 59
Completion and Effectiveness of the Merger.................. 60
Structure of the Merger and Conversion of E-TEK Common
Stock..................................................... 60
Exchange of E-TEK Stock Certificates for JDS Uniphase Stock
Certificates.............................................. 61
Material United States Federal Income Tax Considerations of
the Merger................................................ 61
Accounting Treatment of the Merger.......................... 63
Regulatory Filings and Approvals Required to Complete the
Merger.................................................... 63
Restrictions on Sales of Shares by Affiliates of E-TEK and
JDS Uniphase.............................................. 63
Listing on the Nasdaq National Market of JDS Uniphase Common
Stock to be Issued in the Merger.......................... 64
No Appraisal Rights......................................... 64
Delisting and Deregistration of E-TEK Common Stock after the
Merger.................................................... 64
Dividend Policy............................................. 64
The Merger Agreement........................................ 64
Conditions to Completion of the Merger...................... 70
Termination of the Merger Agreement......................... 71
Payment of Termination Fees................................. 72
Extension, Waiver and Amendment of the Merger Agreement..... 73
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
PAGE
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<S> <C>
The Stock Option Agreement.................................. 73
Affiliate Agreements........................................ 74
Voting Agreements........................................... 74
Operations after the Merger................................. 75
COMPARISON OF RIGHTS OF HOLDERS OF E-TEK COMMON STOCK AND
JDS UNIPHASE COMMON STOCK................................. 75
SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS, MANAGEMENT AND
DIRECTORS OF E-TEK........................................ 81
LEGAL MATTERS............................................... 82
EXPERTS..................................................... 82
Annex A -- Agreement and Plan of Reorganization and
Merger.................................................... A-1
Annex B -- Company Stock Option Agreement................... B-1
Annex C -- Form of Voting Agreement......................... C-1
Annex D -- Fairness Opinion of Goldman, Sachs & Co.......... D-1
</TABLE>
4
<PAGE> 8
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHO IS JDS UNIPHASE?
A: JDS Uniphase is a high-technology company that designs, develops,
manufactures and distributes a comprehensive range of products for the
growing fiber optic communications industry. These products are deployed by
system manufacturers worldwide to develop advanced optical networks for the
telecommunications and cable television industries. JDS Uniphase is traded on
the Nasdaq National Market under the symbol "JDSU" and the exchangeable
shares of JDS Uniphase Canada Ltd. are traded on The Toronto Stock Exchange
under the symbol "JDU."
Q: WHY IS E-TEK PROPOSING THE MERGER?
A: E-TEK is proposing to merge with JDS Uniphase in response to unprecedented
growth in the telecommunications industry and demand for the fiber optic
networks that are enabling such growth. Specifically, E-TEK is proposing the
merger for the following reasons, as well as others described in this proxy
statement-prospectus:
- The combination of the two companies will enable a more rapid scaling of
operations, bringing greater volume and a broader range of products to
customers faster.
- The merger will combine two broad product lines to enhance offerings to
customers.
- The combination of the two companies can achieve higher levels of
automation and lower cost.
- The merger will enable more product and technology innovation for
customers.
- By joining together, the companies can more effectively respond to
changes in technology and the marketplace.
Q: WHAT WILL E-TEK STOCKHOLDERS RECEIVE FOR THEIR E-TEK SHARES?
A: E-TEK stockholders will receive 2.2 shares of JDS Uniphase common stock in
exchange for each of their shares of E-TEK stock, giving effect to the
two-for-one stock split of JDS Uniphase common stock effected as to JDS
Uniphase stockholders of record as of March 2, 2000. JDS Uniphase will not
issue fractional shares in the merger. As a result, the total number of
shares of JDS Uniphase common stock each E-TEK stockholder will receive in
the merger will be rounded down to the nearest whole number. The value of any
remaining fraction of a share will be paid in cash. In addition, concurrently
with the merger, it is intended that the holders of the outstanding
exchangeable shares of E-TEK's subsidiary, Lundy Technology Co., will receive
2.2 exchangeable shares of JDS Uniphase's subsidiary, JDS Uniphase Canada,
Ltd., in exchange for each Lundy exchangeable share.
Q: WHEN WILL THE MERGER OCCUR?
A: The merger will occur after approval of the E-TEK stockholders is obtained
and the other conditions to the merger, including regulatory approvals, are
satisfied or waived. JDS Uniphase and E-TEK are working towards completing
the merger as quickly as possible.
Q: HOW WILL E-TEK FIT INTO JDS UNIPHASE AFTER THE MERGER?
A: Following the merger, E-TEK will operate as a wholly owned subsidiary of JDS
Uniphase. Michael J. Fitzpatrick, currently Chairman, President and Chief
Executive Officer of E-TEK, will join the board of directors of JDS Uniphase.
Donald J. Listwin, currently a member of the E-TEK board of directors, will
also join the board of JDS Uniphase. The employees of E-TEK will become
employees of the merged company.
5
<PAGE> 9
Q: WHAT DO I NEED TO DO NOW?
A: Following your review of this proxy statement-prospectus, mail your signed
proxy card in the enclosed return envelope or vote by telephone or the
Internet, if applicable, as soon as possible so that your shares can be voted
at the special meeting of E-TEK stockholders.
Q: WHAT HAPPENS IF I RETURN MY PROXY CARD BUT DON'T INDICATE HOW TO VOTE?
A: If you sign your proxy properly but do not include instructions on how to
vote and don't vote by telephone or the Internet, your shares will be voted
FOR adoption of the merger agreement and approval of the merger.
Q: WHAT HAPPENS IF I DON'T RETURN A PROXY CARD?
A: Unless you vote FOR adoption of the merger agreement by telephone or the
Internet, not returning your proxy card will have the same effect as voting
against the merger.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD OR VOTED BY
TELEPHONE OR INTERNET?
A: Yes. You can change your vote at any time before your proxy is voted at the
special meeting. You can do this in one of four ways. First, you can send a
written notice to E-TEK stating that you would like to revoke your proxy.
Second, you can complete and submit a new proxy card. Third, you can attend
the special meeting and vote in person. Fourth, if you vote by telephone or
the Internet, you can change your vote at any time by following the telephone
or Internet voting instructions on your proxy card.
Q: IF MY BROKER HOLDS MY SHARES IN STREET NAME, WILL MY BROKER VOTE MY SHARES
FOR ME?
A: No. Your broker will not be able to vote your shares without instructions
from you. If you do not provide your broker with voting instructions, your
shares will be considered present at the special meeting for purposes of
determining a quorum but will not be considered to have been voted in favor
of adoption of the merger agreement. If you have instructed a broker to vote
your shares, you must follow directions received from your broker to change
those instructions.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger is completed, JDS Uniphase will send you written
instructions for exchanging your E-TEK stock certificates for JDS Uniphase
stock certificates.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: You can write or call E-TEK's Investor Relations at 1865 Lundy Avenue, San
Jose, California 95131, telephone (408) 546-4608 with any questions about the
merger and the special meeting.
6
<PAGE> 10
SUMMARY OF THE PROXY STATEMENT-PROSPECTUS
This summary may not contain all of the information that is important to
you. You should carefully read this entire document and the other documents to
which we refer for a more complete understanding of the merger. In particular,
you should read the documents attached to this proxy statement-prospectus,
including the merger agreement, the stock option agreement, the form of voting
agreement and the fairness opinion of Goldman, Sachs & Co., which are attached
as Annexes A, B, C and D, respectively. In addition, we incorporate by reference
important business and financial information about JDS Uniphase and E-TEK into
this proxy statement-prospectus. You may obtain the information incorporated by
reference into this proxy statement-prospectus without charge by following the
instructions in the section entitled "Where You Can Find More Information" on
the inside front cover of this proxy statement-prospectus. All information in
this proxy statement-prospectus gives effect to the two-for-one stock split of
JDS Uniphase common stock, effected as to JDS Uniphase stockholders of record as
of March 2, 2000, and the concurrent two-for-one stock split of the exchangeable
shares of JDS Uniphase's subsidiary, JDS Uniphase Canada Ltd. All references to
the JDS Uniphase common stock split in this proxy statement-prospectus also
include the concurrent stock split of JDS Uniphase's Canadian subsidiary.
THE COMPANIES
E-TEK DYNAMICS, INC.
1865 LUNDY AVENUE
SAN JOSE, CALIFORNIA 95131
ATTN: INVESTOR RELATIONS
(408) 546-5000
E-TEK designs, manufactures and sells high quality fiber optic components
and modules for optical networks. E-TEK's products are designed into optical
systems built for telecommunications service providers' networks by
telecommunications equipment manufacturers. E-TEK's products guide, route or
amplify the light signals which transmit data within the network and include:
narrowband wavelength division multiplexers, commonly referred to as WDMs, which
allow multiple communication signals to be carried on one fiber optic
connection; wideband wavelength division multiplexers, which are used in optical
amplifiers to differentiate signals or enhance performance; isolators, which act
as one-way valves for optical signals, preventing the light from traveling in
the wrong direction; couplers, which are used to combine or split optical
signals; and micro-optic integrated components, which combine two or more of the
above optical component functions into a single package. E-TEK's products are
deployed in land-based and undersea long distance networks, as well as in cable
and metropolitan area networks. E-TEK's customers include many of the leading
telecommunications equipment manufacturers, including Alcatel, Ciena, Corning,
Fujitsu, Lucent, Nortel and Pirelli.
E-TEK's principal offices and manufacturing facilities are at 1865 Lundy
Avenue, San Jose, California 95131, where the telephone number is: (408)
546-5000. E-TEK also has manufacturing facilities in Canada, Taiwan and China.
E-TEK was incorporated in Florida in 1983, reincorporated in California in
1987 and, in 1998, again reincorporated in Delaware.
7
<PAGE> 11
JDS UNIPHASE CORPORATION
163 BAYPOINTE PARKWAY
SAN JOSE, CALIFORNIA 95134
ATTN: INVESTOR RELATIONS
(408) 434-1800
JDS Uniphase Corporation is the result of a merger between Uniphase
Corporation and JDS FITEL Inc., pursuant to which they combined their operations
on June 30, 1999. Historic information described in this proxy
statement-prospectus, not pertaining to E-TEK, pertains only to either Uniphase
Corporation or JDS FITEL Inc. In such instances, historic information that is
specific to Uniphase Corporation or JDS FITEL Inc. is specifically described as
"Uniphase" or "JDS FITEL" information, respectively. References to "JDS
Uniphase" refer to the combined entity resulting from the merger of Uniphase and
JDS FITEL.
JDS Uniphase is a leading provider of advanced fiber optic components and
modules. These products are sold to leading telecommunications and cable
television system providers worldwide, which are commonly referred to as OEMs
and include Alcatel, Ciena, General Instruments, Lucent, Nortel, Pirelli,
Scientific Atlanta, Siemens and Tyco. JDS Uniphase's components and modules are
basic building blocks for fiber optic networks and perform both optical-only
(passive) and optoelectronic (active) functions within these networks. JDS
Uniphase's products include semiconductor lasers, high-speed external
modulators, transmitters, amplifiers, couplers, multiplexers, circulators,
tunable filters, optical switches and isolators for fiber optic applications.
JDS Uniphase also supplies its OEM customers with test instruments for both
system production applications and network installation. In addition, JDS
Uniphase designs, manufactures and markets laser subsystems for a broad range of
commercial applications, which include biotechnology, industrial process control
and measurement, graphics and printing and semiconductor equipment manufactured
by its customers.
In February 2000, JDS Uniphase acquired Optical Coating Laboratory, Inc.
("OCLI") for total consideration of approximately $2.7 billion. OCLI is a
leading manufacturer of optical thin film coatings and components used to
control and enhance light propagation to achieve specific effects such as
reflection, refraction, absorption and wavelength separation.
JDS Uniphase's corporate headquarters in the United States is at 163
Baypointe Parkway, San Jose, California 95134, where the telephone number is
(408) 434-1800. Its corporate headquarters in Canada is at 570 West Hunt Club
Road, Nepean, Ontario, and the telephone number at this location is (613)
727-1304.
JDS Uniphase was incorporated in Delaware in October 1993.
SUMMARY OF THE TRANSACTION
STRUCTURE OF THE TRANSACTION
E-TEK will merge with Rainbow Acquisition, Inc., a wholly owned subsidiary
of JDS Uniphase, and become a wholly owned subsidiary of JDS Uniphase. Following
the merger, as a stockholder of JDS Uniphase, you will own common stock in
E-TEK's parent company JDS Uniphase.
STOCKHOLDER APPROVAL
The holders of a majority of the outstanding shares of E-TEK common stock
must adopt the merger agreement. JDS Uniphase stockholders are not required to
adopt the merger agreement and will not vote on the merger.
8
<PAGE> 12
You are entitled to cast one vote for each share of E-TEK common stock you
owned as of May 22, 2000, the record date.
The directors, officers and affiliates of E-TEK collectively beneficially
own approximately 25.3% of the outstanding E-TEK common stock as of May 17, 2000
and have agreed to vote their shares in favor of the merger.
RECOMMENDATION OF E-TEK'S BOARD OF DIRECTORS (SEE PAGE 51)
After careful consideration, E-TEK's board of directors unanimously
determined that the merger is fair to you and in your best interests and
declared the merger advisable. E-TEK's board of directors unanimously approved
the merger agreement and recommends its adoption by you.
OPINION OF E-TEK'S FINANCIAL ADVISOR (SEE PAGE 53)
Goldman, Sachs & Co. has delivered its written opinion to the board of
directors of E-TEK that, as of January 17, 2000, the exchange ratio pursuant to
the merger agreement was fair from a financial point of view to the holders of
E-TEK common stock.
The full text of the written opinion of Goldman Sachs is contained in Annex
D. Goldman Sachs provided its opinion for the information and assistance of the
E-TEK board of directors in connection with its consideration of the merger. It
is not a recommendation to any holder of E-TEK common stock as to how any
stockholder should vote at the E-TEK meeting. HOLDERS OF E-TEK COMMON STOCK ARE
URGED TO, AND SHOULD, READ THE GOLDMAN SACHS OPINION IN ITS ENTIRETY.
PROCEDURE FOR EXCHANGING YOUR STOCK CERTIFICATES (SEE PAGE 61)
After the merger is completed, JDS Uniphase will send you written
instructions for exchanging your E-TEK stock certificates for JDS Uniphase stock
certificates. Do not send your E-TEK stock certificates now.
COMPLETION AND EFFECTIVENESS OF THE MERGER
JDS Uniphase and E-TEK will complete the merger when all of the conditions
to completion of the merger are satisfied or waived. The merger will become
effective when we file a certificate of merger with the State of Delaware.
JDS Uniphase and E-TEK are working toward completing the merger as quickly
as possible.
CONDITIONS TO COMPLETION OF THE MERGER (SEE PAGE 70)
JDS Uniphase's and E-TEK's obligations to complete the merger are subject
to the prior satisfaction or waiver of conditions. The conditions that must be
satisfied or waived before the completion of the merger include the following:
- the registration statement on Form S-4, of which this proxy
statement-prospectus forms a part, must become effective under the
Securities Act of 1933 and must not be the subject of any stop order or
proceedings seeking a stop order;
- no injunction, order or prohibition preventing the completion of the
merger may be in effect, and no action shall have been taken or any law
be applicable to the merger which makes the merger illegal;
- JDS Uniphase and E-TEK must each receive an opinion of tax counsel that
the merger will qualify as a tax-free reorganization;
9
<PAGE> 13
- E-TEK's stockholders must vote a majority of the outstanding shares of
E-TEK common stock for approval of the merger; and
- the waiting period, and any extension thereof, applicable to the
completion of the merger under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 or under any other premerger notification
statute of a foreign jurisdiction must either have expired or been
terminated.
E-TEK's obligations to complete the merger are subject to the satisfaction
or waiver of each of the following additional conditions before completion of
the merger:
- JDS Uniphase's representations and warranties must be true and correct,
except where it would not have a material adverse effect on JDS Uniphase;
- JDS Uniphase must have performed or complied in all material respects
with all of its agreements and covenants required by the merger agreement
to be performed or complied with by JDS Uniphase at or before completion
of the merger; and
- a material adverse change relating to JDS Uniphase shall not have
occurred.
JDS Uniphase's obligations to complete the merger are subject to the
satisfaction or waiver of each of the following additional conditions before
completion of the merger:
- E-TEK's representations and warranties must be true and correct, except
where it would not have a material adverse effect on E-TEK;
- E-TEK must have performed or complied in all material respects with all
of its agreements and covenants required by the merger agreement to be
performed or complied with by E-TEK at or before completion of the
merger; and
- a material adverse change relating to E-TEK shall not have occurred.
TERMINATION OF THE MERGER AGREEMENT (SEE PAGE 71)
JDS Uniphase or E-TEK may terminate the merger agreement by mutual written
consent, duly authorized by JDS Uniphase's and E-TEK's boards of directors.
Either JDS Uniphase or E-TEK may also terminate the merger agreement if the
conditions to completion of the merger would not be satisfied because of a
material breach of the merger agreement by the other party or if a
representation, warranty, covenant or agreement of the other party in the merger
agreement becomes materially untrue, and the breach or untruth either cannot be
cured through reasonable efforts or is not cured within 30 days.
In addition, either JDS Uniphase or E-TEK may terminate the merger
agreement under any of the following circumstances:
- if the merger is not completed by October 31, 2000;
- if a final court order or other government decree or ruling prohibiting
the merger is issued and is not appealable; or
- if E-TEK's stockholders do not approve and adopt the merger agreement at
the special meeting.
Furthermore, JDS Uniphase may terminate the merger agreement if:
- E-TEK's board of directors withdraws or changes its recommendation in
favor of the merger in a manner adverse to JDS Uniphase;
10
<PAGE> 14
- E-TEK's board of directors approves or recommends any offer or proposal
from a party other than JDS Uniphase relating to an extraordinary
transaction, such as a merger or a sale of significant assets; or
- a person unaffiliated with JDS Uniphase starts a tender or exchange offer
for 15% or more of the outstanding shares of E-TEK, and E-TEK's board of
directors recommends that its stockholders tender their shares.
Furthermore, E-TEK may terminate the merger agreement if:
- prior to the requisite vote of E-TEK's stockholders to approve the merger
transaction, E-TEK receives an unsolicited proposal from a third party to
acquire E-TEK on terms that the E-TEK board of directors determines to be
more favorable to E-TEK's stockholders than the terms of the merger with
JDS Uniphase.
PAYMENT OF TERMINATION FEE (SEE PAGE 72)
If the merger agreement terminates upon some occurrences, E-TEK may be
required to pay JDS Uniphase a termination fee of $350 million, or JDS Uniphase
may be required to pay E-TEK a termination fee of $100 million.
NO OTHER NEGOTIATIONS INVOLVING E-TEK (SEE PAGE 68)
E-TEK has agreed, subject to some limited exceptions, not to initiate or
engage in discussions with another party about a business combination with the
other party while the merger is pending.
STOCK OPTION AGREEMENT (SEE PAGE 73)
E-TEK also entered into a stock option agreement with JDS Uniphase that
grants JDS Uniphase the option to acquire 19.9% of the total issued and
outstanding shares of E-TEK common stock as of January 17, 2000. Based on the
number of shares of common stock of E-TEK outstanding on January 1, 2000 as
represented by E-TEK in the merger agreement, 19.9% of the outstanding shares of
common stock of E-TEK is equal to 13,515,123 shares. The exercise price of the
option is $211.41 per share.
JDS Uniphase also has the right under some circumstances to require E-TEK
to purchase the option or shares acquired by JDS Uniphase.
JDS Uniphase required E-TEK to grant the option as a prerequisite to
entering into the merger agreement. The option may discourage third parties who
are interested in acquiring a significant stake in E-TEK. JDS Uniphase intends
the option to increase the likelihood that the merger will be completed.
The option is not currently exercisable, and JDS Uniphase may exercise the
option only if the merger agreement is terminated in circumstances in which the
termination fee is unconditionally payable to JDS Uniphase. If the proceeds from
the option, together with any termination fees payable by E-TEK to JDS Uniphase,
exceed $600 million, the remainder of the proceeds will be remitted to E-TEK.
You are urged to read the stock option agreement, which is attached as
Annex B, in its entirety.
VOTING AGREEMENT (SEE PAGE 74)
Concurrently with the execution of the merger agreement, E-TEK stockholders
representing approximately 25.3% of E-TEK common stock as of May 17, 2000
entered into voting agreements. These stockholders agreed in the voting
agreements to vote their shares in favor of the merger and
11
<PAGE> 15
transactions contemplated by the merger agreement. They have also signed an
irrevocable proxy to that effect and have agreed to hold their shares until the
merger closes or the merger agreement is terminated.
You are urged to read the form of voting agreement, which is attached as
Annex C, in its entirety.
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER (SEE PAGE 59)
When considering the recommendation of E-TEK's board of directors, you
should be aware that E-TEK's directors and executive officers have interests in
the merger that are different from, or are in addition to, your interests. In
particular, some of the directors and executive officers of E-TEK participate in
arrangements and have continuing indemnification against liabilities that
provide them with interests in the merger that are different from, or are in
addition to, your interests.
As a result of these interests, these directors and officers of E-TEK may
be more likely to vote to approve the merger agreement than if they did not hold
these interests. E-TEK's stockholders should consider whether these interests
may have influenced these directors and officers to support or recommend the
merger.
U. S. FEDERAL INCOME TAX CONSIDERATIONS OF THE MERGER (SEE PAGE 61)
The merger is structured so that, in general, JDS Uniphase, E-TEK and
E-TEK's stockholders will not recognize gain or loss for United States federal
income tax purposes in the merger, except for taxes payable because of cash
received by E-TEK stockholders instead of fractional shares. It is a condition
to the merger that JDS Uniphase and E-TEK receive legal opinions stating that
the merger will be a tax-free reorganization.
ACCOUNTING TREATMENT OF THE MERGER (SEE PAGE 63)
The merger will be accounted for under the purchase method of accounting in
accordance with generally accepted accounting principles.
ANTITRUST APPROVAL REQUIRED TO COMPLETE THE MERGER (SEE PAGE 63)
The merger is subject to approval under the antitrust laws. JDS Uniphase
and E-TEK have made the required filings with the Department of Justice and the
Federal Trade Commission, but the appropriate waiting periods have not expired
as of the date of this proxy statement-prospectus. JDS Uniphase and E-TEK are
not permitted to complete the merger until the applicable waiting periods have
expired or terminated. On March 31, 2000, JDS Uniphase and E-TEK received
requests for additional information and other documentary material from the
Antitrust Division of the U.S. Department of Justice under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976. This request extends the waiting period for
this transaction. JDS Uniphase and E-TEK intend to comply with all requests for
information from the Department of Justice or the Federal Trade Commission. The
Department of Justice or the Federal Trade Commission, as well as a foreign
regulatory agency or government, state or private person, may challenge the
merger at any time before or after its completion.
RESTRICTIONS ON THE ABILITY TO SELL JDS UNIPHASE STOCK (SEE PAGE 63)
All shares of JDS Uniphase common stock received by you in connection with
the merger will be freely transferable unless you are considered an affiliate of
either JDS Uniphase or E-TEK under the federal securities laws. Shares of JDS
Uniphase common stock held by affiliates may only be sold
12
<PAGE> 16
pursuant to a registration statement or exemption under the Securities Act, or
as permitted under the rules of the Securities Act.
APPRAISAL RIGHTS (SEE PAGE 64)
Neither E-TEK nor JDS Uniphase stockholders are entitled under Delaware law
to appraisal rights with respect to the merger.
EXPENSES
If the merger is completed, E-TEK, as a subsidiary of JDS Uniphase, will
bear all expenses incurred in connection with the merger, except that JDS
Uniphase and E-TEK will share equally the costs of filing with the SEC, the
registration statement of which this proxy statement-prospectus is a part and
printing and filing this proxy statement-prospectus. If the merger is not
completed, each party shall pay all expenses it incurs in connection with the
merger.
FORWARD LOOKING STATEMENTS
This proxy statement-prospectus and the documents incorporated by reference
into this proxy statement-prospectus contain forward-looking statements within
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995 with respect to JDS Uniphase's and E-TEK's financial condition, results of
operations and business, and on the expected impact of the merger on JDS
Uniphase's financial performance. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates" and similar expressions
identify forward-looking statements. These forward-looking statements are not
guarantees of future performance and are subject to risks and uncertainties that
could cause actual results to differ materially from the results contemplated by
the forward-looking statements. In evaluating the merger, you should carefully
consider the discussion of risks and uncertainties under the heading "Risk
Factors" beginning on page 29.
13
<PAGE> 17
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF E-TEK
Set forth below is a summary of certain consolidated financial information
with respect to E-TEK as of the dates and for the periods indicated. The
Consolidated Statement of Operations and Other Data set forth below for the
fiscal years ended June 30, 1999, 1998 and 1997 and the Consolidated Balance
Sheet Data as of June 30, 1999 and 1998, have been derived from E-TEK's audited
consolidated financial statements and are incorporated herein by reference. The
Consolidated Statement of Operations Data and Other Data set forth below for the
fiscal years ended June 30, 1996 and 1995 and the Consolidated Balance Sheet
Data as of June 30, 1997, 1996 and 1995 have been derived from E-TEK's audited
consolidated financial statements and are not incorporated herein by reference.
The selected historical financial data of E-TEK as of and for the nine months
ended April 1, 2000 and 1999 has been derived from E-TEK's unaudited financial
statements and includes, in the opinion of E-TEK's management, all adjustments,
consisting only of normal recurring adjustments, which E-TEK considers necessary
to present fairly the results of operations and financial position of such
periods. The selected historical financial data should be read in conjunction
with E-TEK's Consolidated Financial Statements and Notes thereto incorporated by
reference. E-TEK acquired E-TEK Electrophotonics Solutions Corporation
(Electrophotonics) on June 22, 1999 and E-TEK's results of operations subsequent
to that date include those of Electrophotonics. The historical results are not
necessarily indicative of results to be expected for any future periods.
<TABLE>
<CAPTION>
AS OF AND FOR
THE NINE MONTHS
ENDED
APRIL 1, AS OF AND FOR THE YEARS ENDED JUNE 30,
------------------- ---------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------- -------- --------- -------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Net revenues........................... $223,435 $121,122 $ 172,664 $106,924 $ 73,076 $40,382 $31,661
Amortization of intangibles............ $ 22,915 $ -- $ 300 $ -- $ -- $ -- $ --
Purchased in-process research and
development.......................... $ 1,630 $ -- $ 4,207 $ -- $ -- $ -- $ --
Operating income....................... $ 40,148 $ 33,012 $ 43,831 $ 29,062 $ 23,234 $14,453 $12,242
Net income............................. $ 27,973 $ 20,739 $ 27,625 $ 17,924 $ 15,148 $ 9,271 $ 7,706
Net income available to common
stockholders......................... $ 27,973 $ 16,857 $ 23,743 $ 8,903 $ 15,148 $ 9,271 $ 7,706
Net income per share
Basic................................ $ 0.43 $ 0.44 $ 0.55 $ 0.39 $ 0.30 $ 0.19 $ 0.15
Diluted.............................. $ 0.40 $ 0.34 $ 0.45 $ 0.32 $ 0.30 $ 0.19 $ 0.15
Shares used in per share calculation:
Basic................................ 64,473 38,244 43,152 22,970 50,000 50,000 50,000
Diluted.............................. 70,107 60,910 61,746 55,561 50,000 50,000 50,000
CONSOLIDATED BALANCE SHEET DATA:
Working capital........................ $223,913 $ 85,580 $ 66,543 $ 33,582 $ 27,706 $18,342 $ 9,464
Total assets........................... $520,447 $200,410 $ 230,496 $ 90,378 $ 61,760 $26,709 $16,665
Long-term obligations.................. $ 34,638 $ 23,405 $ 21,513 $ 13,808 $ 9,577 $ -- $ --
Total stockholders' equity............. $365,837 $122,222 $ 149,673 $(74,498) $ 36,099 $20,951 $11,680
OTHER DATA:
Net cash provided by (used in):
Operating activities................. $ 31,400 $ 26,745 $ 32,181 $ 27,692 $ 13,456 $10,231 $ 7,180
Investment activities................ $(78,868) $(25,337) $ (63,410) $(12,427) $(21,356) $(4,771) $(3,049)
Financing activities................. $177,481 $ 60,417 $ 64,401 $ (1,606) $ 8,133 $(1,426) $ (198)
Increase (decrease) in cash and cash
equivalents.......................... $130,325 $ 61,825 $ 33,172 $ 13,659 $ 233 $ 4,034 $ 3,933
</TABLE>
14
<PAGE> 18
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF JDS UNIPHASE
Set forth below is a summary of certain consolidated financial information
with respect to JDS Uniphase as of the dates and for the periods indicated. The
Consolidated Statement of Operations and Other Data set forth below for the
fiscal years ended June 30, 1999, 1998 and 1997 and the Consolidated Balance
Sheet Data as of June 30, 1999 and 1998 have been derived from JDS Uniphase's
consolidated financial statements which have been audited by Ernst & Young LLP
and are incorporated herein by reference. The Consolidated Statement of
Operations Data and Other Data set forth below for the fiscal years ended June
30, 1996 and 1995 and the Consolidated Balance Sheet Data as of June 30, 1997,
1996 and 1995 have been derived from JDS Uniphase's consolidated financial
statements which have been audited by Ernst & Young LLP and are not incorporated
herein by reference. The selected historical financial data of JDS Uniphase as
of and for the nine months ended March 31, 2000 and 1999 has been derived from
JDS Uniphase's unaudited financial statements and includes, in the opinion of
JDS Uniphase's management, all adjustments, consisting of normal recurring
adjustments, which JDS Uniphase considers necessary to present fairly the
results of operations and financial position of such periods.
<TABLE>
<CAPTION>
AS OF AND FOR
THE NINE MONTHS
ENDED
MARCH 31, AS OF AND FOR THE YEARS ENDED JUNE 30,
---------------------- ---------------------------------------------------------
2000(3) 1999(2) 1999(2) 1998 1997 1996 1995
---------- -------- ---------- -------- -------- -------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net sales................................. $ 906,401 $195,694 $ 282,828 $185,215 $113,214 $ 73,701 $46,523
Amortization of purchased intangibles..... $ 607,651 $ 11,807 $ 15,730 $ 5,577 $ 1,844 $ 169 $ 229
Acquired in-process research and
development............................. $ 103,746 $ -- $ 210,400 $ 40,268 $ 33,314 $ 4,480 $ 4,460
Merger and other costs(1)................. $ -- $ 6,759 $ 6,759 $ -- $ -- $ -- $ --
Income (loss) from operations............. $ (454,434) $ 35,108 $ (153,222) $(11,521) $(15,785) $ 5,849 $ 1,285
Net income (loss)......................... $ (485,960) $ 23,319 $ (171,057) $(19,630) $(17,787) $ 3,212 $ 1,439
Earnings (loss) per share:
Basic................................... $ (0.70) $ 0.07 $ (0.54) $ (0.07) $ (0.07) $ 0.02 $ 0.01
Dilutive................................ $ (0.70) $ 0.07 $ (0.54) $ (0.07) $ (0.07) $ 0.01 $ 0.01
Shares used in per share calculation:
Basic................................... 696,050 316,448 318,248 283,608 269,528 204,464 151,536
Dilutive................................ 696,050 341,272 318,248 283,608 269,528 223,296 167,176
CONSOLIDATED BALANCE SHEET DATA:
Working capital........................... $1,156,867 $161,977 $ 314,760 $121,428 $110,197 $132,239 $18,404
Total assets.............................. $7,943,464 $382,872 $4,096,097 $332,871 $180,653 $175,692 $33,611
Long-term obligations..................... $ 8,820 $ 7,629 $ 9,847 $ 5,666 $ 2,478 $ 7,049 $ 244
Total stockholders' equity................ $7,158,242 $335,315 $3,619,247 $280,038 $152,033 $154,824 $26,196
Book value per common share............... $ 9.23 $ 1.04 $ 5.62 $ 0.90 $ 0.55 $ 0.59 $ 0.17
OTHER DATA:
Net cash provided by (used in):
Operating activities.................... $ 193,154 $ 40,409 $ 66,946 $ 51,025 $ 21,935 $ 8,031 $ 4,008
Investment activities................... $ (921,832) $(62,894) $ (40,298) $(45,712) $(48,851) $(83,626) $(4,417)
Financing activities.................... $ 791,447 $ 13,279 $ 15,445 $ (1,715) $ 3,790 $125,090 $ 495
Increase (decrease) in cash and cash
equivalents............................. $ 62,769 $ (9,206) $ 42,093 $ 3,598 $(23,126) $ 49,495 $ 86
</TABLE>
-------------------------
(1) Results of operations include $5,877,000 of costs and expenses attributable
to the pooling of interests transaction with Uniphase Broadband Products,
and $882,000 loss on sale of the Ultrapointe Systems assets in fiscal 1999.
(2) Uniphase merged with JDS FITEL effective June 30, 1999 in a transaction
accounted for as a purchase. The Consolidated Statement of Operations and
Other Data for the nine months ended March 31, 2000 and the Consolidated
Balance Sheet Data as of March 31, 2000 and June 30, 1999 include the
results of operations and financial position, respectively, of JDS FITEL.
(3) JDS Uniphase merged with Optical Coating Laboratory, Inc. (OCLI) on February
4, 2000 in a transaction accounted for as a purchase. The Consolidated
Statement of Operations and Other Data for the nine months ended March 31,
2000 and the Consolidated Balance Sheet Data as of March 31, 2000 include
the results subsequent to February 4, 2000 and financial position,
respectively, of OCLI.
15
<PAGE> 19
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
AND UNAUDITED PRO FORMA COMPARATIVE PER SHARE DATA
The following unaudited pro forma condensed combined consolidated financial
statements give effect to the merger using the purchase method of accounting and
include the pro forma adjustments described in the accompanying notes.
Effective June 30, 1999, Uniphase Corporation combined its operations with
JDS FITEL Inc. to form JDS Uniphase Corporation in a transaction accounted for
as a purchase. Accordingly, the historical balance sheet of JDS Uniphase as of
June 30, 1999 includes the financial position of JDS FITEL Inc. as of that date,
but the historical statement of operations for JDS Uniphase for the year ended
June 30, 1999 does not include the results of operations for JDS FITEL Inc. for
that period.
On February 4, 2000, JDS Uniphase acquired Optical Coating Laboratory, Inc.
(OCLI) in a transaction accounted for as a purchase. Accordingly, the historical
statement of operations for JDS Uniphase for the nine months ended March 31,
2000 include the results of operations for OCLI subsequent to February 4, 2000.
The Unaudited Pro Forma Condensed Combined Consolidated Statement of
Operations of JDS Uniphase and E-TEK for the fiscal year ended June 30, 1999 is
based on the Unaudited Pro Forma Condensed Combined Consolidated Statement of
Operations of JDS Uniphase and OCLI included in Amendment No. 2 to Form 8-K/A
filed May 22, 2000 (combining Uniphase, JDS FITEL Inc. and OCLI) after giving
effect to the merger with E-TEK under the purchase method of accounting and the
assumptions and adjustments described in the accompanying Notes to the Unaudited
Pro Forma Condensed Combined Consolidated Financial Statements of JDS Uniphase
and E-TEK.
The Unaudited Pro Forma Condensed Combined Consolidated Statement of
Operations of JDS Uniphase and E-TEK for the nine months ended March 31, 2000 is
based on the Unaudited Pro Forma Condensed Combined Consolidated Statement of
Operations of JDS Uniphase included in Amendment No. 2 to Form 8-K/A filed May
22, 2000 (combining JDS Uniphase and OCLI) and the historical financial
statements of E-TEK, after giving effect to the merger with E-TEK under the
purchase method of accounting and the assumptions and adjustments described in
the accompanying Notes to the Unaudited Pro Forma Condensed Combined
Consolidated Financial Statements of JDS Uniphase and E-TEK.
The Unaudited Pro Forma Condensed Combined Consolidated Financial
Statements of JDS Uniphase and E-TEK should be read in conjunction with the
historical financial statements of JDS Uniphase, OCLI and E-TEK and the
Unaudited Pro Forma Condensed Combined Consolidated Financial Statements of JDS
Uniphase and OCLI included in Amendment No. 2 to Form 8-K/A filed May 22, 2000
(combining JDS Uniphase and OCLI) and the Unaudited Pro Forma Condensed Combined
Consolidated Financial Statements of JDS Uniphase included in Form 8-K/A filed
November 3, 1999 (combining Uniphase Corporation and JDS FITEL Inc.)
The Unaudited Pro Forma Condensed Combined Consolidated Statements of
Operations of JDS Uniphase and E-TEK are presented as if the combination had
taken place on July 1, 1998. The Unaudited Pro Forma Condensed Combined
Consolidated Statement of Operations for the nine months ended March 31, 2000
combines the Pro Forma nine months ended March 31, 2000 for JDS Uniphase
(excluding the results of OCLI subsequent to February 4, 2000) with the
historical nine months ended April 1, 2000 for E-TEK and the nine months ended
January 31, 2000 for OCLI. The Unaudited Pro Forma Condensed Combined
Consolidated Statement of Operations for the year ended June 30, 1999 combines
the year ended June 30, 1999 for JDS Uniphase (combining Uniphase and JDS
FITEL), the historical results of E-TEK for the year ended June 30, 1999 and the
historical results of OCLI for the twelve months ended April 30, 1999. The
Unaudited Pro Forma Condensed Combined Consolidated Balance Sheet is presented
to give effect to the proposed merger
16
<PAGE> 20
as if it occurred on March 31, 2000 and combines the balance sheet for JDS
Uniphase at March 31, 2000 with the balance sheet of E-TEK at April 1, 2000. The
pro forma information does not purport to be indicative of the results that
would have been reported if the above transactions had been in effect for the
period presented or which may result in the future.
JDS Uniphase acquired AFC Technologies in August 1999 and in November 1999
acquired EPITAXX, Inc. In December 1999, JDS Uniphase acquired SIFAM Limited and
Oprel Technologies, Inc. In February 2000, JDS Uniphase agreed to purchase the
remaining 49% of its majority-owned subsidiary (IOT of Germany) and in April
2000, JDS Uniphase acquired Cronos Integrated Microsystems, Inc. and Fujian
Casix Laser, Inc. The Unaudited Pro Forma Condensed Combined Consolidated
Financial Statements of JDS Uniphase, OCLI and E-TEK do not include on a pro
forma basis these acquisitions since collectively they are not significant to
JDS Uniphase.
The Unaudited Pro Forma Comparative Per Share Data for the nine months
ended March 31, 2000 and for the fiscal year ended June 30, 1999 are based on
the Unaudited Pro Forma Condensed Combined Consolidated Statement of Operations
of JDS Uniphase included in Amendment No. 2 to Form 8-K/A filed May 22, 2000
(combining JDS Uniphase and OCLI) and the historical financial statements of
E-TEK for the comparable nine months and fiscal year after giving effect to the
merger with E-TEK as described in the accompany footnotes to these Pro Forma
financial statements.
17
<PAGE> 21
UNAUDITED PRO FORMA CONDENSED COMBINED
CONSOLIDATED STATEMENT OF OPERATIONS
OF JDS UNIPHASE AND E-TEK
YEAR ENDED JUNE 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
JDS UNIPHASE
(UNIPHASE, PRO FORMA
JDS FITEL JDS UNIPHASE
AND OCLI PRO FORMA AND E-TEK
COMBINED) E-TEK ADJUSTMENTS COMBINED
------------- -------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales.......................... $ 794,362 $172,664 $ (100) $ 966,926
Cost of sales...................... 396,313 85,123 (50) 481,386
----------- -------- ----------- -----------
Gross profit.................. 398,049 87,541 (50) 485,540
Operating expenses:
Research and development......... 71,928 14,687 -- 86,615
Selling, general and
administrative................ 116,068 24,516 -- 140,584
Amortization of purchased (300)
intangibles................... 1,006,580 300 3,372,815 4,379,395
Acquired in-process research and
development................... 213,306 4,207 -- 217,513
Other operating expenses......... 13,947 -- -- 13,947
----------- -------- ----------- -----------
Total operating expenses...... 1,421,829 43,710 3,372,515 4,838,054
----------- -------- ----------- -----------
Income (loss) from operations...... (1,023,780) 43,831 (3,372,565) (4,352,514)
Interest and other income, net..... 7,754 2,211 -- 9,965
----------- -------- ----------- -----------
Income (loss) before income
taxes............................ (1,016,026) 46,042 (3,372,565) (4,342,549)
Income tax expense................. 3,237 18,417 -- 21,654
Minority interest.................. 1,287 -- -- 1,287
----------- -------- ----------- -----------
Net income (loss).................. (1,020,550) 27,625 (3,372,565) (4,365,490)
Accretion on preferred stock....... -- 3,882 -- 3,882
----------- -------- ----------- -----------
Net income (loss) available to
common stockholders.............. $(1,020,550) $ 23,743 $(3,372,565) $(4,369,372)
=========== ======== =========== ===========
Basic earnings (loss) per share.... $ (1.50) $ 0.55 $ (5.63)
=========== ======== ===========
Dilutive earnings (loss) per
share............................ $ (1.50) $ 0.45 $ (5.63)
=========== ======== ===========
Average number of shares
outstanding...................... 680,664 43,152 775,598
=========== ======== ===========
Average number of shares
outstanding assuming dilution.... 680,664 61,746 775,598
=========== ======== ===========
</TABLE>
See accompanying notes to JDS Uniphase and E-TEK unaudited pro forma condensed
combined consolidated financial statements.
18
<PAGE> 22
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF
OPERATIONS OF JDS UNIPHASE AND E-TEK
NINE MONTHS ENDED MARCH 31, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
JDS UNIPHASE PRO FORMA
(JDS UNIPHASE JDS UNIPHASE
AND OCLI PRO FORMA AND E-TEK
COMBINED) E-TEK ADJUSTMENTS COMBINED
------------- -------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales............................. $1,037,416 $223,435 $ (1,171) $ 1,259,680
Cost of sales......................... 519,899 112,398 (1,139) 631,158
---------- -------- ----------- -----------
Gross profit..................... 517,517 111,037 (32) 628,522
Operating expenses:
Research and development............ 90,483 19,783 -- 110,266
Selling, general and
administrative................... 134,955 26,561 -- 161,516
(22,915)
Amortization of purchased
intangibles...................... 793,669 22,915 2,529,611 3,323,280
Acquired in-process research
development...................... 19,681 1,630 -- 21,311
Other operating expenses (income),
net.............................. (307) -- -- (307)
---------- -------- ----------- -----------
Total operating expenses......... 1,038,481 70,889 2,506,696 3,616,066
---------- -------- ----------- -----------
Income (loss) from operations......... (520,964) 40,148 (2,506,728) (2,987,544)
Interest and other income, net........ 27,754 4,970 -- 32,724
---------- -------- ----------- -----------
Income (loss) before income taxes..... (493,210) 45,118 (2,506,728) (2,954,820)
Income tax expense.................... 70,445 17,145 -- 87,590
---------- -------- ----------- -----------
Net income (loss)..................... $ (563,655) $ 27,973 $(2,506,728) $(3,042,410)
========== ======== =========== ===========
Basic earnings (loss) per share....... $ (0.76) $ 0.43 $ (3.46)
========== ======== ===========
Dilutive earnings (loss) per share.... $ (0.76) $ 0.40 $ (3.46)
========== ======== ===========
Average number of shares
outstanding......................... 738,076 64,473 879,917
========== ======== ===========
Average number of shares outstanding
assuming dilution................... 738,076 70,107 879,917
========== ======== ===========
</TABLE>
See accompanying notes to JDS Uniphase and E-TEK unaudited pro forma condensed
combined consolidated financial statements.
19
<PAGE> 23
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET
OF JDS UNIPHASE AND E-TEK
MARCH 31, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
JDS UNIPHASE
PRO FORMA AND E-TEK
JDS UNIPHASE E-TEK ADJUSTMENTS COMBINED
------------ -------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Cash & cash equivalents........... $ 138,187 $185,415 $ (80,000) $ 243,602
Short-term investments............ 824,326 -- -- 824,326
Accounts receivable............... 261,874 55,156 (59) 316,971
Inventories....................... 197,053 62,188 (32) 259,209
Other current assets.............. 43,172 22,324 -- 65,496
---------- -------- ----------- -----------
Total current assets............ 1,464,612 325,083 (80,091) 1,709,604
Property, plant and equipment,
net............................. 449,766 103,804 -- 553,570
(73,894)
Intangible assets, including
goodwill........................ 5,827,613 73,894 16,076,822 21,904,435
Other assets...................... 201,473 17,666 618,777 837,916
---------- -------- ----------- -----------
Total assets.................... $7,943,464 $520,447 $16,541,614 $25,005,525
========== ======== =========== ===========
Liabilities and Stockholders'
Equity:
Current maturities on long-term
obligations..................... $ 3,637 $ 16,564 $ -- $ 20,201
Accounts payable.................. 79,472 32,927 (59) 112,340
Other accrued expenses............ 224,636 51,679 (32) 276,283
---------- -------- ----------- -----------
Total current liabilities......... 307,745 101,170 (91) 408,824
Long-term obligations............. 11,027 34,638 -- 45,665
Other non-current liabilities..... 8,820 -- -- 8,820
Deferred tax liabilities.......... 457,630 18,802 -- 476,432
(365,837)
(250,600)
Stockholders' equity.............. 7,158,242 365,837 17,158,142 24,065,784
---------- -------- ----------- -----------
Total liabilities and
stockholders' equity......... $7,943,464 $520,447 $16,541,614 $25,005,525
========== ======== =========== ===========
</TABLE>
See accompanying notes to JDS Uniphase and E-TEK unaudited pro forma condensed
combined consolidated financial statements.
20
<PAGE> 24
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
FINANCIAL STATEMENTS OF JDS UNIPHASE AND E-TEK
1. BASIS OF PRO FORMA PRESENTATION
On January 17, 2000, E-TEK agreed to merge with JDS Uniphase, in a
transaction accounted for as a purchase. The total purchase price of $17.2
billion included consideration of 150.1 million shares of JDS Uniphase common
stock, the issuance of 20.0 million stock options valued at $1.8 billion in
exchange for E-TEK options and estimated direct transaction costs of $80
million.
The JDS Uniphase Pro Forma Condensed Combined Consolidated Financial
Statements provide for the exchange of 2.2 shares of JDS Uniphase common stock
for each outstanding share of E-TEK common stock. The actual number of shares of
JDS Uniphase common stock to be issued will depend on the actual number of
shares of E-TEK common stock outstanding on the date the merger closes. The
average market price per share of JDS Uniphase common stock of $102.37 is based
on the average closing price for a range of trading days (January 10 through
January 24, 2000) around the announcement date (January 17, 2000) of the merger.
Based on the total number of E-TEK options outstanding at April 29, 2000 JDS
Uniphase would issue options to purchase 20.0 million shares of JDS Uniphase
common stock at a weighted average exercise price of $27.77. The actual number
of options granted depends on the actual number of E-TEK options outstanding on
the date the merger closes. The estimated fair value of the options, as well as
estimated direct transaction expenses of $80 million, have been included as a
part of the total estimated purchase cost.
The estimated total purchase cost of the E-TEK merger is as follows (in
thousands):
<TABLE>
<S> <C>
Value of securities issued................................. $15,360,317
Assumption of E-TEK options................................ 1,797,825
-----------
17,158,142
Estimated transaction costs and expenses................... 80,000
-----------
Total purchase cost........................................ $17,238,142
===========
</TABLE>
The purchase price allocation, which is preliminary and therefore subject
to change based on JDS Uniphase's final analysis, is as follows (in thousands):
<TABLE>
<CAPTION>
ANNUAL USEFUL
AMOUNT AMORTIZATION LIVES
----------- ------------ -----------
<S> <C> <C> <C>
Purchase Price Allocation:
Tangible net assets............................ $ 291,943 n/a n/a
Equity investment.............................. 618,777 $ 123,755 5 years
Intangible assets acquired:
Existing technology......................... 248,700 82,900 3 years
Core technology............................. 168,500 33,700 5 years
Trademarks and tradename.................... 60,400 12,080 5 years
Assembled workforce......................... 10,700 2,675 3 - 5 years
Goodwill.................................... 15,588,522 3,117,705 5 years
In-process research and development............ 250,600 n/a n/a
----------- ----------
Total estimated purchase price
allocation............................. $17,238,142 $3,372,815
=========== ==========
</TABLE>
An independent valuation specialist performed an allocation of the total
purchase price of E-TEK to its individual assets. Of the total purchase price,
$250.6 million has been allocated to in-process research and development and
will be charged to expense in the period the transaction closes. Due to their
non-recurring nature, the in-process research and development attributed to the
21
<PAGE> 25
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
FINANCIAL STATEMENTS OF JDS UNIPHASE AND E-TEK (CONTINUED)
E-TEK transaction and the transaction costs incurred by E-TEK estimated at $30
million have been excluded in the pro forma statements of operations. The
remaining purchase price has been allocated to specifically identifiable assets
acquired, including an increase of $618.8 million in the carrying value of
certain investments under the equity method of accounting.
In addition to the value assigned to the in-process research and
development projects, E-TEK's tangible assets, specific intangible assets were
identified and valued. The related amortization of the identifiable intangible
assets is reflected as a pro forma adjustment to the Unaudited Pro Forma
Condensed Combined Statements of Operations. The identifiable assets include
existing technology, core technology, trademarks and tradename, and assembled
workforce.
The acquired existing technology, which is comprised of products that are
already technologically feasible, includes products in most of E-TEK's product
line. These include wavelength division multiplexing ("WDM") components and
modules, isolators, couplers, and micro-optic integrated components. JDS
Uniphase expects to amortize the acquired existing technology of approximately
$248.7 million on a straight-line basis over an average estimated remaining
useful life of 3 years.
The acquired core technology represents E-TEK trade secrets and patents
developed through years of experience in design, package, and manufacture of
passive components for fiber optic telecommunication networks. E-TEK's products
are designed for established terrestrial and submarine long-haul applications,
as well as emerging short-haul applications, such as metropolitan area networks.
This proprietary know-how can be leveraged by E-TEK to develop new and improved
products and manufacturing processes. JDS Uniphase expects to amortize the
acquired core technology of approximately $168.5 million on a straight-line
basis over an average estimated remaining useful life of 5 years.
The trademarks and trade names include the E-TEK trademark and trade name
as well as all branded E-TEK products, such as E-TEK(TM), Unifuse(TM), Kaifa(TM)
and TIGRA(TM). JDS Uniphase expects to amortize the trademark and trade names of
approximately $60.4 million on a straight-line basis over an estimated remaining
useful life of 5 years.
The acquired assembled workforce is comprised of over 3,300 skilled
employees across E-TEK's Executive, Research and Development, Manufacturing,
Supervisor/Manager, and Sales and Marketing groups. JDS Uniphase expects to
amortize the value assigned to the assembled workforce of approximately $10.7
million on a straight-line basis over an estimated remaining useful life of 3 to
5 years.
Goodwill, which represents the excess of the purchase price of an
investment in an acquired business over the fair value of the underlying net
identifiable assets, is amortized on a straight-line basis over its estimated
remaining useful life of 5 years.
E-TEK is currently developing new products that qualify as in-process
research and development in multiple product areas. For the purposes of
determining which projects qualified as in-process research and development,
technological feasibility is defined as being equivalent to completion of design
verification testing, when the design is finalized and ready for pilot
manufacturing.
The following is a general description of in-process research and
development efforts as of the date of this proxy statement-prospectus:
Current engineering efforts are focused on improving product performance,
reducing product form factor, integrating multiple function into single
components and component integration into modules. Products that will
incorporate in-process technologies are as follows: wavelength division
22
<PAGE> 26
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
FINANCIAL STATEMENTS OF JDS UNIPHASE AND E-TEK (CONTINUED)
multiplexers, micro-optic integrated components, high reliability components
(for submarine applications), dispersion compensator, optical performance
monitor, attenuator, switch, erbium-doped fiber amplifier, wavelength locker,
and a configurable add/drop multiplexer. Developing and enhancing these products
is time-consuming, costly and complex. There is a risk that these developments
and enhancements will be late, fail to meet customer or market specifications,
and will not be competitive with other products using alternative technologies
that offer comparable functionality.
E-TEK is developing a number of different WDM components and modules.
Narrowband WDM multiplexers combine light sources of different wavelengths for
simultaneous transmission along a single fiber. E-TEK's current development
efforts on narrowband WDM is to increase the number of optical signals
transmitted simultaneously on a single fiber. E-TEK expects the current
development cycle for these new WDM components and modules to continue for
another 2 months, with expected completion dates in the third quarter of
calendar 2000. Development costs incurred on WDM products to date are
approximately $3.8 million with estimated cost to complete of approximately $0.4
million, which E-TEK expects to incur ratably for the remainder of the
development cycle.
E-TEK is continuing to develop its new submarine products, including high
reliability isolators for undersea networks. An isolator prevents reflected
signals from traveling past it in the wrong direction while still allowing the
unimpeded passage of signals in the original direction. Isolators must offer low
signal loss, which means that a high percentage of light passes through and only
small amounts of light are lost. E-TEK expects the current development cycle for
its submarine products to continue for 12 months, with expected completion dates
in the second quarter of calendar 2001. Development costs incurred on submarine
products to date are approximately $0.5 million with estimated cost to complete
of approximately $0.8 million, which E-TEK expects to incur ratably for the
remainder of the development cycle.
E-TEK is continuing its development of a variety of other new components
and modules including improved versions of:
- attenuators, which are used to adjust the strength of optical signals;
- circulators, which are used to direct signals;
- switches, which are used to flexibly reroute signals; and
- dispersion equalization modules, which ensure that an optical signal
arrives cleanly at the end of an optical fiber. Different colors of light
travel along an optical fiber at slightly different speeds, and light
signals that carry information always have some small variation in the
color of the light. The dispersion equalization modules cancel out those
differences in speed so that all the colors of the light signal arrive at
the same time.
- optical performance monitors, which watch the optical signals passing
through an optical fiber. They count which wavelengths (colors) of light
signals are present. They check to see how strong each wavelength signal
is and whether it is interfering with other signals. As communication
systems move more towards optical networks, these traffic monitors become
increasingly important to prevent "optical gridlock."
E-TEK's development efforts for these products is to enhance their
performance and enable their deployment in metropolitan fiber optic networks and
cable television networks. E-TEK expects the current development cycle for these
components and modules to continue for between 2 to 7 months,
23
<PAGE> 27
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
FINANCIAL STATEMENTS OF JDS UNIPHASE AND E-TEK (CONTINUED)
with expected completion dates in the third and fourth quarters of calendar
2000. Development costs incurred on these components and modules to date are
approximately $3.6 million with estimated cost to complete of approximately $1.0
million, which E-TEK expects to incur ratably for the remainder of the
development cycle.
VALUE ASSIGNED TO IN-PROCESS RESEARCH AND DEVELOPMENT
The value assigned to in-process research and development was determined by
considering the importance of each project to the overall development plan,
estimating costs to develop the purchased in-process research and development
into commercially viable products, estimating the resulting net cash flows from
the projects when completed and discounting the net cash flows to their present
value. The revenue estimates used to value the purchased in-process research and
development were based on estimates of relevant market sizes and growth factors,
expected trends in technology and the nature and expected timing of new product
introductions by E-TEK and its competitors.
The rates utilized to discount the net cash flows to their present value
are based on E-TEK's weighted average cost of capital. Given the nature of the
risks associated with the difficulties and uncertainties in completing each
project and thereby achieving technological feasibility, anticipated market
acceptance and penetration, market growth rates and risks related to the impact
of potential changes in future target markets, the weighted average cost of
capital was adjusted. Based on these factors, discount rates of 12 and 20% were
deemed appropriate for the existing and in-process technology, respectively.
The estimates used in valuing in-process research and development were
based upon assumptions believed to be reasonable but which are inherently
uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and no
assurance can be given that unanticipated events and circumstances will not
occur. Accordingly, actual results may vary from the projected results. Any such
variance may result in a material adverse effect on E-TEK's financial condition
and results of operations.
With respect to the acquired in-process technologies, the calculations of
value were adjusted to reflect the value creation efforts of E-TEK prior to the
merger. Following are the estimated completion percentages and technology lives:
<TABLE>
<CAPTION>
EXPECTED
PERCENT TECHNOLOGY
PROJECT COMPLETED LIFE
------- --------- ----------
<S> <C> <C>
WDM's............................................ 92% 5 years
Submarine Products............................... 39% 5 years
Other Component Products and Modules............. 50 to 92% 5 years
</TABLE>
The value assigned to each acquired in-process research and development
project as of the date of this proxy statement-prospectus were as follows (in
millions):
<TABLE>
<S> <C>
WDM's....................................................... $124.5
Submarine Products.......................................... 18.5
Other Component Products and Modules........................ 107.6
------
Total acquired in-process research and
development.................................... $250.6
======
</TABLE>
A portion of the purchase price has been allocated to developed technology
and acquired in-process research and development. Developed technology and
in-process research and development were identified and valued through, analysis
of data provided by E-TEK concerning developmental
24
<PAGE> 28
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
FINANCIAL STATEMENTS OF JDS UNIPHASE AND E-TEK (CONTINUED)
products, their stage of development, the time and resources needed to complete
them, if applicable, their expected income generating ability, target markets
and associated risks. The Income Approach, which includes an analysis of the
markets, cash flows and risks associated with achieving such cash flows, was the
primary technique utilized in valuing the developed technology and in-process
research and development.
Where developmental projects had reached technological feasibility, they
were classified as developed technology, and the value assigned to developed
technology was capitalized. Where the developmental projects had not reached
technological feasibility and had no future alternative uses, they were
classified as in-process research and development and will be charged to expense
upon closing of the merger.
2. PRO FORMA ADJUSTMENTS
The JDS Uniphase Unaudited Pro Forma Condensed Combined Consolidated
Financial Statements give effect to the allocation of the total purchase cost to
the assets and liabilities of E-TEK based on their respective fair values and to
amortization over the respective useful lives of amounts allocated to intangible
assets. Intercompany balances between JDS Uniphase and E-TEK have been
eliminated for pro forma presentations. The pro forma combined provision for
income taxes does not represent the amounts that would have resulted had JDS
Uniphase and E-TEK filed consolidated income tax returns during the periods
presented.
3. PRO FORMA NET LOSS PER SHARE
The pro forma basic and dilutive net loss per share are based on the
weighted average number of shares of pro forma JDS Uniphase common stock
outstanding during each period and weighted average number of E-TEK shares of
common stock outstanding multiplied by the exchange ratio. Dilutive securities
including the replacement E-TEK options are not included in the computation of
pro forma dilutive net loss per share as their effect would be anti-dilutive.
25
<PAGE> 29
COMPARATIVE PER SHARE DATA
<TABLE>
<CAPTION>
AS OF AND FOR THE NINE MONTHS ENDED
MARCH 31, 2000
----------------------------------------------------
PRO FORMA
JDS UNIPHASE PRO FORMA
(JDS UNIPHASE ----------------------------
AND OCLI JDS UNIPHASE E-TEK
COMBINED) E-TEK AND E-TEK EQUIVALENT(3)
------------- ----- ------------ -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net income (loss) per share:
Basic.................................. $(0.76) $0.43 $(3.46) $(7.61)
Diluted................................ $(0.76) $0.40 $(3.46) $(7.61)
Book value per common share at period
end(1)(2).............................. $ 9.23 $5.38 $26.00 $57.21
</TABLE>
<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED
JUNE 30, 1999
----------------------------------------------------
PRO FORMA
JDS UNIPHASE
(UNIPHASE, PRO FORMA
JDS FITEL ----------------------------
AND OCLI JDS UNIPHASE E-TEK
COMBINED) E-TEK AND E-TEK EQUIVALENT(3)
------------- ----- ------------ -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net income (loss) per share
Basic.................................. $(1.50) $0.55 $(5.63) $(12.39)
Diluted................................ $(1.50) $0.45 $(5.63) $(12.39)
Book value per common share at period
end(1)(2).............................. $ 9.30 $2.41 $27.30 $ 60.06
</TABLE>
-------------------------
(1) The historical book value per share is computed by dividing total
stockholders' equity as of the end of each period for which such computation
is made by the number of common shares outstanding of the end of each
period.
(2) The pro forma book value per share is computed by dividing pro forma
stockholders' equity by the pro forma number of shares outstanding at the
end of each period for which such computation is made. For purposes of
computing pro forma book value per share as of June 30, 1999 the pro forma
book value of $23.1 billion was divided by pro forma common shares
outstanding of 821 million.
(3) The E-TEK pro forma equivalent per share amounts are computed by multiplying
the E-TEK and JDS Uniphase pro forma combined per share amounts by the
exchange ratio of 2.2 shares of JDS Uniphase common stock for each share of
E-TEK common stock. Pro forma diluted earnings per share excludes the effect
of pro forma dilutive securities totaling 39.2 million and 89.3 million
equivalent shares for the nine months ended March 31, 2000 and the year
ended June 30, 1999, respectively, as they are antidilutive.
26
<PAGE> 30
COMPARATIVE PER SHARE MARKET PRICE DATA
JDS Uniphase common stock is traded on the Nasdaq National Market under the
symbol "JDSU," and prior to July 6, 1999, Uniphase's common stock traded under
the symbol "UNPH." The following table shows the high and low sale prices of JDS
Uniphase common stock as reported by the Nasdaq National Market for the periods
indicated. The prices in the following table have been adjusted to reflect all
previous stock dividends and splits through the date of this proxy statement-
prospectus. JDS Uniphase has never paid a cash dividend since its inception and
does not anticipate paying any cash dividends in the foreseeable future.
<TABLE>
<CAPTION>
JDS UNIPHASE
SALE PRICE
-----------------
HIGH LOW
------- ------
<S> <C> <C>
Year Ended June 30, 1998
First Quarter............................................. $ 5.02 $ 3.61
Second Quarter............................................ $ 5.81 $ 3.56
Third Quarter............................................. $ 5.52 $ 4.15
Fourth Quarter............................................ $ 7.62 $ 5.08
Year Ended June 30, 1999
First Quarter............................................. $ 7.87 $ 4.70
Second Quarter............................................ $ 8.67 $ 4.29
Third Quarter............................................. $ 14.39 $ 7.94
Fourth Quarter............................................ $ 20.90 $12.81
Year Ending June 30, 2000
First Quarter............................................. $ 30.37 $19.31
Second Quarter............................................ $ 88.75 $28.00
Third Quarter............................................. $153.42 $74.50
Fourth Quarter through May 22, 2000....................... $124.63 $73.13
</TABLE>
E-TEK common stock is traded on the Nasdaq National Market under the symbol
"ETEK." The following table shows the high and low sale prices of E-TEK common
stock as reported by the Nasdaq National Market for the periods indicated. E-TEK
has never paid a cash dividend since its inception and does not anticipate
paying any cash dividends in the foreseeable future.
<TABLE>
<CAPTION>
E-TEK
SALE PRICE
------------------
HIGH LOW
------- -------
<S> <C> <C>
Year Ended June 30, 1999
Second Quarter (from December 2, 1998).................... $ 27.13 $ 20.06
Third Quarter............................................. $ 36.38 $ 23.31
Fourth Quarter............................................ $ 50.50 $ 30.50
Year Ending June 30, 2000
First Quarter............................................. $ 66.38 $ 36.88
Second Quarter............................................ $133.13 $ 52.69
Third Quarter............................................. $305.02 $ 99.06
Fourth Quarter through May 22, 2000....................... $219.50 $134.50
</TABLE>
On January 14, 2000, the last full trading day before the public
announcement of the proposed merger, the high and low sale prices for JDS
Uniphase common stock, as reported on the Nasdaq National Market, were $100.63
and $94.56, respectively. The high and low sale prices for E-TEK common stock on
that day, as reported on the Nasdaq National Market, were $143.50 and $132.00,
respectively.
27
<PAGE> 31
COMPARATIVE PER SHARE MARKET PRICE DATA (CONTINUED)
The following table sets forth the closing sale price of JDS Uniphase
common stock, as reported on the Nasdaq National Market, E-TEK common stock, as
reported on the Nasdaq National Market, and the equivalent per share price of
E-TEK, giving effect to the proposed merger, on January 14, 2000, the last full
trading day prior to the public announcement of the proposed merger, and May 22,
2000, the latest practicable trading day prior to the printing of this proxy
statement-prospectus.
<TABLE>
<CAPTION>
CLOSING SALES PRICE
-------------------------------------
E-TEK
JDS UNIPHASE E-TEK EQUIVALENT
------------ ------- ----------
<S> <C> <C> <C>
Price per share:
January 14, 2000.......................... $96.09 $135.88 $211.40
May 22, 2000.............................. $85.31 $181.82 $187.68
</TABLE>
You are advised to obtain current market quotations for JDS Uniphase and
E-TEK common stock. The market price of the common stock of both companies is
subject to fluctuation. The value of the shares of JDS Uniphase common stock
that holders of E-TEK will receive in the proposed merger and the value of the
E-TEK stock they surrender may increase or decrease.
28
<PAGE> 32
RISK FACTORS
This proxy statement-prospectus and the documents incorporated by reference
into this proxy statement-prospectus contain forward-looking statements within
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995 with respect to JDS Uniphase's and E-TEK's financial condition, results of
operations and business, and on the expected impact of the merger on JDS
Uniphase's financial performance. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates" and similar expressions
identify forward-looking statements. These forward-looking statements are not
guarantees of future performance and are subject to risks and uncertainties that
could cause actual results to differ materially from the results contemplated by
the forward-looking statements. In evaluating the merger, you should carefully
consider the discussion of risks and uncertainties below.
By voting in favor of the merger, you will be choosing to invest in JDS
Uniphase common stock. An investment in JDS Uniphase common stock involves a
high degree of risk. In addition to the other information contained in or
incorporated by reference into this proxy statement-prospectus, you should
carefully consider the following risk factors in deciding whether to vote for
the merger.
RISKS RELATED TO THE MERGER
YOU WILL RECEIVE 2.2 SHARES OF JDS UNIPHASE COMMON STOCK FOR EACH SHARE OF E-TEK
COMMON STOCK DESPITE CHANGES IN MARKET VALUE OF E-TEK COMMON STOCK OR JDS
UNIPHASE COMMON STOCK
Upon completion of the merger, each share of E-TEK common stock will be
exchanged for 2.2 shares of JDS Uniphase common stock. There will be no
adjustment for changes in the market price of either E-TEK common stock or JDS
Uniphase common stock, and E-TEK is not permitted to withdraw from the merger or
resolicit the vote of its stockholders solely because of changes in the market
price of JDS Uniphase or E-TEK common stock. Accordingly, the specific dollar
value of JDS Uniphase common stock you will receive upon completion of the
merger will depend on the market value of JDS Uniphase common stock at the time
of completion of the merger. The merger may not be completed immediately
following the E-TEK stockholder meeting, if all regulatory approvals have not
yet been obtained. We cannot assure you that the value of the JDS Uniphase
common stock you will receive in the merger will not decline prior to or after
the merger.
ALTHOUGH JDS UNIPHASE AND E-TEK EXPECT THAT THE MERGER WILL RESULT IN BENEFITS,
THOSE BENEFITS MAY NOT BE REALIZED
Achieving the benefits of the merger may depend in part on the integration
of technology, operations and personnel. The integration of JDS Uniphase and
E-TEK will be a complex, time consuming and expensive process and may disrupt
JDS Uniphase's business if not completed in a timely and efficient manner. The
challenges involved in this integration include the following:
- Coordinating manufacturing operations in a rapid and efficient manner;
- Combining product offerings and product lines effectively and quickly;
- Integrating sales efforts so that customers can do business easily with
the combined company;
- Bringing together the companies' marketing efforts so that the industry
receives useful information about the merger;
- Coordinating research and development activities to enhance introduction
of new products and technologies; and
- Persuading employees that JDS Uniphase's and E-TEK's business cultures
are compatible.
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<PAGE> 33
It is not certain that JDS Uniphase and E-TEK can be successfully
integrated in a timely manner or at all or that any of the anticipated benefits
will be realized. Failure to do so could materially harm the business and
operating results of the combined company. Also, neither JDS Uniphase nor E-TEK
can assure you that the growth rate of the combined company will equal the
historical growth rate experienced by JDS Uniphase and E-TEK.
E-TEK EXECUTIVE OFFICERS AND DIRECTORS HAVE INTERESTS THAT MAY INFLUENCE THEM TO
SUPPORT AND APPROVE THE MERGER
Some of the directors and executive officers of E-TEK participate in
arrangements and have continuing indemnification against liabilities that
provide them with interests in the merger that are different from, or are in
addition to, your interests. In particular, as a result of the completion of the
merger, unvested options held by some officers will immediately vest, and these
officers, if terminated, will also be entitled to severance payments. As a
result, these directors and officers may be more likely to vote to approve the
merger agreement than if they did not hold these interests. E-TEK's officers and
directors and affiliates of Summit Partners, each whom are affiliates of E-TEK,
together beneficially owned approximately 17,185,751 shares of E-TEK common
stock, which represented 25.3% of all outstanding shares of E-TEK common stock
entitled to vote at the special meeting of E-TEK as of May 17, 2000, and these
persons have agreed to vote in favor of the merger.
CUSTOMER AND EMPLOYEE UNCERTAINTY RELATED TO THE MERGER COULD HARM THE COMBINED
COMPANY
JDS Uniphase's or E-TEK's customers may, in response to the announcement of
the merger, delay or defer purchasing decisions. Any delay or deferral in
purchasing decisions by JDS Uniphase's or E-TEK's customers could seriously harm
the business of the combined company. Similarly, JDS Uniphase and E-TEK
employees may experience uncertainty about their future role with the combined
company until or after strategies with regard to E-TEK are announced or
executed. This may adversely affect the combined company's ability to attract
and retain key management, marketing and technical personnel.
JDS UNIPHASE'S OPERATING RESULTS WILL SUFFER AS A RESULT OF PURCHASE ACCOUNTING
TREATMENT, THE IMPACT OF AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES RELATING
TO ITS PROPOSED COMBINATION WITH E-TEK
Under U.S. generally accepted accounting principles that apply to JDS
Uniphase, JDS Uniphase will account for the merger using the purchase method of
accounting. Under purchase accounting, JDS Uniphase will record the market value
of its common stock issued in connection with the merger, the fair value of the
options to purchase E-TEK common stock, which became options to purchase its
common stock and the amount of direct transaction costs as the cost of acquiring
the business of E-TEK. JDS Uniphase will allocate that cost to the individual
assets acquired and liabilities assumed, including various identifiable
intangible assets such as acquired technology, acquired trademarks and trade
names and acquired workforce, and to in-process research and development based
on their respective fair values. In-process research and development, which is
currently estimated at $251 million, will be expensed in the quarter when the
merger closes. Intangible assets including goodwill will be generally amortized
over a five year period. As described in the JDS Uniphase Unaudited Pro Forma
Condensed Combined Consolidated Financial Statements, the amount of purchase
cost allocated to goodwill and other intangibles is estimated to be
approximately $16 billion. If goodwill and other intangible assets were
amortized in equal quarterly amounts over a five year period following
completion of the merger, the accounting charge attributable to these items
would be approximately $843 million per quarter and $3.4 billion per fiscal
year. As a result, purchase accounting treatment of the merger will increase the
net
30
<PAGE> 34
loss for JDS Uniphase in the foreseeable future which could have a material and
adverse effect on the market value of JDS Uniphase common stock following
completion of the merger.
JDS UNIPHASE AND E-TEK EXPECT TO INCUR SIGNIFICANT COSTS ASSOCIATED WITH THE
MERGER
JDS Uniphase estimates that it will incur direct transaction costs of
approximately $80 million associated with the merger, which will be included as
a part of the total purchase cost for accounting purposes. In addition, E-TEK
estimates that it will incur direct transaction costs of approximately $30
million which will be expensed in the quarter that the merger closes. JDS
Uniphase and E-TEK believe the combined entity may incur charges to operations,
which are not currently reasonably estimable, in the quarter in which the merger
is completed or the following quarters, to reflect costs associated with
integrating the two companies. There can be no assurance that the combined
company will not incur additional material charges in subsequent quarters to
reflect additional costs associated with the merger.
THE PRICE OF JDS UNIPHASE COMMON STOCK MAY BE AFFECTED BY FACTORS DIFFERENT FROM
THOSE AFFECTING THE PRICE OF E-TEK COMMON STOCK
When the merger is completed, holders of E-TEK common stock will become
holders of JDS Uniphase common stock. JDS Uniphase's business differs from that
of E-TEK, and JDS Uniphase's results of operations, as well as the price of JDS
Uniphase common stock, may be affected by factors different from those affecting
E-TEK's results of operations and the price of E-TEK common stock.
JDS UNIPHASE AND E-TEK MAY NOT BE ABLE TO OBTAIN THE REQUIRED REGULATORY
APPROVALS FOR COMPLETING THE MERGER
As a condition to the obligations of JDS Uniphase and E-TEK to complete the
merger, the waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 must have expired or been terminated. JDS Uniphase and E-TEK have
made the required filings with the Department of Justice or the Federal Trade
Commission. On March 31, 2000, JDS Uniphase and E-TEK received requests for
additional information and other documentary material from the Antitrust
Division of the U.S. Department of Justice under the Hart-Scott-Rodino Act. This
request extends the waiting period for this transaction. Under the applicable
provisions of the Hart-Scott-Rodino Act, JDS Uniphase and E-TEK may not
consummate the merger until the expiration of the applicable waiting period. In
practice, complying with a request for additional information or material can
take a significant amount of time. JDS Uniphase and E-TEK intend to comply with
all requests for information from any government entity. There can be no
assurance that these consents and approvals will be obtained at all or without
materially adverse restrictions or conditions that would have a material adverse
effect on JDS Uniphase and E-TEK on a combined basis. The combined enterprise
may be required to agree to various operating restrictions, before or after
receipt of stockholder approval, in order to obtain the necessary authorizations
and approvals of the merger or to assure that governmental authorities do not
seek to block the merger. No additional stockholder approval is expected to be
required or sought for any decision by JDS Uniphase or E-TEK, after the special
meeting of E-TEK's stockholders, to agree to any terms and conditions necessary
to resolve any regulatory objections to the merger, and stockholder approval
will not be sought unless such stockholder approval is required to approve such
terms and conditions under applicable law. Even if regulatory approvals are
obtained, any federal, state, foreign governmental entity or private person may
challenge the merger at any time before or after its completion.
31
<PAGE> 35
IF THE MERGER IS NOT COMPLETED, JDS UNIPHASE'S AND E-TEK'S STOCK PRICES AND
FUTURE BUSINESS AND OPERATIONS COULD BE HARMED
If the merger is not completed, JDS Uniphase and E-TEK may be subject to
the following material risks, among others:
- E-TEK may be required to pay JDS Uniphase a termination fee of $350
million and JDS Uniphase may be required to pay E-TEK a termination fee
of $100 million as described on page 72;
- the option granted to JDS Uniphase by E-TEK may become exercisable and if
exercised may make another business combination involving E-TEK more
difficult;
- JDS Uniphase could require E-TEK to purchase the option or shares of
E-TEK common stock it acquired under the option, resulting in significant
additional costs to E-TEK;
- the price of JDS Uniphase and E-TEK common stock may decline to the
extent that the current market price of JDS Uniphase and E-TEK common
stock reflects a market assumption that the merger will be completed; and
- JDS Uniphase's and E-TEK's costs related to the merger, such as legal,
accounting and some of the fees of its financial advisor, must be paid
even if the merger is not completed.
Further, with respect to E-TEK, if the merger is terminated and E-TEK's
board of directors determines to seek another merger or business combination, it
is not certain that it will be able to find a partner willing to pay an
equivalent or more attractive price than that which would be paid in the merger.
In addition, while the merger agreement is in effect and subject to limited
exceptions described on page 68 of this proxy statement-prospectus, E-TEK is
generally prohibited from soliciting, initiating or knowingly encouraging or
entering into extraordinary transactions, such as a merger, sale of assets or
other business combination, with any party other than JDS Uniphase.
RISKS RELATED TO JDS UNIPHASE WHICH WILL INCLUDE E-TEK FOLLOWING THE COMPLETION
OF THE MERGER
DIFFICULTIES JDS UNIPHASE MAY ENCOUNTER MANAGING ITS GROWTH COULD ADVERSELY
AFFECT ITS RESULTS OF OPERATIONS
JDS Uniphase has historically achieved growth through a combination of
internally developed new products and acquisitions. JDS Uniphase's growth
strategy depends on its ability to continue developing new components, modules
and other products for its customer base. However, along with internal new
product development efforts as part of this strategy, JDS Uniphase expects to
continue to pursue acquisitions of other companies, technologies and
complementary product lines. The success of each acquisition will depend upon:
- JDS Uniphase's ability to manufacture and sell the products of the
businesses acquired;
- continued demand for these acquired products by JDS Uniphase's customers;
- JDS Uniphase's ability to integrate the acquired business' operations,
products and personnel;
- JDS Uniphase's ability to retain key personnel of the acquired
businesses; and
- JDS Uniphase's ability to expand its financial and management controls
and reporting systems and procedures.
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<PAGE> 36
DIFFICULTIES IN INTEGRATING NEW ACQUISITIONS COULD ADVERSELY AFFECT JDS
UNIPHASE'S BUSINESS
Critical to the success of JDS Uniphase's growth is the ordered, efficient
integration of acquired businesses into its organization and, with this end, JDS
Uniphase has in the past spent and continues to spend significant resources. If
JDS Uniphase's integration efforts are unsuccessful, its businesses will suffer.
JDS Uniphase is the product of several substantial combinations, mergers and
acquisitions, including, among others, the combination of Uniphase and JDS FITEL
on June 30, 1999, and the acquisition of Optical Coating Laboratory, Inc.
("OCLI") on February 4, 2000. In addition, on January 17, 2000, JDS Uniphase
executed a definitive merger agreement to acquire E-TEK. Each combination,
merger and acquisition presents unique product, marketing, research and
development, facilities, information systems, accounting, personnel and other
integration challenges. In the case of several of JDS Uniphase's acquisitions,
including Uniphase Laser Enterprise in March 1997, Uniphase Netherlands in June
1998, and Cronos Integrated Microsystems, Inc. and Fujian Casix Laser, Inc. in
April 2000, JDS Uniphase acquired businesses that had previously been engaged
primarily in research and development and that needed to make the transition
from a research activity to a commercial business with sales and profit levels
that are consistent with its overall financial goals. This transition is in its
genesis at Cronos and is not yet completed at Uniphase Netherlands, which
continues to operate at higher expense levels and lower gross margins than those
required to meet JDS Uniphase's profitability goals. Also, JDS Uniphase's
information systems and those of the companies it acquires are often
incompatible, requiring substantial upgrades to one or the other. Further, JDS
Uniphase's current senior management is a combination of the prior senior
management teams of Uniphase, JDS FITEL and OCLI, several of whom have not
previously worked with other members of management.
The benefits to JDS Uniphase of each combination, merger and acquisition
and its success, as a whole, depends upon it succeeding in each of these and
other integration challenges. Nevertheless, the integration of JDS Uniphase's
business with another may result in unanticipated operations problems, expenses
and liabilities and the diversion of management attention. JDS Uniphase's
integration efforts may not be successful, and, if so, its operating results
would suffer as a result.
IF JDS UNIPHASE FAILS TO EFFICIENTLY INTEGRATE ITS SALES AND MARKETING
FORCES, ITS SALES COULD SUFFER
JDS Uniphase's sales force is and will in the future be a combination of
its sales force and the sale forces of the businesses it acquires, which must be
effectively integrated for it to remain successful. JDS Uniphase's combinations,
mergers and acquisitions (in particular, the June 30, 1999 combination of
Uniphase Corporation with JDS FITEL) often result in sales forces differing in
products sold, marketing channels used and sales cycles and models applied.
Accordingly, JDS Uniphase may experience disruption in sales and marketing in
connection with its efforts to integrate its various sales and marketing forces,
and it may be unable to efficiently or effectively correct such disruption or
achieve its sales and marketing objectives if it fails in these efforts. JDS
Uniphase sales personnel not accustomed to the different sales cycles and
approaches required for products newly added to their portfolio may experience
delays and difficulties in selling these newly added products. Furthermore, it
may be difficult to retain key sales personnel. As a result, JDS Uniphase may
fail to take full advantage of the combined sales forces' efforts, and one
company's sales approaches and distribution channels may be ineffective in
promoting another entity's products, all of which may materially harm JDS
Uniphase's business, financial condition or operating results.
INTEGRATION COSTS AND EXPENSES ASSOCIATED WITH JDS UNIPHASE'S MERGER AND
ACQUISITION ACTIVITIES HAVE AND MAY CONTINUE TO BE SUBSTANTIAL
JDS Uniphase often incurs substantial costs related to its combinations,
mergers and acquisitions. For example, JDS Uniphase has incurred direct costs
associated with the combination of
33
<PAGE> 37
Uniphase and JDS FITEL of approximately $12 million and incurred approximately
$8 million associated with the acquisition of OCLI. JDS Uniphase may incur
additional material charges in subsequent quarters to reflect additional costs
associated with these and other combinations and acquisitions which will be
expensed as incurred.
JDS UNIPHASE MAY FAIL TO COMMERCIALIZE NEW PRODUCT LINES
JDS Uniphase intends to continue to develop new product lines to address
its customers' diverse needs and the several market segments in which it
participates. If JDS Uniphase fails, its business will suffer. As JDS Uniphase
targets new product lines and markets, it will further increase its sales and
marketing, customer support and administrative functions to support anticipated
increased levels of operations from these new products and markets as well as
growth from its existing products. JDS Uniphase may not be successful in
creating this infrastructure nor may it realize any increase in the level of its
sales and operations to offset the additional expenses resulting from this
increased infrastructure. In connection with JDS Uniphase's recent acquisitions,
it has incurred expenses in anticipation of developing and selling new products.
JDS Uniphase operations may not achieve levels sufficient to justify the
increased expense levels associated with these new businesses.
ANY FAILURE OF JDS UNIPHASE'S INFORMATION TECHNOLOGY INFRASTRUCTURE COULD
MATERIALLY HARM ITS RESULTS OF OPERATIONS
JDS Uniphase's success depends, among other things, upon the capacity,
reliability and security of its information technology hardware and software
infrastructure. Any failure relating to this infrastructure could significantly
and adversely impact the results of JDS Uniphase's operations. In connection
with JDS Uniphase's growth, it has identified the need to update its current
information technology infrastructure and expects to incur significant costs
relating to this upgrade. JDS Uniphase is implementing a corporate-wide ERP
solution (Oracle) with integrated product data management and manufacturing
execution systems, expanding and enhancing its wide area network with higher
bandwidth connections and redundant links, and integrating its voice
communication systems.
JDS Uniphase must continue to expand and adapt its system infrastructure to
keep pace with its growth. Demands on infrastructure that exceed JDS Uniphase's
current forecasts could result in technical difficulties. Upgrading the network
infrastructure will require substantial financial, operational and management
resources, the expenditure of which could affect the results of JDS Uniphase's
operations. JDS Uniphase may not successfully and in a timely manner upgrade and
maintain its information technology infrastructure, and a failure to do so could
materially harm JDS Uniphase's business, results of operations and financial
condition.
JDS UNIPHASE IS SUBJECT TO MANUFACTURING DIFFICULTIES
IF JDS UNIPHASE DOES NOT ACHIEVE ACCEPTABLE MANUFACTURING VOLUMES, YIELDS
OR SUFFICIENT PRODUCT RELIABILITY, ITS OPERATING RESULTS COULD SUFFER
The manufacture of JDS Uniphase's products involves highly complex and
precise processes, requiring production in highly controlled and clean
environments. Changes in JDS Uniphase's manufacturing processes or those of its
suppliers, or their inadvertent use of defective or contaminated materials,
could significantly reduce its manufacturing yields and product reliability.
Because the majority of JDS Uniphase's manufacturing costs are relatively fixed,
manufacturing yields are critical to its results of operations. Some of JDS
Uniphase's divisions have in the past experienced lower than expected production
yields, which could delay product shipments and impair gross margins. These
divisions or any of JDS Uniphase's other manufacturing facilities may not
maintain acceptable yields in the future.
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<PAGE> 38
For example, JDS Uniphase's existing Uniphase Netherlands facility has not
achieved acceptable manufacturing yields since the June 1998 acquisition, and
there is continuing risk attendant to this facility and its manufacturing yields
and costs. Moreover, JDS Uniphase recently completed construction of a new laser
fabrication facility at Uniphase Netherlands, and this facility has not yet
reached targeted yields, volumes or cost levels. Uniphase Netherlands may not
successfully manufacture laser products in the future at volumes, yields or cost
levels necessary to meet JDS Uniphase's customers' needs. To the extent JDS
Uniphase does not achieve acceptable manufacturing yields or experience product
shipment delays, JDS Uniphase's business, operating results and financial
condition would be materially and adversely affected.
As JDS Uniphase customers' needs for its products increase, JDS Uniphase
must increase its manufacturing volumes to meet these needs and satisfy customer
demand. Failure to do so may materially harm JDS Uniphase's business, operating
results and financial condition. In some cases, existing manufacturing
techniques, which involve substantial manual labor, may be insufficient to
achieve the volume or cost targets of its customers. As such, JDS Uniphase will
need to develop new manufacturing processes and techniques, which are
anticipated to involve higher levels of automation, to achieve the targeted
volume and cost levels. In addition, it is frequently difficult at a number of
JDS Uniphase manufacturing facilities to hire qualified manufacturing personnel
in a timely fashion, if at all, when customer demands increase over shortened
time periods. While JDS Uniphase continues to devote research and development
efforts to improvement of its manufacturing techniques and processes, it may not
achieve manufacturing volumes and cost levels in its manufacturing activities
that will fully satisfy customer demands.
IF JDS UNIPHASE'S CUSTOMERS DO NOT QUALIFY ITS MANUFACTURING LINES FOR
VOLUME SHIPMENTS, ITS OPERATING RESULTS COULD SUFFER
Customers will not purchase any of JDS Uniphase's products (other than
limited numbers of evaluation units) prior to qualification of the manufacturing
line for the product. Each new manufacturing line must go through varying levels
of qualification with JDS Uniphase's customers. This qualification process
determines whether the manufacturing line achieves the customers' quality,
performance and reliability standards. Delays in qualification can cause a
product to be dropped from a long term supply program and result in significant
lost revenue opportunity over the term of that program. JDS Uniphase may
experience delays in obtaining customer qualification of its new facilities. If
JDS Uniphase fails in the timely qualification of these or other new
manufacturing lines, its operating results and customer relationships would be
adversely affected.
JDS UNIPHASE'S OPERATING RESULTS SUFFER AS A RESULT OF PURCHASE ACCOUNTING
TREATMENT, PRIMARILY DUE TO THE IMPACT OF AMORTIZATION OF GOODWILL AND OTHER
INTANGIBLES ORIGINATING FROM ACQUISITIONS
Under U.S. generally accepted accounting principles that apply to JDS
Uniphase, it accounted for a number of business combinations using the purchase
method of accounting, the most significant being the combination of Uniphase and
JDS FITEL. Under purchase accounting, JDS Uniphase recorded the market value of
its common shares and the exchangeable shares of its subsidiary, JDS Uniphase
Canada Ltd., issued in connection with mergers and acquisitions with the fair
value of the stock options assumed, which became options to purchase JDS
Uniphase common shares and the amount of direct transaction costs as the cost of
acquiring these entities. That cost is allocated to the individual assets
acquired and liabilities assumed, including various identifiable intangible
assets such as in-process research and development, acquired technology,
acquired trademarks and trade names and acquired workforce, based on their
respective fair values. JDS Uniphase allocated the excess of the purchase cost
over the fair value of the net assets to goodwill.
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<PAGE> 39
The impact of purchase accounting on JDS Uniphase's operating results over
the past four quarters attributable to its recent significant acquisitions is as
follows (in millions):
<TABLE>
<CAPTION>
QUARTERLY ANNUAL
IN-PROCESS AMORTIZATION AMORTIZATION
RESEARCH AND OF PURCHASED OF PURCHASED
ENTITY DEVELOPMENT INTANGIBLES INTANGIBLES
------ ------------ ------------ ------------
<S> <C> <C> <C>
JDS FITEL Inc................................... $210.4 $168.0 $672.0
EPITAXX, Inc.................................... $ 16.7 $ 17.1 $ 68.2
OCLI............................................ $ 84.1 $ 79.8 $319.1
</TABLE>
The impact of these mergers and acquisitions as well as other acquisitions
consummated in the past five years resulted in amortization expense of $249.6
million and $607.7 million for the three and nine months ended March 31, 2000.
Additionally, JDS Uniphase also incurs other purchase accounting related costs
and expenses in the period a particular transaction closes to reflect purchase
accounting adjustments adversely impacting gross profit and costs of integrating
new businesses or curtailing overlapping operations. Purchase accounting
treatment of JDS Uniphase's mergers and acquisitions will result in a net loss
for the foreseeable future, which could have a material and adverse effect on
the market value of JDS Uniphase's stock.
JDS UNIPHASE'S STOCK PRICE COULD FLUCTUATE SUBSTANTIALLY
THE UNPREDICTABILITY OF JDS UNIPHASE'S QUARTERLY OPERATING RESULTS COULD
CAUSE ITS STOCK PRICE TO BE VOLATILE OR DECLINE
JDS Uniphase expects to continue to experience fluctuations in its
quarterly results, which in the future may be significant and cause substantial
fluctuations in the market price of its stock. All of the concerns JDS Uniphase
discusses under "Risk Factors" could affect its operating results, including,
among others:
- the timing of the receipt of product orders from a limited number of
major customers;
- the loss of one or more of JDS Uniphase's major suppliers or customers;
- competitive pricing pressures;
- the costs associated with the acquisition or disposition of businesses;
- JDS Uniphase's ability to design, manufacture and ship technologically
advanced products with satisfactory yields on a timely and cost-effective
basis;
- the announcement and introduction of new products by JDS Uniphase; and
- expenses associated with any intellectual property or other litigation.
In addition to concerns potentially affecting JDS Uniphase's operating
results addressed elsewhere under Risk Factors, the following factors may also
influence its operating results:
- JDS Uniphase's product mix;
- the relative proportion of JDS Uniphase's domestic and international
sales;
- the timing differences between when JDS Uniphase incurs expenses to
increase its marketing and sales capabilities and when it realizes
benefits, if any, from such expenditures; and
- fluctuations in the foreign currencies of JDS Uniphase's foreign
operations.
Furthermore, JDS Uniphase's sales often reflect orders shipped in the same
quarter that they are received, which makes its sales vulnerable to short-term
fluctuations in customer demand and difficult to predict. Also, customers may
cancel or reschedule shipments, and production difficulties could
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<PAGE> 40
delay shipments. In addition, JDS Uniphase sells its telecommunications
equipment products to OEMs who typically order in large quantities, and
therefore, the timing of such sales may significantly affect JDS Uniphase's
quarterly results. An OEM supplies system-level network products to
telecommunications carriers and others and incorporates JDS Uniphase's products
in these system-level products. The timing of such OEM sales can be affected by
factors beyond JDS Uniphase's control, such as demand for the OEMs' products and
manufacturing risks experienced by OEMs. In this regard, JDS Uniphase has
experienced rescheduling of orders by customers in each of its markets and may
experience similar rescheduling in the future. As a result of all of these
factors, JDS Uniphase's results from operations may vary significantly from
quarter to quarter.
In addition to the effect of ongoing operations on quarterly results,
acquisitions or dispositions of businesses, JDS Uniphase's products or
technologies have in the past resulted in, and may in the future, result in
reorganization of its operations, substantial charges or other expenses, which
have caused, and may in the future, cause fluctuations in its quarterly
operating results and cash flows.
Finally, JDS Uniphase's net revenues and operating results in future
quarters may be below the expectations of public market securities analysts and
investors. In such event, the price of JDS Uniphase common stock and the
exchangeable shares of its subsidiary, JDS Uniphase Canada Ltd., would likely
decline, perhaps substantially.
FACTORS OTHER THAN JDS UNIPHASE'S QUARTERLY RESULTS COULD CAUSE ITS STOCK
PRICE TO BE VOLATILE OR DECLINE
The market price of JDS Uniphase common stock has been and, is likely to
continue to be, highly volatile because of causes other than its historical
quarterly results, such as:
- announcements by JDS Uniphase's competitors and customers of
technological innovations or new products;
- developments with respect to patents or proprietary rights;
- governmental regulatory action; and
- general market conditions.
In addition, the stock market has from time to time experienced significant
price and volume fluctuations that are unrelated to the operating performance of
particular companies, which may cause the price of JDS Uniphase's stock to
decline.
JDS UNIPHASE'S SALES WOULD SUFFER IF ONE OR MORE OF ITS KEY CUSTOMERS
SUBSTANTIALLY REDUCED ORDERS FOR ITS PRODUCTS
JDS Uniphase's customer base is highly concentrated. Historically, orders
from a relatively limited number of OEM customers accounted for a substantial
portion of JDS Uniphase's net sales from telecommunications products. Two
customers, Lucent and Nortel, each accounted for over 10% of JDS Uniphase's net
sales for the quarter ended March 31, 2000. JDS Uniphase expects that, for the
foreseeable future, sales to a limited number of customers will continue to
account for a high percentage of its net sales. Sales to any single customer may
vary significantly from quarter to quarter. If current customers do not continue
to place orders, JDS Uniphase may not be able to replace these orders with new
orders from new customers. In the telecommunications markets, JDS Uniphase's
customers evaluate its products and competitive products for deployment in their
telecommunications systems. JDS Uniphase's failure to be selected by a customer
for particular system projects can significantly impact its business, operating
results and financial condition. Similarly, even if JDS Uniphase's customers
select it, if its customers are not selected as the primary
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supplier for an overall system installation, JDS Uniphase can be similarly
adversely affected. Such fluctuations could materially harm JDS Uniphase's
business, financial condition and operating results.
INTERRUPTIONS AFFECTING JDS UNIPHASE'S KEY SUPPLIERS COULD DISRUPT PRODUCTION,
COMPROMISE ITS PRODUCT QUALITY AND ADVERSELY AFFECT ITS SALES
JDS Uniphase currently obtains various components included in the
manufacture of its products from single or limited source suppliers. A
disruption or loss of supplies from these companies or a price increase for
these components would materially harm JDS Uniphase's results of operations,
product quality and customer relationships. JDS Uniphase has a sole source
supply agreement for a critical material used in the manufacture of its passive
products. This agreement may be terminated by either party on six months prior
notice. It is JDS Uniphase's objective to maintain strategic inventory of the
key raw material provided by this supplier. In addition, JDS Uniphase currently
utilizes a sole source for the crystal semiconductor chip sets incorporated in
its solid state microlaser products and acquires its pump diodes for use in its
solid state laser products from Opto Power Corporation and GEC. JDS Uniphase
obtains lithium niobate wafers, gallium arsenide wafers, specialized fiber
components and some lasers used in its telecommunications products primarily
from Crystal Technology, Inc., Fujikura, Ltd., Philips Key Modules and Sumitomo,
respectively. JDS Uniphase does not have long-term or volume purchase agreements
with any of these suppliers (other than for its passive products supplier
described in this paragraph), and these components may not in the future be
available in the quantities required by JDS Uniphase, if at all.
JDS UNIPHASE MAY BECOME SUBJECT TO COLLECTIVE BARGAINING AGREEMENTS
JDS Uniphase's employees who are employed at manufacturing facilities
located in North America are not bound by or party to any collective bargaining
agreements with it. These employees may become bound by or party to one or more
collective bargaining agreements with JDS Uniphase in the future. Some of JDS
Uniphase's employees outside of North America, particularly in the Netherlands
and Germany, are subject to collective bargaining agreements. If, in the future,
any such employees become bound by or party to any collective bargaining
agreements, then JDS Uniphase's related costs and its flexibility with respect
to managing its business operations involving such employees may be materially
adversely affected.
ANY FAILURE TO REMAIN COMPETITIVE IN JDS UNIPHASE'S INDUSTRY WOULD IMPAIR ITS
OPERATING RESULTS
IF JDS UNIPHASE'S BUSINESS OPERATIONS ARE INSUFFICIENT TO REMAIN
COMPETITIVE IN ITS INDUSTRY, ITS OPERATING RESULTS COULD SUFFER
The telecommunications and laser subsystems markets in which JDS Uniphase
sells its products are highly competitive. In each of the markets JDS Uniphase
serves, it faces intense competition from established competitors. Many of these
competitors have substantially greater financial, engineering, manufacturing,
marketing, service and support resources than does JDS Uniphase and may have
substantially greater name recognition, manufacturing expertise and capability
and longer standing customer relationships than it does. To remain competitive,
JDS Uniphase believes it must maintain a substantial investment in research and
development, marketing, and customer service and support. JDS Uniphase may not
compete successfully in all or some of its markets in the future, and it may not
have sufficient resources to continue to make such investments, or it may not
make the technological advances necessary to maintain its competitive position
so that its products will receive market acceptance. In addition, technological
changes or development efforts by JDS Uniphase's competitors may render its
products or technologies obsolete or uncompetitive.
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FIBER OPTIC COMPONENT AVERAGE SELLING PRICES ARE DECLINING
Prices for telecommunications fiber optic components are generally
declining because of, among other things, increased competition and greater unit
volumes as telecommunications service providers continue to deploy fiber optic
networks. JDS Uniphase has in the past and JDS Uniphase may in the future
experience substantial period to period fluctuations in average selling prices.
JDS Uniphase anticipates that average selling prices will decrease in the future
in response to product introductions by competitors and it or to other factors,
including price pressures from significant customers. Therefore, JDS Uniphase
must continue to (1) timely develop and introduce new products that incorporate
features that can be sold at higher selling prices and (2) reduce its
manufacturing costs. Failure to achieve any or all of the foregoing could cause
JDS Uniphase's net sales and gross margins to decline, which may have a material
adverse effect on its business, financial condition and operating results.
IF JDS UNIPHASE FAILS TO ATTRACT AND RETAIN KEY PERSONNEL, ITS BUSINESS
COULD SUFFER
JDS Uniphase's future depends, in part, on its ability to attract and
retain key personnel. The former Chief Executive Officer of JDS Uniphase
resigned on May 17, 2000, and was replaced by the then Chief Operating Officer,
Jozef Straus, who was the former Chief Executive Officer of JDS FITEL, which
merged with Uniphase in 1999. In addition, JDS Uniphase's research and
development efforts depend on hiring and retaining qualified engineers.
Competition for highly skilled engineers is extremely intense, and JDS Uniphase
is currently experiencing difficulty in identifying and hiring qualified
engineers in many areas of its business. JDS Uniphase may not be able to hire
and retain such personnel at compensation levels consistent with its existing
compensation and salary structure. JDS Uniphase's future also depends on the
continued contributions of its executive officers and other key management and
technical personnel, each of whom would be difficult to replace. Continuing
uncertainty resulting from the Uniphase/JDS FITEL merger could further adversely
affect JDS Uniphase's ability to retain key employees. JDS Uniphase does not
maintain a key person life insurance policy on its chief executive officer, its
chief operating officer or any other officer. The loss of the services of one or
more of JDS Uniphase's executive officers or key personnel or the inability to
continue to attract qualified personnel could delay product development cycles
or otherwise materially harm its business, financial condition and operating
results.
MARKET CONSOLIDATION HAS CREATED AND CONTINUES TO CREATE COMPANIES THAT ARE
LARGER AND HAVE GREATER RESOURCES THAN JDS UNIPHASE
In the recent past, there have been a number of significant acquisitions
announced among JDS Uniphase's competitors and customers, including:
- Lucent Technologies, Inc./Ortel Corporation;
- Corning Incorporated/NetOptix Corporation;
- SDL, Inc./Veritech Microwave, Inc.;
- Nortel Networks Corp./Xros, Inc.;
- Nortel Networks Corp./Core Tek, Inc.;
- Corning Incorporated/NZ Applied Technologies Corp.;
- Cisco Systems, Inc./ArrowPoint Communications, Inc.; and
- SDL, Inc./Photonic Integration Research, Inc.
The effect of these completed and pending acquisitions on JDS Uniphase
cannot be predicted with accuracy, but some of these competitors are aligned
with companies that are larger or more well
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established than JDS Uniphase. As a result, these competitors may have access to
greater financial, marketing and technical resources than JDS Uniphase. Also,
consolidation of these and other companies may disrupt JDS Uniphase's marketing
and sales efforts.
JDS UNIPHASE FACES RISKS RELATED TO ITS INTERNATIONAL OPERATIONS AND SALES
JDS Uniphase's customers are located throughout the world. In addition, JDS
Uniphase has significant offshore operations, including manufacturing
facilities, sales personnel and customer support operations. JDS Uniphase's
offshore operations include facilities in Great Britain, Switzerland, the
Netherlands, Germany, Australia and the People's Republic of China. JDS
Uniphase's international presence exposes it to risks not faced by
wholly-domestic companies. Specifically, JDS Uniphase faces the following risks,
among others:
International sales are subject to inherent risks, including:
- unexpected changes in regulatory requirements;
- tariffs and other trade barriers;
- political, legal and economic instability in foreign markets,
particularly in those markets in which JDS Uniphase maintains
manufacturing and research facilities;
- difficulties in staffing and management;
- language and cultural barriers;
- seasonal reductions in business activities in the summer months in Europe
and some other countries;
- integration of foreign operations;
- longer payment cycles;
- greater difficulty in accounts receivable collection;
- currency fluctuations; and
- potentially adverse tax consequences.
International sales accounted for approximately 40%, 38% and 32% of
Uniphase's net sales in 1999, 1998 and 1997, respectively. International sales,
excluding sales to the U.S., accounted for approximately 21%, 25% and 20% of JDS
FITEL's net sales in 1999, 1998 and 1997, respectively. JDS Uniphase expects
that international sales will continue to account for a significant portion of
its net sales. JDS Uniphase may continue to expand its operations outside of the
United States and to enter additional international markets, both of which will
require significant management attention and financial resources.
Since a significant portion of JDS Uniphase's foreign sales are denominated
in U.S. dollars, its products may also become less price competitive in
countries in which local currencies decline in value relative to the U.S.
dollar. JDS Uniphase's business and operating results may also be materially and
adversely affected by lower sales levels that typically occur during the summer
months in Europe and some other overseas markets. Furthermore, the sales of many
of JDS Uniphase's OEM customers depend on international sales and consequently
further exposes it to the risks associated with such international sales.
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IF JDS UNIPHASE HAS INSUFFICIENT PROPRIETARY RIGHTS OR IF IT FAILS TO PROTECT
THOSE IT HAS, ITS BUSINESS WOULD BE MATERIALLY IMPAIRED
JDS UNIPHASE MAY NOT OBTAIN THE INTELLECTUAL PROPERTY RIGHTS IT REQUIRES
The telecommunications and laser markets in which JDS Uniphase sells its
products experience frequent litigation regarding patent and other intellectual
property rights. Numerous patents in these industries are held by others,
including academic institutions and JDS Uniphase's competitors. In the past,
Uniphase and JDS FITEL have acquired and in the future JDS Uniphase may seek to
acquire license rights to these or other patents or other intellectual property
to the extent necessary for its business. Unless JDS Uniphase is able to obtain
such licenses on commercially reasonable terms, patents or other intellectual
property held by others could inhibit its development of new products for its
markets. While in the past licenses generally have been available to Uniphase
and JDS FITEL where third-party technology was necessary or useful for the
development or production of their products, in the future licenses to
third-party technology may not be available on commercially reasonable terms, if
at all. Generally, a license, if granted, includes payments by JDS Uniphase of
up-front fees, ongoing royalties or a combination thereof. Such royalty or other
terms could have a significant adverse impact on JDS Uniphase's operating
results. JDS Uniphase is a licensee of a number of third-party technologies and
intellectual property rights and is required to pay royalties to these
third-party licensors on some of its telecommunications products and laser
subsystems.
JDS UNIPHASE'S PRODUCTS MAY BE SUBJECT TO CLAIMS THAT THEY INFRINGE THE
INTELLECTUAL PROPERTY RIGHTS OF OTHERS
The industry in which JDS Uniphase operates experiences periodic claims of
patent infringement or other intellectual property rights. JDS Uniphase has in
the past and may from time to time in the future receive notices from third
parties claiming that its products infringe upon third-party proprietary rights.
Any litigation to determine the validity of any third-party claims, regardless
of the merit of these claims, could result in significant expense to JDS
Uniphase and divert the efforts of its technical and management personnel,
whether or not JDS Uniphase is successful in such litigation. If JDS Uniphase is
unsuccessful in any such litigation, it could be required to expend significant
resources to develop non-infringing technology or to obtain licenses to the
technology that is the subject of the litigation. JDS Uniphase may not be
successful in such development or such licenses may not be available on terms
acceptable to JDS Uniphase, if at all. Without such a license, JDS Uniphase
could be enjoined from future sales of the infringing product or products.
JDS UNIPHASE'S INTELLECTUAL PROPERTY RIGHTS MAY NOT BE ADEQUATELY PROTECTED
JDS Uniphase's future depends in part upon its intellectual property,
including trade secrets, know-how and continuing technological innovation. JDS
Uniphase currently holds approximately 630 U.S. patents on products or processes
and corresponding foreign patents and has applications for some patents
currently pending. The steps taken by JDS Uniphase to protect its intellectual
property may not adequately prevent misappropriation or ensure that others will
not develop competitive technologies or products. Other companies may be
investigating or developing other technologies that are similar to JDS
Uniphase's. It is possible that patents may not be issued from any application
pending or filed by JDS Uniphase and, if patents do issue, the claims allowed
may not be sufficiently broad to deter or prohibit others from marketing similar
products. Any patents issued to JDS Uniphase may be challenged, invalidated or
circumvented. Further, the rights under JDS Uniphase's patents may not provide a
competitive advantage to it. In addition, the laws of some territories in which
JDS Uniphase's products are or may be developed, manufactured or sold, including
Asia, Europe or Latin America, may not protect its products and intellectual
property rights to the same extent as the laws of the United States.
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IF JDS UNIPHASE FAILS TO SUCCESSFULLY MANAGE ITS EXPOSURE TO THE WORLDWIDE
FINANCIAL MARKETS, ITS OPERATING RESULTS COULD SUFFER
JDS Uniphase is exposed to financial market risks, including changes in
interest rates, foreign currency exchange rates and marketable equity security
prices. JDS Uniphase utilizes derivative financial instruments to mitigate these
risks. JDS Uniphase does not use derivative financial instruments for
speculative or trading purposes. The primary objective of JDS Uniphase's
investment activities is to preserve principal while at the same time maximizing
yields without significantly increasing risk. To achieve this objective, a
majority of JDS Uniphase's marketable investments are floating rate and
municipal bonds, auction instruments and money market instruments denominated in
U.S. dollars. JDS Uniphase hedges currency risks of investments denominated in
foreign currencies with forward currency contracts. Gains and losses on these
foreign currency investments are generally offset by corresponding gains and
losses on the related hedging instruments, resulting in negligible net exposure
to JDS Uniphase. A substantial portion of JDS Uniphase's revenue, expense and
capital purchasing activities are transacted in U.S. dollars. However, JDS
Uniphase does enter into these transactions in other currencies, primarily
Canadian and European currencies. To protect against reductions in value and the
volatility of future cash flows caused by changes in foreign exchange rates, JDS
Uniphase has established hedging programs. Currency forward contracts are
utilized in these hedging programs. JDS Uniphase's hedging programs reduce, but
do not always entirely eliminate, the impact of foreign currency exchange rate
movements. Actual results on JDS Uniphase's financial position may differ
materially.
IF JDS UNIPHASE FAILS TO OBTAIN ADDITIONAL CAPITAL AT THE TIMES, IN THE AMOUNTS
AND UPON THE TERMS REQUIRED, ITS BUSINESS COULD SUFFER
JDS Uniphase is devoting substantial resources for new facilities and
equipment to the production of source lasers, fiber Bragg gratings and modules
used in telecommunications and for the development of new solid state lasers.
Although JDS Uniphase believes existing cash balances, cash flow from
operations, available lines of credit and the proceeds from the recently
completed public offering of its common stock and the private placement in
Canada of exchangeable shares of its subsidiary, JDS Uniphase Canada, Ltd., will
be sufficient to meet its capital requirements at least for the next 12 months,
JDS Uniphase may be required to seek additional equity or debt financing to
compete effectively in these markets. JDS Uniphase cannot precisely determine
the timing and amount of such capital requirements and will depend on several
factors, including its acquisitions and the demand for its products and products
under development. Such additional financing may not be available when needed,
or, if available, may not be on terms satisfactory to JDS Uniphase.
JDS UNIPHASE'S CURRENTLY OUTSTANDING PREFERRED STOCK AND ITS ABILITY TO ISSUE
ADDITIONAL PREFERRED STOCK COULD IMPAIR THE RIGHTS OF ITS COMMON STOCKHOLDERS
JDS Uniphase's board of directors has the authority to issue up to 799,999
shares of undesignated preferred stock and to determine the powers, preferences
and rights and the qualifications, limitations or restrictions granted to or
imposed upon any wholly unissued shares of undesignated preferred stock and to
fix the number of shares constituting any series and the designation of such
series, without the consent of JDS Uniphase stockholders. The preferred stock
could be issued with voting, liquidation, dividend and other rights superior to
those of the holders of common stock. The issuance of preferred stock under some
circumstances could have the effect of delaying, deferring or preventing a
change in control. Each outstanding share of JDS Uniphase common stock includes
one-eighth of a right. Each right entitles the registered holder, subject to the
terms of the rights agreement, to purchase from JDS Uniphase one unit, equal to
one one-thousandth of a share of series B preferred stock, at a purchase price
of $600 per unit, subject to adjustment, for each share of common stock held by
the holder. The rights are attached to all certificates representing outstanding
shares of JDS Uniphase common stock, and no separate rights
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certificates have been distributed. The purchase price is payable in cash or by
certified or bank check or money order payable to JDS Uniphase's order. The
description and terms of the rights are set forth in a rights agreement between
JDS Uniphase and American Stock Transfer & Trust Company, as rights agent, dated
as of June 22, 1998, as amended from time to time.
Some provisions contained in the rights plan, and in the equivalent rights
plan that JDS Uniphase's subsidiary, JDS Uniphase Canada Ltd., has adopted with
respect to its exchangeable shares, may have the effect of discouraging a third
party from making an acquisition proposal for JDS Uniphase and may thereby
inhibit a change in control. For example, such provisions may deter tender
offers for shares of common stock or exchangeable shares which offers may be
attractive to the stockholders, or deter purchases of large blocks of common
stock or exchangeable shares, thereby limiting the opportunity for stockholders
to receive a premium for their shares of common stock or exchangeable shares
over the then-prevailing market prices.
SOME ANTI-TAKEOVER PROVISIONS CONTAINED IN JDS UNIPHASE'S CHARTER AND UNDER
DELAWARE LAW COULD IMPAIR A TAKEOVER ATTEMPT
JDS Uniphase is subject to the provisions of Section 203 of the Delaware
General Corporation Law prohibiting, under some circumstances, publicly-held
Delaware corporations from engaging in business combinations with some
stockholders for a specified period of time without the approval of the holders
of substantially all of its outstanding voting stock. Such provisions could
delay or impede the removal of incumbent directors and could make more difficult
a merger, tender offer or proxy contest involving JDS Uniphase, even if such
events could be beneficial, in the short term, to the interests of the
stockholders. In addition, such provisions could limit the price that some
investors might be willing to pay in the future for shares of JDS Uniphase
common stock. JDS Uniphase's certificate of incorporation and bylaws contain
provisions relating to the limitations of liability and indemnification of its
directors and officers, dividing its board of directors into three classes of
directors serving three-year terms and providing that its stockholders can take
action only at a duly called annual or special meeting of stockholders. These
provisions also may have the effect of deterring hostile takeovers or delaying
changes in control or management of JDS Uniphase.
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THE SPECIAL MEETING OF E-TEK STOCKHOLDERS
PURPOSE OF THE SPECIAL MEETING
The special meeting is being held so that stockholders of E-TEK may
consider and vote upon a proposal to adopt the merger agreement, dated as of
January 17, 2000, by and among JDS Uniphase, Rainbow Acquisition, and E-TEK and
to transact any other business that properly comes before the special meeting or
any adjournment of the special meeting. Additionally, E-TEK stockholders may be
asked to vote upon a proposal to adjourn or postpone the special meeting. Any
adjournment or postponement could be used for the purpose of allowing additional
time for soliciting additional votes to approve the merger or to satisfy other
conditions to closing that the parties elect to satisfy prior to the stockholder
vote. Adoption of the merger agreement will also constitute approval of the
merger and the other transactions contemplated by the merger agreement.
STOCKHOLDER RECORD DATE FOR THE SPECIAL MEETING
E-TEK's board of directors has fixed the close of business on May 22, 2000,
as the record date for determination of E-TEK stockholders entitled to notice of
and entitled to vote at the special meeting. On May 17, 2000, there were
67,826,572 shares of E-TEK common stock outstanding, held by approximately 269
holders of record. The number of record holders does not include shares held in
"street name" through brokers.
VOTE OF E-TEK STOCKHOLDERS REQUIRED FOR ADOPTION OF THE MERGER AGREEMENT
One-third of the outstanding shares of E-TEK common stock entitled to vote
at the special meeting must be represented, either in person or by proxy, to
constitute a quorum at the special meeting. The affirmative vote of the holders
of at least a majority of E-TEK common stock outstanding and entitled to vote at
the special meeting is required to adopt the merger agreement. You are entitled
to one vote for each share of E-TEK common stock held by you on the record date
on each proposal to be presented to stockholders at the special meeting.
The following officers and directors of E-TEK have entered into voting
agreements with JDS Uniphase, and have agreed to vote their shares of E-TEK
common stock in favor of the approval and adoption of the merger agreement and
approval of the merger: Michael J. Fitzpatrick, President, Chief Executive
Officer and Chairman of the Board of Directors; Sanjay Subhedar, Chief Operating
Officer and Chief Financial Officer; Ming Shih, President, Asia Pacific
Operations; Philip J. Anthony, Vice President, Engineering; David W. Dorman,
Director; Joseph W. Goodman, Director; and Donald J. Listwin, Director. In
addition, affiliates of Summit Partners, of which E-TEK Director Walter G.
Kortschak is a General Partner, have also entered into voting agreements with
JDS Uniphase, and have agreed to vote their shares of E-TEK common stock in
favor of the approval and adoption of the merger agreement and approval of the
merger. The above officers and directors and affiliates of Summit Partners, each
of whom are affiliates of E-TEK, together beneficially owned approximately
17,185,751 shares of E-TEK common stock, which represented approximately 25.3%
of all outstanding shares of E-TEK common stock entitled to vote at the special
meeting as of May 17, 2000. As a result of these voting agreements, the vote of
16,727,536 additional shares, or approximately 24.7% of the outstanding stock of
E-TEK, would be required to approve the merger assuming no additional shares
have been issued between May 17, 2000 and the record date.
PROXIES
All shares of E-TEK common stock represented by properly executed proxies
that E-TEK receives before or at the special meeting will, unless the proxies
are revoked, be voted in accordance with the instructions indicated thereon. If
no instructions are indicated on a properly executed proxy,
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the shares will be voted FOR adoption of the merger agreement. You are urged to
mark the applicable box on the proxy to indicate how to vote your shares.
If a properly executed proxy is returned and the stockholder has abstained
from voting on adoption of the merger agreement, the E-TEK common stock
represented by the proxy will be considered present at the special meeting for
purposes of determining a quorum, but will not be considered to have been voted
in favor of adoption of the merger agreement. Similarly, if an executed proxy is
returned by a broker holding shares of E-TEK common stock in street name which
indicates that the broker does not have discretionary authority to vote on
adoption of the merger agreement, the shares will be considered present at the
meeting for purposes of determining the presence of a quorum, but will not be
considered to have been voted in favor of adoption of the merger agreement. Your
broker will vote your shares only if you provide instructions on how to vote by
following the information provided to you by your broker.
You may also vote electronically by telephone or Internet by following the
electronic voting instructions on the bottom of the proxy card, if applicable.
Because adoption of the merger agreement requires the affirmative vote of
at least a majority of E-TEK common stock outstanding as of the record date,
abstentions, failures to vote and broker non-votes will have the same effect as
a vote against adoption of the merger agreement.
E-TEK does not expect that any matter other than adoption of the merger
agreement will be brought before the special meeting. If, however, other matters
are properly presented, the persons named as proxies will vote in accordance
with their judgment with respect to those matters, unless authority to do so is
withheld in the proxy.
You may revoke your proxy at any time before it is voted by notifying E-TEK
by:
- writing to Corporate Secretary, E-TEK Dynamics, Inc. 1865 Lundy Avenue,
San Jose, California 95131;
- granting a subsequent proxy;
- appearing in person and voting at the special meeting;
- if your broker holds your shares in street name, you must follow
directions received from your broker to change your voting instructions;
or
- if you voted electronically by telephone or Internet, you can change your
vote at any time by following the electronic voting instructions on the
bottom of the proxy card.
JDS Uniphase and E-TEK will equally share the expenses incurred in
connection with the printing and mailing of this proxy statement-prospectus.
E-TEK and EquiServe LLP, E-TEK's transfer agent, will request banks, brokers and
other intermediaries holding shares beneficially owned by others to send this
proxy statement-prospectus to and obtain proxies from the beneficial owners and
will reimburse the holders for their reasonable expenses in so doing.
YOU SHOULD NOT SEND IN ANY STOCK CERTIFICATES WITH YOUR PROXIES. A
TRANSMITTAL FORM WITH INSTRUCTIONS FOR THE SURRENDER OF STOCK CERTIFICATES FOR
E-TEK COMMON STOCK WILL BE MAILED TO YOU AS SOON AS PRACTICABLE AFTER COMPLETION
OF THE MERGER.
AVAILABILITY OF ACCOUNTANTS
PricewaterhouseCoopers LLP has acted as E-TEK's independent accountants
since 1995. E-TEK expects that representatives of PricewaterhouseCoopers LLP
will be present at the special meeting and will be available to respond to
appropriate questions.
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SOLICITATION OF PROXIES
E-TEK will initially pay the costs of soliciting proxies. In addition to
solicitation by mail, E-TEK's directors, officers and employees may solicit
proxies by telephone, facsimile or otherwise. The directors, officers and
employees of E-TEK will not receive compensation for such solicitation but may
receive reimbursement by E-TEK for out-of-pocket expenses incurred in connection
with such solicitation. E-TEK will request that brokerage firms, fiduciaries and
other custodians forward copies of the proxies and this proxy
statement-prospectus to the beneficial owners of shares of E-TEK common stock
held of record by them, and E-TEK will reimburse them for their reasonable
expenses incurred in forwarding such material. E-TEK has retained a proxy
solicitation firm, Corporate Investor Communications, Inc., to aid it in the
solicitation. E-TEK anticipates that its fees plus expenses to Corporate
Investor Communications, Inc. will be approximately $6,000.
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THE MERGER
This section of the proxy statement-prospectus describes material aspects
of the proposed merger, including the merger agreement, the stock option
agreement, the affiliate agreements, and the voting agreement. While we believe
that the description covers the material terms of the merger and related
transactions, this summary may not contain all of the information that is
important to you. You should read this entire document and the other documents
we refer to carefully for a more complete understanding of the merger.
BACKGROUND OF THE MERGER
The provisions of the merger agreement are the result of arm's length
negotiations conducted among representatives of JDS Uniphase and E-TEK and their
respective legal and financial advisors. The following is a summary of the
meetings, negotiations and discussions between the parties that preceded
execution of the merger agreement.
Starting in 1998, the senior management of E-TEK and Uniphase Corporation
began discussions concerning ways in which the companies could work together to
provide customer solutions that combined the optical component packaging
abilities of E-TEK with the complementary active component products offered by
Uniphase. These discussions continued through early 1999 and Uniphase's merger
with JDS FITEL, creating JDS Uniphase. Following this merger, the senior
management of E-TEK and JDS Uniphase continued to discuss ways in which the
companies could work together to meet the increasing needs of their customers
through possible OEM relationships.
In September 1999, with the demand from telecommunications equipment
manufacturers for optical components growing rapidly, Michael J. Fitzpatrick,
the President and Chief Executive Officer of E-TEK, and Kevin Kalkhoven, the
former Co-Chairman and Chief Executive Officer of JDS Uniphase, met and had
several conversations to discuss potential business opportunities for E-TEK and
JDS Uniphase. The discussions centered upon the complementary strengths of the
two companies and the alternatives for meeting the challenges of increasing
demand for optical components. At or about this time the parties agreed to have
their respective legal counsel commence an analysis of the legal implications of
an OEM agreement and/or a potential business combination of the two companies.
Legal counsel focused principally upon the regulatory aspects of these potential
relationships.
On October 7, 1999, Messrs. Fitzpatrick and Kalkhoven, as well as Jozef
Straus, Co-Chairman, President and Chief Operating Officer of JDS Uniphase at
that time, and Sanjay Subhedar, E-TEK's Chief Financial Officer and Chief
Operating Officer, met at the offices of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, in Palo Alto, California, to discuss the possible
advantages of a potential combination of the two companies as well as an OEM
agreement. The parties agreed to continue their discussions, and there were
several telephone conversations between them through the remainder of October
and into November 1999. On November 24, the parties met again at Wilson Sonsini
Goodrich & Rosati's offices to continue their discussions of the OEM agreement
and other strategic alternatives. These discussions led to consideration of a
potential merger between the companies, and the parties agreed to meet again to
continue those discussions.
At a regular meeting of E-TEK's board of directors on December 3, Mr.
Fitzpatrick reviewed his discussions with Mr. Kalkhoven. The E-TEK board of
directors considered the OEM agreement and the possibility of a business
combination between E-TEK and JDS Uniphase and authorized Messrs. Fitzpatrick
and Subhedar to continue discussions.
On December 6 and 9, Messrs. Fitzpatrick and Subhedar met with Messrs.
Kalkhoven and Straus to continue discussion of the possible terms of an OEM
agreement, as well as to explore in more depth the possibility of a strategic
transaction between the companies.
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<PAGE> 51
On December 16, 1999, the JDS Uniphase board of directors held its regular
meeting in Ottawa, Canada following the annual stockholders meeting that
occurred that morning. At that meeting, Messrs. Kalkhoven and Straus led a
discussion regarding the need for the company to rapidly ramp its production
capacity and product offerings to respond to the significant capacity
constraints and product demands then affecting the fiber optic industry and ways
in which a strategic relationship with E-TEK might address this need. The JDS
Uniphase board of directors gave their approval to Messrs. Kalkhoven and Straus
to continue their discussions with E-TEK regarding the proposed OEM relationship
and to consider a business combination.
In order to better assess the feasibility of the possible strategic fit
between the companies, Mr. Subhedar visited the Ottawa facility of JDS Uniphase
on December 16, and met with operational personnel. Mr. Subhedar also met with
Messrs. Kalkhoven and Straus, and all of the other members of the JDS Uniphase
board at a dinner meeting on the evening of December 16. At that meeting, the
JDS Uniphase Board members became more familiar with E-TEK, Mr. Subhedar and
E-TEK's business and discussed with Mr. Subhedar the capacity constraints facing
the fiber optic industry, the advantages of combining the resources of the two
companies to address these constraints and alternative means for the two
companies to work together going forward.
From December 17 through January 4, 2000, Mr. Fitzpatrick spoke several
times in person and by telephone with Mr. Kalkhoven about the potential terms of
an OEM relationship and the possibility of a business combination. Mr.
Fitzpatrick also consulted separately by telephone with members of E-TEK's board
of directors, and informed them of the status of his discussions with JDS
Uniphase. Operations personnel from the two companies exchanged information to
assess the technical feasibility of an OEM relationship during this time period.
On December 22, 1999, E-TEK engaged Goldman, Sachs & Co. as its financial
advisor to assist E-TEK in evaluating various financial alternatives available
to it. On December 27, 1999, JDS Uniphase engaged Thomas Weisel Partners LLC and
Banc of America Securities LLC as its financial advisors to assist JDS Uniphase
in evaluating a business combination with E-TEK.
During the week of January 3, Messrs. Fitzpatrick, Subhedar, Kalkhoven and
Straus discussed the financial, operational and technical benefits of an OEM
relationship, as well as the valuation and timing of a potential business
combination transaction. On January 4, the companies signed a mutual
confidentiality agreement, and on January 5, Messrs. Fitzpatrick and Subhedar
met with Messrs. Kalkhoven and Straus to discuss the terms of the OEM agreement
and a potential merger transaction. The companies' legal and financial advisors
discussed the customary structural terms and conditions of a potential merger
transaction including the break-up fee, lock-up option and voting rights
agreements.
On January 6, 2000, at Wilson Sonsini Goodrich & Rosati, the management of
the companies continued their discussions of the OEM agreement and a potential
merger. The parties and their financial and legal advisors discussed the
financial terms of a merger, including the number of shares of JDS Uniphase
stock to be exchanged for each E-TEK share. The parties also discussed other
customary transactional terms. At the conclusion of the meeting, the parties
agreed to continue negotiations regarding the terms of the transaction. Messrs.
Fitzpatrick and Subhedar consulted with members of the E-TEK board of directors
and updated them on the status of the discussions.
At a special meeting of the E-TEK board of directors on January 10, 2000,
at Wilson Sonsini Goodrich & Rosati, Mr. Fitzpatrick presented for the board's
consideration the terms of the proposed transaction for the merger of E-TEK into
JDS Uniphase whereby each E-TEK share would be exchanged for shares of JDS
Uniphase as well as an OEM agreement between the companies. The board of
directors invited representatives of Goldman Sachs to review the financial and
business terms of the transaction, the potential combined financial statistics
of the companies, the business of JDS
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<PAGE> 52
Uniphase, its management, ownership and valuation. Wilson Sonsini Goodrich &
Rosati advised the board as to the legal and structural aspects of a possible
transaction. The board members discussed with Messrs. Fitzpatrick and Subhedar
the strategic benefits and risks of a potential transaction between the
companies as well as potential alternatives available to E-TEK. The board
unanimously authorized E-TEK's management to continue the discussions with JDS
Uniphase on the terms of a merger agreement.
In the evening of January 10, Messrs. Fitzpatrick, Subhedar, Kalkhoven and
Straus and Ms. M. Zita Cobb, Senior Vice President, Strategy and Integration of
JDS Uniphase, held a dinner meeting to continue their discussions of possible
strategic relationships between the companies.
On January 11, 2000, the JDS Uniphase board held a special meeting to
discuss the possible merger and OEM agreement with E-TEK. JDS Uniphase's
financial advisors were in attendance and provided certain financial analysis of
a merger between the two companies. The JDS Uniphase board discussed the
advantages of a combination with E-TEK and the proposed terms for such a
combination and OEM agreement and the diligence efforts performed by JDS
Uniphase as to E-TEK to that date. Beginning on January 12, the companies'
respective legal and financial advisors met at Wilson Sonsini Goodrich &
Rosati's offices to conduct due diligence meetings.
On January 14, 2000, the E-TEK board of directors held a special meeting at
Wilson Sonsini Goodrich & Rosati, which was also attended by Mr. Subhedar and
Ming Shih, President of E-TEK's Asia Pacific Operations, as well as
representatives of Goldman Sachs and Wilson Sonsini Goodrich & Rosati.
Management of the company discussed its analysis of JDS Uniphase and the
combined company as well as potential alternatives available to E-TEK. Goldman
Sachs reviewed its financial analysis of the proposed transaction, and Wilson
Sonsini Goodrich & Rosati reviewed the draft merger agreement and related
documents and advised the board of its fiduciary duties. The board unanimously
expressed its approval of the continued negotiations and proposed transaction
structure, subject to satisfactory completion of due diligence and finalization
of the merger agreement.
On January 15 and 16, the companies finalized the principal terms of the
merger and completed their due diligence and preparation of definitive
agreements. On January 17, the E-TEK board of directors held a special meeting
to consider approval of the merger. Goldman Sachs delivered its oral opinion,
subsequently confirmed in writing, that the exchange ratio of 1.1 shares of JDS
Uniphase common stock per E-TEK share was fair from a financial point of view to
E-TEK's stockholders. The E-TEK board unanimously resolved to approve the
merger. On January 17, the JDS Uniphase board of directors also held a special
meeting to consider approval of the merger and an OEM agreement between the two
companies. Following a discussion of the terms of the proposed merger and the
supply relationship contemplated by the OEM agreement, each of Thomas Weisel
Partners and Banc of America Securities delivered its oral opinion that the
terms of the merger with E-TEK was fair from a financial point of view to the
JDS Uniphase stockholders. The JDS Uniphase board of directors unanimously
approved the merger and the OEM agreement. Following these board meetings, the
companies delivered to each other executed copies of the merger and related
agreements, and issued a press release announcing the transaction. Concurrently,
the press release also announced the entering into of an OEM agreement between
JDS Uniphase and E-TEK. Because of the two-for-one stock split of JDS Uniphase
common stock, effective March 2, 2000, the exchange ratio of 1.1 shares of JDS
Uniphase common stock has been treated as adjusted to 2.2 shares of JDS Uniphase
common stock to reflect the stock split in this proxy-statement prospectus in
order to maintain the economic terms of the original transaction.
REASONS FOR THE TRANSACTION
E-TEK and JDS Uniphase are proposing to merge in response to unprecedented
growth in the telecommunications industry and demand for the fiber optic
networks that are enabling such growth.
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<PAGE> 53
Due to the rapid increase in demand for applications such as Internet access,
email, and electronic commerce, telecommunications service providers have
rapidly accelerated the deployment and bandwidth capacity of fiber optic systems
in their networks. To meet these aggressive deployment plans and bandwidth
needs, systems manufacturers are looking both internally and to merchant optical
component and module suppliers to significantly expand production, shorten
development cycles and provide new products and functionalities. The component
and module manufacturers have not been able to meet these demands of the systems
manufacturers to date, and this imbalance is hampering the growth of optical
networking and deployment of these advanced telecommunications networks. E-TEK
and JDS Uniphase believe that the merger will allow the companies to better
respond to these needs of the telecommunications industry and the demands of
their customers, thereby better enabling more widespread deployment of optical
networks and advancement of these networks to increase bandwidth to the levels
sought by the marketplace.
E-TEK and JDS Uniphase believe that both companies will be able to serve
their customers more effectively as a combined company. Specifically, E-TEK and
JDS Uniphase believe that the merger would have the following benefits:
The combination of the two companies will enable a more rapid scaling of
operations bringing greater volume and a broader range of products to customers
faster.
- The merger combines the companies' different areas of manufacturing
expertise, for example JDS Uniphase's capability in WDM filters will be
coupled with E-TEK's packaging capability.
- Increased capacity enables the companies to respond to customers' demands
for rapid increases in component supply at improved price-performance
levels.
- More manufacturing capacity allows for more efficient processes and
increased production, leading to lower costs.
- The combined company would have more resources for more rapidly expanding
the scale of its operations.
The merger will combine two broad product lines to enhance offerings to
customers.
- Combined product lines will enable the companies to provide more
module-level solutions with higher levels of functionality at lower
costs.
- The combined product lines of JDS Uniphase and E-TEK will provide
customers with a more comprehensive solution.
- The combined company will offer greater flexibility for customers by
providing numerous technology choices and solutions for different system
designs.
- A broader selection of products will enable the combined organization to
respond more quickly to its customers' specifications and to reduce
product design cycle times.
The combination of the two companies can achieve higher levels of automation and
lower cost.
- Combined unit volumes of the two companies enables higher levels of
investment in automation, resulting in higher quality and lower costs.
- With the combined resources of the two companies, production lines can be
automated at a faster pace allowing for improved productivity and price
performance.
- The combined company will be better able to improve the supply of raw
materials, including thin film filters used in WDM, allowing the new
organization to deliver more products to customers faster and meet
customers' requirements for continuous cost reductions.
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<PAGE> 54
- The combined efforts of the two companies allows more resources to be
directed to developing manufacturing in lower cost locations.
The merger will enable more product and technology innovation for customers.
- The broader product line of the combined company would allow for further
development of integrated modules utilizing products from both companies,
including both "passive" and "active" optical components.
- Development of more integrated products shortens lead times and brings
products to market faster, providing a better customer solution.
- Combining the research and development efforts of the two companies
reduces duplicative efforts and allows for more efficient use of scarce
resources and limited engineering talent, leading to more rapid
innovation.
- By joining together, the companies can share intellectual property and
focus additional resources on new products and technology solutions for
customers.
By joining together, the companies can more effectively respond to changes in
technology and the marketplace.
- The combined company will have more resources to develop products for
customers that are competitive with alternative technology platforms.
- The merged organization will be better positioned to offer integrated
products to emerging players who increasingly demand turnkey solutions.
- By joining together, the companies will be better able to respond quickly
to technological change, increased competition and market demands in an
industry experiencing rapid innovation and change.
- The combined company may be better equipped to compete with the in-house
optical component manufacturing capability of large systems
manufacturers, many of whom have announced acquisitions and investments
to expand operations.
Although the companies believe the merger could have the benefits described
above, both companies caution that there can be no assurance that any of these
benefits will be achieved and the failure to achieve one or more of these
benefits may have a material adverse effect on the combined company's business,
results of operations and financial condition. See "Risk Factors" on page 29.
RECOMMENDATION OF E-TEK'S BOARD OF DIRECTORS
AT ITS MEETING ON JANUARY 17, 2000, THE E-TEK BOARD OF DIRECTORS DETERMINED
THAT THE MERGER WAS FAIR TO E-TEK STOCKHOLDERS AND IN THE BEST INTERESTS OF
E-TEK AND ITS STOCKHOLDERS AND APPROVED THE MERGER AGREEMENT. ACCORDINGLY, THE
E-TEK BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AND RECOMMENDS THAT
E-TEK STOCKHOLDERS VOTE FOR APPROVAL OF THE MERGER PROPOSAL.
In reaching its decision to approve the merger agreement, the E-TEK board
of directors consulted with (1) its legal counsel regarding the legal terms of
the transaction and the obligations of the E-TEK board of directors in its
consideration of the proposed transaction, (2) its financial advisors regarding
the financial aspects of the proposed transaction and the fairness from a
financial point of view of the exchange ratio to E-TEK's stockholders, and (3)
the management of E-TEK.
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<PAGE> 55
The factors that the E-TEK board of directors considered in reaching its
determination include, but were not limited to, the following:
- historical information concerning E-TEK's and JDS Uniphase's respective
businesses, financial performance and condition, operations, technology
and management, including public reports concerning results of operations
during the most recent fiscal year and fiscal quarter for each company
filed with the SEC;
- E-TEK's management's view of the financial condition, results of
operations and businesses of E-TEK and JDS Uniphase before and after
giving effect to the merger;
- current financial market conditions and historical market prices,
volatility and trading information with respect to the E-TEK common stock
and the JDS Uniphase common stock;
- the relationship between the market value of the E-TEK common stock and
the consideration to be received by stockholders of E-TEK in the merger,
along with a comparison of comparable merger transactions;
- the belief that the terms of the merger agreement are reasonable;
- the opinion of Goldman, Sachs that the exchange ratio pursuant to the
merger agreement was fair from a financial point of view to E-TEK's
stockholders;
- the impact of the merger on E-TEK's customers and employees; and
- reports from management and from E-TEK's legal and financial advisors as
to the results of each of their due diligence investigations of JDS
Uniphase.
In the course of its analysis, E-TEK's board of directors also considered
the strategic benefits of the transaction. The board of directors determined
that:
- the combined company will likely be able to better serve its customers in
the telecommunications industry and accelerate the deployment of optical
networking technology;
- E-TEK's stockholders would have the opportunity to participate in the
potential for growth of the combined company after the merger;
- increased manufacturing capacity may enhance the combined company's
ability to meet the rapidly expanding demand for its products;
- the broadening and integration of the companies' product lines may enable
the combined company to meet the needs of its customers more effectively
and efficiently;
- combined technological resources may allow the combined company to
compete more effectively by providing it with enhanced ability to develop
new products and greater functionality for existing products;
- the creation of a larger field sales organization, the expansion of the
companies' dedicated sales teams, greater marketing resources and
financial strength may present improved opportunities for marketing the
products of the combined company; and
- the structure of the transaction may provide significant advantages in
increasing the opportunity for (a) effectively utilizing the skills and
resources of the companies' respective management teams and (b) matching
the respective "corporate cultures" of the two companies while
maintaining some of the most important aspects of each culture.
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<PAGE> 56
The E-TEK board also considered potentially negative factors relating to
the merger, including:
- the risk that the potential benefits sought in the merger might not be
fully realized;
- the possibility that the merger might not be consummated and the effect
of the public announcement of the merger on (a) E-TEK's sales and
operating results, particularly the effect on key customer and supplier
relationships, (b) E-TEK's ability to attract and retain key management,
marketing and technical personnel and (c) the progress of certain
development projects;
- the substantial charges to be incurred in connection with the merger,
including costs of integrating the businesses and transaction expenses
arising from the merger;
- the risk that despite the efforts of the combined company, key technical
and management personnel might not remain employed by the combined
company; and
- various other risks.
The E-TEK board of directors concluded that these factors were outweighed
by the potential benefits to be gained by the merger agreement and the
completion of the proposed merger.
The above discussion of the material factors considered by the E-TEK board
of directors is not intended to be exhaustive, but does set forth the principal
factors considered by the E-TEK board of directors. The E-TEK board of directors
collectively reached the unanimous conclusion to approve the merger agreement
and the merger in light of the various factors described above and other factors
that each member of the E-TEK board of directors felt were appropriate. In view
of the wide variety of factors considered by the E-TEK board in connection with
its evaluation of the merger and the complexity of these matters, the E-TEK
board did not consider it practical, and did not attempt, to quantify, rank or
otherwise assign relative weights to the specific factors it considered in
reaching its decision. Rather, the E-TEK board made its recommendation based on
the totality of information presented to and the investigation conducted by it.
In considering the factors discussed above, individual directors may have given
different weights to different factors.
In considering the recommendation of E-TEK's board of directors with
respect to the merger agreement, you should be aware that some directors and
officers of E-TEK have interests in the merger that are different from, or are
in addition to, the interests of E-TEK stockholders generally. Please see the
section entitled "Interests of Directors and Officers in the Merger" on page 59
of this proxy statement-prospectus.
OPINION OF E-TEK'S FINANCIAL ADVISOR
On January 17, 2000, Goldman Sachs delivered its oral opinion to the board
of directors of E-TEK that as of that date, the exchange ratio pursuant to the
merger agreement was fair from a financial point of view to the holders of E-TEK
common stock. Goldman Sachs subsequently confirmed its earlier opinion by
delivery of its written opinion dated January 17, 2000.
THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS IS CONTAINED IN ANNEX
D. GOLDMAN SACHS PROVIDED ITS OPINION FOR THE INFORMATION AND ASSISTANCE OF THE
E-TEK BOARD OF DIRECTORS IN CONNECTION WITH ITS CONSIDERATION OF THE MERGER. IT
IS NOT A RECOMMENDATION TO ANY HOLDER OF E-TEK COMMON STOCK AS TO HOW ANY
STOCKHOLDER SHOULD VOTE AT THE E-TEK MEETING. THE SUMMARY OF THE GOLDMAN SACHS
OPINION BELOW IS QUALIFIED BY ITS FULL TEXT. HOLDERS OF E-TEK COMMON STOCK ARE
URGED TO, AND SHOULD, READ THE GOLDMAN SACHS OPINION IN ITS ENTIRETY.
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<PAGE> 57
In connection with its opinion, Goldman Sachs reviewed, among other things:
- the merger agreement;
- the Registration Statements on Form S-1 of E-TEK, including the
prospectuses therein dated December 1, 1998 and August 11, 1999, relating
to the initial public offering and secondary offering of the E-TEK common
stock;
- Annual Reports on Form 10-K of E-TEK for the fiscal year ended June 30,
1999 and of JDS Uniphase and its predecessors for the five fiscal years
ended June 30, 1999, respectively;
- a number of interim reports to stockholders and Quarterly Reports on Form
10-Q of E-TEK and JDS Uniphase;
- the Registration Statement on Form S-4 of JDS Uniphase, including the
proxy statement/prospectus therein dated December 22, 1999, related to
the proposed merger of Optical Coating Laboratory, Inc. with a newly
formed wholly owned subsidiary of JDS Uniphase;
- a number of other communications from E-TEK and JDS Uniphase to their
respective stockholders;
- a number of internal financial analyses and forecasts for E-TEK prepared
by its management;
- a number of internal financial analyses and forecasts for JDS Uniphase
prepared by its management; and
- a number of financial analyses and forecasts for JDS Uniphase prepared by
E-TEK's management.
Goldman Sachs also held discussions with members of the senior management
of E-TEK and JDS Uniphase regarding their assessment of the strategic rationale
for, and the potential benefits of, the merger and the past and current business
operations, financial condition, and future prospects of their respective
companies. In addition, Goldman Sachs reviewed the reported price and trading
activity for the E-TEK common stock and the JDS Uniphase common stock, which,
like many communications technology related stocks, have been and are likely to
continue to be subject to significant short term price and trading volatility,
and compared some financial and stock market information for E-TEK and JDS
Uniphase with similar information for several other companies with publicly
traded securities. In addition, Goldman Sachs reviewed the financial terms of
certain recent business combinations in the communications technology industry
specifically and other industries generally. Goldman Sachs also performed other
studies and analyses that it considered appropriate.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information discussed with E-TEK or reviewed by it and
assumed that accuracy and completeness for purposes of rendering its opinion.
Goldman Sachs assumed with the consent of E-TEK that the internal financial
analyses and forecasts for E-TEK prepared by its management and the financial
analyses and forecasts for JDS Uniphase prepared by E-TEK's management were
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of E-TEK. In addition, Goldman Sachs did not make an independent
evaluation or appraisal of the assets and liabilities of E-TEK or JDS Uniphase
or any of their respective subsidiaries. No evaluation or appraisal of the
assets and liabilities of E-TEK or JDS Uniphase or any of their respective
subsidiaries was furnished to Goldman Sachs. Goldman Sachs assumed that all
material governmental, regulatory or other consents and approvals necessary to
complete the merger will be obtained without any adverse effect on E-TEK or JDS
Uniphase or on the contemplated benefits of the merger. Goldman Sachs provided
its opinion for the information and assistance of the board of directors of
E-TEK in connection with its consideration of the merger. The Goldman Sachs
opinion is not a recommendation as to how any holder of E-TEK common stock
should vote.
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<PAGE> 58
The following is a summary of the material financial analyses used by
Goldman Sachs in connection with providing its oral and written opinions to
E-TEK's board of directors dated January 17, 2000. Some of the summaries of the
financial analyses include information presented in tabular format. The tables
must be read together with the text accompanying each summary.
Historical Stock Trading Analysis. Goldman Sachs reviewed the historical
trading prices and volumes for the E-TEK common stock and the JDS Uniphase
common stock. In addition, Goldman Sachs analyzed the consideration to be
received by holders of E-TEK common stock pursuant to the merger agreement in
relation to the one day, one week, and one month closing market prices of the
E-TEK common stock. Based on the $192.19 closing price of the JDS Uniphase
common stock on January 14, 2000 times the exchange ratio of 1.1 (prior to
giving effect to the two-for-one stock split of JDS Uniphase common stock
effected as to JDS Uniphase stockholders of record as of March 2, 2000), this
analysis indicated that the price per share of E-TEK common stock to be paid
pursuant to the merger agreement represented a premium of:
- 63% based on the closing market price of $129.69 per share of E-TEK
common stock on January 13, 2000;
- 69% based on the closing market price of $124.94 per share of E-TEK
common stock one week prior to the date of the merger agreement; and
- 140% based on the closing market price of $88.13 per share of E-TEK
common stock one month prior to the date of the merger agreement.
Selected Companies Analysis. Goldman Sachs reviewed and compared certain
financial information relating to E-TEK to corresponding financial information,
ratios and public market multiples for the following publicly traded companies:
<TABLE>
<CAPTION>
OPTICAL AND SYSTEMS INTERNET INFRASTRUCTURE OTHER COMMUNICATIONS
COMPANIES COMPANIES COMPANIES
------------------- ----------------------- --------------------
<S> <C> <C>
JDS Uniphase Juniper Networks, Inc. 3Com Corporation
Alcatel Redback Networks Inc. Broadcom Corporation
Cisco Systems, Inc. Sycamore Networks Inc. Ciena Corporation
Corning Incorporated Foundry Networks Inc. Tellabs, Inc.
Ericsson LM Telephone Co.
Lucent Technologies Inc.
Motorola, Inc.
Nokia Corporation
Nortel Networks Corporation
SDL Inc.
Siemens AG
</TABLE>
Goldman Sachs chose these companies because they were publicly-traded companies
with operations that for purposes of the analysis Goldman Sachs considered
reasonably similar to E-TEK. Goldman Sachs calculated and compared various
financial multiples and ratios in order to indicate how various valuation
multiples and financial ratios for E-TEK compare on a relative basis to those of
selected public companies which Goldman Sachs considered comparable to E-TEK.
The multiples for E-TEK were calculated using a price of $135.88, the closing
price of the E-TEK common stock on the Nasdaq National Market on January 14,
2000. The multiples and ratios for E-TEK were based on information provided by
E-TEK's management and the multiples for each of the selected companies were
based on the most recent publicly available information.
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<PAGE> 59
The following table presents the ranges, the mean and the median figures
for the selected companies for:
(1) leveraged revenue multiples;
(2) estimated year 2000 price/earnings ratios as a multiple of growth;
(3) estimated calendar year 2000 and 2001 price/earnings ratios; and
(4) five-year EPS growth rate.
As used here, "P/E" means the ratio of price to earnings; "LTM" means the
latest twelve months; "EBIT" means earnings before interest and taxes; and "EPS"
means earnings per share.
OPTICAL AND SYSTEMS COMPANIES
<TABLE>
<CAPTION>
MULTIPLES OF LEVERAGED MARKET E-TEK AT
CAPITALIZATION TO: RANGE(A) MEDIAN(A) MEAN(A) $135.88/SHARE(B)
----------------------------- -------------- --------- ------- ----------------
<S> <C> <C> <C> <C>
CY1999 Estimated Revenue......... 1.2x - 89.5x 6.9x 20.3x 41.1x
CY2000 Estimated Revenue......... 1.2x - 51.8x 5.7x 13.6x 27.0x
P/E MULTIPLE
2000CY Estimates................. 36.1x - 234.1x 63.5x 87.9x 144.5x
2001CY Estimates................. 28.9x - 163.7x 58.9x 74.2x 114.5x
2000 P/E/5-Year EPS Growth....... 1.4x - 5.2x 2.8x 3.1x 4.8x
5-Year I/B/E/S EPS Growth........ 15.3% - 45.0% 23.5% 26.0% 30.0%
</TABLE>
INTERNET INFRASTRUCTURE COMPANIES
<TABLE>
<CAPTION>
MULTIPLES OF LEVERAGED E-TEK AT
MARKET CAPITALIZATION TO: RANGE(A) MEDIAN(A) MEAN(A) $135.88/SHARE(B)
------------------------- ----------------- --------- ------- ----------------
<S> <C> <C> <C> <C>
CY1999 Estimated Revenue............ 55.3x - 462.8x 228.4x 243.7x 41.1x
CY2000 Estimated Revenue............ 31.0x - 176.9x 114.6x 109.3x 27.0x
P/E MULTIPLE
2000CY Estimates.................... 377.9x - 8,954.2x 1,049.0x 2,857.5x 144.5x
2001CY Estimates.................... 270.0x - 1,611.8x 474.9x 707.9x 114.5x
2000 P/E/5-Year EPS Growth.......... 9.4x - 179.1x 21.0x 57.6x 4.8x
5-Year I/B/E/S EPS Growth........... 40.0% - 50.0% 50.0% 47.5% 30.0%
</TABLE>
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<PAGE> 60
OTHER COMMUNICATIONS COMPANIES
<TABLE>
<CAPTION>
MULTIPLES OF LEVERAGED MARKET E-TEK AT
CAPITALIZATION TO: RANGE(A) MEDIAN(A) MEAN(A) $135.88/SHARE(B)
----------------------------- ---------------- --------- ------- ----------------
<S> <C> <C> <C> <C>
CY1999 Estimated Revenue......... 2.7x - 70.1x 15.5x 25.9x 41.1x
CY2000 Estimated Revenue......... 2.5x - 46.6x 10.8x 17.7x 27.0x
P/E MULTIPLE
2000CY Estimates................. 35.5x - 236.2x 74.6x 105.2x 144.5x
2001CY Estimates................. 29.4x - 178.9x 49.0x 76.6x 114.5x
2000 P/E/5-Year EPS Growth....... 1.4x - 4.7x 2.7x 2.9x 4.8x
5-Year I/B/E/S EPS Growth........ 20.0% - 50.0% 30.0% 32.5% 30.0%
</TABLE>
-------------------------
(a) Price/earnings ratios were based upon I/B/E/S International, Inc. estimates
as of January 14, 2000. I/B/E/S International Inc. is a data service that
monitors and publishes compilations of earnings estimates by selected
research analysts regarding companies of interest to institutional
investors. EPS and revenue estimates for each of E-TEK and JDS Uniphase were
based on E-TEK's management estimates. Lucent Technologies' EPS was based on
Goldman Sachs' research analysts. All other revenue estimates were based on
various research analysts.
(b) The closing price of the E-TEK common stock on January 14, 2000.
Selected Transactions Analysis. Goldman Sachs analyzed certain information
relating to selected transactions with values exceeding $2 billion in the
communications technology industry since 1996. Goldman Sachs analyzed, among
other things:
(1) levered aggregate consideration as a multiple of LTM sales;
(2) equity consideration as a multiple of LTM net income;
(3) equity consideration as a multiple of estimated net income for one
year after the transaction; and
(4) the ratio of price paid in the transaction to the target's
earnings as a multiple of the target's estimated long term growth.
As of January 14, 2000, the statistics derived from this analyses are set
forth below:
<TABLE>
<CAPTION>
RANGE MEDIAN MEAN MERGER
-------------- ------ ----- ------
<S> <C> <C> <C> <C>
MULTIPLES OF LEVERAGED MARKET CAPITALIZATION
TO:
LTM Sales................................... 2.0x - 677.3x 9.5x 52.8x 75.2x
MULTIPLES OF EQUITY CONSIDERATION TO:
LTM Net Income.............................. 34.5x - 180.5x 75.1x 80.5x 414.6x
Estimated Net Income........................ 19.1x - 89.3x 46.7x 47.3x 192.3x
MULTIPLES OF P/E PAID TO:
Long Term Growth............................ 0.5x - 4.8x 1.5x 1.6x 6.4x
</TABLE>
Goldman Sachs also analyzed the premium to the market value for each of the
transactions, calculated using the closing market price of the target's stock
five trading days prior to the announcement of the transaction. The following
table sets forth the result of this analysis:
<TABLE>
<CAPTION>
% PREMIUM
-------------------------------
HIGH LOW MEDIAN MEAN
----- ---- ------ ----
<S> <C> <C> <C> <C>
One Week Prior.......................................... 109.8% (7.5%) 33.2% 37.6%
</TABLE>
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<PAGE> 61
Goldman Sachs compared this to the 55.6% premium to be paid in the merger to the
holders of E-TEK common stock based on the market value of the E-TEK common
stock on January 14, 2000.
Pro Forma Merger Analysis. Goldman Sachs prepared an analysis of the pro
forma cash EPS impact, i.e. excluding goodwill, of the merger on the E-TEK
shareowners, based on estimates for E-TEK and JDS Uniphase prepared by E-TEK's
management for the years 2000 and 2001. Goldman Sachs performed this analysis
under two scenarios: JDS Uniphase prior to its contemplated merger with OCLI and
JDS Uniphase combined with OCLI.
The following table shows the result of this analysis:
<TABLE>
<CAPTION>
PRE-OCLI PRE-OCLI POST-OCLI POST-OCLI
MERGER MERGER MERGER MERGER
PRO FORMA ACCRETION PRO FORMA ACCRETION
CASH EPS (DILUTION) CASH EPS (DILUTION)
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
FY2000................................... $.69 2.4% $ .75 1.1%
CY2000................................... $.83 0.6% $ .89 (1.1%)
FY2001................................... $.98 (0.4%) $1.08 (2.2%)
</TABLE>
Contribution Analysis. Goldman Sachs reviewed historical and estimated
future operating and financial information, including, among other things,
revenue, EBIT and net income, for E-TEK and JDS Uniphase and the relative
contribution of E-TEK and JDS Uniphase to the combined entity resulting from the
merger, based on E-TEK management's estimates. Goldman Sachs performed this
analysis both before and after giving effect to JDS Uniphase' pending merger
with OCLI.
The result of this analysis is set forth below:
<TABLE>
<CAPTION>
E-TEK CONTRIBUTION E-TEK CONTRIBUTION
(PRE-OCLI MERGER) (POST-OCLI MERGER)
------------------ --------------------
<S> <C> <C>
FY2000 Revenue............................ 20.5% 18.6%
CY2000 Revenue............................ 19.6% 17.7%
FY2001 Revenue............................ 19.1% 16.2%
FY2000 EBIT............................... 20.2% N.A.
CY2000 EBIT............................... 19.3% N.A.
FY2001 EBIT............................... 18.7% 16.4%
FY2000 Net Income......................... 18.9% 17.1%
CY2000 Net Income......................... 17.6% 15.8%
FY2001 Net Income......................... 16.8% 14.4%
</TABLE>
These statistics were then compared to the pro forma ownership by E-TEK
stockholders on a diluted basis of the common stock of the combined company
implied by the merger consideration of 16.5% in the pre-OCLI merger scenario and
15.6% in the post-OCLI merger scenario.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of all such analyses. No company or
transaction used in the above analyses as a comparison is directly comparable to
E-TEK or JDS Uniphase or the merger. The analyses were prepared solely for
purposes of Goldman Sachs providing its opinion to the E-TEK board of directors
as to the fairness from a financial point of view of the exchange ratio pursuant
to the merger agreement and do not purport to be appraisals or necessarily
reflect the prices at which businesses or securities actually may be sold.
Analyses based upon forecasts of future results are not necessarily indicative
of actual future results, which may be significantly more or less favorable than
suggested by
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such analyses. Because such analyses are inherently subject to uncertainty,
being based upon numerous factors or events beyond the control the parties or
their respective advisors, none of E-TEK, JDS Uniphase, Goldman Sachs or any
other person assumes responsibility if future results are materially different
from those forecast. As described above, Goldman Sachs' opinion to the board of
directors of E-TEK was one of many factors taken into consideration by the E-TEK
board of directors in making its determination to approve the merger agreement.
The foregoing summary does not purport to be a complete description of the
analysis performed by Goldman Sachs and is qualified by reference to the written
opinion of Goldman Sachs set forth in Annex D hereto.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements,
and valuations for estate, corporate and other purposes. Goldman Sachs is
familiar with E-TEK since it has provided various investment banking services to
E-TEK in the past. These services include having acted as managing underwriter
of the initial public offering of 5,000,000 shares of E-TEK common stock in
December 1998 and having acted as managing underwriter of the public offering of
6,000,000 shares of E-TEK common stock in August 1999. E-TEK selected Goldman
Sachs as its financial advisor because it is a nationally recognized investment
banking firm that has substantial experience in transactions similar to the
merger.
Goldman Sachs provides a full range of financial, advisory and brokerage
services and in the course of its normal trading activities may from time to
time effect transactions and hold positions in the securities or options on
securities of E-TEK and/or JDS Uniphase for its own account and for the account
of customers.
Pursuant to a letter agreement dated December 22, 1999, E-TEK engaged
Goldman Sachs to act as its financial advisor in connection with the merger.
E-TEK has agreed to pay Goldman Sachs upon consummation of the merger customary
transaction fees. E-TEK has also agreed to indemnify Goldman Sachs against
certain liabilities, including certain liabilities under the federal securities
laws.
INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER
When considering the recommendation of E-TEK's board of directors, you
should be aware that E-TEK's directors and officers have interests in the merger
that are different from, or are in addition to, your interests. In particular,
some of the directors and executive officers of E-TEK participate in
arrangements and have continuing indemnification against liabilities that
provide them with interests in the merger that are different from, or are in
addition to, your interests.
E-TEK's officers and directors and affiliates of Summit Partners, each whom
are affiliates of E-TEK, together beneficially owned approximately 17,185,751
shares of E-TEK common stock, which represented 25.3% of all outstanding shares
of E-TEK common stock entitled to vote at the special meeting of E-TEK as of May
17, 2000 and these persons have agreed to vote in favor of the merger.
Under the terms of the existing employment agreement of E-TEK's Chairman of
the Board of Directors, President and Chief Executive Officer, Michael J.
Fitzpatrick, will receive full vesting of all unvested options and stock after
the merger, 1,591,063 additional shares as of the date of this proxy
statement/prospectus. Mr. Fitzpatrick will also receive a lump sum severance
payment equal to two times his current base salary and bonus upon his
termination. Mr. Fitzpatrick may also receive other benefits having an aggregate
value of approximately $380,000.
In addition, effective January 17, 2000, E-TEK entered into
change-in-control agreements with three of its directors, David W. Dorman,
Donald J. Listwin and Joseph W. Goodman, and its Chief Operating Officer and
Chief Financial Officer, Sanjay Subhedar. The agreements provide that all
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<PAGE> 63
options and stock held by these persons will immediately vest upon a change of
control, including this merger. Under these arrangements, a total of
approximately 965,417 shares would vest as of the date of this proxy
statement/prospectus. Mr. Subhedar is also entitled by the terms of his
employment agreement to up to one additional year of his current base salary if
he does not accept other employment and may also receive other benefits having
an aggregate value of approximately $60,000.
E-TEK's board of directors also resolved on January 17, 2000 that E-TEK's
President, Asia Pacific Operations, Ming Shih, will be entitled to maintain his
current position for the lesser of one year after the merger or until the
completion of the manufacturing facility in China, and receive the title of
Fellow upon retirement, assuming successful completion of the manufacturing
facility. If Mr. Shih is not given a comparable position at E-TEK upon his
return to E-TEK's headquarters from China, Mr. Shih will be entitled to six
months additional vesting of his options and restricted stock, or 84,183
additional shares as of the date of this proxy statement-prospectus. Mr. Shih
may also receive other benefits having an aggregate value of approximately
$60,000.
In addition, each of the directors' and Mr. Fitzpatrick's and Mr.
Subhedar's arrangements provide that if each is subject to any excise tax due to
the classification of any payments by E-TEK to such person as "excess parachute
payments" within the meaning of Section 280G or 4999 of the Internal Revenue
Code, E-TEK will pay such person an amount so that the amount realizable by him
is the same as if there were no excise tax. Based on the current exchange ratio
and market price of JDS Uniphase common stock, the total amount of such payments
is estimated to be $37,686,000, assuming the merger is completed on May 18,
2000.
Under the merger agreement, JDS Uniphase has agreed to honor E-TEK's
obligations under indemnification agreements between E-TEK and its directors and
officers in effect before the completion of the merger and any indemnification
provisions of E-TEK's certificate of incorporation and bylaws. JDS Uniphase has
also agreed to provide for indemnification provisions in the certificate of
incorporation and bylaws of the surviving corporation of the merger that are at
least as favorable as E-TEK's provisions. In addition, JDS Uniphase has agreed
to maintain E-TEK's directors' and officers' liability insurance for six years
from the completion of the merger, provided that JDS Uniphase is not required to
pay more than 150% of the amount of the premium E-TEK paid for insurance at the
completion of the merger.
After the merger, under the terms of the merger agreement, Donald J.
Listwin and Michael J. Fitzpatrick will join the JDS Uniphase Board of Directors
as Class I and III directors, respectively.
As a result of these interests, these directors and officers of E-TEK may
be more likely to vote to approve the merger agreement than if they did not hold
these interests. E-TEK's stockholders should consider whether these interests
may have influenced these directors and officers to support or recommend the
merger.
COMPLETION AND EFFECTIVENESS OF THE MERGER
JDS Uniphase and E-TEK will complete the merger when all of the conditions
to completion of the merger are satisfied or waived, including adoption of the
merger agreement by the stockholders of E-TEK. The merger will become effective
on the filing of a certificate of merger with the State of Delaware.
JDS Uniphase and E-TEK are working towards completing the merger as quickly
as possible and hope to complete it in the second calendar quarter of 2000.
STRUCTURE OF THE MERGER AND CONVERSION OF E-TEK COMMON STOCK
In accordance with the merger agreement and Delaware law, Rainbow
Acquisition will merge with and into E-TEK. As a result of the merger, the
separate corporate existence of Rainbow
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Acquisition will cease and E-TEK will survive the merger as a wholly owned
subsidiary of JDS Uniphase.
Upon completion of the merger, each outstanding share of E-TEK common
stock, other than shares held by JDS Uniphase and its subsidiaries, will be
converted into the right to receive 2.2 fully paid and nonassessable shares of
JDS Uniphase common stock, which gives effect to the two-for-one stock split of
JDS Uniphase common stock effected as to JDS Uniphase stockholders of record as
of March 2, 2000. The number of shares of JDS Uniphase common stock issuable in
the merger will be proportionately adjusted for any stock split, stock dividend
or similar event with respect to E-TEK common stock or JDS Uniphase common stock
that takes place between the date of the merger agreement and the completion of
the merger. In addition, concurrently with the merger, it is intended that the
holders of the outstanding exchangeable shares of E-TEK's subsidiary, Lundy
Technology Co., will receive 2.2 exchangeable shares of JDS Uniphase's
subsidiary, JDS Uniphase Canada, Ltd., in exchange for each Lundy exchangeable
share.
No certificate or scrip representing fractional shares of JDS Uniphase
common stock will be issued in connection with the merger. Instead of a fraction
of a share you will receive cash, without interest, equal to the product of the
fraction and the closing price of one share of JDS Uniphase common stock on the
last trading day before the effective time of the merger.
EXCHANGE OF E-TEK STOCK CERTIFICATES FOR JDS UNIPHASE STOCK CERTIFICATES
When the merger is completed, the exchange agent will mail you a letter of
transmittal and instructions for surrendering your E-TEK stock certificates in
exchange for JDS Uniphase stock certificates. When you deliver your E-TEK stock
certificates to the exchange agent along with a properly executed letter of
transmittal and any other required documents, your E-TEK stock certificates will
be canceled and you will receive JDS Uniphase stock certificates representing
the number of full shares of JDS Uniphase common stock to which you are entitled
under the merger agreement. You will receive payment in cash, without interest,
instead of any fractional shares of JDS Uniphase common stock which you would
otherwise have received.
YOU SHOULD NOT SUBMIT YOUR E-TEK STOCK CERTIFICATES FOR EXCHANGE UNLESS AND
UNTIL YOU RECEIVE THE TRANSMITTAL INSTRUCTIONS AND A FORM OF LETTER OF
TRANSMITTAL FROM THE EXCHANGE AGENT.
You are not entitled to receive any dividends or other distributions on JDS
Uniphase common stock until the merger is completed and you have surrendered
your E-TEK stock certificates in exchange for JDS Uniphase stock certificates.
If there is any dividend or other distribution on JDS Uniphase common stock
with a record date after the merger and a payment date prior to the date you
surrender your E-TEK stock certificates in exchange for JDS Uniphase stock
certificates, promptly after your shares of JDS Uniphase common stock are issued
you will receive the distribution or dividend on those shares. If there is any
dividend or other distribution on JDS Uniphase common stock with a record date
after the merger and a payment date after the date you surrender your E-TEK
stock certificates in exchange for JDS Uniphase stock certificates, you will
receive the distribution or dividend on your shares promptly after the payment
date.
JDS Uniphase will only issue a JDS Uniphase stock certificate or a check in
lieu of a fractional share in a different name than the name in which a
surrendered E-TEK stock certificate is registered if you present the exchange
agent with all documents required to show and effect the unrecorded transfer of
ownership and show that you paid any applicable stock transfer taxes.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS OF THE MERGER
In the opinion of Morrison & Foerster LLP and Wilson Sonsini Goodrich &
Rosati, Professional Corporation, the following are the material United States
federal income tax considerations of the merger assuming that the merger is
effected as described in the merger agreement and this proxy
statement-prospectus. These opinions and the following discussion are based on
and subject to the Internal Revenue Code of 1986, as amended, the regulations
promulgated under the Internal Revenue
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Code, existing administrative interpretations and court decisions, all of which
are subject to change, possibly with retroactive effect, and assumptions,
limitations, representations and covenants, including those contained in
certificates of officers of JDS Uniphase and E-TEK expected to be executed as of
the completion of the merger. This discussion does not address all aspects of
United States federal income taxation that may be important to you in light of
your particular circumstances or if you are subject to special rules, such as
rules relating to:
- stockholders who are not citizens or residents of the United States;
- stockholders subject to the alternative minimum tax provisions of the tax
code;
- financial institutions;
- tax-exempt organizations;
- insurance companies;
- dealers in securities;
- stockholders who acquired their shares of E-TEK common stock pursuant to
the exercise of options or similar derivative securities or otherwise as
compensation; and
- stockholders who hold their shares of E-TEK common stock as part of a
hedge, straddle or other risk reduction, constructive sale or conversion
transaction.
This discussion assumes you hold your shares of E-TEK common stock as capital
assets within the meaning of Section 1221 of the Internal Revenue Code.
JDS Uniphase's and E-TEK's obligations to complete the merger are
conditioned on, among other things, JDS Uniphase's receipt of an opinion dated
as of the completion of the merger from Morrison & Foerster LLP and E-TEK's
receipt of an opinion dated as of the completion of the merger from Wilson
Sonsini Goodrich & Rosati, Professional Corporation, in each case stating that
the merger will constitute a tax-free reorganization under Section 368(a) of the
Internal Revenue Code. Alternatively, this condition will also be satisfied upon
the delivery of such tax opinion to JDS Uniphase and E-TEK from either Morrison
& Foerster LLP or Wilson Sonsini Goodrich & Rosati, Professional Corporation.
The opinions of counsel to be provided at the completion of the merger will be
based on then existing law, will assume the absence of changes in existing facts
and will rely on assumptions, representations and covenants including those
contained in certificates executed by officers of JDS Uniphase, E-TEK and
Rainbow Acquisition and dated as of the completion of the merger. The opinions
neither bind the IRS nor preclude the IRS from adopting a contrary position, and
it is possible that the IRS may successfully assert a contrary position in
litigation or other proceedings. Neither JDS Uniphase nor E-TEK intends to
obtain a ruling from the IRS with respect to the tax consequences of the merger.
Tax Implications to E-TEK Stockholders. Except as discussed below, you will
not recognize gain or loss for United States federal income tax purposes when
you exchange your E-TEK common stock for JDS Uniphase common stock pursuant to
the merger. The aggregate tax basis of the JDS Uniphase common stock you receive
as a result of the merger will be the same as your aggregate tax basis in the
E-TEK common stock you surrender in exchange for the JDS Uniphase common stock,
reduced by the tax basis of any shares of E-TEK common stock for which you
receive cash instead of fractional shares of JDS Uniphase common stock. The
holding period of the JDS Uniphase common stock you receive as a result of the
exchange will include the period during which you held the E-TEK common stock
you exchange in the merger.
You will recognize gain or loss for United States federal income tax
purposes with respect to the cash you receive instead of a fractional share
interest in JDS Uniphase common stock. Your gain or loss will be measured by the
difference between the amount of cash you receive and the portion of
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the tax basis of your shares of E-TEK common stock allocable to the shares of
E-TEK common stock exchanged for the fractional share interest. This gain or
loss will be capital gain or loss and will be a long-term capital gain or loss
if you have held your shares of E-TEK common stock for more than one year at the
time the merger is completed.
Tax Implications to JDS Uniphase, E-TEK and Rainbow Acquisition, Inc. None
of JDS Uniphase, E-TEK or Rainbow Acquisition, Inc. will recognize gain or loss
for United States federal income tax purposes solely as a result of the merger.
THE FOREGOING DISCUSSION IS NOT INTENDED TO BE A COMPLETE ANALYSIS OR
DESCRIPTION OF ALL POTENTIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OR
ANY OTHER CONSEQUENCES OF THE MERGER. IN ADDITION, THE DISCUSSION DOES NOT
ADDRESS TAX CONSEQUENCES WHICH MAY VARY WITH, OR ARE CONTINGENT ON, YOUR
INDIVIDUAL CIRCUMSTANCES. MOREOVER, THE DISCUSSION DOES NOT ADDRESS ANY NON-
INCOME TAX OR ANY FOREIGN, STATE OR LOCAL TAX CONSEQUENCES OF THE MERGER.
ACCORDINGLY, YOU ARE STRONGLY URGED TO CONSULT WITH YOUR TAX ADVISOR TO
DETERMINE THE PARTICULAR UNITED STATES FEDERAL, STATE, LOCAL OR FOREIGN INCOME
OR OTHER TAX CONSEQUENCES TO YOU OF THE MERGER.
ACCOUNTING TREATMENT OF THE MERGER
JDS Uniphase intends to account for the merger with E-TEK as the accounting
acquirer in a purchase business combination for financial reporting and
accounting purposes, under generally accepted accounting principles. After the
merger, the results of operations of E-TEK will be included in the consolidated
financial statement of JDS Uniphase.
REGULATORY FILINGS AND APPROVALS REQUIRED TO COMPLETE THE MERGER
The merger is subject to the requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, which prevents reportable transactions from
being completed until statutory waiting periods expire or are terminated. During
such waiting periods, the Antitrust Division of the Department of Justice or the
Federal Trade Commission may request the parties to provide, voluntarily or
otherwise, certain information relevant to their review. JDS Uniphase and E-TEK
have made the required filings with the Department of Justice and the Federal
Trade Commission and the applicable waiting periods have not yet expired. On
March 31, 2000, JDS Uniphase and E-TEK received requests for additional
information and other documentary material from the Antitrust Division of the
U.S. Department of Justice under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976. This request extends the waiting period for this transaction. JDS
Uniphase and E-TEK intend to comply with all requests for information from any
government entity. The requirements of Hart-Scott-Rodino will be satisfied if
the merger is completed within one year from the termination of the waiting
period.
During or after the statutory waiting periods, and even after completion of
the merger, either the Antitrust Division of the Department of Justice or the
Federal Trade Commission could challenge or seek to block the merger under the
antitrust laws, as it deems necessary or desirable in the public interest.
Foreign competition agencies with jurisdiction over the merger could also
initiate action to challenge or block the merger. In addition, a competitor,
customer or other third party could initiate a private action under the
antitrust laws challenging or seeking to enjoin the merger, before or after it
is completed. JDS Uniphase and E-TEK cannot be sure that a challenge to the
merger will not be made or that, if a challenge is made, JDS Uniphase and E-TEK
will prevail.
RESTRICTIONS ON SALES OF SHARES BY AFFILIATES OF E-TEK AND JDS UNIPHASE
The shares of JDS Uniphase common stock to be issued in connection with the
merger will be registered under the Securities Act of 1933 and will be freely
transferable under the Securities Act, except for shares of JDS Uniphase common
stock issued to any person who is deemed to be an
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affiliate of either JDS Uniphase or E-TEK at the time of the special meeting.
Persons who may be deemed to be affiliates include individuals or entities that
control, are controlled by, or are under common control of either JDS Uniphase
or E-TEK and may include some of their officers and directors, as well as their
principal stockholders. Some affiliates of E-TEK entered into affiliate
agreements in connection with the merger. See "Affiliate Agreements" on page 74.
Affiliates may not sell their shares of JDS Uniphase common stock acquired in
connection with the merger except under:
- an effective registration statement under the Securities Act covering the
resale of those shares;
- an exemption under paragraph (d) of Rule 145 under the Securities Act; or
- any other applicable exemption under the Securities Act.
JDS Uniphase's registration statement on Form S-4, of which this proxy
statement-prospectus forms a part, does not cover the resale of shares of JDS
Uniphase common stock to be received by affiliates in the merger.
LISTING ON THE NASDAQ NATIONAL MARKET OF JDS UNIPHASE COMMON STOCK TO BE ISSUED
IN THE MERGER
Under the merger agreement, JDS Uniphase shall cause the shares of JDS
Uniphase common stock to be issued in the merger to be approved for listing on
the Nasdaq National Market, subject to official notice of issuance.
NO APPRAISAL RIGHTS
Under Delaware corporate law, holders of E-TEK common stock are not
entitled to appraisal rights in connection with the merger because, on the
record date, E-TEK common stock was designated and quoted for trading on the
Nasdaq National Market and will be converted into shares of JDS Uniphase common
stock, which at the effective time of the merger will be listed on the Nasdaq
National Market.
DELISTING AND DEREGISTRATION OF E-TEK COMMON STOCK AFTER THE MERGER
If the merger is completed, E-TEK common stock will be delisted from the
Nasdaq National Market and will be deregistered under the Securities Exchange
Act of 1934.
DIVIDEND POLICY
JDS Uniphase has never paid a cash dividend on its common stock since its
inception and does not anticipate paying any cash dividends in the foreseeable
future. E-TEK has never paid a cash dividend on its common stock since its
inception and does not anticipate paying any cash dividends in the foreseeable
future.
THE MERGER AGREEMENT
The following is a brief summary of the material provisions of the merger
agreement. JDS Uniphase and E-TEK urge you to read the entire merger agreement,
which is attached as Annex A, in its entirety. This summary is qualified in its
entirety by reference to the full text of the merger agreement.
The Merger. At the closing of the merger, Rainbow Acquisition Inc., a
wholly owned subsidiary of JDS Uniphase, will merge with and into E-TEK. As a
result of the merger, E-TEK will become a wholly owned subsidiary of JDS
Uniphase.
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Conversion of Securities. Each share of E-TEK common stock issued and
outstanding immediately before the effective time of the merger will
automatically convert into the right to receive 2.2 shares of JDS Uniphase
common stock. JDS Uniphase will not issue any fractional shares. Instead of
receiving a fractional share, an E-TEK stockholder will receive cash equal to
the same fraction of the closing price of the JDS Uniphase common stock on the
day of the closing.
Representations and Warranties. JDS Uniphase and E-TEK each made a number
of customary representations and warranties in the merger agreement regarding
aspects of their respective businesses, financial condition, structure and other
facts pertinent to the merger.
The representations given by E-TEK cover the following topics, among
others, as they relate to E-TEK and its subsidiaries:
- E-TEK's corporate organization and its qualification to do business;
- E-TEK's certificate of incorporation and bylaws;
- E-TEK's capitalization;
- E-TEK's authorization of the merger agreement;
- E-TEK's filings and reports with the SEC;
- E-TEK's financial statements;
- the absence of material changes or events in E-TEK's business between
June 30, 1999 and January 17, 2000;
- E-TEK's liabilities;
- E-TEK's material contracts;
- E-TEK's litigation;
- E-TEK's employee benefit plans and employment agreements;
- E-TEK's labor matters;
- information supplied by E-TEK in this proxy statement-prospectus and the
related registration statement filed by JDS Uniphase;
- E-TEK's taxes and tax returns;
- environmental laws that apply to E-TEK;
- E-TEK's brokers;
- E-TEK's disclosure of all material information;
- the opinions of E-TEK's financial advisor;
- intellectual property owned or used by E-TEK;
- change in control payments of E-TEK resulting from the merger;
- absence of antitakeover statutes;
- E-TEK's title to the properties it owns and leases; and
- E-TEK's Year 2000 matters.
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The representations given by JDS Uniphase cover the following topics, among
others, as they relate to JDS Uniphase and its subsidiaries:
- JDS Uniphase's corporate organization and its qualification to do
business;
- JDS Uniphase's certificate of incorporation and bylaws;
- JDS Uniphase's and Rainbow Acquisition's capitalization;
- JDS Uniphase's and Rainbow Acquisition's authorization of the merger
agreement;
- JDS Uniphase's filings and reports with the SEC;
- JDS Uniphase's financial statements;
- the absence of material changes or events in JDS Uniphase's business
between June 30, 1999 and January 17, 2000;
- JDS Uniphase's liabilities;
- JDS Uniphase's material contracts;
- JDS Uniphase litigation;
- JDS Uniphase's labor matters;
- information supplied by JDS Uniphase in this proxy statement-prospectus
and the related registration statement filed by JDS Uniphase;
- JDS Uniphase's taxes and tax returns;
- environmental laws that apply to JDS Uniphase;
- JDS Uniphase's brokers;
- JDS Uniphase's disclosure of all material information;
- the opinion of JDS Uniphase's financial advisors;
- intellectual property owned or used by JDS Uniphase;
- JDS Uniphase's title to properties it owns and leases; and
- JDS Uniphase's year 2000 matters.
The representations and warranties in the merger agreement are complicated
and not easily summarized. You are urged to carefully read the articles of the
merger agreement entitled "Representations and Warranties of Company" and
"Representations and Warranties of Parent and Merger Sub."
E-TEK's Conduct of Business before Completion of the Merger. E-TEK agreed
that until the earlier of the completion of the merger or the termination of the
merger agreement or unless JDS Uniphase consents in writing, E-TEK and its
subsidiaries will operate its businesses in the usual, regular and ordinary
course and use commercially reasonable efforts to:
- preserve intact its assets and current business organizations;
- keep available the services of its current officers, employees and
consultants; and
- maintain its material contracts and preserving its relationships with:
- customers;
- suppliers; and
- others having business dealings with E-TEK and its subsidiaries.
E-TEK also agreed that until the earlier of the completion of the merger or
the termination of the merger agreement or unless JDS Uniphase consents in
writing, E-TEK and its subsidiaries would
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conduct their business in compliance with specific restrictions relating to,
among other things, the following:
- the modification of E-TEK's certificate of incorporation and bylaws;
- the issuance and redemption of securities, except up to 2,000,000 shares
of common stock on exercise of stock options issued in the ordinary
course of business under existing employee stock plans and shares
issuable under existing grants under E-TEK's stock purchase plans;
- the disposition of certain of E-TEK's assets;
- any modification in the vesting period of options granted under E-TEK's
stock option plans;
- the issuance of dividends or other distributions;
- the liquidation or restructuring of E-TEK, or a merger involving E-TEK;
- an increase in the compensation payable to E-TEK's officers or employees,
except regular annual salary adjustments made in the ordinary course of
business;
- investment in any subsidiary or other entity, except minority investments
not to exceed $5 million individually or $30 million in the aggregate;
- changes in accounting policies and procedures;
- the incurrence of indebtedness and discharge of indebtedness outside the
ordinary course of business;
- the acquisition of assets or other entities;
- capital expenditures;
- the entrance into material contracts, or their termination or
modification;
- settlement of claims;
- tax elections and liabilities;
- any action that would delay the consummation of the merger agreement; and
- revaluation of E-TEK's assets.
The agreements related to the conduct of E-TEK's business in the merger
agreement are complicated and not easily summarized. You are urged to carefully
read the article of the merger agreement entitled "Conduct of Business Pending
the Merger."
JDS Uniphase's Conduct of Business before Completion of the Merger. JDS
Uniphase agreed that until the earlier of the completion of the merger or the
termination of the merger agreement or unless E-TEK consents in writing, JDS
Uniphase and its subsidiaries will operate its businesses in the usual, regular
and ordinary course and use commercially reasonable efforts to:
- preserve intact its assets and current business organizations;
- keep available the services of its current officers, employees and
consultants; and
- maintain its material contracts and preserve its relationships with:
- customers;
- suppliers; and
- others having business dealings with JDS Uniphase and its subsidiaries.
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JDS Uniphase also agreed that until the earlier of the completion of the
merger or the termination of the merger agreement or unless E-TEK consents in
writing, JDS Uniphase and its subsidiaries would conduct their business in
compliance with specific restrictions relating to, among other things, the
following:
- any action that would delay the consummation of the merger; and
- the acquisition of other entities, except minority investments in other
entities not to exceed $5 million individually or $30 million in the
aggregate.
No Other Negotiations Involving E-TEK. Until the merger is completed or the
merger agreement is terminated, E-TEK has agreed, subject to limited exceptions,
that neither it nor any of its subsidiaries will:
- solicit, initiate, knowingly encourage or facilitate any inquiries or the
making of a proposal relating to any "alternative transaction," as
defined below;
- enter into any discussions or negotiations regarding any alternative
transaction, except as to the existence of the alternative transaction
provisions in the merger agreement;
- engage in discussions or enter into a confidentiality agreement with, any
person with respect to any alternative transaction; and
- agree to or endorse an alternative transaction.
If any officer or director of E-TEK or any of its subsidiaries or any
investment banker, attorney or other advisor or representative of E-TEK or any
of its subsidiaries violates any of the restrictions in the immediately
preceding paragraph, E-TEK will be deemed to have breached the relevant
restriction.
Between the date of the merger agreement and the earlier of the completion
of the merger or the termination of the merger agreement, E-TEK may furnish
information regarding E-TEK to, or enter into discussions with, any person or
group in response to an unsolicited bona fide proposal by the person or group
relating to an alternative transaction, or enter into an agreement with respect
to an alternative transaction if, and only to the extent that:
- E-TEK's board of directors concludes in good faith, after consultation
with its outside legal counsel, that the action is reasonably necessary
for E-TEK's board of directors to comply with its fiduciary obligations
under Delaware law;
- E-TEK's board of directors believes that the terms of the proposal
relating to the alternative transaction are or could reasonably be
expected to lead to an alternative transaction that is more favorable to
E-TEK's stockholders than the terms of the merger transaction with JDS
Uniphase; and
- prior to furnishing any such information to, or entering into discussions
or negotiations with, the person or group, E-TEK gives JDS Uniphase
written notice of the identity of such person or group and of E-TEK's
intention to furnish information to, or enter into discussions or
negotiations with, such person or group.
In addition, E-TEK is permitted to comply with Rule 14e-2 of the Securities
Exchange Act of 1934 with regard to an alternative transaction.
E-TEK has agreed to promptly inform and provide updates to JDS Uniphase of
any of the following:
- any proposal for an alternative transaction or any inquiry that E-TEK
believes or reasonably should believe would lead to any alternative
transaction;
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- the material terms and conditions of such proposal or inquiry; and
- the identity of the person or group making any such proposal or inquiry.
E-TEK further agreed to keep JDS Uniphase informed in all material respects of
the status and details, including material changes to such request, alternative
transaction or inquiry.
An "alternative transaction" is any of the following:
- any acquisition or purchase from E-TEK, or any tender offer or exchange
offer, by any person or group of more than a 25% interest in the total
outstanding voting securities of E-TEK;
- any merger or other business combination involving E-TEK in which any
third party acquires more than 25% of the total outstanding voting
securities of E-TEK or any entity resulting from such transaction;
- any transaction by which a third party acquires control of all or
substantially all of E-TEK's assets;
- any liquidation or dissolution of E-TEK; or
- any repurchase by E-TEK of at least 25% of its total outstanding voting
securities.
Directors of JDS Uniphase following the Closing. JDS Uniphase has agreed
that, effective as of the closing, JDS Uniphase will cause the size of its Board
of Directors to be increased to twelve members, and will appoint Michael J.
Fitzpatrick and Donald J. Listwin as Class III and I directors, respectively, to
serve until their successors are duly elected and qualified.
E-TEK's Employee Benefit Plans. Individuals who are employed by E-TEK at
the time the merger is completed will continue to be employees of E-TEK as the
surviving corporation in the merger. JDS Uniphase has agreed that all continuing
employees of E-TEK will be eligible to participate in JDS Uniphase's employee
benefit plans and arrangements to the same extent as similarly situated
employees of JDS Uniphase.
Treatment of E-TEK Stock Options. JDS Uniphase will assume E-TEK's stock
option plans in the merger. Upon completion of the merger, each outstanding
award, including restricted stock, stock equivalents and stock units, under any
employee incentive or benefit plans, programs or arrangements maintained by
E-TEK that provide for grants of equity-based awards, will be amended or
converted into a similar instrument of JDS Uniphase, with adjustments to
preserve their value. The other terms of each E-TEK award, and the plans or
agreements under which they were issued, will continue to apply, including any
provisions providing for acceleration. Each outstanding option to purchase E-TEK
common stock will be converted, in accordance with its terms, into an option to
purchase the number of shares of JDS Uniphase common stock equal to 2.2 times
the number of shares of E-TEK common stock which could have been obtained before
the merger upon the exercise of each option, rounded down to the nearest whole
share. The exercise price will equal the exercise price per share of E-TEK
common stock subject to the option before conversion divided by 2.2, rounded up
to the nearest whole cent.
Some executive officers and directors of E-TEK have change-in-control
agreements which provide for the acceleration of unvested options on the
completion of the merger. As a result, unvested options held by these executive
officers and directors will immediately vest on the completion of the merger.
JDS Uniphase will file a registration statement on Form S-8 for the shares
of JDS Uniphase common stock issuable with respect to options under the E-TEK
stock option and stock purchase plans and will use its commercially reasonable
efforts to maintain the effectiveness of that registration
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statement for as long as any of the options remain outstanding, to the same
extent that JDS Uniphase maintains the effectiveness of its existing Forms S-8.
Indemnification. JDS Uniphase has agreed to honor E-TEK's obligations under
indemnification agreements between E-TEK and its directors and officers in
effect before the completion of the merger and any indemnification provisions of
E-TEK's certificate of incorporation and bylaws. JDS Uniphase has also agreed to
provide for indemnification provisions in the certificate of incorporation and
bylaws of the surviving corporation of the merger that are at least as favorable
as E-TEK's provisions.
In addition, JDS Uniphase has agreed to maintain E-TEK's directors' and
officers' liability insurance for six years from the completion of the merger,
provided that JDS Uniphase is not required to pay more than 150% of the premium
for E-TEK's insurance.
CONDITIONS TO COMPLETION OF THE MERGER
The obligations of JDS Uniphase and E-TEK to complete the merger and the
other transactions contemplated by the merger agreement are subject to the
satisfaction or waiver of each of the following conditions before completion of
the merger:
- the merger agreement must be approved and adopted and the merger must be
approved by the holders of a majority of outstanding shares of E-TEK
common stock entitled to vote;
- JDS Uniphase's registration statement must be effective, no stop order
suspending its effectiveness will be in effect and no proceedings for
suspension of its effectiveness will be pending before or threatened by
the SEC;
- no law, regulation, injunction or other order may be enacted or issued
which has the effect of making the merger illegal or otherwise
prohibiting completion of the merger substantially on the terms contained
in the merger agreement;
- JDS Uniphase and E-TEK must each receive from their respective tax
counsel, an opinion to the effect that the merger will constitute a
tax-free reorganization within the meaning of Section 368(a) of the
Internal Revenue Code and these opinions must not have been withdrawn;
and
- The waiting period, and any extension thereof, applicable to the
completion of the merger under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 or under any other premerger notification
statute of a foreign jurisdiction must either have expired or been
terminated.
E-TEK's obligations to complete the merger and the other transactions
contemplated by the merger agreement are subject to the satisfaction or waiver
of each of the following additional conditions before completion of the merger:
- JDS Uniphase's representations and warranties must be true and correct as
of the date the merger is to be completed as if made at and as of such
time except for the following:
- to the extent JDS Uniphase's representations and warranties address
matters only as of a particular date, they must be true and correct as
of that date, except that if any of these representations and
warranties are not true and correct as of a particular date but the
effect in each case, or in the aggregate, of the inaccuracies of these
representations and breaches of these warranties does not have a
material adverse effect on JDS Uniphase, then this condition will be
deemed satisfied;
- if any of these representations and warranties are not true and correct
but the effect in each case, or in the aggregate, of the inaccuracies
of these representations and breaches of these
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warranties does not have a material adverse effect on JDS Uniphase, then this
condition will be deemed satisfied;
- JDS Uniphase must have performed or complied in all material respects
with all of its agreements and covenants required by the merger agreement
to be performed or complied with by JDS Uniphase at or before completion
of the merger; and
- a material adverse change relating to JDS Uniphase must not have
occurred.
JDS Uniphase's obligations to complete the merger and the other
transactions contemplated by the merger agreement are subject to the
satisfaction or waiver of each of the following additional conditions before
completion of the merger:
- E-TEK's representations and warranties must be true and correct as of the
date the merger is to be completed as if made at and as of such time
except for the following:
- to the extent E-TEK's representations and warranties address matters
only as of a particular date, they must be true and correct as of that
date, except that if any of these representations and warranties are
not true and correct as of a particular date but the effect in each
case, or in the aggregate, of the inaccuracies of these representations
and breaches of these warranties does not have a material adverse
effect on E-TEK, then this condition will be deemed satisfied;
- if any of these representations and warranties are not true and correct
but the effect in each case, or in the aggregate, of the inaccuracies
of these representations and breaches of these warranties does not have
a material adverse effect on E-TEK, then this condition will be deemed
satisfied; and
- E-TEK must have performed or complied in all material respects with all
of its agreements and covenants required by the merger agreement to be
performed or complied with by E-TEK at or before completion of the
merger; and
- a material adverse change relating to E-TEK must not have occurred.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated at any time prior to completion of
the merger, whether before or after the approval and adoption of the merger
agreement and approval of the merger by the E-TEK stockholders:
- by mutual written consent of JDS Uniphase and E-TEK;
- by JDS Uniphase or E-TEK, if the merger is not completed before October
31, 2000, unless the party relying on this provision caused the delay;
- by JDS Uniphase or E-TEK, if there is any order, decree or ruling of a
court or governmental authority having the effect of permanently
restraining, enjoining or prohibiting the completion of the merger which
is final and non-appealable, except that this right to terminate the
merger agreement is not available to any party who has failed to comply
with its respective obligation to obtain any consents, approvals and
other appropriate authorizations required by the merger agreement;
- by JDS Uniphase or E-TEK, if the requisite vote of the E-TEK stockholders
necessary for the approval and adoption of the merger agreement fails to
be obtained at the E-TEK special meeting or at any adjournment of that
meeting, except that this right to terminate the merger agreement is not
available to E-TEK where the failure to obtain the requisite vote of the
E-TEK stockholders shall have been caused by E-TEK's breach of the merger
agreement; or
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- by JDS Uniphase or E-TEK, upon a material breach of any representation,
warranty, covenant or agreement on the part of the other party in the
merger agreement, or if any of the other party's representations or
warranties are or become untrue so that the corresponding condition to
completion of the merger would not be met, and the breach cannot be cured
or is not cured within 30 days or the breaching party did not use
commercially reasonable efforts to cure the breach within the 30 days.
Furthermore, JDS Uniphase may terminate the merger agreement if any of the
following shall have occurred:
- E-TEK's board of directors withdraws or changes in a manner adverse to
JDS Uniphase its recommendation in favor of the merger;
- E-TEK's board of directors approves or recommends any offer or proposal
from a party other than JDS Uniphase relating to an extraordinary
transaction, such as a merger or a sale of significant assets; or
- a person unaffiliated with JDS Uniphase starts a tender or exchange offer
for 15% or more of the outstanding shares of E-TEK, and E-TEK's board of
directors recommends that its stockholders tender their shares.
Furthermore, E-TEK may terminate the merger agreement if:
- prior to the requisite vote of E-TEK's stockholders to approve the merger
transaction, E-TEK receives an unsolicited proposal from a third party to
acquire E-TEK on terms that the Board of Directors determines to be more
favorable to the E-TEK's stockholders than the terms of the merger with
JDS Uniphase.
PAYMENT OF TERMINATION FEES
E-TEK is required to pay JDS Uniphase a termination fee of $350 million
within one business day after termination of the merger agreement if:
- E-TEK stockholders do not approve the merger, provided that prior to such
vote of the stockholders a takeover proposal is publicly announced and
such takeover proposal has not been withdrawn by the third party or
otherwise rejected by the board of directors of E-TEK;
- E-TEK stockholders do not approve the merger, provided that prior to such
vote of the stockholders and regardless of whether the takeover proposal
has been withdrawn by a third party or otherwise rejected by the board of
directors of E-TEK, E-TEK enters into a definitive agreement with respect
to a takeover proposal within 12 months following the date of the
proposed stockholder vote;
- JDS Uniphase terminates the merger agreement because the board of
directors of E-TEK withdraws or changes in a manner adverse to JDS
Uniphase its recommendation in favor of the merger, the board of
directors of E-TEK have recommended to its stockholders any offer or
proposal from a party other than JDS Uniphase relating to an
extraordinary transaction, such as a merger or a sale of significant
assets, or a person unaffiliated with JDS Uniphase starts a tender or
exchange offer for 15% or more of the outstanding shares of E-TEK, and
E-TEK's board of directors recommends that its stockholders tender their
shares; or
- E-TEK terminates the merger agreement because, prior to the requisite
vote of E-TEK's stockholders to approve the merger transaction, E-TEK
receives an unsolicited proposal from a third party to acquire E-TEK on
terms that the E-TEK board of directors determines to be more favorable
to E-TEK's stockholders than the terms of the merger with JDS Uniphase.
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JDS Uniphase is required under some circumstances to pay E-TEK a
termination fee of $100 million if the merger is not completed by October 31,
2000.
E-TEK is required to pay JDS Uniphase $15 million, which the parties agree
is a reasonable estimate of JDS Uniphase's out-of-pocket expenses in connection
with the merger transaction, in the event that E-TEK stockholders do not approve
the merger and E-TEK is not otherwise required to pay JDS Uniphase a termination
fee due to a failure to obtain E-TEK stockholder approval.
EXTENSION, WAIVER AND AMENDMENT OF THE MERGER AGREEMENT
Subject to applicable law, JDS Uniphase and E-TEK may amend the merger
agreement before completion of the merger by mutual written consent.
Either JDS Uniphase or E-TEK may extend the other's time for the
performance of any of the obligations or other acts under the merger agreement,
waive any inaccuracies in the other's representations and warranties and waive
compliance by the other with any of the agreements or conditions contained in
the merger agreement.
THE STOCK OPTION AGREEMENT
The stock option agreement grants JDS Uniphase the option to acquire 19.9%
of the total outstanding shares of common stock of E-TEK as of January 17, 2000.
19.9% of the total outstanding shares of common stock of E-TEK as of January 1,
2000, as represented by E-TEK in the merger agreement, is equal to 13,515,123
shares of E-TEK common stock. The exercise price of the option is $211.41 per
share of E-TEK common stock, payable in cash. The number of shares issuable upon
exercise of the option and the exercise price of the option is subject to
adjustment in the event of any stock dividend, splits, mergers,
recapitalizations, or the like. JDS Uniphase required E-TEK to enter into the
stock option agreement as a condition to entering into the merger agreement.
The option is intended to increase the likelihood that the merger will be
completed. Some of the aspects of the stock option agreement may have the effect
of discouraging persons who might be interested in acquiring all or a
significant interest in E-TEK or its assets before completion of the merger.
The full text of the stock option agreement is attached as Annex B to this
proxy statement-prospectus, and you are urged to read the stock option agreement
in its entirety.
Exercise Events. JDS Uniphase may exercise the option, in whole or in part,
from time to time, upon any event which would result in E-TEK being
unconditionally required to pay JDS Uniphase a termination fee of $350 million.
Termination. The option will terminate and cease to be exercisable upon the
earliest to occur of any of the following:
- immediately prior to the completion of the merger;
- termination of the merger agreement by E-TEK, other than where an
exercise event has occurred; and
- one year following any termination of the merger agreement where an
exercise event has occurred.
JDS Uniphase cannot exercise the option if it is in material breach of its
representations or warranties, or in material breach of any of its covenants or
agreements contained in the stock option agreement or in the merger agreement.
Exercise of the option may require regulatory approvals.
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Repurchase at the Option of JDS Uniphase. During the period when the option
is exercisable, JDS Uniphase may require E-TEK to repurchase from JDS Uniphase
the unexercised portion of the option and all the shares of E-TEK common stock
purchased by JDS Uniphase under the option that JDS Uniphase then owns.
Economic Benefit to JDS Uniphase is Limited. The stock option agreement
limits the cash proceeds, including the amount, if any, paid to JDS Uniphase as
a termination fee under the merger agreement and any amounts received from the
repurchase option, which may be received by JDS Uniphase on exercise of its put
right, to $600 million.
Registration Rights. The stock option agreement grants registration rights
to JDS Uniphase with respect to the shares of E-TEK common stock represented by
the option, including the right to demand that E-TEK register all or part of
such shares with the SEC, provided that JDS Uniphase will only be able to make
two such demands and the right to register all or part of such shares may be
reduced if E-TEK, at the time of such a demand, is in registration with respect
to an underwritten public offering of its shares. In addition, upon JDS
Uniphase's request for registration, E-TEK has the option to purchase all of the
option shares for cash at the price equal to the product of the number of option
shares and the per share average of the closing sale prices of E-TEK common
stock on the Nasdaq National Market for the 10 trading days preceding the date
of JDS Uniphase's request for registration.
AFFILIATE AGREEMENTS
Some members of E-TEK's board of directors and officers of E-TEK are being
requested by JDS Uniphase to execute affiliate agreements prior to closing.
Under the affiliate agreements, JDS Uniphase will be entitled to place
appropriate legends on the certificates evidencing any JDS Uniphase common stock
to be received by these persons and to issue stop transfer instructions to the
transfer agent for the JDS Uniphase common stock. Further, these persons have
also acknowledged the resale restrictions imposed by Rule 145 under the
Securities Act on shares of JDS Uniphase common stock to be received by them in
the merger.
VOTING AGREEMENTS
Concurrently with the execution of the merger agreement, the following
officers and directors of E-TEK have entered into voting agreements with JDS
Uniphase, and have agreed to vote their shares of E-TEK common stock in favor of
the approval and adoption of the merger agreement and approval of the merger:
Michael J. Fitzpatrick, President, Chief Executive Officer and Chairman of the
Board of Directors; Sanjay Subhedar, Chief Operating Officer and Chief Financial
Officer; Ming Shih, President, Asia Pacific Operations; Philip J. Anthony, Vice
President, Engineering; David W. Dorman, Director; Joseph W. Goodman, Director;
and Donald J. Listwin, Director. In addition, affiliates of Summit Partners, of
which E-TEK Director Walter G. Kortschak is a General Partner, have also entered
into voting agreements with JDS Uniphase, and have agreed to vote their shares
of E-TEK common stock in favor of the approval and adoption of the merger
agreement and approval of the merger. Under the terms of the voting agreement,
such E-TEK stockholders have granted an irrevocable proxy and power of attorney
to the General Counsel and Secretary of JDS Uniphase to vote or act by written
consent with respect to the shares they hold. The above officers and directors
and affiliates of Summit Partners, each of whom are affiliates of E-TEK,
together beneficially owned approximately 17,185,751 shares of E-TEK common
stock, which represented approximately 25.3% of all outstanding shares of E-TEK
common stock entitled to vote at the special meeting as of May 17, 2000. None of
the E-TEK stockholders who are a party to the voting agreement were paid
additional consideration in connection with entering the voting agreement. Each
E-TEK stockholder who is a party to the voting agreement agreed not to sell or
transfer any of its shares owned or acquired by
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such person until the closing of the merger or the termination of the merger
agreement in accordance with its terms.
OPERATIONS AFTER THE MERGER
Following the merger, E-TEK will continue its operations as a wholly owned
subsidiary of JDS Uniphase for a period of time determined by JDS Uniphase. The
membership of JDS Uniphase's board of directors will change as a result of the
merger. Michael J. Fitzpatrick, E-TEK's current chairman of the board of
directors, president and chief executive officer, and Donald J. Listwin, a
current member of E-TEK's board of directors, will join JDS Uniphase's board of
directors as Class III and I directors, respectively. The current directors and
officers of Rainbow Acquisition will be the directors and officers of E-TEK
after the completion of the merger. In addition, some officers of JDS Uniphase
may also serve as officers of E-TEK. The stockholders of E-TEK will become
stockholders of JDS Uniphase, and their rights as stockholders will be governed
by the JDS Uniphase certificate of incorporation, as currently in effect, the
JDS Uniphase bylaws and the laws of the State of Delaware. See "Comparison of
Rights of Holders of E-TEK Common Stock and JDS Uniphase Common Stock" below.
COMPARISON OF RIGHTS OF HOLDERS OF E-TEK COMMON STOCK AND
JDS UNIPHASE COMMON STOCK
This section of the proxy statement-prospectus describes the material
differences between the rights of holders of E-TEK common stock and holders of
JDS Uniphase common stock. While JDS Uniphase and E-TEK believe that the
description covers the material differences between the two, this summary may
not contain all of the information that is important to you. You should
carefully read this entire document and the other documents we refer to for a
more complete understanding of the differences between being a stockholder of
E-TEK and being a stockholder of JDS Uniphase.
JDS Uniphase and E-TEK are incorporated under the laws of the State of
Delaware. The rights of their stockholders are governed by Delaware law and by
their respective certificates of incorporation and bylaws. If the merger is
completed, stockholders of E-TEK will become stockholders of JDS Uniphase and
the rights of stockholders of E-TEK will be governed by Delaware law, the JDS
Uniphase certificate and JDS Uniphase bylaws. The following summarizes
differences in the charter documents of E-TEK and JDS Uniphase that could
materially affect the rights of stockholders of E-TEK after completion of the
merger. A number of the provisions of JDS Uniphase's charter documents may have
the effect of delaying, deferring or preventing a change in control of JDS
Uniphase.
CAPITALIZATION
The total authorized shares of capital stock of E-TEK consist of (1)
300,000,000 shares of common stock, $0.001 par value per share, and (2)
25,000,000 shares of preferred stock, $0.01 par value per share, one of which is
designated as special voting stock and the remainder of which is undesignated.
As of May 17, 2000, there were 68,212,105 shares of E-TEK common stock
outstanding (including 385,533 shares of common stock issuable upon exchange of
the outstanding exchangeable shares of E-TEK's Canadian subsidiary, Lundy
Technology Co.). On May 23, 2000, E-TEK issued one share of special voting
stock, which share of special voting stock grants voting rights in E-TEK to the
outstanding exchangeable shares of Lundy Technology Co. Holders of the
exchangeable shares of Lundy Technology Co. may tender their holdings for E-TEK
common stock on a one-for-one basis at any time prior to June 22, 2002. In
addition, concurrently with the merger, it is intended that the holders of the
outstanding exchangeable shares of Lundy Technology Co. will receive 2.2
exchangeable shares of JDS Uniphase's subsidiary, JDS Uniphase Canada, Ltd., in
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exchange for each Lundy exchangeable share. Holders of the exchangeable shares
of JDS Uniphase Canada, Ltd. may tender their holdings for JDS Uniphase common
stock on a one-for-one basis.
The E-TEK board of directors is authorized to issue preferred stock from
time to time in one or more series and to determine and fix voting powers,
designations, preferences and rights granted to or imposed upon any unissued
series of preferred shares, including the rights and terms of dividends,
redemption, conversion and liquidation preference of the shares of any such
series. The E-TEK board of directors, without stockholder approval, can issue
E-TEK preferred stock with dividend, voting, conversion or other rights that
could adversely affect the voting power and other rights of the holders of E-TEK
common stock. E-TEK preferred stock could thus be issued quickly with terms
calculated to delay or prevent a change in control of E-TEK or make removal of
management more difficult. Additionally, issuing E-TEK preferred stock may cause
the market price of E-TEK common stock to decrease.
The total authorized shares of capital stock of JDS Uniphase consist of (1)
3,000,000,000 shares of common stock $0.001 par value per share, and (2)
1,000,000 shares of preferred stock, $0.001 par value per share, 100,000 of
which are designated as series A preferred stock, 100,000 of which are
designated as series B preferred stock, one of which is designated as special
voting stock and the remainder of which is undesignated. At the close of
business on May 17, 2000, there were 783,132,297 shares of JDS Uniphase common
stock outstanding (including 184,356,512 shares of common stock issuable upon
exchange of the outstanding exchangeable shares of JDS Uniphase's subsidiary,
JDS Uniphase Canada, Ltd.), 100,000 shares of series A preferred stock
outstanding, no shares of series B preferred stock outstanding and one share of
special voting stock outstanding, which share of special voting stock grants
voting rights in JDS Uniphase to the outstanding exchangeable shares of JDS
Uniphase Canada, Ltd. In addition, on that date, there were 184,356,512
exchangeable shares of JDS Uniphase's subsidiary, JDS Uniphase Canada, Ltd.,
outstanding. Holders of the exchangeable shares of JDS Uniphase Canada, Ltd.,
may tender their holdings for JDS Uniphase common stock on a one-for-one basis
at any time.
The JDS Uniphase board of directors' right to issue preferred stock is
similar to the right of the E-TEK board to issue preferred stock.
NUMBER OF DIRECTORS
JDS Uniphase's bylaws fix the authorized number of directors at ten. JDS
Uniphase's board of directors or stockholders may change such number by amending
the bylaws. The merger agreement provides that the board of directors shall be
increased from ten to twelve effective upon the completion of the merger.
E-TEK's bylaws fix the authorized number of directors at five. E-TEK's
board of directors or stockholders may change such number by amending the
bylaws.
VOTING RIGHTS
Each holder of JDS Uniphase and E-TEK common stock is entitled to one vote
for each share held of record. Elections of directors are determined by a
plurality of the votes cast by the stockholders entitled to vote at the
election.
Under Delaware law, unless the corporation's certificate of incorporation
provides otherwise, there can be no cumulative voting for the election of
directors. JDS Uniphase's and E-TEK's certificates do not provide for cumulative
voting.
CLASSIFIED BOARD OF DIRECTORS
A classified board is one to which some, but not all, of the directors are
elected on a rotating basis each year. Delaware law permits, but does not
require, a classified board of directors with staggered terms under which
one-half or one-third of the directors are elected for terms of two or
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three years, respectively. Currently, JDS Uniphase and E-TEK each has a
classified board under which one-third of its directors are elected each year
for a term of three years. Having a classified board of directors makes it more
difficult for stockholders to change management.
DIRECTOR VOTING
JDS Uniphase's bylaws and E-TEK's bylaws provide that the number of
directors constituting a quorum shall be a majority of the number of authorized
directors.
REMOVAL OF DIRECTORS
Under Delaware law, unless otherwise restricted by the certificate of
incorporation or by the corporation's bylaws, any director or the entire board
of directors may be removed with or without cause by the holders of a majority
of the shares then entitled to vote at an election of directors; provided,
however, that so long as stockholders of the corporation are entitled to
cumulative voting, no individual director may be removed without cause, unless
the entire board is removed, if the number of votes cast against such removal
would be sufficient to elect the director if then cumulatively voted at an
election of the class of directors of which the director is a part. Whenever the
holders of any class or series are entitled to elect one or more directors by
the certificate of incorporation, the director or directors may be removed
without cause only if there are sufficient votes by the holders of the
outstanding shares of that class or series. A vacancy created by the removal of
a director may be filled only by the approval of the stockholders.
JDS Uniphase's bylaws and E-TEK's bylaws provide that the board of
directors or any director may be removed with or without cause at a special
meeting of stockholders by a vote of stockholders holding a majority of the
outstanding shares entitled to vote at an election of directors.
Under Delaware law, no reduction of the authorized number of directors
shall have the effect of removing any director prior to the expiration of the
director's term of office.
FILLING VACANCIES ON THE BOARD OF DIRECTORS
Under Delaware law, vacancies and newly created directorships may be filled
by a majority of the directors then in office, even though less than a quorum,
unless otherwise provided in the certificate of incorporation or bylaws and
unless the certificate of incorporation directs that a particular class is to
elect the director, in which case any other directors elected by such class, or
a sole remaining director, shall fill such vacancy. JDS Uniphase's and E-TEK's
bylaws allow a majority of the directors then in office to fill any vacancy on
the board even if they make up less than a quorum.
E-TEK's bylaws also provide that if, at the time of filling a vacancy or
newly created directorship, the directors then in office constitute less than a
majority of the whole Board of Directors (as constituted immediately prior to
any such increase), then the Delaware Court of Chancery may, upon application of
any stockholder or stockholders holding at least ten percent of the total number
of shares at the time outstanding having the right to vote for such directors,
order an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office.
ADVANCE NOTICE OF STOCKHOLDER PROPOSALS
JDS Uniphase's and E-TEK's bylaws provide that no matter proposed by their
respective stockholders will be considered at an annual meeting or special
stockholder meeting unless:
- it is specified in the notice of meeting;
- it is brought by or at the direction of the board of directors; or
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<PAGE> 81
- it is brought by a stockholder of the corporation who was a stockholder
of record on the record date and has provided written notice of the
matter to either JDS Uniphase or E-TEK in compliance with the time and
content requirements in JDS Uniphase's and E-TEK's bylaws, as applicable.
POWER TO CALL SPECIAL MEETINGS OF STOCKHOLDERS
Under Delaware law, a special meeting of stockholders may be called by the
board of directors or by any other person authorized to do so in the certificate
of incorporation or the bylaws. Pursuant to JDS Uniphase's bylaws, special
meetings may be called by the chairman of the board, the board of directors or
the chief executive officer. E-TEK's bylaws provide that special meetings may be
called by the board of directors or by a duly designated and authorized
committee of the board of directors.
BUSINESS COMBINATION FOLLOWING A CHANGE OF CONTROL
In the last several years, a number of states have adopted special laws
designed to make some kinds of "unfriendly" corporate takeovers, or other
transactions involving a corporation and one or more of its significant
stockholders, more difficult. Under Section 203 of the Delaware General
Corporation Law, some business combinations by Delaware corporations with
interested stockholders are subject to a three-year moratorium unless specified
conditions are met. Section 203 prohibits a Delaware corporation from engaging
in a business combination with an interested stockholder for three years
following the date that such person becomes an interested stockholder. With some
exceptions, an interested stockholder is generally a person or group who or
which owns 15% or more of the corporation's outstanding voting stock, including
any rights to acquire stock pursuant to an option, warrant, agreement,
arrangement or understanding, or upon the exercise of conversion or exchange
rights, and stock with respect to which the person has voting rights only, or is
an affiliate or associate of the corporation and was the owner of 15% or more of
such voting stock at any time within the previous three years.
Because JDS Uniphase's and E-TEK's certificates of incorporation and bylaws
do not contain a provision expressly electing not to be governed by Section 203
of the Delaware General Corporation Law, they are subject to Section 203.
However, because the board of directors of E-TEK approved the merger prior to
the execution of the merger agreement, the business combination that will result
from the merger is not prohibited by Section 203.
AMENDMENT OF CHARTER DOCUMENTS
Generally, under Delaware law, an amendment to a corporation's certificate
of incorporation requires the approval of the board of directors and the
approval of holders of a majority of the outstanding stock entitled to vote on
the amendment. The holders of the outstanding shares of a class are entitled to
vote as a separate class on a proposed amendment that would increase or decrease
the aggregate number of authorized shares of their class, increase or decrease
the par value of the shares of their class, or alter or change the powers,
preferences or special rights of the shares of their class in a way that affects
them adversely. JDS Uniphase's certificate can be amended, altered or repealed
or rescinded in any manner now or hereafter prescribed by Delaware law. E-TEK's
certificate can be amended, altered or repealed or rescinded in any manner now
or hereafter prescribed by Delaware law, except that an affirmative vote of
two-thirds of the combined voting power of the then-outstanding shares is
required to alter, amend or repeal the article governing the election, number
and the filling of vacancies of directors, the article prohibiting stockholder
action by written consent, and the article governing the alternation, amendment
and repeal of the certificate unless such amendment is approved by a majority of
the directors not affiliated or associated with any person or entity holding (or
which has announced an intention to obtain) twenty percent of more of the voting
power of E-TEK's outstanding capital stock. JDS Uniphase's bylaws may be
altered, amended, repealed or
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rescinded by unanimous written consent of the board of directors or by the
affirmative vote of a majority of the stockholders. E-TEK's bylaws may be
altered, amended, repealed or rescinded by an affirmative vote of a majority of
the stockholders or a majority of the board of directors at a meeting at which a
quorum is present.
INDEMNIFICATION
JDS Uniphase's and E-TEK's certificates of incorporation indemnify
directors and officers to the fullest extent permissible under Delaware law, as
such law exists currently or as it may be amended in the future. Under Delaware
law, a corporation may not indemnify directors' or officers' liability for the
following:
- breaches of a director's or officer's duty of loyalty to the corporation
or its stockholders;
- acts or omissions not in good faith or involving intentional misconduct
or knowing violations of law;
- the payment of unlawful dividends or unlawful stock repurchases or
redemptions; or
- transactions in which the director or officer received an improper
personal benefit.
JDS Uniphase's bylaws authorize it to provide insurance for its directors,
officers or agents against any expense, liability or loss, whether or not JDS
Uniphase would have the power to indemnify such a person against such expense,
liability or loss under Delaware law.
E-TEK's bylaws authorize it to provide insurance for directors, officers,
employees or agents. The merger agreement provides that for a period of six
years JDS Uniphase will maintain in effect the directors' and officers'
liability policies maintained by E-TEK.
RESTRICTION ON SALES OF STOCK
JDS Uniphase and E-TEK are public companies, each of which lists its shares
of common stock for trading on the Nasdaq National Market. As a result, JDS
Uniphase's and E-TEK's certificates and bylaws do not provide for any
restrictions on the transfer of outstanding shares, other than those imposed by
federal or other securities laws for shares offered under exempt transactions.
INSPECTION OF STOCKHOLDERS LIST
Delaware law permits any stockholder by making a written demand under oath
stating the purpose at the inspection, to inspect a corporation's stock ledger,
a list of its stockholders and its other books and records, and to make copies
of extracts from the books and records for any proper purpose. If the
corporation refuses such a request, or fails to respond within five business
days after the demand has been made, the stockholder may petition the court for
an order to compel such an inspection. The court may prescribe limitations or
conditions upon the inspection, or award any other or further relief the court
deems just and proper.
APPRAISAL RIGHTS
Under Delaware law, a stockholder of a corporation participating in some
major corporate transactions may, under varying circumstances, be entitled to
appraisal rights under which the stockholder may receive cash in the amount of
the fair market value of his or her shares instead of the consideration he or
she would otherwise receive in the transaction.
Under Delaware law, appraisal rights are not available:
- in a merger or consolidation by a corporation the shares of which are
either listed on a national securities exchange designated as a national
market system security on an interdealer
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quotation system by the National Association of Securities Dealers, Inc.
or are held of record by more than 2,000 holders; or
- to stockholders of a corporation surviving a merger if no vote of the
stockholders of the surviving corporation is required to approve the
merger because the merger agreement does not amend the existing
certificate of incorporation, if each share of the surviving corporation
outstanding prior to the merger is an identical outstanding or treasury
share after the merger, and the number of shares to be issued in the
merger does not exceed 20% of the shares of the surviving corporation
outstanding immediately prior to the merger and if other conditions are
met.
Because JDS Uniphase and E-TEK are listed on the Nasdaq National Market,
JDS Uniphase's and E-TEK's stockholders are not entitled to appraisal rights
under Delaware Law.
RIGHTS PLANS
JDS Uniphase's Rights Plan. Each outstanding share of JDS Uniphase common
stock includes one-eighth of a right. Each right entitles the registered holder,
subject to the terms of the rights agreement, to purchase from JDS Uniphase one
unit, equal to one one-thousandth of a share of JDS Uniphase series B preferred
stock, at a purchase price of $600 per unit, subject to adjustment. The rights
are attached to all certificates representing outstanding shares of JDS Uniphase
common stock, and no separate rights certificates have been distributed. The
purchase price is payable in cash or by certified or bank check or money order
payable to the order of JDS Uniphase. The description and terms of the rights
are set forth in a rights agreement between JDS Uniphase and American Stock
Transfer & Trust Company, as rights agent, dated as of June 22, 1998, as amended
from time to time. JDS Uniphase's subsidiary, JDS Uniphase Canada Ltd., has
adopted an equivalent rights plan with respect to its exchangeable shares.
No E-TEK Rights Plan. E-TEK does not maintain a rights plan.
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SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS,
MANAGEMENT AND DIRECTORS OF E-TEK
The following table sets forth information concerning the beneficial
ownership of common stock of E-TEK as of May 17, 2000 for the following:
- each person or entity who is known by E-TEK to own beneficially more than
five percent of the outstanding shares of E-TEK common stock;
- each of E-TEK's current directors;
- the chief executive officer and other four most highly compensated
officers of E-TEK (the "Named Executive Officers"); and
- all directors and executive officers of E-TEK as a group.
The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act and the information is
not necessarily indicative of beneficial ownership for any other purpose. Under
that rule, beneficial ownership includes any shares as to which the individual
or entity has voting power or investment power and any shares that the
individual has the right to acquire within 60 days of May 17, 2000 through the
exercise of any stock option or other right. Unless otherwise indicated in the
footnotes or table, each person or entity has sole voting and investment power,
or shares such powers with his or her spouse, with respect to the shares shown
as beneficially owned.
<TABLE>
<CAPTION>
COMMON STOCK
---------------------------
NUMBER OF
SHARES PERCENT OF
BENEFICIALLY OUTSTANDING
OWNED SHARES
------------ -----------
<S> <C> <C>
PRINCIPAL STOCKHOLDERS(1):
Summit Ventures IV, L.P.
Summit Subordinated Debt Fund II, L.P.
Summit Investors III, L.P.
c/o Summit Partners(2)...................................... 12,850,517 18.9%
499 Hamilton Avenue, Suite 200
Palo Alto, CA 94301-1829
Jing Jong Pan(3)............................................ 6,669,600 9.8%
Theresa Pan(4).............................................. 5,502,200 8.1%
Putnam Investments, Inc.
One Post Office Square
Boston, MA 02109(5)....................................... 7,487,952 11.0%
DIRECTORS (OTHER THAN THOSE INCLUDED IN THE NAMED EXECUTIVE
OFFICERS GROUP)(1):
Donald J. Listwin(6)........................................ 19,166 *
Joseph W. Goodman(7)........................................ 19,166 *
David W. Dorman(8).......................................... 20,000 *
Walter G. Kortschak(9)...................................... 12,850,517 18.9%
NAMED EXECUTIVE OFFICERS(1):
Philip J. Anthony(10)....................................... 175,773 *
Michael J. Fitzpatrick(11).................................. 2,145,156 3.2%
Ming Shih(12)............................................... 810,448 1.2%
Sanjay Subhedar(13)......................................... 1,145,525 1.7%
All directors and executive officers as a group (8
persons).................................................. 17,185,751 25.3%
</TABLE>
-------------------------
* Less than 1%
(1) Except as otherwise noted, the address of each person listed in the table
is c/o E-TEK Dynamics, Inc. 1865 Lundy Avenue, San Jose, California 95131.
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<PAGE> 85
(2) Represents 11,501,213 shares held by Summit Ventures IV, L.P., 1,220,799
shares held by Summit Subordinated Debt Fund II, L.P., and 128,505 shares
held by Summit Investors III, L.P.
(3) 978 Westridge Drive, Milpitas, California 95035. Mr. Pan is the spouse of
Theresa Pan.
(4) 978 Westridge Drive, Milpitas, California 95035. Ms. Pan is the spouse of
Jing Jong Pan. Includes 512,200 shares held indirectly in the Theresa Stone
Pan Charitable Unitrust IV.
(5) Based on information furnished by Putnam in Schedule 13G filed with the
Securities and Exchange Commission on February 17, 2000.
(6) Includes 19,166 shares under options exercisable within 60 days of May 17,
2000.
(7) Includes 9,166 shares under options exercisable within 60 days of May 17,
2000.
(8) Includes 20,000 shares under options exercisable within 60 days of May 17,
2000.
(9) Represents 11,501,213 shares held by Summit Ventures IV, L.P., 1,220,799
shares held by Summit Subordinated Debt Fund II, L.P. and 128,505 shares
held by Summit Investors III, L.P. Mr. Kortschak, a director of E-TEK, is
(i) a general partner of Stamps, Woodsum & Co. IV, which is the general
partner of Summit Partners IV, L.P., which is the general partner of Summit
Ventures IV, L.P. and (ii) a member of Summit Partners SD II, LLC, which is
the general partner of Summit Subordinated Debt Fund II, L.P. Mr. Kortschak
is also a general partner of Summit Investors III, L.P. Mr. Kortschak
disclaims beneficial ownership of such shares except to the extent of his
pecuniary interest therein.
(10) Includes 69,062 shares under options exercisable within 60 days of May 17,
2000.
(11) Includes 207,479 shares under options exercisable within 60 days of May 17,
2000.
(12) Includes 281,250 shares under options exercisable within 60 days of May 17,
2000.
(13) Includes 118,750 shares under options exercisable within 60 days of May 17,
2000.
LEGAL MATTERS
The validity of the shares of JDS Uniphase common stock offered by this
proxy statement-prospectus and certain federal income tax considerations of the
merger will be passed upon for JDS Uniphase by Morrison & Foerster LLP, San
Francisco, California. Certain federal income tax considerations of the merger
will be passed upon for E-TEK by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, Palo Alto, California. Certain members of the Wilson Sonsini
Goodrich & Rosati, Professional Corporation, participating in the transaction on
behalf of the firm own an aggregate of 1,500 shares of E-TEK common stock.
EXPERTS
The consolidated financial statements of JDS Uniphase Corporation appearing
in JDS Uniphase Corporation's Annual Report (Form 10-K/A) for the year ended
June 30, 1999, have been audited by Ernst & Young LLP, independent auditors, as
set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements of E-TEK Dynamics, Inc. as of June
30, 1998 and 1999, and for each of the three years in the period ended June 30,
1999, incorporated by reference herein have been incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on their
authority as experts in auditing and accounting.
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The financial statements of Electrophotonics as of April 30, 1999 and July
31, 1998 and for the nine-month period ended, April 30, 1999 and the year ended
July 31, 1998 incorporated by reference herein have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, chartered accountants,
given on their authority as experts in auditing and accounting.
The financial statements of JDS FITEL, Inc., for the three year period
ended May 31, 1999 contained in JDS Uniphase's Current Report on Form 8-K/A
dated November 3, 1999, have been audited by PricewaterhouseCoopers LLP,
independent chartered accountants auditors, as set forth in their reports
therein or incorporated by references therein and incorporated by reference
herein. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
The financial statements of Optical Coating Laboratory, Inc. (OCLI) and its
consolidated subsidiaries as of October 31, 1999 and 1998 and for each of the
three years in the period ended October 31, 1999, except for Flex Products,
Inc., a consolidated subsidiary for the year ended October 31, 1997, have been
audited by Deloitte & Touche LLP, independent auditors. The financial statements
of Flex Products, Inc., for the year ended November 2, 1997, have been audited
by KPMG LLP, as stated in their report. The financial statements of OCLI and its
consolidated subsidiaries as of October 31, 1999 and 1998 and for each of the
three years in the period ended October 31, 1999 is incorporated by reference
from JDS Uniphase's Current Report on Amendment No. 1 to Form 8-K/A dated
February 10, 2000. Such consolidated financial statements are incorporated by
reference herein in reliance upon the reports of Deloitte & Touche LLP and KPMG
LLP, given upon their authority as experts in accounting and auditing.
THIS PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO PURCHASE, THE SECURITIES OFFERED BY THIS PROXY
STATEMENT-PROSPECTUS, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR
FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER,
SOLICITATION OF AN OFFER OR PROXY SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROXY STATEMENT-PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES
PURSUANT TO THIS PROXY STATEMENT-PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET
FORTH OR INCORPORATED INTO THIS PROXY STATEMENT-PROSPECTUS BY REFERENCE OR IN
OUR AFFAIRS SINCE THE DATE OF THIS PROXY STATEMENT-PROSPECTUS. THE INFORMATION
CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS WITH RESPECT TO E-TEK AND ITS
SUBSIDIARIES WAS PROVIDED BY E-TEK AND THE INFORMATION CONTAINED IN THIS PROXY
STATEMENT-PROSPECTUS WITH RESPECT TO JDS UNIPHASE WAS PROVIDED BY JDS UNIPHASE.
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ANNEX A
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
AMONG
JDS UNIPHASE CORPORATION,
RAINBOW ACQUISITION, INC.
AND
E-TEK DYNAMICS, INC.
DATED AS OF JANUARY 17, 2000
<PAGE> 88
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
This AGREEMENT AND PLAN OF REORGANIZATION AND MERGER, is dated as of
January 17, 2000 (this "Agreement"), among JDS UNIPHASE CORPORATION, a Delaware
corporation ("Parent"), RAINBOW ACQUISITION, INC., a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), and E-TEK DYNAMICS, INC., a
Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, the boards of directors of Parent, Merger Sub and the Company have
each determined that it is advisable and in the best interests of their
respective stockholders for Parent to enter into a strategic business
combination with the Company upon the terms and subject to the conditions set
forth herein;
WHEREAS, in furtherance of such combination, the boards of directors of
Parent, Merger Sub and the Company have each approved the merger (the "Merger")
of Merger Sub with and into the Company in accordance with the applicable
provisions of the Delaware General Corporation Law (the "DGCL"), and upon the
terms and subject to the conditions set forth herein;
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to Parent's willingness to enter into this
Agreement, the Company has entered into a Company Stock Option Agreement dated
as of the date hereof in the form of Exhibit A (the "Stock Option Agreement"),
pursuant to which the Company has granted to Parent an option to purchase
validly issued, fully paid and nonassessable shares of the common stock of the
Company, par value $0.001 per share (the "Company Common Stock"), in an
aggregate amount equal to 19.9% of the outstanding shares of Company Common
Stock as of the date specified therein;
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to Parent's willingness to enter into this
Agreement, certain stockholders of the Company have entered into voting
agreements with Parent upon the terms and conditions specified therein;
WHEREAS, Parent, Merger Sub and the Company intend that the Merger qualify
as a reorganization under Section 368(a) of the Internal Revenue Code of 1986,
as amended (the "Code"), and that, by approving resolutions authorizing this
Agreement, this Agreement be adopted as a plan of reorganization under Section
368(a) of the Code; and
WHEREAS, pursuant to the Merger, each outstanding share of Company Common
Stock (a "Share") shall be exchanged for the right to receive the Merger
Consideration (as defined in Section 1.07(b)), upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I.
THE MERGER
SECTION 1.01. The Merger.
(a) At the Effective Time (as defined in Section 1.02 hereof), and subject
to and upon the terms and conditions of this Agreement and in accordance with
the DGCL, Merger Sub shall be merged with and into the Company and the separate
corporate existence of Merger Sub shall cease
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<PAGE> 89
upon the filing of a certificate of merger with the Secretary of State of the
State of Delaware pursuant to the DGCL. The Company shall continue as the
surviving company being the successor to all the property, rights, powers,
privileges, liabilities and obligations of both Merger Sub and the Company. The
Company as the surviving corporation after the Merger is hereinafter sometimes
referred to as the "Surviving Company."
(b) The closing of the Merger (the "Closing") shall take place at a time
and on a date to be specified by the parties, which shall be no later than the
second business day after satisfaction or waiver of the conditions set forth in
Article VI, unless another time or date is agreed to in writing by the parties
hereto. The Closing will be held at the offices of Morrison & Foerster LLP, 425
Market Street, San Francisco, California 94105, unless another place is agreed
to in writing by the parties hereto.
SECTION 1.02. Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VI, but in no
event later than two business days thereafter, the parties hereto shall cause
the Merger to be consummated by filing all necessary documentation (the "Merger
Documents"), together with any required related certificates, with the Secretary
of State of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, the DGCL (the time of such filing
being the "Effective Time").
SECTION 1.03. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Merger Documents and the
applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, powers and privileges of the Company and Merger Sub shall vest in
the Surviving Company, and all liabilities and obligations of the Company and
Merger Sub shall become the liabilities and obligations of the Surviving
Company.
SECTION 1.04. Certificate of Incorporation and Bylaws. Unless otherwise
determined by Parent prior to the Effective Time, at the Effective Time the
certificate of incorporation and bylaws of Merger Sub, as in effect immediately
prior to the Effective Time shall be the certificate of incorporation and bylaws
of the Surviving Company (the "Certificate of Incorporation" and "Bylaws") until
thereafter changed or amended as provided therein or by the DGCL; provided,
however, that Article I of the Certificate of Incorporation shall be amended to
read as follows: "The name of the company is E-TEK Dynamics, Inc."
SECTION 1.05. Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Company, each to hold office in accordance with the Certificate of
Incorporation and Bylaws, and the officers of Merger Sub immediately prior to
the Effective Time shall be the initial officers of the Surviving Company, in
each case until their respective successors are duly elected or appointed and
qualified.
SECTION 1.06. Merger Consideration; Conversion and Cancellation of
Securities. At the Effective Time, by virtue of the Merger and without any
action on the part of Parent, Merger Sub, the Company or the holders of any of
the Shares:
(a) Conversion of Securities. Each Share issued and outstanding
immediately prior to the Effective Time (excluding any Shares to be
canceled pursuant to Section 1.06(b) and any Dissenting Shares as defined
in Section 1.09) shall be converted, subject to Section 1.06(f), into the
right to receive 1.1 shares (the "Exchange Ratio") of validly issued, fully
paid and nonassessable shares of Parent Common Stock, $0.001 par value per
share ("Parent Common Shares").
(b) Cancellation. Each Share owned by the Company, Parent, Merger Sub
or any direct or indirect wholly owned subsidiary of the Company or Parent
immediately prior to the Effective
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Time shall, by virtue of the Merger and without any action on the part of
the holder thereof, be canceled and retired without payment of any
consideration therefor and cease to exist.
(c) Assumption of Stock Options.
(i) At the Effective Time, each outstanding option to purchase
Company Common Stock (a "Stock Option") granted under the Company's 1998
Stock Plan, 1998 Director Option Plan, 1997 Equity Incentive Plan and
1997 Executive Equity Incentive Plan (collectively, the "Company Stock
Option Plans"), whether vested or unvested, shall be deemed assumed by
Parent and deemed to constitute an option to acquire, on the same terms
and conditions as were applicable under such Stock Option prior to the
Effective Time, the number (rounded down to the nearest whole number) of
Parent Common Shares as the holder of such Stock Option would have been
entitled to receive pursuant to the Merger had such holder exercised
such option in full immediately prior to the Effective Time (not taking
into account whether or not such option was in fact exercisable), at a
price per share rounded up to the nearest whole cent equal to (x) the
aggregate exercise price for Company Common Stock otherwise purchasable
pursuant to such Stock Option divided by (y) the number of Parent Common
Shares deemed purchasable pursuant to such Stock Option; provided,
however, that the vesting schedule of the assumed options shall continue
to be determined by reference to the applicable Company Stock Option
Plan.
(ii) As soon as practicable after the Effective Time, Parent shall
deliver to each holder of an outstanding Stock Option an appropriate
notice setting forth such holder's rights pursuant thereto and such
Stock Option shall continue in effect on the same terms and conditions
(including any applicable anti-dilution provisions, and subject to the
adjustments required by this Section 1.06(c) after giving effect to the
Merger). Parent shall comply with the terms of all such Stock Options
and ensure, to the extent required by, and subject to the provisions of,
the applicable Company Stock Option Plan that any Stock Options which
qualified for special tax treatment prior to the Effective Time continue
to so qualify after the Effective Time. Parent shall take all corporate
action necessary to reserve for issuance a sufficient number of Parent
Common Shares for delivery pursuant to the terms set forth in this
Section 1.06(c).
(d) Common Stock of Merger Sub. Each share of the common stock of
Merger Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for a validly issued, fully paid and
nonassessable share of common stock of the Surviving Company. Each share
certificate of Merger Sub evidencing ownership of any such shares shall
evidence, from and after the Effective Time, ownership of such shares of
the Surviving Company.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect fully the effect of any share split, reverse split,
share dividend (including any dividend or distribution of securities
convertible into Parent Common Shares or Company Common Stock),
reorganization, recapitalization or other like change with respect to
Parent Common Shares or Company Common Stock occurring or having a record
date after the date hereof and prior to the Effective Time, including
without limitation the two-for-one stock split announced by Parent on
January 3, 1999 proposed to be paid March 10, 2000.
(f) Fractional Shares. No fraction of a Parent Common Share will be
issued, but in lieu thereof each holder of Company Common Stock who would
otherwise be entitled to a fraction of a Parent Common Share (after
aggregating all fractional Parent Common Shares to be received by such
holder) shall receive from Parent an amount of cash (rounded up to the
nearest whole cent), without interest, equal to the product of (i) such
fraction, multiplied by (ii) the closing price of a Parent Common Share on
the Nasdaq National Market on the last trading day
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immediately prior to the Effective Time (as reported in the Wall Street
Journal or, if not reported therein, any other authoritative source).
SECTION 1.07. Exchange of Certificates.
(a) Exchange Agent. Promptly after the Effective Time, Parent shall supply,
or shall cause to be supplied, to or for the account of a bank or trust company
designated by Parent (the "Exchange Agent"), in trust for the benefit of the
holders of Company Common Stock (other than Dissenting Shares), for exchange in
accordance with this Section 1.07, through the Exchange Agent, certificates
evidencing the Parent Common Shares issuable pursuant to Section 1.06 in
exchange for outstanding Shares. Parent shall promptly make available to the
Exchange Agent from time to time as needed, cash sufficient to pay cash in lieu
of fractional shares.
(b) Exchange Procedures. On or prior to the tenth (10) Business Day after
the Effective Time, Parent will instruct the Exchange Agent to mail to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time evidenced outstanding Shares (other than Dissenting Shares) (the
"Certificates") (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as Parent may reasonably specify)
and (ii) instructions to effect the surrender of the Certificates in exchange
for the certificates evidencing Parent Common Shares and, in lieu of any
fractional shares thereof, cash pursuant to Section 1.06(f). Upon surrender of a
Certificate to the Exchange Agent for cancellation together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor (A) certificates evidencing that number
of whole Parent Common Shares which such holder has the right to receive in
accordance with the Exchange Ratio in respect of the Shares formerly evidenced
by such Certificate, (B) any dividends or other distributions with respect to
Shares to which such holder was entitled to receive prior to the Effective Time,
and (C) cash in lieu of fractional Parent Common Shares to which such holder is
entitled pursuant to Section 1.06(f) (the Parent Common Shares, dividends,
distributions and cash described in clauses (A)-(C) delivered for each Share
being, collectively, the "Merger Consideration"), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Shares which is not registered in the transfer records of the Company as of
the Effective Time, Parent Common Shares and cash may be issued and paid in
accordance with this Article I to a transferee if the Certificate evidencing
such Shares is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer pursuant to this Section 1.07(b)
and by evidence that any applicable stock/share transfer taxes have been paid.
Until so surrendered, each outstanding Certificate that, prior to the Effective
Time, represented Shares will be deemed from and after the Effective Time, for
all corporate purposes, other than the payment of dividends, to evidence the
ownership of the number of full Parent Common Shares into which such Shares
shall have been so converted and the right to receive an amount in cash in lieu
of the issuance of any fractional shares in accordance with Section 1.06.
(c) Distributions With Respect to Unexchanged Parent Common Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Shares with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to the
Parent Common Shares they are entitled to receive until the holder of such
Certificate shall surrender such Certificate. Subject to applicable law,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Parent Common Shares
issued in exchange therefor, without interest, at the time of such surrender,
the amount of dividends or other distributions with a record date after the
Effective Time theretofore
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paid with respect to such whole shares of Parent Common Shares and cash in lieu
of any fractional Parent Common Share pursuant to Section 1.06(f) above.
(d) Transfers of Ownership. If any certificate for Parent Common Shares is
to be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it will be a condition of the issuance thereof
that the Certificate so surrendered will be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange will have
paid to Parent or any agent designated by it any transfer or other taxes
required by reason of the issuance of a certificate for Parent Common Shares in
any name other than that of the registered holder of the Certificate
surrendered, or established to the reasonable satisfaction of Parent or any
agent designated by it that such tax has been paid or is not payable.
(e) No Liability. Neither Parent, Merger Sub nor the Company shall be
liable to any holder of Shares for any Merger Consideration (or dividends or
distributions with respect thereto) properly delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(f) Withholding Rights. Parent or the Exchange Agent shall be entitled to
deduct and withhold from the Merger Consideration otherwise payable pursuant to
this Agreement to any holder of Shares such amounts as Parent or the Exchange
Agent is required to deduct and withhold with respect to the making of such
payment under the Code, or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld by Parent or the Exchange Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Shares in respect of which such deduction and
withholding was made by Parent or the Exchange Agent.
SECTION 1.08. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, the Merger Consideration
delivered upon the surrender for exchange of Shares in accordance with the terms
hereof shall be deemed to have been issued in full satisfaction of all rights
pertaining to such Shares, and there shall be no further registration of
transfers on the records of the Surviving Company of Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Company for any reason, they
shall be canceled and exchanged as provided in this Article I.
SECTION 1.09. Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary, any
shares of capital stock of the Company held by a holder who has exercised
appraisal rights for such shares in accordance with the DGCL and who, as of the
Effective Time, has not effectively withdrawn or lost such appraisal rights
("Dissenting Shares"), shall not be converted into or represent a right to
receive Merger Consideration pursuant to Section 1.06, but the holder thereof
shall only be entitled to such rights as are granted under the DGCL.
(b) Notwithstanding the provisions of subsection (a) if any holder of
Dissenting Shares shall effectively withdraw or lose (through failure to perfect
or otherwise) such holder's appraisal rights, then, as of the later of the
Effective Time or the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to receive the
Merger Consideration, without interest thereon, upon surrender of the
certificate or certificates representing such Dissenting Shares.
(c) The Company shall give Parent (i) prompt notice of any written demands
received by the Company to require the Company to purchase shares of capital
stock of the Company pursuant to the DGCL, withdrawals of such demands, and any
other instruments served pursuant to the DGCL and received by the Company and
(ii) the opportunity to participate in all negotiations and proceedings with
respect to such demands. The Company shall not, except with the prior written
consent of
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Parent, voluntarily make any payment with respect to any such demands or offer
to settle or settle any such demands.
SECTION 1.10. Lost, Stolen or Destroyed Certificate. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such Parent Common
Shares and cash as may be required pursuant to Section 1.06; provided, however,
that Parent may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed Certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against Parent or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
SECTION 1.11. Federal Income Tax Consequences. It is intended by the
parties here to that the Merger shall constitute a reorganization within the
meaning of Section 368(a) of the Code. The parties hereto hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Section 368 of the
Code.
SECTION 1.12. Material Adverse Effect. When used in connection with the
Company or any of its subsidiaries, or Parent or any of its respective
subsidiaries, as the case may be, the term "Material Adverse Effect" means any
change or effect that, individually or in the aggregate, is materially adverse
to the business, assets (including intangible assets), financial condition or
results of operations of the Company and its subsidiaries (a "Company Material
Adverse Effect") or Parent and its respective subsidiaries (a "Parent Material
Adverse Effect"), respectively, in each case taken as a whole, but other than
those adverse effects occurring as a result of the execution and public
announcement of this Agreement, the pendency of this Agreement or the
consummation of the transactions contemplated hereby (including, without
limitation, loss of customers, orders, suppliers or employees resulting
therefrom) or general market or industry conditions (including, without
limitation, any change in trading prices, in and of itself and without the
occurrence of any other Material Adverse Effect, of either Parent's or the
Company's outstanding publicly traded equity securities).
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub that,
except as set forth in the written disclosure schedule previously delivered by
the Company to Parent, the paragraphs of which are numbered to correspond to the
Sections of this Agreement (the "Company Disclosure Schedule"):
SECTION 2.01. Organization and Qualification; Subsidiaries. The Company and
each of its subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority and is in possession of all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders ("Approvals") necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on its
business as it is now being conducted, except where the failure to have such
power, authority and Approvals would not, individually or in the aggregate, have
a Company Material Adverse Effect. The Company and each subsidiary is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not, either individually
or in the aggregate, have a Company Material
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Adverse Effect. The Company's subsidiaries are the only entities in which the
Company has any equity interest.
SECTION 2.02. Charter Documents. The Company has heretofore furnished or
made available to Parent a complete and correct copy of the charter documents
(including the articles or certificate of incorporation and bylaws, if any), as
most recently amended to date of the Company and each of its subsidiaries. Each
such charter document is in full force and effect. Neither the Company nor any
subsidiary is in violation or any of the provisions of its respective charter
documents.
SECTION 2.03. Capitalization. The authorized capital stock of the Company
consists of shares of Company Common Stock and shares of Preferred Stock. As of
January 1, 2000, (i) 67,915,191 shares of Company Common Stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable, and
issued in compliance with applicable securities laws, (ii) no shares of Company
Common Stock were held in the Company's treasury or by any subsidiary, (iii) no
shares of Company Preferred Stock were issued and outstanding and (iv) 6,733,218
shares of Company Common Stock were reserved for future issuance pursuant to
outstanding employee stock options granted pursuant to the Company's Stock
Option Plans. No shares of Company Common Stock have been issued between January
1, 2000 and the date hereof, other than pursuant to the Company's Stock Option
Plans. Except as set forth in Sections 2.03, 2.08 or 2.10 of the Company
Disclosure Schedule, as of the date hereof, there are no options, warrants or
other rights, agreements, arrangements or commitments of any character relating
to the issued or unissued shares (or other equity interests) of the Company or
of any subsidiary or obligating the Company or any subsidiary to issue or sell
any shares of, or other equity interests in, the Company or any subsidiary. All
shares of Company Common Stock subject to issuance as aforesaid, upon issuance
on the terms and conditions specified in the instruments pursuant to which they
are issuable, shall be duly authorized, validly issued, fully paid and
nonassessable. As of the date hereof, there are no obligations, contingent or
otherwise, of the Company or of any subsidiary to repurchase, redeem or
otherwise acquire any shares of Company Common Stock or the shares of any
subsidiary or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any subsidiary or any other entity other
than guarantees of bank obligations of a subsidiary entered into in the ordinary
course of business. None of the options, warrants, rights, agreements,
arrangements or commitments identified in Section 2.03 or 2.10 of the Company
Disclosure Schedule provide that, absent action by the board of directors of the
Company or a committee thereof, upon exercise or conversion the holder thereof
shall receive cash, and no such action of the board of directors or a committee
thereof has been taken. Except as set forth in Section 2.03 of the Company
Disclosure Schedule, all of the outstanding shares of each subsidiary (and all
shares to be issued prior to the Effective Time) are or will be duly authorized,
validly issued, fully paid and nonassessable, and issued in compliance with
applicable securities laws, and all such shares are or will be owned by the
Company free and clear of all security interests, liens, claims, pledges,
agreements, limitations in voting rights, charges, encumbrances or rights or
interests of others of any nature whatsoever (collectively, "Liens"), other than
Liens for taxes not yet due and payable.
SECTION 2.04. Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and subject to obtaining any necessary stockholder approval of this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions so contemplated (other than the
approval and adoption of the Merger by a majority of the holders of the
outstanding Shares entitled to vote in accordance with the DGCL and the
Company's certificate of incorporation and bylaws). This Agreement has been duly
and validly executed and delivered by
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the Company and, assuming the due authorization, execution and delivery by
Parent and Merger Sub, as applicable, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms. The board of directors of the Company has on the date of this Agreement
unanimously determined that it is advisable and in the best interest of the
Company's stockholders for the Company to enter into a strategic business
combination with Parent upon the terms and subject to the conditions of this
Agreement, and has on the date of this Agreement unanimously recommended that
the Company's stockholders approve and adopt this Agreement and the transactions
contemplated hereby, and, subject to Section 4.03 hereof, such resolutions of
the board of directors shall be in effect as of the Effective Time.
SECTION 2.05. SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports, exhibits and other documents
required to be filed with the Securities and Exchange Commission (the "SEC")
between December 2, 1998 and the date of this Agreement and has made available
to Parent (i) its Quarterly Report on Form 10-Q for the period ended October 2,
1999 and its Annual Report on Form 10-K for the year ended June 30, 1999 (the
"1999 10-K"), respectively, (ii) all proxy statements relating to the Company's
meetings of stockholders (whether annual or special) held between December 2,
1998 and the date of this Agreement, (iii) all other reports or registration
statements (other than reports on Forms 3, 4 or 5 filed on behalf of affiliates
of the Company) filed by the Company with the SEC between December 2, 1998 and
the date hereof, and (iv) all amendments and supplements to all such reports and
registration statements filed by the Company with the SEC (collectively, the
"Company SEC Reports"). The Company SEC Reports (i) were prepared in accordance
with applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act") or the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and the SEC's rules and regulations thereunder (collectively,
the "Federal Securities Laws"), as the case may be, and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. No subsidiary is
required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports was prepared in
accordance with U.S. generally accepted accounting principles ("GAAP") applied
on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto) and each fairly presented the consolidated
financial position of the Company and its subsidiaries as of the respective
dates thereof and the consolidated results of its operations and cash flows and
stockholder equity for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount.
(c) The Company has heretofore furnished to Parent a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by the Company with the SEC pursuant
to the Securities Act or the Exchange Act.
SECTION 2.06. Absence of Certain Changes or Events. Except as set forth in
Section 2.06 of the Company Disclosure Schedule or the Company SEC Reports,
between June 30, 1999 and the date hereof, there has not occurred: (i) any
Company Material Adverse Effect; (ii) any amendments or changes in the
certificate of incorporation or bylaws of the Company; (iii) any damage to,
destruction or loss of any asset of the Company, (whether or not covered by
insurance) that has had or is reasonably likely to have a Company Material
Adverse Effect; (iv) any change by the Company in its accounting methods,
principles or practices, except any such change as required by any
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concurrent change in GAAP or Federal Securities Law applicable to companies
generally; (v) any revaluation of any of the Company's or any subsidiary's
assets, including, without limitation, writing down the value of inventory or
writing off notes or accounts receivable other than in the ordinary course of
business; (vi) any sale, pledge, disposition of or encumbrance upon a material
amount of property of the Company or of any subsidiary, except in the ordinary
course of business; (vii) any material Tax (as defined below) election
inconsistent with past practices or the settlement or compromise of any material
Tax liability; (viii) any declaration, issuance or payment of any dividend or
other distribution (whether in cash, stock or property or any combination
thereof); or (ix) the creation of any indebtedness for borrowed money or the
issuance of any debt securities or the assumption, guarantee (other than
guarantees of bank debt of a subsidiary entered into in the ordinary course of
business) or endorsement or other accommodation whereby the Company became
responsible for, the obligations of any person, or the making of any loans or
advances, except in the ordinary course of business consistent with past
practice.
SECTION 2.07. No Undisclosed Liabilities. Except as is disclosed in Section
2.07 of the Company Disclosure Schedule and in the Company SEC Reports, neither
the Company nor any subsidiary has any liabilities (absolute, accrued,
contingent or otherwise) which are, in the aggregate, material to the business,
operations or financial condition of the Company and its subsidiaries taken as a
whole, except liabilities (a) adequately provided for in the Company's audited
balance sheet (including any related notes thereto) for the fiscal year ended
June 30, 1999; (b) not required under U.S. GAAP to be reflected on such balance
sheet; or (c) incurred since June 30, 1999 in the ordinary course of business,
and liabilities incurred in connection with this Agreement.
SECTION 2.08. Material Contracts; No Violation.
(a) Section 2.08(a) of the Company Disclosure Schedule includes a list of
each of the following currently outstanding agreements under which the Company
or any of its subsidiaries is a party or by which any of their assets are bound:
(i) joint venture, technology sharing and noncompetition agreements; (ii)
intellectual property licensing agreements other than commercial shrinkwrap
licenses; (iii) agreements with any consultant, employee, officer or director of
the Company or any of its subsidiaries, including employee benefit plans; (iv)
distribution agreements; (v) agreements, contracts or other instruments
(including all amendments thereto) which, in each case, as of the date hereof,
will be required to be filed by the Company with the SEC pursuant to the
requirements of the Exchange Act as "material contracts" and have not been filed
((i) through (v) collectively with all agreements, contracts and other
instruments (including amendments thereto) which have been filed by the Company
with the SEC, being, collectively, the "Material Contracts" of the Company and
its subsidiaries). The Company has made available to Parent prior to the date
hereof, true, correct and complete copies in all material respects of each such
Material Contract.
(b) Except as set forth in Section 2.08(b) of the Company Disclosure
Schedule, (i) neither the Company nor any subsidiary has breached, is in default
under, or has received written notice of any breach of or default under, any
Material Contract, (ii) to the knowledge of the Company, no other party to any
of the Material Contracts has breached or is in default of any of its
obligations thereunder, and (iii) each of the Material Contracts is in full
force and effect, except in any such case for breaches, defaults or failures to
be in full force that in the aggregate do not constitute a Company Material
Adverse Effect.
(c) Except as set forth in Section 2.08(c) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement and the consummation of the transactions
contemplated by this Agreement by the Company will not, (i) conflict with or
violate the certificate of incorporation or bylaws of the Company, (ii) conflict
with or violate any federal, foreign, state or provincial law, rule, regulation,
order, judgment or decree (collectively, "Laws") applicable to the Company or
any subsidiary or by which any of their
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respective properties are bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair the Company's or any subsidiary's
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any contract, or result in the creation of a Lien on any of the properties or
assets of the Company or any subsidiary pursuant to, any Material Contract or
other note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
subsidiary is a party or by which the Company or any subsidiary or any of their
respective properties are bound or affected, except in the case of clauses (ii)
and (iii) for any such conflicts, violations, breaches, defaults or other
occurrences that would not, individually or in the aggregate, have a Company
Material Adverse Effect.
SECTION 2.09. Absence of Litigation. Except as set forth in Section 2.09 of
the Company Disclosure Schedule or the Company SEC Reports, (i) there are no
claims, actions, suits, proceedings or investigations pending or, to the
knowledge of the Company, threatened, against the Company or against any
subsidiary and (ii) there is no judgment, decree, injunction, rule or order of
any Governmental or Regulatory Authority (as defined in Section 2.14(g) below)
outstanding against the Company or its subsidiaries other than, in each case,
those that the outcome of which, individually or in the aggregate, would not
have a Company Material Adverse Effect or a material adverse effect on the
Company's ability to consummate the Merger.
SECTION 2.10. Employee Benefit Plans; Employment Agreements.
(a) For purposes of this Section 2.10: "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended; "Company ERISA Affiliate"
means any trade or business (whether or not incorporated) which is a member of a
controlled group including the Company or which is under common control with the
Company or any subsidiary of the Company; and "Company Employee Plans" means all
bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other fringe or employee benefit plans,
programs or arrangements, and any current or former employment or executive
compensation or severance agreements, written or otherwise, for the benefit of,
or relating to, any employee of the Company, as well as each such plan with
respect to which the Company or a Company ERISA Affiliate could incur liability
under applicable law (if such plan has been or were terminated), and excluding
agreements with former employees under which the Company has no remaining
monetary obligations.
(b) Except as set forth in Section 2.10(b) of the Company Disclosure
Schedule, none of the Company Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person other than coverage
mandated by applicable law or benefits, the full cost of which is borne by the
retiree.
(c) Except as would not have a Company Material Adverse Effect: (i) the
Company and its subsidiaries have complied with ERISA, the Code and all laws and
regulations applicable to the Company Employee Plans and each Company Employee
Plan has been maintained and administered in compliance with its terms; and (ii)
each Company Employee Plan intended to qualify under Section 401(a) of the Code
and each trust intended to qualify under Section 501(a) of the Code is the
subject of a favorable determination opinion, notification or advisory letter
from the Internal Revenue Service (the "IRS"), and nothing has occurred which
may reasonably be expected to impair such determination.
(d) Neither the Company nor its subsidiaries have incurred any material
liability under Title IV of ERISA (other than liability for premiums to the
Pension Benefit Guaranty Corporation arising in the ordinary course). No Company
Employee Plan has incurred a material "accumulated funding deficiency" (within
the meaning of Section 302 of ERISA or Section 412 of the Code), whether or
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not waived. To the knowledge of the Company, there are not any facts or
circumstances that would materially change the funded status of any Company
Employee Plan that is a "defined benefit" plan (as defined in Section 3(35) of
ERISA) since the date of the most recent actuarial report for such plan. No
Company Employee Plan is a "multiemployer plan" within the meaning of Section
3(37) of ERISA.
(e) With respect to each of the Company Employee Plans that is subject to
Title IV of ERISA, the present value of accrued benefits under each such plan
did not, as of its latest valuation date, materially exceed the then current
value of the aggregate assets of such plans allocable to the payment of such
benefits.
SECTION 2.11. Labor Matters. Except as set forth in Section 2.11 of the
Company Disclosure Schedule, (i) there are no controversies pending or, to the
knowledge of the Company, threatened, between the Company or any of its
subsidiaries and any of their respective employees, which controversies have or
may reasonably be expected to have a Company Material Adverse Effect; (ii)
neither the Company nor any of its subsidiaries is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or by any of its subsidiaries nor does the Company or
any of its subsidiaries know of any activities or proceedings of any labor union
to organize any such employees, and (iii) neither the Company nor any of its
subsidiaries has any knowledge of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of the Company
or of any of its subsidiaries.
SECTION 2.12. Disclosure Documents. The proxy statement of the Company to
be filed with the SEC in connection with the Merger (the "Company Proxy
Statement") and any amendments or supplements thereto will, when filed, comply
as to form in all material respects with the applicable requirements of the
Exchange Act. At the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company and at the
time such stockholders vote on the approval and adoption of this Agreement, the
Company Proxy Statement, as supplemented or amended, if applicable, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements contained therein, in light of
the circumstances under which they were made, not misleading. The foregoing
representations and warranties will not apply to statements or omissions
included in the Company Proxy Statement or any amendment or supplement thereto
based upon information furnished to the Company by Parent for use therein. None
of the information furnished to Parent for use in (or incorporation by reference
in) the Registration Statement (as defined in Section 3.10) or any amendment or
supplement thereto will contain, at the time the Registration Statement or any
amendment or supplement thereto becomes effective or at the Effective Time, any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements contained
therein not misleading.
SECTION 2.13. Taxes.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes,
fees, levies, duties, tariffs, imposts and governmental impositions or charges
of any kind in the nature of (or similar to) taxes, payable to any federal,
state, local or foreign taxing authority, including (without limitation) (i)
income, franchise, profits, gross receipts, ad valorem, net worth, goods and
services, fringe benefits, withholding, sales, use, service, real or personal
property, special assessments, Common Stock, license, payroll, withholding,
employment, social security, accident compensation, unemployment compensation,
utility, severance, production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes and (ii) interest, penalties, additional taxes
and additions to tax imposed with respect thereto; and "Tax Returns" shall mean
returns, reports and information statements with respect to Taxes required to be
filed with the IRS or any other taxing authority, domestic or foreign,
including, without limitation, consolidated, combined and unitary tax returns.
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(b) The Company has made available to Parent all Tax Returns filed by the
Company and its subsidiaries for all periods ending on or after June 30, 1999
and before the date of this Agreement. Except as disclosed on Schedule 2.13(b)
of the Company Disclosure Schedule, the Company and each of its subsidiaries
have filed all United States federal income Tax Returns and all other material
Tax Returns required to be filed by them, and such Tax Returns are complete and
correct in all material respects. Each of the Company and its subsidiaries has
duly paid or made adequate provision on its books and records and financial
statements for the payment of all material Taxes which have accrued or have
become payable. Except as disclosed on Schedule 2.13(b) of the Company
Disclosure Schedule (i) there are no pending audits, examinations or proposed
audits or examinations of any Tax Returns filed by the Company or by any of its
subsidiaries, (ii) with respect to any period for which material Tax Returns
have not yet been filed, or for which material Taxes are not yet due or owing,
each of the Company and its subsidiaries has made due and sufficient accruals
for such Taxes in its respective books and records and financial statements, and
(iii) neither the Company nor any of its subsidiaries has given or been
requested to give waivers or extensions of any statute of limitations relating
to the filing of Tax Returns or the assessment of Taxes for which the Company or
any of its subsidiaries may have any undisclosed liability, except for any
waiver or extension which has expired or any extensions resulting from the
filing of a Tax Return after its original due date in the ordinary course of
business. Except as set forth on Schedule 2.13(b) of the Company Disclosure
Schedule, as of the date of this Agreement the consolidated Tax Returns of the
Company and its subsidiaries have not been audited by the IRS (or the
appropriate statute of limitations has expired) for all fiscal years through
June 30, 1999.
(c) Except as set forth on Schedule 2.13(c) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries: (i) is a party to any
agreement providing for the allocation, payment or sharing of taxes between the
Company or its subsidiaries, on the one hand, and any third party, on the other
hand; or (ii) has an application pending with respect to any Tax requesting
permission for a change in accounting method.
SECTION 2.14. Environmental Matters.
(a) Each of the Company and its subsidiaries has obtained all licenses,
permits, authorizations, approvals and consents from Governmental or Regulatory
Authorities which are required under any applicable Environmental Law (as
defined below) in respect of its business or operations ("Environmental
Permits"), except for such failures to have Environmental Permits which,
individually or in the aggregate, are not reasonably expected to have a Company
Material Adverse Effect. Each of such Environmental Permits is in full force and
effect and each of the Company and its subsidiaries is in compliance with the
terms and conditions of all such Environmental Permits and with any applicable
Environmental Law, except for such failures to be in compliance which,
individually or in the aggregate, are not reasonably expected to have a Company
Material Adverse Effect.
(b) There is no Environmental Claim (as defined below) pending or to the
knowledge of the Company threatened against the Company or any of its
subsidiaries or to the knowledge of the Company, pending or threatened against
any person or entity whose liability for any Environmental Claim the Company or
any of its subsidiaries has or may have retained or assumed either contractually
or by operation of law that is reasonably expected to have a Company Material
Adverse Effect.
(c) To the knowledge of the Company, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release, threatened release or presence of any Hazardous
Material (as defined below) which could form the basis of any Environmental
Claim against the Company or any of its subsidiaries, or to the knowledge of the
Company, against any person or entity whose liability for any Environmental
Claim the Company or
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any of its subsidiaries has or may have retained or assumed either contractually
or by operation of law, except for such liabilities which, individually or in
the aggregate, are not reasonably expected to have a Company Material Adverse
Effect.
(d) To the knowledge of the Company, no site or facility now or previously
owned, operated or leased by the Company or any of its subsidiaries is listed or
proposed for listing on the National Priorities List promulgated pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, and the rules and regulations thereunder ("CERCLA").
(e) No Liens have arisen under or pursuant to any Environmental Law on any
site or facility owned, operated or leased by the Company or any of its
subsidiaries, other than any such Liens which would not, individually or in the
aggregate, have a Company Material Adverse Effect, and no action of any
Governmental or Regulatory Authority (as defined below) has been taken or, to
the knowledge of the Company, is in process which could subject any of such
properties to such Liens.
(f) To the best of the Company's knowledge, the Company has delivered or
otherwise made available for inspection to the Parent true, complete and correct
copies and results of any material reports, studies, analyses, tests or
monitoring possessed or initiated by the Company or any of its subsidiaries
pertaining to Hazardous Materials in, on, beneath or adjacent to any property
currently or formerly owned, operated or leased by the Company or any of its
subsidiaries, or regarding the Company's or any of its subsidiaries' compliance
with applicable Environmental Laws.
(g) As used herein: (i) "Governmental or Regulatory Authority" means any
court, tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision; (ii) "Environmental
Claim" means any claim, action, cause of action, investigation or notice
(written or oral) by any person or entity alleging potential liability
(including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or resulting
from (A) the presence, or release or threatened release, of any Hazardous
Materials at any location, whether or not owned or operated by the Company or
any of its subsidiaries, or (B) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law; (iii) "Environmental
Law" means any law or order of any Governmental or Regulatory Authority relating
to the regulation or protection of human health, safety or the environment or to
emissions, discharges, releases or threatened releases of Hazardous Material,
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes into the environment; and (iv) "Hazardous Material" means (A) any
petroleum or petroleum products, flammable materials, radioactive materials,
friable asbestos, urea formaldehyde foam insulation and transformers or other
equipment that contain dielectric fluid containing regulated levels of
polychlorinated biphenyls (PCBs); (B) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants" or words of similar import under any Environmental Law; and
(C) any other chemical or other material or substance, exposure to which is now
or hereafter prohibited, limited or regulated by any Governmental or Regulatory
Authority under any Environmental Law.
SECTION 2.15. Brokers. No broker, finder or investment banker (other than
Goldman, Sachs & Co., Inc. ("GS")) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company. The
Company has heretofore furnished to Parent a complete and correct copy of all
agreements between the Company and GS pursuant to which such firm would be
entitled to any payment relating to the transactions contemplated hereunder.
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SECTION 2.16. Full Disclosure. No statement contained in any representation
or warranty contained herein or any statement contained in any certificate or
schedule furnished or to be furnished by the Company or by any subsidiary to
Parent or Merger Sub in, or pursuant to the provisions of, this Agreement
contains or shall contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in the light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
SECTION 2.17. Opinion of Financial Advisor. The Company has been advised by
its financial advisor, GS, that, in its opinion, as of the date of this
Agreement, the Exchange Ratio is fair from a financial point of view to the
Company's stockholders and has agreed to deliver a written copy of such opinion
dated the date hereof to Parent.
SECTION 2.18. Intellectual Property.
The Company, directly or indirectly, owns, or is licensed or otherwise
possesses legally enforceable rights to use, all patents, trademarks, trade
names, service marks, copyrights, and any applications therefor, technology,
know-how and tangible or intangible proprietary information, inventions, trade
secrets, processes or material that are required for the conduct of the business
of the Company and its subsidiaries as currently conducted (the "Company
Intellectual Property Rights"). Section 2.18 of the Company Disclosure Schedule
contains a list of all registered Company Intellectual Property Rights and the
jurisdictions where such registrations have been made.
Either the Company or a subsidiary is the sole and exclusive owner of, or
the exclusive or non-exclusive licensee of, with all right, title and interest
in and to (free and clear of any Liens), the Company Intellectual Property
Rights, and, in the case of Company Intellectual Property Rights owned by the
Company or a subsidiary, has sole and exclusive rights (and is not contractually
obligated to pay any compensation to any third party in respect thereof) to the
use thereof or the material covered thereby in connection with the services or
products in respect of which the Company Intellectual Property Rights are
currently being used. To the knowledge of the Company, there is no and there has
not been any unauthorized use, infringement or misappropriation by the Company
or any of its subsidiaries of any patents, trademarks, trade names, service
marks, copyrights, and any applications therefor, technology, know-how and
tangible or intangible proprietary information, inventions, trade secrets or
processes of any third party. All registered patents, trademarks, service marks
and copyrights held by the Company are valid and subsisting. To the knowledge of
the Company, there is no unauthorized use, infringement or misappropriation of
any of the Company Intellectual Property Rights by any third party, including
any employee or former employee of the Company or any subsidiary. No Company
Intellectual Property Right or product of the Company or any subsidiary is
subject to any outstanding decree, order, judgment, or stipulation restricting
in any manner the licensing thereof by the Company or any subsidiary, except to
the extent any such restriction does not constitute a Company Material Adverse
Effect. Neither the Company nor any subsidiary has entered into any agreement
under which the Company or any subsidiary is restricted from selling, licensing
or otherwise distributing any of its products to any class of customers, in any
geographic area, during any period of time or in any segment of the market,
except to the extent any such restriction does not constitute a Company Material
Adverse Effect. Each of the Company and its subsidiaries has used commercially
reasonable efforts to (i) protect through nondisclosure agreements or other
appropriate means all material patent, copyright, trademark and trade secret
rights and confidential information of the Company and its subsidiaries, and
(ii) otherwise to secure and protect for the Company's benefit all Company
Intellectual Property Rights of the Company. Each employee, officer and
consultant of the Company and each of its subsidiaries has executed a
proprietary information and inventions agreement substantially in the form
provided by the Company to Parent. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not impair or
invalidate in any way any of the Company Intellectual Property Rights.
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SECTION 2.19. Change in Control Payments. Except as set forth in Section
2.19 of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries have any plans, programs or agreements to which they are parties,
or to which they are subject, pursuant to which payments (whether in cash or
property or the vesting of property) may be required upon, or may become payable
directly or indirectly as a result of, a change of control of the Company.
SECTION 2.20. Antitakeover Statutes. The board of directors of the Company
has approved this Agreement and the transactions contemplated hereby and neither
Section 203 of the DGCL nor any other antitakeover or similar statute or
regulation applies or purports to apply to the transactions contemplated hereby.
SECTION 2.21. Title to Property. The Company and its subsidiaries own or
lease no material real property other than as set forth in Section 2.21 of the
Company Disclosure Schedule or the Company SEC Reports. Except as reflected in
the Company's financial statements included in the Company SEC Reports, each of
the Company and its subsidiaries has good and valid title to all of its
respective properties and assets, free and clear of all Liens except Liens for
Taxes not yet due and payable and such liens or other imperfections of title, if
any, as do not materially detract from the value of or materially interfere with
the present use of the property affected thereby; and, to the knowledge of the
Company, all leases pursuant to which the Company or any subsidiary leases from
others material amounts of real or personal property are in good standing, valid
and effective in accordance with their respective terms, and there is not, to
the knowledge of the Company, under any of such leases, any existing material
default or event of default (or event which with notice or lapse of time, or
both, would constitute a material default and in respect of which the Company or
any of its subsidiaries, as applicable, has not taken adequate steps to prevent
such a default from occurring).
SECTION 2.22. Year 2000 Matters. Any reprogramming required to permit the
proper functioning in and following the year 2000 of computer systems and other
equipment containing embedded microchips, in either case owned or operated by
the Company or any of its subsidiaries or used or relied upon in the conduct of
their respective businesses (including any systems and other equipment supplied
by others or with which the computer systems of the Company or any of its
subsidiaries interface) has been completed. The testing of all such systems and
other equipment as so reprogrammed has been completed. The costs to the Company
and its subsidiaries for such reprogramming and testing and for other
foreseeable consequences to them of any improper functioning of other computer
systems and equipment containing embedded microchips due to the occurrence of
the year 2000 will not have a Company Material Adverse Effect.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant to the Company that,
except as set forth in the written disclosure schedule previously delivered by
Parent to the Company, the paragraphs of which are numbered to correspond to the
Sections of this Agreement (the "Parent Disclosure Schedule"):
SECTION 3.01. Organization and Qualification; Subsidiaries. Parent and each
of its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority and is in possession of all
Approvals necessary to own, lease and operate the properties it purports to own,
operate or lease and to carry on its business as it is now being conducted,
except where the failure to have such power, authority and Approvals would not,
individually or in the aggregate, have a Parent Material Adverse Effect. Parent
and each of its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its
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properties owned, leased or operated by it or the nature of its activities makes
such qualification or licensing necessary, except for such failures to be so
duly qualified or licensed and in good standing that would not, either
individually or in the aggregate, have a Parent Material Adverse Effect.
SECTION 3.02. Certificate of Incorporation and Bylaws. Parent has
heretofore furnished to the Company a complete and correct copy of the
Certificate of Incorporation and Bylaws, as amended to date, of Parent and the
Certificate of Incorporation and Bylaws, as amended to date, of Merger Sub. Such
Certificates of Incorporation and Bylaws of Parent and Merger Sub are in full
force and effect. Neither Parent nor any of its subsidiaries is in violation of
any of the provisions of its charter documents.
SECTION 3.03. Capitalization.
(a) The authorized capital stock of Parent consists of (i) 600,000,000
shares of Parent Common Stock and (ii) 1,000,000 shares of Preferred Stock,
$0.001 par value ("Parent Preferred Stock") were authorized, of which (x)
100,000 shares of Series A Preferred Stock were authorized, (y) 100,000 shares
of Series B Preferred Stock were authorized, and (z) one share of special voting
stock is authorized. As of December 31, 1999, (1) 349,825,511 shares of Parent
Common Stock were issued and outstanding (including 107,753,682 shares of Parent
Common Stock issuable upon exchange of the outstanding exchangeable shares of
Parent's subsidiary, JDS Uniphase Canada, Ltd.), (2) 100,000 shares of Series A
Preferred Stock were issued and outstanding, (3) no shares of Series B Preferred
Stock were issued and outstanding and one share of special voting stock was
issued and outstanding, (4) no shares of capital stock were held in its
treasury, and (5) 58,127,797 shares of Parent Common Stock were reserved for
issuance pursuant to outstanding options under Parent's stock option plans
("Parent's Stock Option Plans"). No shares of Parent Common Stock or Parent
Preferred Stock have been issued between December 31, 1999 and the date hereof,
except for shares of Parent Common Stock issued upon exercise of options
outstanding under Parent's Stock Option Plans. The authorized common stock of
Merger Sub consists of 100 shares of common stock, all of which, as of the date
hereof, are issued and outstanding. All of the outstanding shares of Parent's
and Merger Sub's respective common stock have been duly authorized and validly
issued and are fully paid and nonassessable, and issued in compliance with
applicable securities laws. As of the date hereof, except for options
outstanding under Parent's Stock Option Plans and as set forth in Section 3.03
of the Parent Disclosure Schedule and as described in the Parent SEC Reports,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued common stock of
Parent or any of its subsidiaries or obligating Parent or any of its
subsidiaries to issue or sell any shares of common stock of, or other equity
interests in, Parent or any of its subsidiaries. As of the date hereof, there
are no obligations, contingent or otherwise, of Parent or any of its
subsidiaries to repurchase, redeem or otherwise acquire any Parent Common Shares
or the common stock of any subsidiary. Except as set forth in Section 3.03(a) of
the Parent Disclosure Schedule or as will not have a Parent Material Adverse
Effect, all of the outstanding shares of common stock (or other equity
interests) of each of Parent's subsidiaries is duly authorized, validly issued,
fully paid and nonassessable, and issued in compliance with applicable
securities laws and all such shares are owned by Parent or another subsidiary
free and clear of all Liens, other than Liens for taxes not yet due and payable.
(b) The Parent Common Shares to be issued pursuant to the Merger will be
duly authorized, validly issued, fully paid and nonassessable and shall be
available for trading on the Nasdaq National Market.
SECTION 3.04. Authority Relative to this Agreement. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Merger Sub and the consummation by Parent and Merger
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Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered by
Parent and Merger Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
Parent and Merger Sub, enforceable against each in accordance with its terms.
The board of directors of Parent has determined that it is advisable and in the
best interest of Parent's stockholders for Parent to enter into a strategic
business combination with the Company upon the terms and subject to the
conditions of this Agreement.
SECTION 3.05. SEC Filings; Financial Statements.
(a) Parent has filed all forms, reports, exhibits and other documents
required to be filed with the SEC between June 30, 1999 and the date of this
Agreement and has made available to the Company, in the form filed with the SEC,
(i) its Quarterly Report on Form 10-Q for the period ended September 30, 1999
and its Annual Reports on Form 10-K for the fiscal year ended June 30, 1999 and
June 30, 1998, respectively, (ii) all proxy statements relating to Parent's
meetings of stockholders (whether annual or special) held between June 30, 1998
and the date of this Agreement, (iii) all other reports or registration
statements (other than Reports on Form 3, 4 or 5 filed on behalf of affiliates
of the Parent) filed by Parent with the SEC between June 30, 1998 and the date
of this Agreement, and (iv) all amendments and supplements to all such reports
and registration statements filed by Parent with the SEC (collectively, the
"Parent SEC Reports"). The Parent SEC Reports (i) were prepared in accordance
with applicable requirements of the Federal Securities Laws, and (ii) did not at
the time they were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. None of Parent's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Parent SEC Reports has been prepared
in accordance with U.S. GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and each
fairly presented the consolidated financial position of Parent and its
subsidiaries as of the respective dates thereof and the consolidated results of
its operations and cash flows and stockholder equity for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be material in amount.
(c) Parent has heretofore furnished to the Company a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by Parent with the SEC pursuant to
the Securities Act or the Exchange Act.
SECTION 3.06. Absence of Certain Changes or Events. Except as set forth in
Section 3.06 of the Parent Disclosure Schedule or the Parent SEC Reports,
between June 30, 1999 and the date hereof, there has not occurred: (i) any
Parent Material Adverse Effect; (ii) any amendments or changes in the
certificate of incorporation or bylaws of Parent (other than amendments to
increase the authorized common stock of Parent); (iii) any damage to,
destruction or loss of any asset of Parent, (whether or not covered by
insurance) that has had or is reasonably likely to have a Parent Material
Adverse Effect; (iv) any change by Parent in its accounting methods, principles
or practices, except any such change as required by any concurrent change in
GAAP or Federal Securities Law applicable to companies generally; (v) any
revaluation of any of Parent's or any subsidiary's assets, including, without
limitation, writing down the value of inventory or writing off notes or accounts
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receivable other than in the ordinary course of business; (vi) any sale, pledge,
disposition of or encumbrance upon a material amount of property of Parent or of
any subsidiary, except in the ordinary course of business; (vii) any material
Tax (as defined above) election inconsistent with past practices or the
settlement or compromise of any material Tax liability; or (viii) any
declaration, issuance or payment of any dividend or other distribution (whether
in cash, stock or property or any thereof), other than the two-for-one stock
split paid by Parent on December 29, 1999 and the two-for-one stock split
announced by Parent on January 3, 1999 proposed to be paid March 10, 2000.
SECTION 3.07. No Undisclosed Liabilities. Except as is set forth in the
Parent SEC Reports, neither the Parent nor any of its subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise) which are, in the
aggregate, material to the business, operations or financial condition of the
Parent and its subsidiaries taken as a whole, except liabilities (a) adequately
provided for in the Parent's balance sheet (including any related notes thereto)
as of June 30, 1999, (b) not required under U.S. GAAP to be reflected on such
balance sheet, or (c) incurred since June 30, 1999 in the ordinary course of
business, and liabilities incurred in connection with this Agreement.
SECTION 3.08. Absence of Litigation. Except as set forth in the Parent SEC
Reports, (i) there are no claims, actions, suits, proceedings or investigations
pending or, to the knowledge of the Parent, threatened, against Parent or
against any subsidiary and (ii) there is no judgment, decree, injunction, rule
or order of any Governmental or Regulatory Authority outstanding against Parent
or its subsidiaries, other than, in each case those that the outcome of which,
individually or in the aggregate, would not have a Parent Material Adverse
Effect or a material adverse effect on Parent's ability to consummate the
Merger.
SECTION 3.09. Labor Matters. Except as set forth in Section 3.09 of the
Parent Disclosure Schedule, (i) there are no controversies pending or, to the
knowledge of Parent or any of its subsidiaries, threatened between Parent or any
of its subsidiaries and any of their respective employees, which controversies
have or may reasonably be expected to have a Parent Material Adverse Effect;
(ii) neither Parent nor any of its subsidiaries is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by Parent or its subsidiaries nor does Parent or any of its
subsidiaries know of any activities or proceedings of any labor union to
organize any such employees, and (iii) neither Parent nor any of its
subsidiaries has any knowledge of any strikes, slowdowns, work stoppages,
lockouts or threats thereof, by or with respect to any employees of Parent or
any of its subsidiaries.
SECTION 3.10. Disclosure Documents. The registration statement of Parent to
be filed with the SEC with respect to the offering of Parent Common Shares in
connection with the Merger (the "Registration Statement") and any amendments or
supplements thereto will, when filed, comply as to form in all material respects
with the applicable requirements of the Securities Act. At the time the
Registration Statement or any amendment or supplement thereto becomes effective
and at the Effective Time, the Registration Statement, as amended or
supplemented, if applicable, shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements contained therein not misleading. The
foregoing representations and warranties will not apply to statements or
omissions included in the Registration Statement or any amendment or supplement
thereto based upon information furnished to Parent or Merger Sub by the Company
for use therein. None of the information furnished to the Company for use in (or
incorporation by reference in) the Company Proxy Statement or any amendment or
supplement thereto will contain, at the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to stockholders of the Company
or at any time the stockholders vote on the approval and adoption of this
Agreement, any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements contained therein, in light of
the circumstances under which they were made, not misleading.
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SECTION 3.11. Taxes. Except as disclosed on Schedule 3.11 of the Parent
Disclosure Schedule, Parent and its subsidiaries have filed all United States
federal income Tax Returns and all other material Tax Returns required to be
filed by them for all periods ending on or after June 30, 1999 and before the
date of this Agreement, which Tax Returns are correct and complete in all
material respects, and have duly paid or made adequate provision on their books,
records and financial statements for the payment of all material Taxes which
have accrued or have become payable.
SECTION 3.12. Environmental Matters.
(a) Each of the Parent and its subsidiaries has obtained all Environmental
Permits, except for such failures to have Environmental Permits which,
individually or in the aggregate, are not reasonably expected to have a Parent
Material Adverse Effect. Each of such Environmental Permits is in full force and
effect and each of the Parent and its subsidiaries is in compliance with the
terms and conditions of all such Environmental Permits and with any applicable
Environmental Law, except for such failures to be in compliance which,
individually or in the aggregate, are not reasonably expected to have a Parent
Material Adverse Effect.
(b) Except as described in the Parent SEC Reports, there is no
Environmental Claim pending or to the knowledge of the Parent threatened against
the Parent or any of its subsidiaries or to the knowledge of the Parent, against
any person or entity whose liability for any Environmental Claim the Parent or
any of its subsidiaries has or may have retained or assumed either contractually
or by operation of law that is reasonably expected to have a Parent Material
Adverse Effect.
(c) Except as described in the Parent SEC Reports, to the knowledge of
Parent, there are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
threatened release or presence of any Hazardous Material which could form the
basis of any Environmental Claim against Parent or any of its subsidiaries, or
to the knowledge of Parent, against any person or entity whose liability for any
Environmental Claim Parent or any of its subsidiaries has or may have retained
or assumed either contractually or by operation of law, except for such
liabilities which, individually or in the aggregate, are not reasonably expected
to have a Parent Material Adverse Effect.
(d) To the knowledge of Parent, no site or facility now or previously
owned, operated or leased by Parent or any of its subsidiaries is listed or
proposed for listing on the National Priorities List promulgated pursuant to
CERCLA.
(e) No Liens have arisen under or pursuant to any Environmental Law on any
site or facility owned, operated or leased by Parent or any of its subsidiaries,
other than any such Liens which would, individually or in the aggregate, have a
Parent Material Adverse Effect, and no action of any Governmental or Regulatory
Authority has been taken or, to the knowledge of Parent, is in process which
could subject any of such properties to such Liens.
SECTION 3.13. Brokers. No broker, finder or investment banker (other than
Thomas Weisel Partners ("TWP") and Banc of America Securities LLC ("BAS") is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent or Merger Sub. Parent has heretofore furnished to
the Company a complete and correct copy of all agreements between Parent and TWP
and BAS pursuant to which such firms would be entitled to any payment relating
to the transaction contemplated hereunder.
SECTION 3.14. Full Disclosure. No statement contained in any representation
or warranty contained herein or any statement contained in any certificate or
schedule furnished or to be furnished by Parent or Merger Sub to the Company in,
or pursuant to the provisions of, this Agreement contains or will contain any
untrue statement of a material fact or omits or shall omit to
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state any material fact necessary, in light of the circumstances under which it
was made, in order to make the statements herein or therein not misleading.
SECTION 3.15. Opinion of Financial Advisor. Parent has been advised by its
financial advisor, BAS, that, in its opinion, as of the date of this Agreement,
the Exchange Ratio is fair from a financial point of view to Parent and has
delivered a written copy of such opinion dated the date hereof to the Company.
SECTION 3.16. Intellectual Property. Parent, directly or indirectly, owns,
or is licensed or otherwise possesses legally enforceable rights to use, all
patents, trademarks, trade names, service marks, copyrights, and any
applications therefor, technology, know-how and tangible or intangible
proprietary information, inventions, trade secrets, processes or material that
are required for the conduct of the business of Parent and its subsidiaries as
currently conducted (the "Parent Intellectual Property Rights"). Section 3.16 of
the Parent Disclosure Schedule contains a list of all registered Parent
Intellectual Property Rights and the jurisdictions where such registrations have
been made.
Either Parent or a subsidiary is the sole and exclusive owner of, or the
exclusive or non-exclusive licensee of, with all right, title and interest in
and to (free and clear of any Liens), the Parent Intellectual Property Rights,
and, in the case of Parent Intellectual Property Rights owned by Parent or a
subsidiary, has sole and exclusive rights (and is not contractually obligated to
pay any compensation to any third party in respect thereof) to the use thereof
or the material covered thereby in connection with the services or products in
respect of which the Parent Intellectual Property Rights are currently being
used. To the knowledge of Parent, there is no and there has not been any
unauthorized use, infringement or misappropriation by Parent or any of its
subsidiaries of any patents, trademarks, trade names, service marks, copyrights,
and any applications therefor, technology, know-how and tangible or intangible
proprietary information, inventions, trade secrets or processes of any third
party. All registered patents, trademarks, service marks and copyrights held by
Parent are valid and subsisting. To the knowledge of Parent, there is no
unauthorized use, infringement or misappropriation of any of the Parent
Intellectual Property Rights by any third party, including any employee or
former employee of Parent or any subsidiary. No Parent Intellectual Property
Right or product of Parent or any subsidiary is subject to any outstanding
decree, order, judgment, or stipulation restricting in any manner the licensing
thereof by Parent or any subsidiary, except to the extent any such restriction
does not constitute a Parent Material Adverse Effect. Neither Parent nor any
subsidiary has entered into any agreement under which Parent or any subsidiary
is restricted from selling, licensing or otherwise distributing any of its
products to any class of customers, in any geographic area, during any period of
time or in any segment of the market, except to the extent any such restriction
does not constitute a Parent Material Adverse Effect. Each of Parent and its
subsidiaries has used commercially reasonable efforts to (i) protect through
nondisclosure agreements or other appropriate means all material patent,
copyright, trademark and trade secret rights and confidential information of
Parent and its subsidiaries, and (ii) otherwise to secure and protect for
Parent's benefit all Parent Intellectual Property Rights of Parent. Each
employee, officer and consultant of Parent and each of its subsidiaries has
executed a proprietary information and inventions agreement substantially in the
form provided by Parent to the Company. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not impair or
invalidate in any way any of the Parent Intellectual Property Rights.
SECTION 3.17. Title to Property. Parent and its subsidiaries own or lease
no material real property other than as set forth in Section 3.17 of the Parent
Disclosure Schedule or the Parent SEC Reports. Except as reflected in Parent's
financial statements included in the Parent SEC Reports, each of Parent and its
subsidiaries has good and valid title to all of its respective properties and
assets, free and clear of all Liens except Liens for taxes not yet due and
payable and such liens or other imperfections of title, if any, do not
materially detract from the value of or
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materially interfere with the present use of the property affected thereby; and,
to the knowledge of Parent, all leases pursuant to which Parent or any
subsidiary leases from others material amounts of real or personal property are
in good standing, valid and effective in accordance with their respective terms,
and there is not, to the knowledge of Parent, under any of such leases, any
existing material default or event of default (or event which with notice or
lapse of time, or both, would constitute a material default and in respect of
which Parent or any of its subsidiaries, as applicable, has not taken adequate
steps to prevent such a default from occurring).
SECTION 3.18. Year 2000 Matters. Any reprogramming required to permit the
proper functioning in and following the year 2000 of computer systems and other
equipment containing embedded microchips, in either case owned or operated by
Parent or any of its subsidiaries or used or relied upon in the conduct of their
respective businesses (including any systems and other equipment supplied by
others or with which the computer systems of Parent or any of its subsidiaries
interface) has been completed. The testing of all such systems and other
equipment as so reprogrammed has been completed. The costs to Parent and its
subsidiaries for such reprogramming and testing and for other foreseeable
consequences to them of any improper functioning of other computer systems and
equipment containing embedded microchips due to the occurrence of the year 2000
will not have a Parent Material Adverse Effect.
SECTION 3.19. Material Contracts; No Violation.
(a) Except as set forth in Section 3.19(a) of the Parent Disclosure
Schedule, (i) neither the Parent nor any subsidiary has breached, is in default
under, or has received written notice of any breach or default under, any
contract filed as an exhibit or required to be filed as an exhibit to the Parent
SEC Reports (a "Parent Material Contract"), (ii) to the knowledge of Parent, no
other party to any of the Parent Material Contracts has breached or is in
default of any of its obligations thereunder, and (iii) each of the Parent
Material Contracts is in full force and effect, except in any such case for
breaches, defaults or failures to be in full force that in the aggregate do not
constitute a Parent Material Adverse Effect.
(b) Except as set forth in Section 3.19(b) of the Parent Disclosure
Schedule, the execution and delivery of this Agreement by the Parent does not,
and the performance of this Agreement and the consummation of the transactions
contemplated by this Agreement by Parent will, (i) conflict with or violate the
certificate of incorporation or bylaws of Parent, (ii) conflict with or violate
any Laws applicable to the Parent or any subsidiary or by which any of their
respective properties are bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair the Company's or any subsidiary's
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any contract, or result in the creation of a Lien on any of the properties or
assets of the Company or any subsidiary pursuant to, any material contract filed
as an exhibit or required to be filed as an exhibit to the Parent SEC Reports or
other note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or any
subsidiary is a party or by which Parent or any subsidiary or any of their
respective properties are bound or affected, except in the case of clauses (ii)
and (iii) for any such conflicts, violations, breaches, defaults or other
occurrences that would not, individually or in the aggregate, have a Parent
Material Adverse Effect.
ARTICLE IV.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01. Conduct of Business by the Company Pending the Merger. During
the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement
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or the Effective Time, the Company covenants and agrees that, unless Parent
shall otherwise agree in writing or as required or permitted under this
Agreement, the Company shall conduct its business and shall cause the business
of its subsidiaries to be conducted only in, and the Company and its
subsidiaries shall not take any action except in the ordinary course of business
and in a manner consistent with past practice; and the Company shall use
reasonable commercial efforts to preserve substantially intact the business
organization of the Company and its subsidiaries, to keep available the services
of the present officers, employees and consultants of the Company and its
subsidiaries and to preserve the present relationships of the Company and its
subsidiaries with customers, suppliers and other persons with which the Company
or any subsidiary has significant business relations. By way of amplification
and not limitation, except as contemplated by this Agreement and except as
disclosed in Section 4.01 of the Company Disclosure Schedule, neither the
Company nor any subsidiary shall, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, directly or indirectly do, or propose to do, any of the
following without the prior written consent of Parent:
(a) amend or otherwise change the Company's certificate of
incorporation or bylaws;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of
Company capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of Company
capital stock, or any other ownership interest (including, without
limitation, any phantom interest) of the Company, any subsidiary or any of
its affiliates, except for the issuance of (i) options under the Company
Stock Option Plans to purchase up to 2,000,000 shares of Company Common
Stock granted to Company employees in the ordinary course of business,
which options shall have exercise prices no less than the fair market value
at the time of grant and (ii) shares of Company Common Stock issuable to
participants in the Company's employee stock purchase plan in the ordinary
course of business and upon issuance of outstanding Stock Options granted
under the Company Stock Option Plans;
(c) sell, pledge, dispose of or encumber any assets or inventory of
the Company or of any subsidiary (except for (i) sales of assets or
inventory in the ordinary course of business, (ii) dispositions of obsolete
or worthless assets, and (iii) pledges of assets pursuant to existing
agreements, or agreements the Company is permitted to enter into in
connection with the purchase of assets), or take any action that would
reasonably be expected to result in any damage to, destruction or loss of
any material asset of the Company (whether or not covered by insurance);
(d) except as is contemplated by this Agreement, or the applicable
award agreement or Employee Plan, accelerate, amend or change the period
(or permit any acceleration, amendment or change) of exercisability of
options or restricted stock granted under the Employee Plans (including the
Company Stock Option Plans) or authorize cash payments in exchange for any
options granted under any of such plans;
(e)(i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its common stock, except that a subsidiary
may declare and pay a dividend to the Company, (ii) split, combine or
reclassify any of its common stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its common stock, (iii) amend the terms of,
repurchase, redeem or otherwise acquire, or permit any subsidiary to
repurchase, redeem or otherwise acquire, any of its securities or any
securities of a subsidiary, except in accordance with preexisting
commitments as of the date hereof, or propose to do any of the foregoing;
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(f)(i) acquire (by merger, consolidation, or acquisition of stock or
assets) any company, corporation, partnership or other business
organization or division thereof, or enter into or amend any contract,
agreement, commitment or arrangement to effect any such acquisition, except
with respect to those transactions as set forth in Section 4.01(f) of the
Company Disclosure Schedule, (ii) incur any indebtedness for borrowed money
or issue any debt securities or assume, guarantee (other than guarantees of
bank debt of a subsidiary entered into in the ordinary course of business)
or endorse or otherwise as an accommodation become responsible for, the
obligations of any person, or make any loans or advances, except in each
case in the ordinary course of business (including pursuant to existing
credit lines and lease facilities); (iii) to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in
any subsidiary or any other entity other than guarantees of bank
obligations of a subsidiary entered into in the ordinary course of
business; (iv) except in the ordinary course of business or otherwise
provided or permitted by this Agreement, to enter into or amend any
material agreement or contract which provides for the sale, license, or
purchase by the Company or any of its subsidiaries of assets; (iv)
authorize any capital expenditures or purchase of fixed assets which are,
in the aggregate, in excess of $100,000,000; or (v) enter into or amend any
contract, agreement, commitment or arrangement to effect any of the matters
prohibited by this Section 4.01(f); provided, however, notwithstanding
anything to the contrary contained in the foregoing, the Company shall be
permitted to make minority equity investments in other entities not to
exceed $5 million individually, or $30 million in the aggregate (including
without limitation the right to enter into appropriate investment
agreements);
(g) increase the compensation payable or to become payable to its
officers or employees, except for increases in salary or wages of employees
of the Company or of any subsidiary who are not executive officers of the
Company in the ordinary course of business in accordance with past
practices, or grant any severance or termination pay to, or enter into any
employment or severance agreement with any director, officer (except for
officers who are terminated on an involuntary basis), or, except as
consistent with past practice and in the ordinary course of business,
establish, adopt, enter into or amend any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any current or former directors, officers or employees,
except, in each case, as may be required by law;
(h) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts
receivable), except as required by concurrent changes in GAAP or Federal
Securities Law applicable to companies generally;
(i) make any material Tax election inconsistent with past practices or
settle or compromise any material federal, state, local or foreign Tax
liability or agree to an extension of a statute of limitations except to
the extent the amount of any such settlement has been reserved for on the
most recent Company SEC Report or incurred in the ordinary course of
business since such date;
(j) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business;
(k) Engage in any action or enter into any transaction or permit any
action to be taken or transaction to be entered into that could reasonably
be expected to delay the consummation of, or otherwise adversely affect,
any of the transactions contemplated by this Agreement;
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(l) undertake any revaluation of any of the Company's or any
subsidiary's assets, including, without limitation, writing down the value
of inventory or writing off notes or accounts receivable other than in the
ordinary course of business or in accordance with GAAP consistently
applied;
(m) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.01 (a) through (l) above.
SECTION 4.02. Conduct of Business by Parent and Merger Sub Pending the
Merger. During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, Parent
covenants and agrees that, unless the Company shall otherwise agree in writing
or as required or permitted under this Agreement, Parent shall conduct its
business and shall cause the business of its subsidiaries to be conducted only
in, and Parent and its subsidiaries shall not take any action except in the
ordinary course of business and in a manner consistent with past practice; and
Parent shall use reasonable commercial efforts to preserve substantially intact
the business organization of Parent and its subsidiaries, to keep available the
services of the present officers, employees and consultants of Parent and its
subsidiaries and to preserve the present relationships of Parent and its
subsidiaries with customers, suppliers and other persons with which Parent or
any subsidiary has significant business relations. By way of amplification and
not limitation, except as contemplated by this Agreement and except as disclosed
in Section 4.02 of the Parent Disclosure Schedule, neither Parent nor any of its
subsidiaries shall, unless the Company shall otherwise agree in writing or as
required or permitted under this Agreement, during the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, directly or indirectly do, or propose to do,
any of the following without the prior written consent of the Company:
(a) Engage in any action or enter into any transaction or permit any
action to be taken or transaction to be entered into that could reasonably
be expected to delay the consummation of, or otherwise adversely affect,
any of the transactions contemplated by this Agreement;
(b) Acquire (by merger, consolidation, or acquisition of stock or
assets) any company, corporation, partnership or other business
organization or division thereof or enter into or amend any contract,
agreement, commitment or arrangement to effect any such acquisition, except
with respect to those transactions as set forth in Section 4.02(b) of the
Parent Disclosure Schedule; provided that Parent (or its subsidiaries) may
make minority equity investments in other entities not to exceed $5 million
individually, or $30 million in the aggregate (including without limitation
the right to enter into appropriate investment agreements); or
(c) Take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.02(a) through (b) above.
SECTION 4.03. No Solicitation.
(a) The Company shall not, and shall not permit or authorize the Company's
subsidiaries, its and their officers, directors, employees, affiliates, agents
or other representatives (including without limitation any investment banker,
financial advisor, attorney or accountant retained by it or any of its
subsidiaries) to initiate, solicit or knowingly encourage (including by way of
furnishing information or assistance) or take any other action to facilitate,
any inquiries or the making of any proposal relating to, or that may reasonably
be expected to lead to, any Alternative Transaction (as defined in Section
7.03(d)), or enter into discussions (except as to the existence of these
provisions) or negotiate with any person or entity in furtherance of such
inquiries or to obtain an Alternative Transaction, or agree to, or endorse, any
Alternative Transaction and the Company shall promptly notify Parent of all
relevant terms of any such inquiries or proposals received by the Company or by
any subsidiary or by any such officer, director, employee, agent, investment
banker, financial advisor, attorney, accountant or other representative relating
to any of such matters and if such inquiry or
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proposal is in writing, the Company shall promptly deliver or cause to be
delivered to Parent a copy of such inquiry or proposal and promptly update
Parent as to any material changes with respect to such inquiry or proposal;
provided, however, that nothing contained in this subsection (a) shall prohibit
the board of directors of the Company, any of its subsidiaries, and each of
their officers, directors, employees, affiliates, agents or other
representatives (including without limitation any investment banker, financial
advisor, attorney or accountant retained by it or any of its subsidiaries) from
(i) furnishing information to, entering into a confidentiality agreement with,
or entering into discussions or negotiations with, any persons or entity in
connection with an unsolicited bona fide proposal in writing by such person or
entity relating to an Alternative Transaction if, and only to the extent that
(A) the board of directors of the Company determines in good faith, after
consultation with its outside legal counsel, that such action is reasonably
necessary to comply with its fiduciary duties under Delaware law, (B) such
action is in response to an unsolicited bona fide written proposal made by a
third party relating to an Alternative Transaction on terms which the Company's
board of directors believes to be more favorable to the Company's stockholders
than the Merger or may reasonably be expected to result in an Alternative
Transaction on terms that the Company's board of directors believe is more
favorable to the Company's stockholders than the Merger, and in each case for
which financing, to the extent required, is then committed (a "Superior
Proposal"), and (C) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity the Company provides
written notice to Parent to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person or entity; (ii)
complying with Rule 14e-2 promulgated under the Exchange Act with regard to an
Alternative Transaction; or (iii) in the event of a Superior Proposal, to enter
an agreement or understanding with respect to the Superior Proposal.
(b) The Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any parties (other than Parent and
Merger Sub) conducted heretofore with respect to any of the foregoing. The
Company agrees not to release any third party from any confidentiality or
standstill agreement to which the Company is a party.
(c) The Company shall ensure that the officers, directors and employees of
the Company and of each subsidiary and any investment banker or other advisor or
representative retained by the Company are aware of the restrictions described
in this Section.
ARTICLE V.
ADDITIONAL AGREEMENTS
SECTION 5.01. Proxy Statement; Form S-4.
In connection with the meeting of the Company's stockholders to approve
this Agreement and the transactions contemplated hereby (the "Company
Stockholders' Meeting"), after the date hereof the Company will promptly prepare
and file with the SEC a proxy statement (the "Company Proxy Statement"),
conforming to the requirements of the applicable provisions of the Exchange Act,
soliciting the Company stockholders' approval of this Agreement and the
transactions contemplated herein at the Company Stockholders' Meeting. After the
date hereof, Parent shall prepare and Parent shall file with the SEC the
Registration Statement in which a prospectus and the Company Proxy Statement
will be included as part. Each of Parent and the Company will respond to any
comments of the SEC, will use commercially reasonable efforts to cause the
Registration Statement to become effective and will cause the Company Proxy
Statement/Prospectus to be mailed to all stockholders of the Company at the
earliest practicable time after the Registration Statement is declared
effective. Each of Company and Parent will notify the other promptly upon the
receipt of any comments from the SEC or its staff of any request by the SEC or
its staff for amendments or supplements to the
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Registration Statement, Company Proxy Statement, or for additional information
and will supply the other copies with all such correspondence between such party
or any of its representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to the Registration Statement, Company Proxy Statement
or Merger. The Company Proxy Statement and all other proxy materials shall be
subject to the review and reasonable approval of Parent.
SECTION 5.02. Company Stockholders' Meeting; Voting Agreements. The Company
shall call and use commercially reasonable efforts to hold the Company
Stockholders' Meeting as promptly as practicable after the date on which the
Registration Statement becomes effective for the purpose of voting upon the
approval of the Merger. The Company shall use commercially reasonable efforts to
solicit from its stockholders proxies in favor of the approval of the Merger,
and shall use commercially reasonable efforts to take all other action necessary
or advisable to secure the vote or consent of stockholders required by the DGCL
and the certificate of incorporation and bylaws of the Company to obtain such
approvals. Concurrently herewith each of the persons listed on Exhibit 5.02(a)
has entered into a Voting Agreement with Parent in substantially the form of
Exhibit 5.02(b) hereto (the "Voting Agreements") and the Company shall in no way
challenge the validity, or enforceability of any of the Voting Agreements or any
proxy entered into in connection therewith.
SECTION 5.03. Access to Information; Confidentiality. Upon reasonable
notice and subject to restrictions contained in confidentiality agreements to
which such party is subject, the Company and Parent shall each (and shall cause
each of their subsidiaries to) afford to the officers, employees, accountants,
counsel and other representatives of the other, reasonable access, during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period. The Company and Parent each
shall (and shall cause each of their subsidiaries to) furnish promptly to the
other all information concerning its business, properties and personnel as such
other party may reasonably request, and each shall make available to the other
the appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the other's business, properties and personnel
as either party may reasonably request. Each party shall keep such information
confidential in accordance with the terms of the letter agreement, entered into
on January 7, 2000 (the "Confidentiality Agreement") between Parent and the
Company. The Company and Parent shall file all reports required to be filed by
each of them with the SEC between the date of this Agreement and the Effective
Time and shall deliver to the other party copies of such reports promptly after
the same are filed.
SECTION 5.04. Consents; Approvals. The Company and Parent shall coordinate
and cooperate with one another and shall each use their reasonable best efforts
to obtain (and shall each refrain from taking any willful action that would
impede obtaining) all consents, waivers, approvals, authorizations or orders
(including, without limitation, all rulings, decisions or approvals by any
Governmental or Regulatory Authority), and the Company and Parent shall make all
filings (including, without limitation, the pre-merger notification filings
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR
Act"), as amended, and all other filings with Governmental or Regulatory
Authorities) required in connection with the authorization, execution and
delivery of this Agreement by the Company and Parent and the consummation by
them of the transactions contemplated hereby, excepting only those merger
notification filings with foreign jurisdictions for which the failure to file
would not have a Material Adverse Effect on the Company or the transactions
contemplated hereby. The Company and Parent shall furnish all information
required to be included in the Company Proxy Statement and the Registration
Statement, or for any application or other filing to be made pursuant to the
rules and regulations of any Governmental or Regulatory Authority in connection
with the transactions contemplated by this Agreement. Except where prohibited by
applicable statutes and regulations, and subject to the Confidentiality
Agreement, each party shall coordinate with one another in preparing and
exchanging such information, and shall
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promptly provide the other (or its counsel) with copies of all filings,
presentations or submissions made by such party with any Governmental or
Regulatory Authority in connection with this Agreement or the transactions
contemplated hereby.
SECTION 5.05. Agreements of Affiliates. The Company shall deliver to
Parent, prior to the date the Registration Statement becomes effective under the
Securities Act, a letter (the "Affiliate Letter") identifying all persons who
are, or may be deemed to be, at the time of the Company Stockholders' Meeting,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use commercially reasonable efforts to cause each person who
is identified as an "affiliate" in the Affiliate Letter to deliver to Parent,
prior to the Effective Time, a written agreement (an "Affiliate Agreement") in a
form mutually agreeable to the Company and Parent.
SECTION 5.06. Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation or warranty
contained in this Agreement to be materially untrue or inaccurate such that the
conditions to closing set forth in Section 6.02(a) and 6.03(b), as the case may
be, shall not be met and (ii) any failure of the Company, Parent or Merger Sub,
as the case may be, to materially comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder such that the
conditions to closing set forth in Section 6.02(a) and 6.03(b), as the case may
be, shall not be met; provided, however, that the delivery of any notice
pursuant to this Section 5.06 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice and further provided that
failure to give such notice shall not be treated as a breach of covenant for the
purposes of Section 6.02(b) or 6.03(b) unless the failure to give such notice
results in material prejudice to the other party.
SECTION 5.07. Further Assurances; Tax Treatment.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all other things necessary, proper
or advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, to obtain in a timely manner all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings, and to otherwise satisfy or cause to be satisfied all
conditions precedent to its obligations under this Agreement.
(b) Each of Parent, Merger Sub and the Company shall use its best efforts
to cause the Merger to qualify, and will not (both before and after consummation
of the Merger) take any actions which could prevent the Merger from qualifying,
as a reorganization under the provisions of Section 368 of the Code.
(c) Each of Parent, Merger Sub and the Company shall cooperate with each
other in obtaining the opinions of Morrison & Foerster LLP and Wilson Sonsini
Goodrich & Rosati Professional Corporation described in Section 6.01(c). In
connection therewith, each of Parent and the Company shall deliver to such
counsel customary representation letters substantially in the form of Exhibit
5.07(c) hereto.
SECTION 5.08. Public Announcements. Parent and the Company shall consult
with each other before issuing any press release with respect to the Merger or
this Agreement and shall not issue any such press release or make any such
public statement without the prior consent of the other party, which shall not
be unreasonably withheld; provided, however, that a party may, without the prior
consent of the other party, issue such press release or make such public
statement as may upon the advice of counsel be required by law or the Nasdaq
National Market if it has used all reasonable efforts to consult with the other
party. Each of Parent and Company shall make all necessary filings
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with Governmental or Regulatory Authorities and shall promptly provide the other
party with copies of filings made by such party between the date hereof and the
Effective Time.
SECTION 5.09. Listing of Parent Common Shares. Parent shall use its
commercially reasonable best efforts to cause the shares of Parent Common Shares
to be issued in the Merger to be approved for quotation on the Nasdaq National
Market prior to the Effective Time. Parent shall use its commercially reasonable
best efforts to cause shares of Parent Common Stock, when issued upon exercise
of Company Stock Options, to be approved for quotation on the Nasdaq National
Market.
SECTION 5.10. Form S-8. Parent shall file with the SEC, no later than 10
days after the Effective Time, a registration statement on Form S-8 relating to
Parent Common Stock issuable pursuant to assumed awards under the Company Stock
Option Plans and the Company's Employee Stock Purchase Plan (the "Company
ESPP").
SECTION 5.11. Conveyance Taxes. Parent and the Company shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications, or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated hereby that are
required or permitted to be filed on or before the Effective Time.
SECTION 5.12. Director and Officer Liability. From and after the Effective
Time, Parent will cause the Surviving Company to indemnify and hold harmless the
present and former officers and directors of the Company in respect of acts or
omissions occurring prior to the Effective Time to the extent provided under the
Company's certificate of incorporation and bylaws in effect on the date hereof.
For a period of six years after the Effective Time, Parent shall cause to be
maintained in effect the policies of directors' and officers' liability
insurance maintained by the Company for the benefit of those persons who are
covered by such policies at the Effective Time (or Parent and/or the Surviving
Company may substitute therefor policies of at least the same coverage with
respect to matters occurring prior to the Effective Time); provided, however,
that in no event shall Parent and/or the Surviving Company be required to expend
in excess of 150 percent of the annual premium currently paid by the Company for
such coverage, and provided further, that if the premium for such coverage
exceeds such amount, Parent and/or the Surviving Company shall purchase a policy
with the greatest coverage available for such 150 percent of the annual premium.
SECTION 5.13. Action by Parent and Company's Boards. Prior to the Effective
Time, the boards of directors of Parent and the Company shall each comply as
applicable with the provisions of the SEC's no-action letter dated January 12,
1999 addressed to Skadden, Arps, Slate, Meagher and Flom LLP relating to Rule
l6b of the Exchange Act.
SECTION 5.14. Composition of the Board of Directors. Parent's board of
directors currently consists of ten members, divided into three classes and the
members of each class of directors serve staggered three-year terms. At the
Effective Time, Parent shall cause (a) the size of its Board of Directors to be
increased to twelve members, and (b) the persons listed on Exhibit 5.14 to be
appointed to Parent's Board of Directors (each to be in such class as shall be
reasonably approved by the Company and Parent) to serve until such time as
successors are duly elected and qualified.
SECTION 5.15. Employee Benefits. Parent agrees that all employees of the
Company and its subsidiaries who continue employment with Parent, the Surviving
Company or any subsidiary thereof after the Effective Time (the "Continuing
Employees") shall be eligible to participate in Parent's employee benefit plans
and arrangements to the same extent as and on a basis no less favorable than
similarly situated employees of Parent. The Continuing Employees shall be given
credit for service with the Company and its subsidiaries for all purposes under
Parent's employee benefit plans and arrangements. With respect to the Continuing
Employees, Parent shall waive all pre-existing
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condition limitations in its health and welfare plans and shall give credit for
co-payments, deductibles and out-of-pocket maximums already incurred by the
Continuing Employees under the Company Employee Plans. Upon the Effective Time,
the Parent shall assume the Company ESPP and each outstanding option thereunder.
Each ESPP option so assumed by Parent shall continue to have, and be subject to
the same terms and conditions set forth in the ESPP, except that (a) the fair
market value per share of Company Common Stock at the beginning of each offering
period in effect as of the Effective Time shall be equal to the fair market
value per share of the Company's Common Stock at the beginning of each such
offering period divided by the Exchange Ratio, rounded up to the nearest whole
cent, and (b) no ESPP option shall be terminated by Parent prior to its normal
expiration in accordance with the terms of the ESPP. In the event that following
the expiration of all ESPP options, Parent terminates the Company ESPP,
Continuing Employees will be eligible to participate in the Parent Employees'
Stock Purchase Plan ("Parent ESPP") in accordance with the terms and conditions
of the Parent ESPP.
ARTICLE VI.
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to Obligations of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no proceedings
for that purpose and no similar proceeding in respect of the Company Proxy
Statement shall have been initiated or threatened by the SEC;
(b) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect; and there
shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger, which makes
the consummation of the Merger illegal;
(c) Tax Opinions. Parent and the Company shall have received opinions
of Morrison & Foerster LLP and Wilson Sonsini Goodrich & Rosati,
Professional Corporation, respectively, in form and substance reasonably
satisfactory to Parent and the Company, respectively, on the basis of
certain facts, representations and assumptions set forth in such opinion,
dated the Effective Time, to the effect that the Merger will be treated for
federal income tax purposes as a reorganization qualifying under the
provisions of Section 368(a) of the Code and that each of Parent, Merger
Sub and the Company will be a party to the reorganization within the
meaning of Section 368(b) of the Code; provided, however, that if the
counsel to either Parent or the Company does not render such opinion this
condition shall nonetheless be deemed to be satisfied with respect to such
party if counsel to the other party renders such opinion to such party;
(d) HSR Act. The waiting period (and any extension thereof) applicable
to the consummation of the Merger under the HSR Act shall have expired or
been terminated and any other applicable waiting period under any other
premerger notification statute of a foreign jurisdiction, to the extent
material, has either expired or been terminated; and
(e) Stockholder Approval. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the stockholders of the
Company.
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SECTION 6.02. Additional Conditions to Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to effect the Merger are also
subject to the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company contained in this Agreement shall be true and correct on and
as of the Effective Time, except (i) for changes contemplated by this
Agreement, (ii) those representations and warranties which address matters
only as of a particular date (which shall remain true and correct as of
such date (subject to the qualifications in clause (iii) below)); and (iii)
where the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality" or
"material adverse effect" set forth therein) would not have a Company
Material Adverse Effect, with the same force and effect as if made on and
as of the Effective Time, and Parent and Merger Sub shall have received a
certificate to such effect signed by the President and Chief Financial
Officer of the Company;
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time, and Parent and Merger Sub shall have received
a certificate to such effect signed by the President and Chief Financial
Officer of the Company;
(c) Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred a Company Material Adverse Effect.
SECTION 6.03. Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. The representations and warranties
of Parent and Merger Sub contained in this Agreement shall be true and
correct on and as of the Effective Time, except (i) for changes
contemplated by this Agreement, (ii) those representations and warranties
which address matters only as of a particular date (which shall remain true
and correct as of such date (subject to the qualifications in clause (iii)
below)), and (iii) where the failure of such representations and warranties
to be so true and correct (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth therein) would not
have, individually or in the aggregate, a Parent Material Adverse Effect,
with the same force and effect as if made on and as of the Effective Time,
and the Company shall have received a certificate to such effect signed by
the President and Chief Financial Officer of Parent;
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
them on or prior to the Effective Time, and the Company shall have received
a certificate to such effect signed by the President and Chief Financial
Officer of Parent;
(c) Material Adverse Effect. Since the date of this Agreement, there
shall not have been a Parent Material Adverse Effect.
ARTICLE VII.
TERMINATION
SECTION 7.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company:
(a) by mutual written consent duly authorized by the boards of
directors of Parent and the Company; or
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(b) by either Parent or the Company if the Merger shall not have been
consummated by October 31, 2000 (the "Final Date") (provided that the right
to terminate this Agreement under this Section 7.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been a principal cause of or resulted in the failure of the
Merger to occur on or before such date and such action or failure to act
constitutes a material breach of this Agreement); or
(c) by either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a non-appealable final order, decree or ruling
or taken any other action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger, except if the
party relying on such order, decree or ruling or other action has not
complied with its obligations under Sections 5.04 and 5.07; or
(d) by Parent or the Company if, at the Company Stockholders' Meeting
(including any adjournment or postponement thereof), the requisite vote of
the stockholders of the Company as required by the DGCL (the "Requisite
Vote") shall not have been obtained; provided, however, that the right to
terminate this Agreement under this Section 7.01(d) shall not be available
to the Company where the failure to obtain the Requisite Vote shall have
been caused by the Company's breach of this Agreement (subject solely to
any actions taken by the Company in connection with a Superior Proposal to
the extent permitted by and pursuant to Section 4.03(a)); or
(e) by Parent, if (i) the board of directors of the Company shall
withdraw, modify or change its recommendation of this Agreement or the
Merger in a manner adverse to Parent or shall have resolved to do any of
the foregoing; (ii) the board of directors of the Company shall have
recommended to the stockholders of the Company an Alternative Transaction
(as defined in Section 7.03(d)); or (iii) a tender offer or exchange offer
for 15% or more of the outstanding shares of Company Common Stock is
commenced (other than by Parent or an affiliate of Parent), and the board
of directors of the Company recommends that the stockholders of the Company
tender their shares in such tender or exchange offer;
(f) by the Company, prior to the receipt of the Requisite Vote, if the
Company receives, without violating its obligations under Section 4.03
hereof, a Superior Proposal; provided that in order for the termination of
this Agreement to be deemed effective pursuant to this paragraph (f), the
Company shall have complied with all its obligations under Section 4.03
hereof and with applicable requirements of Section 7.03 hereof, including
payment of the Fee Payable By Company (as defined in Section 7.03(b)
hereof) pursuant to Section 7.03(b) hereof;
(g) by Parent or the Company, upon a material breach of any
representation, warranty, covenant or agreement on the part of the Company
or Parent, respectively, set forth in this Agreement such that the
conditions set forth in Section 6.02(a) or 6.02(b), or Section 6.03(a) or
6.03(b), would not be satisfied, provided, that if such breach is curable
through the exercise of commercially reasonable efforts, then the other
party may not terminate pursuant to this Section 7.01(g) in respect of such
breach if such breach is curable and shall have been cured within 30 days
following notice by the other party of such breach, provided the breaching
party continues to use commercially reasonable efforts to cure such breach
during the 30 day period (it being understood that (i) the other party may
not terminate this Agreement pursuant to this Section 7.01(g) after notice
of such breach if such breach shall have been cured within 30 days or the
party seeking to terminate shall then be in material breach of this
Agreement and (ii) no cure period shall be required for a breach which by
its nature cannot be cured).
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SECTION 7.02. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.01, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or stockholders except (i) as set forth in
Sections 7.03 and 8.01 hereof, and (ii) nothing herein shall relieve any party
from liability for any willful breach hereof.
SECTION 7.03. Fees and Expenses.
(a) Except as set forth in this Section 7.03, (i) all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, if the Merger is not
consummated, or (ii) if the Merger is consummated, then the Surviving Company
shall pay all such fees and expenses; provided however, that Parent and the
Company shall share equally all fees and expenses, other than attorneys' fees,
incurred in relation to the printing and filing of the Company Proxy Statement
(including any preliminary materials related thereto) and the Registration
Statement (including financial statements and exhibits) and any amendments or
supplements thereto.
(b) The Company shall pay Parent a fee of $350 million in cash (the "Fee
Payable By Company"), less the Expenses (as defined in Section 7.03(c) hereof)
to the extent that the Expenses have already been paid to Parent pursuant to
Section 7.03(c) hereof, upon the earliest to occur of the following events:
(i) the termination by Parent or the Company pursuant to Section
7.01(d); provided, that an Alternative Transaction has been publicly
announced at or prior to the time the Requisite Vote is sought to be
obtained and either: (i) such proposed Alternative Transaction has not been
withdrawn by the Third Party (as defined below) or otherwise affirmatively
rejected by the Board of Directors of the Company; or (ii) notwithstanding
the withdrawal and/or rejection of such Alternative Transaction as provided
in the foregoing clause (i), an Alternative Transaction with such Third
Party is consummated within twelve (12) months of the date the Requisite
Vote is sought to be obtained as provided above; or
(ii) the termination of this Agreement by Parent pursuant to Section
7.01(e); or
(iii) the termination of this Agreement by Company pursuant to Section
7.01(f).
(c) The Company shall pay Parent an amount equal to $15 million, which the
parties agree represents a reasonable estimate of the out-of-pocket expenses
that Parent will incur in connection with the transactions contemplated by this
Agreement and which amount shall represent the entire amount that Parent is
entitled to receive with respect to such expenses, including, but not limited
to, fees and expenses of Parent's counsel, accountants and financial advisers
(the "Expenses") upon the termination by Parent or the Company pursuant to
Section 7.01(d) if payment of the Fee Payable By Company is not required in
connection with such termination by Section 7.03(b)(i) above.
(d) As used herein, "Alternative Transaction" means any of the following:
(i) transaction pursuant to which any person (or group of persons) other than
Parent or its affiliates (a "Third Party") seeks to acquire, directly or
indirectly, more than 25 percent of the outstanding Shares, whether from the
Company or pursuant to a tender offer or exchange offer or otherwise, (ii) a
merger or other business combination involving the Company pursuant to which any
Third Party acquires more than 25 percent of the outstanding equity securities
of the Company or the entity surviving such merger or business combination,
(iii) any other transaction pursuant to which any Third Party acquires control
of all or substantially all of the assets of the Company (including for this
purpose the outstanding equity securities of the Company's subsidiaries), (iv)
the adoption by the Company of a plan of liquidation, the declaration or payment
by the Company of an extraordinary dividend on any of its shares of capital
stock or the effectuation by the Company of a recapitalization
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or other type of transaction that would involve either a change in the Company's
outstanding capital stock or a distribution of assets of any kind to the holders
of such capital stock or (v) the repurchase by the Company or any of its
subsidiaries of shares of the Company's capital stock representing at least 25
percent or more of the aggregate voting power of all voting securities of the
Company; provided, however, that the term Alternative Transaction shall not
include any acquisition of securities by a broker dealer in connection with a
bona fide public offering of such securities.
(e) Parent shall pay the Company a fee of $100 million (the "Fee Payable By
Parent") upon a termination of this Agreement pursuant to Section 7.01(b);
provided that the Fee Payable by Parent shall not be payable if either (i) any
of the conditions set forth in Section 6.02 is not satisfied as of the Final
Date; or (ii) the failure to effect the Closing prior to the Final Date is not
solely the result of the failure of any of the conditions set forth in Sections
6.01(c), 6.01(e) or 6.03 hereof.
(f)(i) The Fee Payable By Company payable pursuant to Section 7.03(b)(ii)
and 7.03(b)(iii) hereof, Expenses payable pursuant to Section 7.03(c) hereof, or
the Fee Payable By Parent payable pursuant to Section 7.03(e) hereof shall be
paid within one business day after the termination of the Agreement.
(ii) The Fee Payable By Company payable pursuant to Section 7.03(b)(i)
hereof shall be paid within one business day after the later of (x) the
termination of the Agreement and (y) the date on which the contingencies
described in Section 7.03(b)(i) shall have been satisfied.
ARTICLE VIII.
GENERAL PROVISIONS
SECTION 8.01. Effectiveness of Representations, Warranties and Agreements;
Knowledge, Etc.
(a) Except as otherwise provided in this Section 8.01, the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 7.01(a) through (g), as the case may be, except that the
agreements set forth in Article I, Section 5.07(b) and Section 5.11 shall
survive the Effective Time indefinitely and the agreements and liabilities set
forth or otherwise described in Section 7.03 shall survive termination
indefinitely. The Confidentiality Agreement shall survive termination of this
Agreement as provided therein.
(b) Any disclosure made with reference to one or more Sections of the
Company Disclosure Schedule or the Parent Disclosure Schedule shall be deemed
disclosed with respect to each other section therein as to which such disclosure
is relevant provided that such relevance is reasonably apparent.
SECTION 8.02. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or mailed if delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt
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requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like changes of address which shall be
effective upon receipt):
(a) If to Parent or Merger Sub:
JDS Uniphase Corporation
3 Baypointe Parkway
San Jose, CA 95134
Attention: Michael C. Phillips
Facsimile No.: (408) 954-0540
Telephone No.: (408) 434-1800
With copies to:
Morrison & Foerster LLP
5 Market Street
San Francisco, CA 94105
Attention: John W. Campbell
Fax: (415) 268-7522
Telephone No.: (415) 268-7000
(b) If to the Company:
E-TEK Dynamics, Inc.
65 Lundy Avenue
San Jose, CA 95131
Attention: William N. Gerson
Fax: (408) 273-6342
Telephone No.: (408) 546-5000
With copies to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
Attention: Larry W. Sonsini
Daniel R. Mitz
Fax: (650) 493-6811
Telephone No.: (650) 493-9300
SECTION 8.03. Certain Definitions. For purposes of this Agreement, the
term:
(a) "AFFILIATES" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person;
(b) "BUSINESS DAY" means any day other than a day on which banks in
San Francisco are required or authorized to be closed;
(c) "CONTROL" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock,
as trustee or executor, by contract or credit arrangement or otherwise;
(d) "KNOWLEDGE" means, in the case of Parent, the actual knowledge of
Parent's Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer and General Counsel after reasonable inquiry, and, in the case of
the Company, the actual knowledge of the Company's
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Chief Executive Officer, Director, Strategy and Business Development, Chief
Financial Officer and General Counsel after reasonable inquiry;
(e) "PERSON" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(f) "SUBSIDIARY" or "SUBSIDIARIES" of the Company, the Surviving
Company, Parent or any other person means (i) a corporation or other entity
in which the Company, the Surviving Company, Parent or such other person,
as the case may be, owns, directly or indirectly, 50% or more of the shares
of capital stock or other securities having ordinary voting power to elect
the board of directors or any similar governing body or (ii) any
partnership, limited liability company or other unincorporated entity of
which the Company, the Surviving Company, Parent or such other person, as
the case may be, is the general partner or of which it owns, directly or
indirectly, securities or other ownership interests which entitle them to
receive more than 50% of the distributions made by such partnership,
limited liability company or other entity.
SECTION 8.04. Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective boards of directors
at any time prior to the Effective Time; provided, however, that, after approval
of the Merger by the stockholders of the Company, no amendment may be made which
by law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 8.05. Waiver. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
SECTION 8.06. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.07. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 8.08. Entire Agreement. This Agreement (including the documents and
instruments referred to herein) constitute the entire agreement and supersede
all prior agreements and undertakings (other than the Stock Option Agreement and
the Confidentiality Agreement), both written and oral, among the parties, or any
of them, with respect to the subject matter hereof and, except as otherwise
expressly provided herein, are not intended to confer upon any other person any
rights or remedies hereunder.
SECTION 8.09. Assignment, Merger Sub. This Agreement shall not be assigned
by operation of law or otherwise, except that Parent and Merger Sub may assign
all or any of their rights hereunder to any affiliate provided that no such
assignment shall relieve the assigning party of its obligations hereunder.
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SECTION 8.10. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, except as provided in Sections 5.12 and 5.14 hereof.
SECTION 8.11. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware
applicable to contracts executed and fully performed within the State of
Delaware, without regard to the conflicts of laws provisions thereof.
SECTION 8.12. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 8.13. WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND THE
COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER
BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement and Plan of Reorganization and Merger to be executed as of the date
first written above by their respective officers thereunto duly authorized.
PARENT
By: /s/ MICHAEL C. PHILLIPS
------------------------------------
Name: Michael C. Phillips
Title: Senior Vice President, Business
Development, General Counsel
MERGER SUB
By: /s/ CHRISTOPHER S. DEWEES
------------------------------------
Name: Christopher S. Dewees
Title: President, Treasurer and
Secretary
COMPANY
By: /s/ MICHAEL J. FITZPATRICK
------------------------------------
Name: Michael J. Fitzpatrick
Title: Chairman of the Board,
President and Chief Executive
Officer
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ANNEX B
COMPANY STOCK OPTION AGREEMENT
BY AND BETWEEN
JDS UNIPHASE CORPORATION,
AND
E-TEK DYNAMICS, INC.
DATED AS OF JANUARY 17, 2000
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COMPANY STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Stock Option Agreement"), dated as of
January 17, 2000, is by and between JDS Uniphase Corporation, a Delaware
corporation ("Grantee"), and E-TEK Dynamics, Inc., a Delaware corporation
("Issuer").
RECITALS
A. Grantee and Issuer propose to enter into an Agreement and Plan of
Reorganization and Merger, dated as of the date hereof (the "Merger Agreement"),
which has been executed in connection with this Agreement (each capitalized term
used herein without definition shall have the meaning specified in the Merger
Agreement).
B. As a condition to Grantee's entering into the Merger Agreement and in
consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. Grant of Option. Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 19.9% as of the date hereof, as adjusted in accordance with the provisions of
Section 5 of this Agreement, of the outstanding shares of common stock of the
Issuer, par value $0.001 per share (the "Common Stock"), fully paid and
nonassessable, at a purchase price of $211.41 per share, (such price, as
adjusted if applicable, the "Option Price").
2. Exercise of Option.
(a) Exercise. Grantee may exercise the Option, in whole or part, and from
time to time, if, but only if, a Triggering Event (as hereinafter defined) shall
have occurred prior to the occurrence of an Option Termination Event (as
hereinafter defined).
(b) Option Termination Events. The term "Option Termination Event" shall
mean any of the following events: (i) immediately prior to the Effective Time of
the Merger; (ii) termination of the Merger Agreement pursuant to Section 7.01 of
the Merger Agreement (other than where a Triggering Event has occurred); or
(iii) one year following any termination of the Merger Agreement where a
Triggering Event has occurred (or if, at the expiration of such one year period
the Option cannot be exercised by reason of any applicable judgment, decree,
order, law or regulation, 10 business days after such impediment to exercise
shall have been removed or shall have become final and not subject to appeal).
Notwithstanding the foregoing, the Option may not be exercised if there has not
been a Triggering Event, or Grantee is in material breach of its representation
or warranties, or in material breach of any of its covenants or agreements
contained in this Agreement or the Merger Agreement.
(c) Triggering Events. The term "Triggering Event" shall mean any event
which would result in the Fee Payable By Company being unconditionally payable
to Grantee pursuant to Section 7.03(b) of the Merger Agreement.
(d) Notice of Exercise; Closing. In the event Grantee is entitled to and
wishes to exercise the Option, it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 10 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
provided, that if the closing of the purchase and sale pursuant to the Option
(the "Closing") cannot reasonably be consummated by reason of any applicable
judgment, decree, order, law or regulation, the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on which the
restriction
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on consummation has expired or been terminated; and provided further, without
limiting the foregoing, that if, prior notification to or approval of any
regulatory agency is reasonably required in connection with such purchase,
Grantee or Issuer, as the case may be, shall promptly file the required notice
or application for approval and shall expeditiously process the same, and the
period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification periods have expired or
been terminated or such approvals have been obtained and any requisite waiting
period or periods shall have passed. Any exercise of the Option shall be deemed
to occur on the Notice Date relating thereto. Notwithstanding this subsection
(d), in no event shall any Closing Date be more than two years after the related
Notice Date, and if the Closing Date shall not have occurred within two years
after the related Notice Date due to the failure to obtain any such required
approval, the exercise of the Option effected on the Notice Date shall be deemed
to have expired.
(e) Purchase Price. At the Closing referred to in subsection (d) above,
Grantee shall pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a bank account
shall not preclude Grantee from exercising the Option.
(f) Maximum Proceeds. If Grantee, or any of its wholly-owned subsidiaries,
receives an aggregate amount in excess of six hundred million dollars
($600,000,000.00) from:
(i) the Fee Payable By Company pursuant to Section 7.03 of the Merger
Agreement, (ii) proceeds, if any, from the sale to any entity that is not a
wholly-owned subsidiary of Grantee of shares purchased pursuant to the
exercise of the Option in excess of the aggregate Option Price for such
shares; (iii) any dividends received by Grantee declared on the shares
purchased pursuant to the exercise of the Option; and (iv) proceeds, if
any, received pursuant to Section 6(b) and 7 hereof, less the aggregate
Option Price paid by Grantee, or any of its wholly-owned subsidiaries, for
any shares purchased pursuant to the exercise of the Option being purchased
by Issuer pursuant to Section 6(b) and 7 hereof, then Grantee shall notify
Issuer within three business days of receipt of such excess proceeds and
all such excess proceeds shall promptly be remitted by Grantee to Issuer by
wire transfer to a bank account designated by Issuer.
(g) Issuance of Common Stock. At the Closing, simultaneously with the
delivery of immediately available funds as provided in subsection (e) of this
Section 2, Issuer shall deliver to Grantee a certificate or certificates
representing the number of shares of Common Stock purchased by the Grantee and,
if the Option is exercised in part only, a new Option evidencing the rights of
Grantee thereof to purchase the balance of the shares purchasable hereunder, and
the Grantee shall deliver to Issuer a copy of this Agreement and a letter
agreeing that Grantee will not offer to sell or otherwise dispose of such shares
in violation of applicable law or the provisions of this Agreement.
(h) Legend. Certificates for Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate are
subject to certain provisions of an agreement between the registered holder
hereof and Issuer and to resale restrictions arising under the Securities
Act of 1933, as amended. A copy of such agreement is on file at the
principal office of Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if Grantee shall
have delivered to Issuer a copy of a letter from the staff of the SEC, or an
opinion of
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counsel, in form and substance reasonably satisfactory to Issuer, to the effect
that such legend is not required for purposes of the Securities Act; (ii) the
reference to the provisions of this Agreement in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Record Grantee; Expenses. Upon the giving by Grantee to Issuer of the
written notice of exercise of the Option provided for under subsection (d) of
this Section 2 and the tender of the applicable purchase price in immediately
available funds, Grantee shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of Issuer shall then be closed or that certificates,
representing such shares of Common Stock shall not then be actually delivered to
Grantee. Issuer shall pay all expenses and any and all United States federal,
state and local taxes and other charges that may be payable in connection with
the preparation, issuance and delivery of stock certificates under this Section
2 in the name of Grantee or its assignee, transferee or designee.
3. Reservation of Shares. Issuer agrees: (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but unissued or
treasury shares of Common Stock (and other securities issuable pursuant to
Section 5(a)) so that the Option may be exercised without additional
authorization of Common Stock (or such other securities) after giving effect to
all other options, warrants, convertible securities and other rights to purchase
Common Stock (or such other securities); (ii) that it will not, by charter
amendment or through reorganization, consolidation, merger, dissolution or sale
of assets, or by any other voluntary act, avoid or seek to avoid the observance
or performance of any of the covenants, stipulations or conditions to be
observed or performed hereunder by Issuer; and (iii) promptly to take all action
as may from time to time be reasonably required (including without limitation
complying with all premerger notification, reporting and waiting periods under
the HSR Act) in order to permit Grantee to exercise the Option and Issuer duly
and effectively to issue shares of Common Stock pursuant hereto.
4. Lost Options. Upon receipt by Issuer of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Agreement, and (in
the case of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this Agreement, if
mutilated, Issuer will execute and deliver a new Agreement of like tenor and
date. Any such new Agreement executed and delivered shall constitute the sole
contractual obligation on the part of Issuer, and the Agreement so lost, stolen,
destroyed or mutilated shall be deemed cancelled and of no further force and
effect.
5. Adjustment Upon Changes in Capitalization. The shares of Common Stock
purchasable upon the exercise of the Option shall be subject to adjustment from
time to time as provided in this Section 5.
In the event of any change in Common Stock by reason of stock dividends,
splits, mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares or other similar transactions, then (i) the type and number
of shares of Common Stock purchasable upon exercise hereof shall be
appropriately adjusted so that Grantee shall receive upon exercise of the Option
and payment of the aggregate Option Price hereunder the number and class of
shares or other securities or property that Grantee would have received in
respect of Common Stock if the Option had been exercised in full immediately
prior to such event, or the record date therefor, as applicable, and (ii) the
Option Price shall be adjusted by multiplying the Option Price by a fraction,
the numerator of which shall be equal to the aggregate number of shares of
Common Stock purchasable prior to the
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adjustment and the denominator of which shall be equal to the aggregate number
of shares of Common Stock purchasable immediately after the adjustment.
6. Registration Rights.
(a) Following the Closing Date, Issuer shall, at the written request of
Grantee, subject to subsection (b) below, delivered at any time on or prior to
an Option Termination Event, promptly prepare and file a shelf registration
statement under the Securities Act (including a shelf registration under Rule
415 of the Securities Act or similar provision, if available) covering any
shares issued and issuable pursuant to this Option and shall use its reasonable
best efforts to cause such registration statement to become effective and remain
current in order to permit the sale or other disposition of any shares of Common
Stock issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Grantee agrees to
cause, and to cause any underwriters of any sale or other disposition to cause,
any sale or other disposition pursuant to such registration to be effected on a
widely distributed basis so that upon consummation thereof no purchaser or
transferee will beneficially own more than 4.9% of the then-outstanding voting
power of Issuer. Issuer will use its reasonable best efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 180 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. The obligations of Issuer
hereunder to file a registration statement and to maintain its effectiveness may
be suspended for up to 90 calendar days in the aggregate during any 360 day
period if the Board of Directors of Issuer shall have determined in good faith
that the filing of such registration statement or the maintenance of its
effectiveness would require the premature disclosure of material nonpublic
information that would adversely affect Issuer and interfere with or adversely
affect any pending or proposed offering of securities of Issuer or any other
material transaction involving Issuer. Grantee for a period of three years
following such first request shall have the right to demand a second such
registration if reasonably necessary to effect such sales or dispositions. The
foregoing notwithstanding, if, at the time of any request by Grantee for
registration of Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering of shares of Common Stock, and if in
the good faith judgment of the managing underwriter or managing underwriters,
or, if none, the sole underwriter or underwriters, of such offering the sale of
the Grantee's Option Shares would interfere with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option Shares otherwise
to be covered in the registration statement contemplated hereby may be reduced;
provided, however, that after any such required reduction the number of Option
Shares to be sold by Grantee shall constitute at least 25% of the total number
of shares to be sold by Issuer in the aggregate; and provided further, that if
such reduction occurs, then the Issuer shall file a registration statement for
the balance as promptly as practicable and no reduction shall thereafter occur
(and such registration shall not be charged against Grantee). Grantee shall
provide all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. If requested by any Grantee in
connection with such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements for the Issuer.
(b) Upon request for registration, the Issuer will have the option
exercisable by written notice delivered to Grantee within five business days
after receipt of the written request for registration, to purchase all, but not
some, of the Option Shares for cash at the price (the "Purchase Price") equal to
the product of (i) the number of Option Shares and (ii) the per share average of
the closing sale prices of the Issuer's Common Stock on the Nasdaq Stock Market
for the ten trading days immediately preceding the date of the written request
for registration. Any such purchase of shares of Option Shares hereto will take
place at a closing to be held at the principal executive offices of the Issuer
or its counsel at any reasonable date and time designated by Grantee within five
business days
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after the delivery of such notice. The payment for the Option Shares to be
purchased under this subsection (b) shall be made by delivery at the time of
such closing of the Purchase Price in immediately available funds.
7. Repurchase of Option and Option Shares.
(a) Within ten business days following the occurrence of a Repurchase Event
(as defined below), Issuer shall (i) deliver an offer (a "Repurchase Offer") to
repurchase the Option from Grantee at a price (the "Option Repurchase Price")
equal to the amount by which (A) the Alternative Transaction Price (as defined
below) exceeds (B) the Option Price, multiplied by the number of shares for
which the Option may then be exercised, and (ii) deliver an offer (also, a
"Repurchase Offer") to repurchase the Option Shares from Grantee at a price (the
"Option Share Repurchase Price") equal to the Alternative Transaction Price
multiplied by the number of Option Shares then held by such Grantee. The term
"Alternative Transaction Price" shall mean, as of any date for the determination
thereof, the price per share of Common Stock paid pursuant to the Alternative
Transaction or, in the event of a sale of assets of Issuer, the last per-share
sale price of Common Stock on the fourth trading day following the announcement
of such sale. If the consideration paid or received in the Alternative
Transaction shall be other than in cash, the value of such consideration shall
be based on the average of the closing trading prices for such securities on
their principal trading market during the five business days immediately
preceding the payment or receipt of such consideration, or, if such securities
are not traded on a market or exchange, determined by a nationally recognized
investment banking firm selected by Grantee, which determination shall be
conclusive for all purposes of this Agreement.
(b) Upon the occurrence of a Repurchase Event and whether or not Issuer
shall have made a Repurchase Offer under Section 7(a), (i) at the request (the
date of such request being the "Option Repurchase Request Date") of Grantee
delivered prior to an Option Termination Event, Issuer shall repurchase the
Option from Grantee in cash at the Option Repurchase Price, and (ii) at the
request (the date of such request being the "Option Share Repurchase Request
Date") of Grantee delivered prior to an Option Termination Event, Issuer shall
repurchase such number of the Option Shares from the Grantee as Grantee shall
designate at the Option Share Repurchase Price.
(c) Grantee may accept Issuer's Repurchase Offer under Section 7(a) or may
exercise its right to require Issuer to repurchase the Option and/or any Option
Shares pursuant to Section 7(b) by a written notice or notices stating that
Grantee elects to accept such offer or to require Issuer to repurchase the
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days following receipt of a notice under this Section 7(c) and the surrender to
Issuer of this Agreement and/or Certificates for Option Shares, as applicable,
and the occurrence of a Repurchase Event, Issuer shall deliver or cause to be
delivered to Grantee the Option Repurchase Price and/or to the Grantee the
Option Share Repurchase Price and/or the portion thereof that Issuer is not then
prohibited from so delivering under applicable law.
(d) Issuer hereby undertakes to use its reasonable best efforts to obtain
all required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish any repurchase contemplated by
this Section 7. Nonetheless, to the extent that Issuer is prohibited under
applicable law, from repurchasing the Option and/or any Option Shares in full,
Issuer shall immediately so notify Grantee and thereafter deliver or cause to be
delivered, from time to time, to Grantee the portion of the Option Repurchase
Price and the Option Share Repurchase Price, respectively, that it is no longer
prohibited from delivering, in every case within five business days after the
date on which Issuer is no longer so prohibited; provided, however, that if
Issuer at any time after delivery of a notice of repurchase pursuant to Section
7(c) is prohibited under applicable law, from delivering to Grantee the Option
Repurchase Price or the Option Share Repurchase Price,
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respectively, in full, Grantee may revoke its notice of repurchase of the Option
or the Option Shares either in whole or in part whereupon, in the case of a
revocation in part, Issuer shall promptly (i) deliver to Grantee that portion of
the Option Repurchase Price or the Option Share Repurchase Price that Issuer is
not prohibited from delivering after taking into account any such revocation and
(ii) deliver, as appropriate, either (A) to Grantee, a new Agreement evidencing
the right of Grantee to purchase that number of shares of Common Stock equal to
the number of shares of Common Stock purchasable immediately prior to the
delivery of the notice of repurchase less the number of shares of Common Stock
covered by the portion of the Option repurchased or (B) to the Grantee, a
certificate for the number of Option Shares covered by the revocation. If an
Option Termination Event shall have occurred prior to the date of the notice by
Issuer described in the first sentence of this subsection (d), or shall be
scheduled to occur at any time before the expiration of a period ending on the
thirtieth day after such date, Grantee shall nonetheless have the right to
exercise the Option until the expiration of such 30-day period.
(e) The term "REPURCHASE EVENT" shall mean the occurrence of a Triggering
Event prior to the occurrence of an Option Termination Event followed by the
consummation of an Alternative Transaction within twelve months after such
Triggering Event.
8. Substitute Option in the Event of Corporate Change. (a) In the event
that prior to an Option Termination Event, Issuer shall enter into an agreement
(i) to consolidate with or merge into any person, other than Grantee or one of
its subsidiaries, and shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) to permit any person, other than Grantee or
one of its subsidiaries, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the
then-outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other person or cash or any other property or
the then outstanding shares of Common Stock shall after such merger represent
less than 50% of the outstanding shares and share equivalents of the merged
company, or (iii) to sell or otherwise transfer all or substantially all of its
assets to any person, other than Grantee or one of its subsidiaries, then, and
in each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "SUBSTITUTE OPTION"), for the publicly
traded common stock of either (x) the Acquiring Corporation (as hereinafter
defined) or (y) any person that controls the Acquiring Corporation; provided
that, if both the Acquiring Corporation and the person that controls the
Acquiring Corporation have common stock that is publicly traded (or neither do)
Grantee may elect to substitute either the common stock of the Acquiring
Corporation or the person that controls the Acquiring Corporation.
(b) "ACQUIRING CORPORATION" shall mean any of (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or surviving
person, or (iii) the transferee of all or substantially all of Issuer's assets.
(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to Grantee. The issuer of the Substitute Option shall
also enter into an agreement with Grantee in substantially the same form as this
Agreement, which agreement shall be applicable to the Substitute Option.
(d) Issuer shall not enter into any transaction described in subsection (a)
of this Section 8 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
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9. Representations and Warranties of the Issuer. Issuer hereby represents
and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to authorize this Agreement
or to consummate the transactions so contemplated. This Agreement has been
duly and validly executed and delivered by Issuer. This Agreement is the
valid and legally binding obligation of Issuer, enforceable against Issuer
in accordance with its terms.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly
issued, fully paid, nonassessable, and will be delivered free and clear of
all claims, liens, encumbrances and security interests, and not subject to
any preemptive rights.
(c) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation pursuant to any provisions of the
Certificate of Incorporation or Bylaws of Issuer or the incorporation
documents of any of its subsidiaries (as that term is defined in the Merger
Agreement), subject to obtaining any approvals or consents contemplated
hereby, result in any violation of any loan or credit agreement, note,
mortgage, indenture, lease, plan, or other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Issuer or
its subsidiaries or their respective properties or assets which violation
would have, individually or in the aggregate, a Material Adverse Effect on
the Issuer.
(d) The Board of Directors of Issuer has taken all necessary action to
approve this Agreement and the consummation of the transactions
contemplated hereby and the provisions of Section 243 of the Delaware
General Corporation Law will not apply to this Agreement or the purchase of
shares of Issuer Common Stock pursuant to this Agreement.
10. Application for Regulatory Approval. Each of Grantee and Issuer will
use its reasonable best efforts to make all filings with, and to obtain consents
of, all third parties and governmental authorities necessary to the consummation
of the transactions contemplated by this Agreement, including without limitation
making application to list the shares of Common Stock issuable hereunder on the
Nasdaq Stock Market upon official notice of issuance.
11. Specific Performance. The parties hereto acknowledge that damages would
be an inadequate remedy for a breach of this Agreement by either party hereto
and that the obligations of the parties hereto shall be enforceable by either
party hereto through injunctive or other equitable relief.
12. Separability of Provisions. If any term, provision, covenant, or
restriction, contained in this Agreement is held by a court or a federal or
state regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, and covenants and
restrictions contained in this Agreement shall remain in full force and effect,
and shall in no way be affected, impaired or invalidated.
13. Notices. All notices, claims, demands and other communications
hereunder shall be deemed to have been duly given or made when delivered in
person, by registered or certified mail
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(postage prepaid, return receipt requested), by overnight courier, or by
facsimile at the respective addresses of the parties set forth in the Merger
Agreement.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed to be an original, but all of which
shall constitute one and the same agreement.
16. Expenses. Except as otherwise expressly provided herein or in the
Merger Agreement, each of the parties hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
17. Entire Agreement. Except as otherwise expressly provided herein or in
the Merger Agreement and the Confidentiality Agreement, this Agreement contains
the entire agreement between the parties with respect to the transactions
contemplated hereunder and supersedes all prior arrangements or understandings
with respect thereof, written or oral. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein. Any provision of this Agreement
may be waived only in writing at any time by the party that is entitled to the
benefits of such provision. This Agreement may not be modified, amended,
altered, or supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
18. Assignment. Neither of the parties may sell, transfer, assign or
otherwise dispose of any of its rights or obligations under this Agreement or
the Option created hereunder to any other person, without the express written
consent of the other party, except that the rights and obligations hereunder
will inure to the benefit of and be binding upon any successor of a party
hereto; provided, however, that Grantee shall be entitled to transfer its rights
or obligations under this Agreement to a wholly-owned subsidiary of Grantee,
provided such subsidiary remains a wholly-owned subsidiary.
19. Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise. Nothing contained
in this Agreement shall be deemed to authorize Issuer or Grantee to breach any
provision of the Merger Agreement.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be
signed by their respective officers hereunto duly authorized, all as of the date
first written above.
ISSUER
By: /s/ MICHAEL J.
FITZPATRICK
---------------------------------
Name: Michael J. Fitzpatrick
Title: Chairman of the Board,
President and Chief Executive
Officer
GRANTEE
By: /s/ MICHAEL C. PHILLIPS
---------------------------------
Name: Michael C. Phillips
Title: Senior Vice President,
Business
Development, General Counsel
B-9
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ANNEX C
FORM OF VOTING AGREEMENT
DATED JANUARY 17, 2000
<PAGE> 136
VOTING AGREEMENT
This VOTING AGREEMENT (the "Agreement") is made and entered into as of
January 17, 2000, between and among JDS Uniphase Corporation, a corporation
incorporated under the laws of the State of Delaware ("JDSU"), and the
undersigned stockholder (the "Stockholder") of E-TEK Dynamics, Inc., a
corporation organized under the laws of the State of Delaware ("Rainbow"). All
capitalized terms herein not otherwise defined shall have the meaning ascribed
to them in the Merger Agreement (as defined below).
RECITALS
A. Pursuant to an Agreement and Plan of Reorganization and Merger dated as
of the date hereof (the "Merger Agreement") by and among JDSU, Rainbow
Acquisition, Inc. a corporation organized under the laws of the State of
Delaware ("Sub") and wholly owned subsidiary of JDSU, and Rainbow, Sub is
merging with and into Rainbow (the "Merger") and Rainbow, as the surviving
corporation of the Merger, will thereby become a wholly owned subsidiary of
JDSU;
B. Stockholder is the beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of the shares
of the outstanding Common Stock, $0.001 par value per share, of Rainbow in the
amounts indicated on the final page of this Agreement (the "Shares"); and
C. In consideration of the execution of the Merger Agreement by JDSU,
Stockholder agrees (i) not to transfer or otherwise dispose of any of its
Shares, or any other shares of capital stock of Rainbow acquired by such
Stockholder hereafter and prior to the Expiration Date (as defined in Section
1.1 below) and (ii) agrees to vote its Shares and any other such shares of
capital stock of Rainbow in favor of approval of the Merger.
NOW, THEREFORE, the parties agree as follows:
1. Agreement to Retain Shares.
1.1 Transfer and Encumbrance. Stockholder agrees to be subject to such
Stockholder's Proxy (as defined in Section 3) and agrees not to transfer (except
as may be specifically required by court order), sell, exchange, or pledge prior
to the Expiration Date or otherwise dispose of or encumber Stockholder's Shares
or any New Shares (as defined in Section 1.2) prior to the Expiration Date, or
to make any offer or agreement relating thereto, at any time prior to the
Expiration Date. As used herein, the term "Expiration Date" shall mean the
earlier to occur of (i) the Effective Time (as such term is defined in the
Merger Agreement) and (ii) the date on which the Merger Agreement is terminated
in accordance with its terms (including any extensions to the Merger Agreement,
as provided for therein).
1.2 New Shares. Stockholder agrees that any shares of capital stock of
Rainbow that such Stockholder purchases or with respect to which Stockholder
otherwise acquires beneficial ownership after the date of this Agreement and
prior to the Expiration Date ("New Shares") shall be subject to the terms and
conditions of this Agreement to the same extent as if they constituted Shares.
2. Agreement to Vote Shares. At every meeting of the stockholders of
Rainbow called with respect to any of the following, and at every adjournment
thereof, and on every action or approval by written consent of the stockholders
of Rainbow with respect to any of the following, Stockholder agrees such
Stockholder shall vote Stockholder's Shares and any New Shares in favor of
approval of the Merger Agreement, the Merger, and the transactions contemplated
thereby. This Agreement is intended to bind Stockholder as a stockholder of
Rainbow only with respect to the specific matters set forth herein.
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3. Proxy. Concurrently with the execution of this Agreement, Stockholder
agrees to deliver to JDSU a proxy in the form attached hereto as Exhibit A (the
"Proxy"), which shall be irrevocable to the extent provided in Section 212 of
the Delaware General Corporation Law, covering the total number of Shares and
New Shares beneficially owned or as to which beneficial ownership is acquired
(as such term is defined in Rule 13d-3 under the Exchange Act) by such
Stockholder set forth therein.
4. Representations, Warranties and Covenants of Stockholder. Stockholder
hereby represents, warrants and covenants to JDSU that such Stockholder (i) is
the beneficial owner of Stockholder's Shares, which at the date of this
Agreement and at all times up until the Expiration Date will be free and clear
of any liens, claims, options, charges or other encumbrances; (ii) does not
beneficially own any shares of capital stock of Rainbow other than Stockholder's
Shares (excluding shares as to which such Stockholder currently disclaims
beneficial ownership in accordance with applicable law); (iii) has full power
and authority to make, enter into and carry out the terms of this Agreement and
such Stockholder's Proxy; and (iv) the execution, delivery and performance of
this Agreement by such Stockholder and the consummation of the transactions
contemplated hereby, will not (a) require the consent, waiver, approval, or
authorization of any governmental authority or any other person or entity or (b)
violate, conflict with, result in a breach of or the acceleration of any
obligation under, or constitute a default (or an event which with notice or the
lapse of time or both would become a default) under, or give to others any right
of termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the
Stockholder pursuant to any provision of any indenture, mortgage, lien, lease,
agreement, contract, instrument, order, judgment, ordinance, regulation or
decree to which the Stockholder is subject or by which the Stockholder or any of
Stockholder's property or assets is bound.
5. Additional Documents. Stockholder hereby covenants and agrees to execute
and deliver any additional documents necessary or desirable, in the reasonable
opinion of JDSU, to carry out the purpose and intent of this Agreement.
6. Consent and Waiver. Stockholder hereby gives any consents or waivers
that are reasonably required for the consummation of the Merger under the terms
of any agreement to which such Stockholder is a party or pursuant to any rights
such Stockholder may have. Stockholder further agrees to give such additional
consents and waivers as may be reasonably required for the consummation of the
Merger under the terms of any agreement to which such Stockholder is a party or
pursuant to any rights such Stockholder may have. As further clarification, but
not limitation, of the foregoing, Stockholder further agrees to waive any
registration rights it may have with respect to Stockholder's Shares (including
piggyback registration rights) prior to the Expiration Date.
7. Termination. This Agreement and the Proxies delivered in connection
herewith shall terminate and shall have no further force or effect as of the
Expiration Date.
8. Miscellaneous.
8.1 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, then the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
8.2 Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and insure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without the prior written consent of the other.
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<PAGE> 138
8.3 Amendment and Modification. This Agreement may not be modified,
amended, altered or supplemented except by the execution and delivery of a
written agreement executed by the parties hereto.
8.4 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that JDSU will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
Stockholder set forth herein. Therefore, it is agreed that, in addition to any
other remedies that may be available to JDSU upon such violation, JDSU shall
have the right to enforce such covenants and agreements by specific performance,
injunctive relief or by any other means available to JDSU at law or in equity.
8.5 Notices. All notices that are required or may be given pursuant to the
terms of this Agreement shall be in writing and shall be sufficient in all
respects if given in writing and delivered by hand or national overnight courier
service, transmitted by telecopy or mailed by registered or certified mail,
postage prepaid (effective when delivered by hand or telecopy, one day after
dispatch by overnight courier, and three business days after dispatch by mail),
as follows:
(a) if to JDSU or Sub, to:
JDS Uniphase Corporation
163 Baypointe Parkway
San Jose, CA 95134
Attention: Michael C. Phillips
Facsimile No.: (408) 954-0540
Telephone No.: (408) 434-1800
with a copy to:
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105
Attention: John W. Campbell, Esq.
Facsimile No.: (415) 268-7522
Telephone No.: (415) 268-7000
(b) if to Stockholder, to the address set forth beneath such Shareholder's
signature below.
8.6 Governing Law; Forum. This Agreement shall be governed by, construed
and enforced in accordance with the internal laws of the State of Delaware.
8.7 Entire Agreement. This Agreement and the Proxies contain the entire
understanding of the parties in respect of the subject matter hereof, and
supersede all prior negotiations and understandings between the parties with
respect to such subject matters.
8.8 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same agreement.
8.9 Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction or interpretation of this Agreement.
8.10 Jurisdiction. The parties to this Agreement agree that any suit,
action or proceeding arising out of, or with respect to, this Agreement or any
judgment entered by any court in respect thereof shall be brought in the courts
of Delaware or in the U.S. District Court for Delaware as the commencing party
may elect, and Stockholder hereby accepts the exclusive jurisdiction of those
courts for the purpose of any suit, action or proceeding. In addition,
Stockholder hereby irrevocably waives, to the fullest extent permitted by law,
any objection which Stockholder may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this Agreement
or any judgment entered by any court in respect thereof brought in Delaware or
the U.S.
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<PAGE> 139
District Court for the District of Delaware, as selected by the commencing
party, and hereby further irrevocably waives any claim that any suit, action or
proceedings brought in Delaware or in such District Court has been brought in an
inconvenient forum.
8.11 No Limitation on Actions of Stockholder as Director. Notwithstanding
anything to the contrary in this Agreement, in the event Stockholder is a
director of the Company, nothing in this Agreement is intended or shall be
construed to require Stockholder, in Stockholder's capacity as a director of the
Company, to act or fail to act in accordance with Stockholder's fiduciary duties
in such capacity.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed the day and year first above written.
JDS UNIPHASE CORPORATION
By:
--------------------------------------
Title:
--------------------------------------
Stockholder
By:
--------------------------------------
Stockholder's Address for
Notice:
Shares beneficially owned:
________ shares of Rainbow Common
Stock
[SIGNATURE PAGE TO VOTING AGREEMENT]
C-4
<PAGE> 140
EXHIBIT A
PROXY
TO VOTE STOCK OF
E-TEK DYNAMICS, INC.
The undersigned stockholder of E-TEK Dynamics, Inc., a corporation
organized under the laws of the State of Delaware, ("Rainbow"), hereby
irrevocably (to the full extent permitted by Section 212 of the Delaware General
Corporation Law) appoints Michael C. Phillips and Anthony R. Muller of JDS
Uniphase Corporation, a corporation organized under the laws of State of
Delaware ("JDSU"), and each of them, as the sole and exclusive attorneys and
proxies of the undersigned, with full power of substitution and resubstitution,
to vote with respect to all of the shares of capital stock of Rainbow that now
are or hereafter may be beneficially owned by the undersigned (including,
without limitation, the power to execute and deliver written consents pursuant
to Section 228 of the Delaware General Corporation Law), and any and all other
shares or securities of Rainbow issued or issuable in respect thereof on or
after the date hereof (collectively, the "Shares") in accordance with the terms
of this Proxy. The Shares beneficially owned by the undersigned stockholder of
Rainbow as of the date of this Proxy are listed on the final page of this Proxy.
Upon the undersigned's execution of this Proxy, any and all prior proxies given
by the undersigned with respect to any Shares are hereby revoked and the
undersigned agrees not to grant any subsequent proxies with respect to the
Shares until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the extent provided in Section 212 of the
Delaware General Corporation Law), is coupled with an interest and is granted
pursuant to that certain Voting Agreement dated as of January 17, 2000, by and
among JDSU and the undersigned stockholder (the "Voting Agreement"), and is
granted in consideration of JDSU entering into that certain Agreement and Plan
of Reorganization and Merger, dated as of January 17, 2000, by and among
Rainbow, JDSU and Rainbow Acquisition, Inc., a corporation organized under the
laws of the State of Delaware ("Sub") and wholly owned subsidiary of JDSU (the
"Merger Agreement"). The Merger Agreement provides for the merger of Sub with
and into Rainbow (the "Merger"). As used herein, the term "Expiration Date"
shall mean the earlier to occur of (i) the Effective Time (as such term is
defined in the Merger Agreement) and (ii) the date on which the Merger Agreement
is terminated in accordance with its terms (including any extensions to the
Merger Agreement, as provided for therein).
The attorneys and proxies named above, and each of them are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Shares
(including, without limitation, the power to execute and deliver written
consents pursuant to Section 228 of the Delaware General Corporation Law), at
every annual, special or adjourned meeting of the stockholders of Rainbow and in
every written consent in lieu of such meeting in favor of approval of the Merger
and the Merger Agreement. The attorneys and proxies named above may not exercise
this Proxy on any other matter except as provided above. The undersigned
stockholder may vote the Shares on all other matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
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<PAGE> 141
This Proxy is irrevocable (to the extent provided in Section 212 of the
Delaware General Corporation Law). This Proxy shall terminate, and be of no
further force and effect, automatically upon the Expiration Date.
Dated: January 17, 2000
--------------------------------------
(Signature of Stockholder)
--------------------------------------
(Print Name of Stockholder)
Shares beneficially owned:
________ shares of Rainbow Common
Stock
C-6
<PAGE> 142
ANNEX D
FAIRNESS OPINION OF GOLDMAN, SACHS & CO.
DATED JANUARY 17, 2000
<PAGE> 143
FAIRNESS OPINION OF GOLDMAN, SACHS & CO.
January 17, 2000
Board of Directors
E-TEK Dynamics, Inc.
1865 Lundy Avenue
San Jose, CA 95131-1835
Gentlemen:
You have requested our opinion as to the fairness from a financial point of view
to the holders of the outstanding shares of Common Stock, par value $.001 per
share (the "Shares"), of E-TEK Dynamics, Inc. (the "Company") of the exchange
ratio of 1.1 shares of Common Stock, par value $.001 per share (the "JDS Common
Stock"), of JDS Uniphase Corporation ("JDS") to be received for each Share (the
"Exchange Ratio"), pursuant to the Agreement and Plan of Reorganization and
Merger, dated as of January 17, 2000, among JDS, Rainbow Acquisition, Inc., a
wholly-owned subsidiary of JDS, and the Company (the "Agreement").
Goldman, Sachs & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. We are familiar with
the Company having provided certain investment banking services to the Company
from time to time, including having acted as managing underwriter of the initial
public offering of 5,000,000 Shares in December 1998, having acted as managing
underwriter for a secondary offering of 6,000,000 Shares in August 1999 and
having acted as financial advisor to the Company in connection with, and having
participated in certain of the negotiations leading to, the Agreement. Goldman,
Sachs & Co. provides a full range of financial advisory and securities services
and, in the course of its normal trading activities, may from time to time
effect transactions and hold securities, including derivative securities, of the
Company or JDS for its own account and for the accounts of customers.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Registration Statements on Form S-1 of the Company, including the
Prospectuses therein dated December 1, 1998 and August 11, 1999, relating to the
initial public offering and secondary offering of the Shares, respectively; the
Annual Reports on Form 10-K of the Company for the fiscal year ended June 30,
1999 and of JDS and its predecessors for the five fiscal years ended June 30,
1999, respectively; certain interim reports to stockholders and Quarterly
Reports on Form 10-Q of the Company and JDS; the Registration Statement on Form
S-4 of JDS, including the proxy statement/prospectus therein dated December 22,
1999, relating to the proposed merger of Optical Coating Laboratory, Inc. with a
newly formed wholly-owned subsidiary of JDS; certain other communications from
the Company and JDS to their respective stockholders; certain internal financial
analyses and forecasts for the Company prepared by its management (the "Company
Forecasts"); certain internal financial analyses and forecasts for JDS prepared
by its management; and certain financial analyses and forecasts for JDS prepared
by the Company's management (the "JDS Forecasts"). We also have held discussions
with members of the senior management of the Company and JDS regarding their
assessment of the strategic rationale for, and the potential benefits of, the
transaction contemplated by the Agreement and the past and current business
operations, financial condition and future prospects of their respective
companies. In addition, we have reviewed the reported price and trading activity
for the Shares and JDS Common Stock, which like many communications technology
related stocks have been and are likely to continue to be subject to significant
short term price and trading volatility, compared certain financial and stock
market
D-1
<PAGE> 144
information for the Company and JDS with similar information for certain other
companies the securities of which are publicly traded, reviewed the financial
terms of certain recent business combinations in the communications technology
industry specifically and other industries generally and performed such other
studies and analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information discussed with the Company or reviewed by us and have assumed
such accuracy and completeness for purposes of rendering this opinion. In that
regard, we have assumed with your consent that the Company Forecasts and the JDS
Forecasts have been reasonably prepared on a basis reflecting the best currently
available estimates and judgments of the Company. In addition, we have not made
an independent evaluation or appraisal of the assets and liabilities of the
Company or JDS or any of their subsidiaries and we have not been furnished with
any such evaluation or appraisal. We have assumed that all material
governmental, regulatory or other consents and approvals necessary for the
consummation of the transaction contemplated by the Agreement will be obtained
without any adverse effect on the Company or JDS or on the contemplated benefits
of the transaction contemplated by the Agreement. Our advisory services and the
opinion expressed herein are provided for the information and assistance of the
Board of Directors of the Company in connection with its consideration of the
transaction contemplated by the Agreement and such opinion does not constitute a
recommendation as to how any holder of Shares should vote with respect to such
transaction.
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the Exchange
Ratio pursuant to the Agreement is fair from a financial point of view to the
holders of Shares.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
D-2
<PAGE> 145
1821-SPS-00
<PAGE> 146
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the General Corporation Law of the State of Delaware
("Delaware Corporation Law") provides, in general, that a corporation shall have
the power to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation), because the person is or was a director
or officer of the corporation. Such indemnity may be against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by the person in connection with such action, suit or
proceeding, if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
corporation and if, with respect to any criminal action or proceeding, the
person did not have reasonable cause to believe the person's conduct was
unlawful.
Section 145(b) of the Delaware Corporation Law provides, in general, that a
corporation shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor because the person is or was a director or officer of the corporation,
against any expenses (including attorneys' fees) actually and reasonably
incurred by the person in connection with the defense or settlement of such
action or suit if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
corporation.
Section 145(g) of the Delaware Corporation Law provides, in general, that a
corporation shall have the power to purchase and maintain insurance on behalf of
any person who is or was a director or officer of the corporation against any
liability asserted against the person in any such capacity, or arising out of
the person's status as such, whether or not the corporation would have the power
to indemnify the person against such liability under the provisions of the law.
Article 8 of the Registrant's Amended and Restated Certificate of
Incorporation (incorporated by reference herein) provides for indemnification of
directors, officers and other persons as follows:
8.1 Limitation of Directors' Liability. A director of the Corporation
shall not be personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (a) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) under
Section 174 of the General Corporation Law of the State of Delaware, or (d) for
any transaction from which the director derived any improper personal benefit.
8.2 Indemnification of Corporate Agents. To the fullest extent permitted
by applicable law, the Corporation is also authorized to provide indemnification
of (and advancement of expenses to) such agents (and any other persons to which
Delaware law permits this corporation to provide indemnification) through Bylaw
provisions, agreements with such agents or other persons, vote of stockholders
or disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the General Corporation Law of
the State of Delaware, subject only to limits created by applicable Delaware law
(statutory or non-statutory), with respect to actions for breach of duty to the
Corporation, its stockholders, and others.
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<PAGE> 147
8.3 Repeal or Modification. Any repeal or modification of the foregoing
provisions of this Article 8 shall not adversely affect any right of
indemnification or limitation of liability of an agent of the Corporation
relating to the acts or omissions occurring prior to such repeal or
modification.
Article IX of the Registrant's By-Laws (incorporated by reference herein)
provides that:
SECTION 1. Right to Indemnification.
Each person who was or is a party or is threatened to be made a party
to or is involved (as a party, witness, or otherwise), in any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (hereinafter a "Proceeding"), by reason of
the fact that he, or a person of whom he is the legal representative, is or
was a director, officer, employee, or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee,
or agent of another corporation or of a partnership, joint venture, trust,
or other enterprise, including service with respect to employee benefit
plans, whether the basis of the Proceeding is alleged action in an official
capacity as a director, officer, employee, or agent or in any other
capacity while serving as a director, officer, employee, or agent
(hereafter an "Agent"), shall be indemnified and held harmless by the
corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended or
interpreted (but, in the case of any such amendment or interpretation, only
to the extent that such amendment or interpretation permits the corporation
to provide broader indemnification rights than were permitted prior
thereto) against all expenses, liability, and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid
or to be paid in settlement, and any interest, assessments, or other
charges imposed thereon, and any federal, state, local, or foreign taxes
imposed on any Agent as a result of the actual or deemed receipt of any
payments under this Article) reasonably incurred or suffered by such person
in connection with investigating, defending, being a witness in, or
participating in (including on appeal), or preparing for any of the
foregoing in, any Proceeding (hereinafter "Expenses"); provided, however,
that except as to actions to enforce indemnification rights pursuant to
Section 3 of this Article, the corporation shall indemnify any Agent
seeking indemnification in connection with a Proceeding (or part thereof)
initiated by such person only if the Proceeding (or part thereof) was
authorized by the Board of Directors of the corporation. The right to
indemnification conferred in this Article shall be a contract right.
SECTION 2. Authority to Advance Expenses.
Expenses incurred by an officer or director (acting in his capacity as
such) in defending a Proceeding shall be paid by the corporation in advance
of the final disposition of such Proceeding, provided, however, that if
required by the Delaware General Corporation Law, as amended, such Expenses
shall be advanced only upon delivery to the corporation of an undertaking
by or on behalf of such director or officer to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this Article or otherwise. Expenses
incurred by other Agents of the corporation (or by the directors or
officers not acting in their capacity as such, including service with
respect to employee benefit plans) may be advanced upon such terms and
conditions as the Board of Directors deems appropriate. Any obligation to
reimburse the corporation for Expense advances shall be unsecured and no
interest shall be charged thereon.
SECTION 3. Right of Claimant to Bring Suit.
If a claim under Section 1 or 2 of this Article is not paid in full by
the corporation within 120 days after a written claim has been received by
the corporation, the claimant may at any time thereafter bring suit against
the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid
also the expense
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(including attorneys' fees) of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending a Proceeding in advance of its final
disposition where the required undertaking has been tendered to the
corporation) that the claimant has not met the standards of conduct that
make it permissible under the Delaware General Corporation Law for the
corporation to indemnify the claimant for the amount claimed. Neither the
failure of the corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a determination prior to
the commencement of such action that indemnification of the claimant is
proper under the circumstances because he has met the applicable standard
of conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant had not
met such applicable standard of conduct, shall be a defense to the action
or create a presumption that claimant has not met the applicable standard
of conduct.
SECTION 4. Provisions Nonexclusive.
The rights conferred on any person by this Article shall not be
exclusive of any other rights that such person may have or hereafter
acquire under any statute, provision of the Certificate of Incorporation,
agreement, vote of stockholders or disinterested directors, or otherwise,
both as to action in an official capacity and as to action in another
capacity while holding such office. To the extent that any provision of the
Certificate, agreement, or vote of the stockholders or disinterested
directors is inconsistent with these bylaws, the provision, agreement, or
vote shall take precedence.
SECTION 5. Authority to Insure.
The corporation may purchase and maintain insurance to protect itself
and any Agent against any Expense, whether or not the corporation would
have the power to indemnify the Agent against such Expense under applicable
law or the provisions of this Article.
SECTION 6. Survival of Rights.
The rights provided by this Article shall continue as to a person who
has ceased to be an Agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
SECTION 7. Settlement of Claims.
The corporation shall not be liable to indemnify any Agent under this
Article (a) for any amounts paid in settlement of any action or claim
effected without the corporation's written consent, which consent shall not
be unreasonably withheld; or (b) for any judicial award if the corporation
was not given a reasonable and timely opportunity, at its expense, to
participate in the defense of such action.
SECTION 8. Effect of Amendment.
Any amendment, repeal, or modification of this Article shall not
adversely affect any right or protection of any Agent existing at the time
of such amendment, repeal, or modification.
SECTION 9. Subrogation.
In the event of payment under this Article, the corporation shall be
subrogated to the extent of such payment to all of the rights of recovery
of the Agent, who shall execute all papers required and shall do everything
that may be necessary to secure such rights, including the execution of
such documents necessary to enable the corporation effectively to bring
suit to enforce such rights.
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<PAGE> 149
SECTION 10. No Duplication of Payments.
The corporation shall not be liable under this Article to make any
payment in connection with any claim made against the Agent to the extent
the Agent has otherwise actually received payment (under any insurance
policy, agreement, vote, or otherwise) of the amounts otherwise
indemnifiable hereunder.
The directors and officers of the Registrant are covered by a policy
of liability insurance indemnifying them against certain liabilities,
including liabilities arising under the Securities Act, which might be
incurred by them in their capacities as directors and officers.
See also the undertakings set out in item 22 herein.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) See Exhibit Index.
(b) Not Applicable.
(c) Opinion of Goldman, Sachs & Co., Inc., attached as Annex D to the proxy
statement-prospectus which is part of this registration statement.
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof;
(2) that before any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form;
(3) that every prospectus (i) that is filed pursuant to paragraph (2)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to
the registration statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(4) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this
Form S-4 under the Securities Act of 1933, within one business day of
receipt of any such request, and to send the incorporated documents by
first class mail or other equally prompt means, including information
contained in documents filed after the effective date of the registration
statement through the date of responding to such request; and
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<PAGE> 150
(5) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 20 above, or otherwise,
the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable. If a claim of indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in a
successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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<PAGE> 151
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 2 to Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of San
Jose, California on May 31, 2000.
JDS Uniphase Corporation
By: /s/ JOZEF STRAUS, PH.D.
------------------------------------
Jozef Straus, Ph.D.
Chief Executive Officer and
Co-Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 2 to Registration Statement on Form S-4 has been signed by
the following persons in the capacities indicated on May 31, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ JOZEF STRAUS, PH.D. Chief Executive Officer and Co-Chairman of
------------------------------------------- the Board of Directors (Principal Executive
Jozef Straus, Ph.D. Officer)
* Co-Chairman of the Board of Directors
---------------------------------------------
Martin Kaplan
/s/ ANTHONY R. MULLER Executive Vice President, Chief Financial
------------------------------------------- Officer and Secretary (Principal Financial
Anthony R. Muller and Accounting Officer)
* Director
-------------------------------------------
Bruce Day
* Director
---------------------------------------------
Peter Guglielmi
* Director
---------------------------------------------
Robert E. Enos
* Director
---------------------------------------------
John A. MacNaughton
* Director
---------------------------------------------
Wilson Sibbett
* Director
---------------------------------------------
Casimir S. Skrzypczak
* Director
---------------------------------------------
William J. Sinclair
*By: /s/ ANTHONY R. MULLER
---------------------------------------------
Anthony R. Muller
Attorney-in-Fact
</TABLE>
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<PAGE> 152
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
-------
<C> <S>
2.1 Agreement and Plan of Reorganization and Merger, dated as of
January 17, 2000, by and among the Registrant, Rainbow
Acquisition, Inc. and E-TEK Dynamics, Inc. (included as
Annex A to the proxy statement-prospectus filed as part of
this Registration Statement).
2.2 Company Stock Option Agreement, dated as of January 17,
2000, by and between E-TEK Dynamics, Inc., as issuer, and
the Registrant, as grantee (included as Annex B to the proxy
statement-prospectus filed as a part of this Registration
Statement).
5.1* Opinion of Morrison & Foerster LLP, together with consent.
8.1* Tax Opinion of Morrison & Foerster LLP, together with
consent.
8.2* Tax Opinion of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, together with consent.
9.1 Form of Voting Agreement (included as Annex C to the proxy
statement-prospectus filed as a part of this Registration
Statement).
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Deloitte & Touche LLP, independent auditors.
23.3 Consent of PricewaterhouseCoopers LLP, independent chartered
accountants.
23.4 Consent of PricewaterhouseCoopers LLP, independent
accountants.
23.5 Consent of PricewaterhouseCoopers LLP, independent chartered
accountants.
23.6 Consent of KPMG LLP, independent auditors.
23.7 Consent of Goldman, Sachs & Co., Inc.
23.8* Consent of Morrison & Foerster LLP (included as part of its
opinions filed as Exhibits 5.1 and 8.1).
23.9* Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included as part of its opinion filed as
Exhibit 8.2).
24.1* Power of Attorney (See Page II-6 of Registration Statement
on Form S-4 filed on February 11, 2000).
99.1* Form of Proxy of E-TEK Dynamics, Inc.
99.2 Opinion of Goldman, Sachs & Co. (included as Annex D to the
proxy statement-prospectus filed as a part of this
Registration Statement).
99.3* Consent of Michael J. Fitzpatrick.
99.4* Consent of Donald J. Listwin.
</TABLE>
---------------
* Previously filed.
