<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
E-TEK DYNAMICS, INC.
-------------------------------------------------
(Name of Issuer)
COMMON STOCK, $.001 PAR VALUE
-------------------------------------------------
(Title of Class of Securities)
269-240107
-------------------------------------------------
(CUSIP Number)
KEVIN N. KALKHOVEN,
CO-CHAIRMAN OF THE BOARD
OF DIRECTORS AND CHIEF EXECUTIVE OFFICER,
JDS UNIPHASE CORPORATION
163 BAYPOINTE PARKWAY
SAN JOSE, CALIFORNIA 95134
(408) 434-1800
--------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
JANUARY 17, 2000
-------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check the
following box. [ ]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including exhibits. See Rule 13d-7(b) for other parties
to whom copies are to be sent.
(Continued on following pages)
1
<PAGE> 2
CUSIP No. 269-240107 13D
- --------------------------------------------------------------------------------
(1) Names of Reporting Person
I.R.S. Identification No. of Above Person (Entities Only)
JDS UNIPHASE CORPORATION., I.R.S. No. 94-2579683
- --------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
(3) SEC Use Only
- --------------------------------------------------------------------------------
(4) Source of Funds
00
- --------------------------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
NOT APPLICABLE
- --------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
DELAWARE
- --------------------------------------------------------------------------------
(7) Sole Voting Power
13,515,123(a)
Number of --------------------------------------------------------------
Shares (8) Shared Voting Power
Beneficially
Owned by 17,073,083(b)
Each --------------------------------------------------------------
Reporting (9) Sole Dispositive Power
Person With
13,515,123(a)
--------------------------------------------------------------
(10) Shared Dispositive Power
0
- --------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
30,588,206(a)(b)
- --------------------------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
[x]
- --------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
45.04%(a)(b)
- --------------------------------------------------------------------------------
2
<PAGE> 3
(14) Type of Reporting Person
CO
* (a) The shares of common stock of E-TEK Dynamics, Inc. referred to are
purchasable by JDS Uniphase Corporation upon exercise of an option (the
"Option") granted to JDS Uniphase Corporation pursuant to the Company Stock
Option Agreement dated as of January 17, 2000 between E-TEK Dynamics, Inc. and
JDS Uniphase Corporation (the "Stock Option Agreement"), and described in Items
3 and 4 of this statement. Prior to the exercise of the Option, JDS Uniphase
Corporation is not entitled to any rights as a stockholder of E-TEK Dynamics,
Inc. as to the shares covered by the Option. Under the Option, JDS Uniphase
Corporation may purchase 19.9% of the total outstanding shares of common stock
of E-TEK Dynamics, Inc. as of January 17, 2000. 19.9% of the total outstanding
shares of common stock of E-TEK Dynamics, Inc. as of January 1, 2000, as
represented by E-TEK Dynamics, Inc. in the Agreement Plan of Reorganization and
Merger dated as of January 17, 2000 by and among JDS Uniphase Corporation,
Rainbow Acquisition, Inc. and E-TEK Dynamics, Inc. (the "Merger Agreement"), is
equal to 13,515,123 shares (the "Option Shares"). The purchase price for the
Option Shares is $211.41 per share (the "Purchase Price"). Prior to the exercise
of the Option, the Reporting Person is not entitled to any rights as a
stockholder of E-TEK as to the Option Shares. The number of Option Shares and
the Purchase Price are subject to adjustment in certain circumstances. The
Option may only be exercised upon the happening of certain events, none of which
has occurred as of the date hereof. Prior to such occurrence, JDS Uniphase
Corporation expressly disclaims beneficial ownership of the shares of common
stock of E-TEK Dynamics, Inc. which are purchasable by JDS Uniphase Corporation
upon exercise of the Option.
(b) The shares of common stock of E-TEK Dynamics, Inc. referred to are
subject to voting agreements entered into between the persons listed on Exhibit
5 hereto (collectively, the "Stockholders") and the Reporting Person, and
described in Items 3 and 4 of this statement. As of January 17, 2000, based on
the number of shares of common stock of E-TEK Dynamics, Inc. represented to be
beneficially owned by the respective Stockholders in such voting agreements, the
Stockholders beneficially owned (including 614,205 shares subject to options
which are exercisable within 60 days of January 17, 2000) 17,073,083 shares of
the common stock of E-TEK Dynamics, Inc., which, based on the number of shares
of common stock of E-TEK Dynamics, Inc. outstanding on January 1, 2000 as
represented by E-TEK Dynamics, Inc. in the Merger Agreement, amounted to 25.14%
of the total outstanding shares of common stock of E-TEK Dynamics, Inc. JDS
Uniphase Corporation expressly disclaims beneficial ownership of the shares of
common stock of E-TEK Dynamics, Inc. which are subject to such voting
agreements.
3
<PAGE> 4
Item 1. Security and Issuer.
This Schedule 13D relates to the common stock, par value $0.001 per
share ("common stock"), of E-TEK Dynamics, Inc., a Delaware corporation
("E-TEK"). The principal executive offices of E-TEK are located at 1865 Lundy
Avenue, San Jose, CA 95131.
Item 2. Identity and Background.
This Schedule 13D is filed by JDS Uniphase Corporation, a Delaware
corporation (the "Reporting Person"). The Reporting Person's principal business
is designing, developing, manufacturing and marketing optical components and
modules. The address of the Reporting Person's principal office is 163 Baypointe
Parkway, San Jose, California 95134.
The name, business address, present principal occupation or employment,
and citizenship of each director and executive officer of the Reporting Person
are set forth on Exhibit 1 attached hereto and are incorporated herein by
reference.
As a result of entering into the form of Voting Agreement described in
Items 3 and 4 below, the Reporting Person may be deemed to have formed a "group"
with each of the Stockholders (as defined in Item 3 below), for purposes of
Section 13(d)(3) of the Act and Rule 13d-5(b)(1) thereunder. The Reporting
Person expressly declares that the filing of this Schedule 13D shall not be
construed as an admission by it that it has formed any such group.
To the best knowledge of the Reporting Person, the name of each
Stockholder, each Stockholder's residence or business address and the number of
Shares owned by each Stockholder is set forth in Exhibit 5 hereto. To the best
knowledge of the Reporting Person, based on E-TEK's 1999 Annual Report on Form
10-K filed with the Securities and Exchange Commission on August 17, 1999, the
following Stockholders are presently employed by E-TEK and the present principal
occupation of each is as follows: Michael J. Fitzpatrick, President and Chief
Executive Officer, Ming Shih, Senior Vice President, Sales and Marketing, Sanjay
Subhedar, Senior Vice President, Operations, Chief Financial Officer and Philip
J. Anthony, Vice President, Engineering.
During the last five years neither of the Reporting Person, nor, to the
best of its knowledge, any of its directors or executive officers, has been (i)
convicted of any criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The Reporting Person entered into an Agreement and Plan of Merger dated
as of January 17, 2000 by and among the Reporting Person, Rainbow Acquisition
Inc., a Delaware corporation and newly-formed wholly owned direct subsidiary of
the Reporting Person
<PAGE> 5
("Merger Sub"), and E-TEK (the "Merger Agreement"), providing for the merger
(the "Merger") of Merger Sub with and into E-TEK with E-TEK as the surviving
corporation, pursuant to which each outstanding share of common stock of E-TEK
will be converted into the right to receive 1.1 shares of common stock, par
value $0.001 per share, of the Reporting Person. The Merger is conditional upon
obtaining certain regulatory approvals and the consent of E-TEK's stockholders.
As an inducement for the Reporting Person to enter into the Merger
Agreement and in consideration thereof, E-TEK and the Reporting Person entered
into that certain Company Stock Option Agreement (the "Option Agreement") dated
as of January 17, 2000, whereby E-TEK granted to the Reporting Person an option
(the "Option") to purchase, under certain circumstances described therein, 19.9%
of the outstanding shares of common stock of E-TEK 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 "Option Shares").
The purchase price for the Option Shares is $211.41 per share (the "Purchase
Price"). Prior to the exercise of the Option, the Reporting Person is not
entitled to any rights as a stockholder of E-TEK as to the Option Shares. The
number of Option Shares and the Purchase Price are subject to adjustment in
certain circumstances.
No Triggering Event (defined in Item 4 below) permitting the exercise of
the Option has occurred as of the date hereof. In the event that the Option
becomes exercisable and the Reporting Person wishes to purchase the Shares
subject thereto, the Reporting Person anticipates that it would fund the
exercise price with working capital. See also Item 4 below.
As a further inducement for the Reporting Person to enter into the
Merger Agreement and in consideration thereof, the persons listed on Exhibit 5
(collectively, the "Stockholders"), each entered into a form of Voting Agreement
(the "Voting Agreements"), each dated as of January 17, 2000, with the Reporting
Person whereby the Stockholders agreed, to vote all of the shares beneficially
owned by them in favor of approval of the Merger Agreement. The Reporting Person
did not pay additional consideration to any Stockholder in connection with the
execution and delivery of the Voting Agreements.
References to, and descriptions of, the Merger Agreement, the Option
Agreement and the form of Voting Agreement, respectively, as set forth above in
this Item 3, are qualified in their entirety by reference to the copies of the
Merger Agreement, the Option Agreement and the form of Voting Agreement,
respectively, included as Exhibits 2, 3 and 4, respectively, to this Schedule
13D, and are incorporated in this Item 3 in their entirety, respectively, where
such references and descriptions appear.
Item 4. Purpose of Transaction.
(a)-(j) The information set forth, or incorporated by reference, in Item
3 is hereby incorporated herein by reference.
Pursuant to the Option Agreement, E-TEK has granted the Reporting Person
the Option. Upon the terms and subject to the conditions set forth in the Option
Agreement, the
<PAGE> 6
Reporting Person may exercise the Option, in whole or in part, at any time and
from time to time following the occurrence of a "Triggering Event," being any
event which would result in the fee of $350 million in cash payable by E-TEK
being unconditionally payable pursuant to Section 7.03(b) of the Merger
Agreement. The Option terminates in general (i) immediately prior to the
completion 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); and (iii) one year following any termination of the Merger Agreement
where a Triggering Event has occurred.
Upon the occurrence of certain events set forth in the Option Agreement,
E-TEK is required to repurchase the Option or shares acquired by the Reporting
Person pursuant thereto. In addition, the Option Agreement grants certain
registration rights to the Reporting Person with respect to the shares subject
to the Option. Also, upon request for registration, E-TEK is entitled to
purchase all of the shares acquired by the Reporting Person pursuant to the
Option. E-TEK has the right to purchase the shares so acquired at a price
specified in the Option Agreement.
Pursuant to the Voting Agreements, the Stockholders have agreed to vote
all of the Shares beneficially owned by them in favor of approval of the Merger
Agreement, the Merger and the approval of the transactions contemplated by the
Merger Agreement at every meeting of the stockholders of E-TEK called with
respect thereto. As required by each of the Voting Agreements, the Stockholders
have executed the form of Proxy To Vote Stock Of E-TEK, attached as Exhibit A to
the Voting Agreements, designating Michael C. Phillips and Anthony R. Muller,
each an executive officer of the Reporting Person, to vote their shares as to
the matters referred to in the Voting Agreements. Pursuant to the Voting
Agreements, the Stockholders have also agreed not to transfer, sell, exchange,
or pledge or otherwise dispose of or encumber their shares, prior to the earlier
of the consummation of the Merger and the date the Merger Agreement is
terminated. The name of each Stockholder and the number of outstanding shares of
common stock of E-TEK held by each Stockholder are set forth on Exhibit 5 which
is incorporated herein by reference.
The purpose of the Option Agreement and the Voting Agreement are to
facilitate consummation of the Merger.
References to, and descriptions of, the Merger Agreement, the Option
Agreement and the form of Voting Agreement, respectively, as set forth above in
this Item 4, are qualified in their entirety by reference to the copies of the
Merger Agreement, the Option Agreement and the form of Voting Agreement,
respectively, included as Exhibits 2, 3 and 4, respectively, to this Schedule
13D, and are incorporated in this Item 4 in their entirety, respectively, where
such references and descriptions appear.
Except as disclosed in this Item 4, the Reporting Person does not have
any current plans or proposals that relate to or would result in any of the
events described in paragraphs (a) through (j) of Item 4 of Schedule 13D.
<PAGE> 7
Item 5. Interest in Securities of the Issuer.
(a)-(b) Under the Option, the Reporting Person may purchase 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 Dynamics, Inc. in the Merger Agreement, is equal
to 13,515,123 shares of common stock of E-TEK.
Prior to the exercise of the Option, the Reporting Person (i) is not
entitled to any rights as a stockholder of E-TEK as to the shares covered by the
Option and (ii) disclaims any beneficial ownership of the shares of common stock
of E-TEK which are purchasable by the Reporting Person upon exercise of the
Option because the Option is exercisable only in the limited circumstances
referred to in Item 4 above, none of which has occurred as of the date hereof.
If the Option were exercised, the Reporting Person would have the sole right to
vote and to dispose of the shares of common stock of E-TEK issued as a result of
such exercise, subject to the terms and conditions of the Option Agreement. See
the information in Items 3 and 4 above with respect to the Option Agreement,
which information is incorporated herein by reference.
As of January 17, 2000, based on the number of shares of common stock of
E-TEK represented to be beneficially owned by the respective Stockholders in the
Voting Agreements, the Stockholders beneficially owned (including 614,205 shares
subject to options which are exercisable within 60 days of January 17, 2000)
17,073,083 shares of the common stock of E-TEK, which, based on the number of
shares of common stock of E-TEK outstanding on January 1, 2000 as represented by
E-TEK Dynamics, Inc. in the Merger Agreement, amounted to 25.14% of the total
outstanding shares of common stock of E-TEK.
By virtue of the Voting Agreements, the Reporting Person may be deemed
to share with the respective Stockholders the power to vote Shares subject to
the Voting Agreements. However, the Reporting Person (i) is not entitled to any
rights as a stockholder of E-TEK as to the shares covered by the Voting
Agreement and (ii) disclaims any beneficial ownership of the shares of common
stock of E-TEK which are covered by the Voting Agreements. See the information
in Item 2 with respect to the Stockholders and the information in Items 3 and 4
with respect to the Voting Agreement, which information is incorporated herein
by reference.
(c) Other than as set forth in Item 5(a)-(b), to the best of the
Reporting Person's knowledge as of the date hereof (i) neither the Reporting
Person nor any subsidiary or affiliate of the Reporting Person nor any of the
Reporting Person's executive officers or directors, beneficially owns any shares
of common stock of E-TEK and (ii) there have been no transactions in the shares
of common stock of E-TEK effected during the past 60 days by the Reporting
Person, nor to the best of the Reporting Person's knowledge, by any subsidiary
or affiliate of the Reporting Person or any of the Reporting Person's executive
officers of directors.
(d) No other person is known by the Reporting Person to have the right
to receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, E-TEK shares of common stock obtainable by the Reporting
Person upon exercise of the Option.
<PAGE> 8
(e) Not applicable.
Reference to, and descriptions of, the Merger Agreement, Option
Agreement and form of Voting Agreement, respectively, as set forth in this Item
5, are qualified in their entirety by reference to the copies of the Merger
Agreement, the Option Agreement and the form of Voting Agreement, respectively,
included as Exhibits 2, 3 and 4, respectively, to this Schedule 13D, and
incorporated in this Item 5 in their entirety, respectively, where such
references and descriptions appear.
The responses of the Reporting Person to Rows (7) through (13) of the
cover page of this statement on Schedule 13D are incorporated herein by
reference.
Item 6. Interest in Securities of the Issuer.
The responses of the Reporting Person to Items 3 through 5 hereof are
incorporated herein by reference. Except as set forth in this Schedule 13D, to
the best knowledge of the Reporting Person, there are no other contracts,
arrangements, understandings or relationships (legal or otherwise) among the
persons named in Item 2 and between such persons and any person with respect to
any securities of the Issuer, including, but not limited to, transfer or voting
of any of the securities of the Issuer, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or loss,
or the giving or withholding of proxies, or a pledge or contingency the
occurrence of which would give another person voting power or investment power
over the securities of E-TEK.
Item 7. Material to Be Filed as Exhibits.
Exhibit 1 The name, business address, present principal occupation or
employment, and citizenship of each director and executive
officer of the Reporting Person
Exhibit 2 Agreement and Plan of Reorganization and Merger, dated as of
January 17, 2000, among the Reporting Person, Merger Sub, and
E-TEK
Exhibit 3 Company Stock Option Agreement entered into by the Reporting
Person and E-TEK dated as of January 17, 2000
Exhibit 4 Form of Voting Agreement entered into by the Reporting Person
and each of the Stockholders on January 17, 2000
Exhibit 5 List of Persons entering into form of Voting Agreement.
<PAGE> 9
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
JDS UNIPHASE CORPORATION
Dated: January 27, 2000 /s/ Michael C. Phillips
----------------------------------------
Name: Michael C. Phillips
Title: Senior Vice President,
Business Development,
General Counsel
<PAGE> 10
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No.
- -----------
<S> <C>
Exhibit 1 The name, business address, present principal occupation or
employment, and citizenship of each director and executive
officer of the Reporting Person
Exhibit 2 Agreement and Plan of Reorganization and Merger, dated as of
January 17, 2000, among the Reporting Person, Merger Sub, and
E-TEK
Exhibit 3 Company Stock Option Agreement entered into by the Reporting
Person and E-TEK dated as of January 17, 2000
Exhibit 4 Form of Voting Agreement entered into by the Reporting Person
and each of the Stockholders on January 17, 2000
Exhibit 5 List of Persons entering into form of Voting Agreement.
</TABLE>
<PAGE> 11
EXHIBIT 1
Directors and Executive Officers of JDS Uniphase Corporation
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
PRESENT PRINCIPAL OCCUPATION OR
NAME BUSINESS ADDRESS EMPLOYMENT CITIZENSHIP
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Kevin N. 163 Baypointe Parkway, San Co-Chairman and Chief Executive U.K.
Kalkhoven Jose, California 95134 Officer
- --------------------------------------------------------------------------------------------------------
Josef Straus, Ph.D. 163 Baypointe Parkway, San Co-Chairman, President and Chief Canada
Jose, California 95134 Operating Officer
- --------------------------------------------------------------------------------------------------------
M. Zita Cobb 163 Baypointe Parkway, San Senior Vice President, Strategy and Canada
Jose, California 95134 Integration
- --------------------------------------------------------------------------------------------------------
Joseph Ip 163 Baypointe Parkway, San Senior Vice President, Product Canada
Jose, California 95134 Strategy
- --------------------------------------------------------------------------------------------------------
Russell A. Johnson 163 Baypointe Parkway, San Vice President, Global Sales and U.S.A.
Jose, California 95134 Marketing
- --------------------------------------------------------------------------------------------------------
Leo Lefebvre 163 Baypointe Parkway, San Vice President, Operations Finance Canada
Jose, California 95134
- --------------------------------------------------------------------------------------------------------
Frederick L. 163 Baypointe Parkway, San Senior Vice President and Chief U.S.A.
Leonberger, Ph.D. Jose, California 95134 Technical Officer
- --------------------------------------------------------------------------------------------------------
Anthony R. Muller 163 Baypointe Parkway, San Senior Vice President, Chief U.S.A.
Jose, California 95134 Financial Officer and Secretary
- --------------------------------------------------------------------------------------------------------
Dan E. Pettit 163 Baypointe Parkway, San Senior Vice President, President, U.S.A.
Jose, California 95134 Semiconductor
- --------------------------------------------------------------------------------------------------------
Michael C. Phillips 163 Baypointe Parkway, San Senior Vice President, Business U.S.A.
Jose, California 95134 Development, General Counsel
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 12
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Bruce D. Day 163 Baypointe Parkway, San Director Canada
Jose, California 95134
- --------------------------------------------------------------------------------------------------------
Robert E. Enos 163 Baypointe Parkway, San Director Canada
Jose, California 95134
- --------------------------------------------------------------------------------------------------------
Peter A. Guglielmi 163 Baypointe Parkway, San Director U.S.A.
Jose, California 95134
- --------------------------------------------------------------------------------------------------------
Martin A. Kaplan 163 Baypointe Parkway, San Director U.S.A.
Jose, California 95134
- --------------------------------------------------------------------------------------------------------
John A. MacNaughton 163 Baypointe Parkway, San Director Canada
Jose, California 95134
- --------------------------------------------------------------------------------------------------------
Wilson Sibbet, Ph.D. 163 Baypointe Parkway, San Director U.K.
Jose, California 95134
- --------------------------------------------------------------------------------------------------------
William J. Sinclair 163 Baypointe Parkway, San Director Canada
Jose, California 95134
- --------------------------------------------------------------------------------------------------------
Casimir S. Skrzypczak 163 Baypointe Parkway, San Director U.S.A.
Jose, California 95134
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 13
EXHIBIT 2
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
DATED AS OF
JANUARY 17, 2000
AMONG
JDS UNIPHASE CORPORATION,
RAINBOW ACQUISITION, INC.,
AND
E-TEK DYNAMICS, INC.
<PAGE> 14
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Article I. THE MERGER............................................................................2
SECTION 1.01. The Merger......................................................................2
SECTION 1.02. Effective Time..................................................................2
SECTION 1.03. Effect of the Merger............................................................2
SECTION 1.04. Certificate of Incorporation and Bylaws.........................................2
SECTION 1.05. Directors and Officers..........................................................3
SECTION 1.06. Merger Consideration; Conversion and Cancellation of Securities.................3
SECTION 1.07. Exchange of Certificates........................................................4
SECTION 1.08. Stock Transfer Books............................................................6
SECTION 1.09. Dissenting Shares...............................................................6
SECTION 1.10. Lost, Stolen or Destroyed Certificate...........................................7
SECTION 1.11. Federal Income Tax Consequences.................................................7
SECTION 1.12. Material Adverse Effect.........................................................7
Article II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................8
SECTION 2.01. Organization and Qualification; Subsidiaries....................................8
SECTION 2.02. Charter Documents...............................................................8
SECTION 2.03. Capitalization..................................................................8
SECTION 2.04. Authority Relative to this Agreement............................................9
SECTION 2.05. SEC Filings; Financial Statements..............................................10
SECTION 2.06. Absence of Certain Changes or Events...........................................10
SECTION 2.07. No Undisclosed Liabilities.....................................................11
SECTION 2.08. Material Contracts; No Violation...............................................11
SECTION 2.09. Absence of Litigation..........................................................12
SECTION 2.10. Employee Benefit Plans; Employment Agreements..................................12
SECTION 2.11. Labor Matters..................................................................13
SECTION 2.12. Disclosure Documents...........................................................14
SECTION 2.13. Taxes..........................................................................14
SECTION 2.14. Environmental Matters..........................................................15
SECTION 2.15. Brokers........................................................................17
SECTION 2.16. Full Disclosure................................................................17
SECTION 2.17. Opinion of Financial Advisor...................................................17
SECTION 2.18. Intellectual Property..........................................................17
SECTION 2.19. Change in Control Payments.....................................................18
SECTION 2.20. Antitakeover Statutes..........................................................18
SECTION 2.21. Title to Property..............................................................18
SECTION 2.22. Year 2000 Matters..............................................................19
</TABLE>
i
<PAGE> 15
<TABLE>
<S> <C>
Article III. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...................................19
SECTION 3.01. Organization and Qualification; Subsidiaries...........................................19
SECTION 3.02. Certificate of Incorporation and Bylaws................................................20
SECTION 3.03. Capitalization.........................................................................20
SECTION 3.04. Authority Relative to this Agreement...................................................21
SECTION 3.05. SEC Filings; Financial Statements......................................................21
SECTION 3.06. Absence of Certain Changes or Events...................................................22
SECTION 3.07. No Undisclosed Liabilities.............................................................22
SECTION 3.08. Absence of Litigation..................................................................22
SECTION 3.09. Labor Matters..........................................................................23
SECTION 3.10. Disclosure Documents...................................................................23
SECTION 3.11. Taxes..................................................................................23
SECTION 3.12. Environmental Matters..................................................................23
SECTION 3.13. Brokers................................................................................24
SECTION 3.14. Full Disclosure........................................................................24
SECTION 3.15. Opinion of Financial Advisor...........................................................25
SECTION 3.16. Intellectual Property..................................................................25
SECTION 3.17. Title to Property......................................................................26
SECTION 3.18. Year 2000 Matters......................................................................26
SECTION 3.19. Material Contracts; No Violation.......................................................26
Article IV. CONDUCT OF BUSINESS PENDING THE MERGER......................................................27
SECTION 4.01. Conduct of Business by the Company Pending the Merger..................................27
SECTION 4.02. Conduct of Business by Parent and Merger Sub Pending the Merger........................30
SECTION 4.03. No Solicitation........................................................................30
Article V. ADDITIONAL AGREEMENTS........................................................................32
SECTION 5.01. Proxy Statement; Form S-4..............................................................32
SECTION 5.02. Company Stockholders' Meeting; Voting Agreements.......................................32
SECTION 5.03. Access to Information; Confidentiality.................................................32
SECTION 5.04. Consents; Approvals....................................................................33
SECTION 5.05. Agreements of Affiliates...............................................................33
SECTION 5.06. Notification of Certain Matters........................................................34
SECTION 5.07. Further Assurances; Tax Treatment......................................................34
SECTION 5.08. Public Announcements...................................................................34
SECTION 5.09. Listing of Parent Common Shares........................................................35
SECTION 5.10. Form S-8...............................................................................35
SECTION 5.11. Conveyance Taxes.......................................................................35
SECTION 5.12. Director and Officer Liability.........................................................35
SECTION 5.13. Action by Parent and Company's Boards..................................................35
SECTION 5.14. Composition of the Board of Directors..................................................35
</TABLE>
ii
<PAGE> 16
<TABLE>
<S> <C>
SECTION 5.15. Employee Benefits......................................................................36
Article VI. CONDITIONS TO THE MERGER....................................................................36
SECTION 6.01. Conditions to Obligations of Each Party to Effect the Merger...........................36
SECTION 6.02. Additional Conditions to Obligations of Parent and Merger Sub..........................37
SECTION 6.03. Additional Conditions to Obligation of the Company.....................................38
Article VII. TERMINATION................................................................................38
SECTION 7.01. Termination............................................................................38
SECTION 7.02. Effect of Termination..................................................................39
SECTION 7.03. Fees and Expenses......................................................................40
Article VIII. GENERAL PROVISIONS........................................................................41
SECTION 8.01. Effectiveness of Representations, Warranties and Agreements; Knowledge, Etc............41
SECTION 8.02. Notices................................................................................42
SECTION 8.03. Certain Definitions....................................................................43
SECTION 8.04. Amendment..............................................................................44
SECTION 8.05. Waiver.................................................................................44
SECTION 8.06. Headings...............................................................................44
SECTION 8.07. Severability...........................................................................44
SECTION 8.08. Entire Agreement.......................................................................44
SECTION 8.09. Assignment, Merger Sub.................................................................44
SECTION 8.10. Parties in Interest....................................................................44
SECTION 8.11. Governing Law..........................................................................45
SECTION 8.12. Counterparts...........................................................................45
SECTION 8.13. WAIVER OF JURY TRIAL...................................................................45
</TABLE>
iii
<PAGE> 17
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.
1
<PAGE> 18
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 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
2
<PAGE> 19
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 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.
3
<PAGE> 20
(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 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
4
<PAGE> 21
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
5
<PAGE> 22
theretofore 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.
6
<PAGE> 23
(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 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).
7
<PAGE> 24
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 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,
8
<PAGE> 25
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 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.
9
<PAGE> 26
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
10
<PAGE> 27
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 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
11
<PAGE> 28
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 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,
12
<PAGE> 29
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 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
13
<PAGE> 30
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.
(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
14
<PAGE> 31
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)
15
<PAGE> 32
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 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
16
<PAGE> 33
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.
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
17
<PAGE> 34
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.
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
18
<PAGE> 35
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 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.
19
<PAGE> 36
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.
20
<PAGE> 37
(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 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
21
<PAGE> 38
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
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
22
<PAGE> 39
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.
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
23
<PAGE> 40
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
24
<PAGE> 41
the provisions of, this Agreement contains or will contain any untrue statement
of a material fact or omits or shall omit to 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
25
<PAGE> 42
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 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.
26
<PAGE> 43
(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 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
27
<PAGE> 44
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;
(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
28
<PAGE> 45
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;
(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
29
<PAGE> 46
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
30
<PAGE> 47
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 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
31
<PAGE> 48
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 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
32
<PAGE> 49
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 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.
33
<PAGE> 50
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 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.
34
<PAGE> 51
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
35
<PAGE> 52
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 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;
36
<PAGE> 53
(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.
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.
37
<PAGE> 54
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
(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,
38
<PAGE> 55
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).
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,
39
<PAGE> 56
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
40
<PAGE> 57
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 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,
41
<PAGE> 58
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
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
163 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
425 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.
1865 Lundy Avenue
San Jose, CA 95131
Attention: William N. Gerson
Fax: (408) 273-6342
42
<PAGE> 59
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 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
43
<PAGE> 60
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.
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
44
<PAGE> 61
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]
45
<PAGE> 62
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
46
<PAGE> 63
EXHIBIT 3
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.
1
<PAGE> 64
(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 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,
2
<PAGE> 65
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 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
3
<PAGE> 66
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 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
4
<PAGE> 67
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 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.
5
<PAGE> 68
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,
6
<PAGE> 69
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, 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.
7
<PAGE> 70
(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.
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.
8
<PAGE> 71
(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 (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
9
<PAGE> 72
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.
10
<PAGE> 73
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
11
<PAGE> 74
EXHIBIT 4
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).
<PAGE> 75
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.
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.
<PAGE> 76
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.
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.
<PAGE> 77
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
<PAGE> 78
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. 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.
<PAGE> 79
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]
<PAGE> 80
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
1
<PAGE> 81
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.
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
2
<PAGE> 82
EXHIBIT 5
List of Persons Signing Voting Agreements
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
NUMBER OF SHARES
NAMES ADDRESS OWNED
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
David W. Dorman c/o General Counsel, E-TEK Dynamics, Inc., 16,666
1865 Lundy Avenue, San Jose, CA 95131
- --------------------------------------------------------------------------------------------------------
Michael J. Fitzpatrick c/o General Counsel, E-TEK Dynamics, Inc., 2,109,072
1865 Lundy Avenue, San Jose, CA 95131
- --------------------------------------------------------------------------------------------------------
Joseph W. Goodman c/o General Counsel, E-TEK Dynamics, Inc., 15,833
1865 Lundy Avenue, San Jose, CA 95131
- --------------------------------------------------------------------------------------------------------
Donald J. Listwin c/o General Counsel, E-TEK Dynamics, Inc., 15,833
1865 Lundy Avenue, San Jose, CA 95131
- --------------------------------------------------------------------------------------------------------
Summit Investors III, c/o Summit Partners 128,505
L.P. 499 Hamilton Avenue, Suite, 200 Palo Alto, CA 94301
- --------------------------------------------------------------------------------------------------------
Summit Subordinated c/o Summit Partners 1,220,799
Debt Fund II, L.P. 499 Hamilton Avenue, Suite 200, Palo Alto, CA 94301
- --------------------------------------------------------------------------------------------------------
Summit Ventures IV, . c/o Summit Partners 11,501,213
L.P. 499 Hamilton Avenue, Suite 200, Palo Alto, CA 94301
- --------------------------------------------------------------------------------------------------------
Philip J. Anthony 2635 Greenrock Rd., Milpitas, CA 95035 161,189
- --------------------------------------------------------------------------------------------------------
Ming Shih 3105 Monte Sereno Terrace, Fremont, CA 94539 785,448
- --------------------------------------------------------------------------------------------------------
Sanjay Subhedar 1865 Lundy Avenue, San Jose, CA 95131 1,118,525
- --------------------------------------------------------------------------------------------------------
</TABLE>
