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Exhibit 10.1
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STOCK PURCHASE AGREEMENT
BY AND AMONG
AVAYA INC.
AND
THE INVESTORS LISTED ON SCHEDULE 1 HERETO
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Dated as of
MARCH 10, 2002
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TABLE OF CONTENTS
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ARTICLE I
Definitions
ARTICLE II
Purchase and Sale
SECTION 2.01. Purchase and Sale............................................5
SECTION 2.02. Closing......................................................5
SECTION 2.03. Closing Deliveries...........................................5
ARTICLE III
Representations and Warranties of the Company
SECTION 3.01. Organization and Standing....................................6
SECTION 3.02. Capital Stock................................................6
SECTION 3.03. Authorization; Enforceability................................7
SECTION 3.04. No Violation; Consents.......................................7
SECTION 3.05. Commission Filings; Financial Statements.....................8
SECTION 3.06. No Material Adverse Effect...................................8
SECTION 3.07. Contract.....................................................9
SECTION 3.08. Compliance with Laws.........................................9
SECTION 3.09. Compliance with Constituent Documents........................9
SECTION 3.10. Opinion of Financial Advisor.................................9
SECTION 3.11. Section 355..................................................9
SECTION 3.12. DGCL Section 203............................................10
SECTION 3.13. Rights Agreement............................................10
ARTICLE IV
Representations and Warranties of the Investors
SECTION 4.01. Organization; Authorization; Enforceability.................10
SECTION 4.02. Private Placement...........................................10
SECTION 4.03. No Violation; Consents......................................11
SECTION 4.04. Financing...................................................12
SECTION 4.05. Ownership of Securities.....................................12
SECTION 4.06. Future Acquisitions.........................................12
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ARTICLE V
Covenants of the Company
SECTION 5.01. Conduct of Business Pending the Closing....................12
SECTION 5.02. Access to Books and Records................................13
SECTION 5.03. Compliance with Conditions; Commercially
Reasonable Efforts.........................................13
SECTION 5.04. HSR Act Notification.......................................13
SECTION 5.05. Consents and Approvals.....................................14
SECTION 5.06. Listing of Shares..........................................14
SECTION 5.07. Use of Proceeds............................................14
SECTION 5.08. Registration Rights........................................14
SECTION 5.09. No Distributions...........................................15
SECTION 5.10. Observer Right.............................................15
SECTION 5.11. Director's Insurance.......................................15
SECTION 5.12. Relationship with Lucent...................................15
ARTICLE VI
Covenants of the Investors
SECTION 6.01. Compliance with Conditions; Commercially Reasonable Efforts.16
SECTION 6.02. HSR Act Notification........................................16
SECTION 6.03. Consents and Approvals......................................16
SECTION 6.04. Standstill..................................................17
SECTION 6.05. Warburg Group Director......................................18
SECTION 6.06. Compliance with Section 355.................................18
SECTION 6.07. Waiver of Preemptive Rights.................................18
ARTICLE VII
Conditions Precedent to the Closing
SECTION 7.01. Conditions to the Company's Obligations in
Respect of the Closing......................................19
SECTION 7.02. Conditions to Each Investor's Obligations in
Respect of the Closing......................................19
SECTION 7.03. Conditions to Each Party's Obligations in
Respect of the Closing......................................20
ARTICLE VIII
Miscellaneous
SECTION 8.01. Survival....................................................21
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SECTION 8.02. Legends.....................................................21
SECTION 8.03. Notices.....................................................21
SECTION 8.04. Termination.................................................22
SECTION 8.05. GOVERNING LAW...............................................23
SECTION 8.06. WAIVER OF JURY TRIAL........................................23
SECTION 8.07. Attorney Fees...............................................23
SECTION 8.08. Entire Agreement............................................23
SECTION 8.09. Modifications and Amendments................................24
SECTION 8.10. Waivers and Extensions......................................24
SECTION 8.11. Titles and Headings; Rules of Construction..................24
SECTION 8.12. Exhibits and Schedules......................................24
SECTION 8.13. Expenses; Brokers...........................................24
SECTION 8.14. Press Releases and Public Announcements.....................25
SECTION 8.15. Assignment; No Third Party Beneficiaries....................25
SECTION 8.16. Severability................................................25
SECTION 8.17. Counterparts................................................25
SECTION 8.18. Reimbursement of Certain Expenses...........................25
Schedules
Schedule 1 List of Investors
Exhibits
Exhibit A Form of Opinion of Weil, Gotshal & Manges LLP
Exhibit B Registration Rights Provisions
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STOCK PURCHASE AGREEMENT, dated as of March 10, 2002, by and
among Avaya Inc., a Delaware corporation (the "COMPANY"), and each of the
investors listed on Schedule 1 hereto (individually, an "INVESTOR" and,
collectively, the "INVESTORS").
WHEREAS, the Board of Directors (as defined herein) deems it
appropriate and in the best interests of the Company to, and the Company and the
Investors desire that the Company, issue and sell to the Investors, and the
Investors purchase from the Company 14,383,953 shares (the "SHARES") of Common
Stock (the "STOCK PURCHASE").
NOW, THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows.
ARTICLE I
DEFINITIONS
SECTION 1.01. As used in this Agreement, the following terms
shall have the following meanings:
"AFFILIATE" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"APPLICABLE LAW" means (a) any United States Federal, state,
local or foreign law, statute, rule, regulation, order, writ, injunction,
judgment, decree or permit of any Governmental Authority and (b) any rule or
listing requirement of any national stock exchange or Commission recognized
trading market on which securities issued by the Company or any of the
Subsidiaries are listed or quoted, including, as of the date of this Agreement,
the New York Stock Exchange Inc.
"BOARD OF DIRECTORS" means the board of directors of the
Company.
"BUSINESS DAY" means any day other than a Saturday, a Sunday,
or a day when banks in The City of New York are authorized by Applicable Law to
be closed.
"CAPITAL STOCK" means (a) with respect to any Person that is a
corporation, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock and (b) with respect to any
other Person, any and all partnership or other equity interests of such Person.
"COMMISSION" means the United States Securities and Exchange
Commission.
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"COMMON STOCK" means the Common Stock of the Company, par
value $0.01 per share, and, unless the context otherwise requires, includes the
associated Series A Junior Participating Preferred Stock purchase rights
issuable in respect of such shares pursuant to the Rights Agreement.
"CONTRACT" means any contract, lease, loan agreement,
mortgage, security agreement, trust indenture, note, bond, or other agreement
(whether written or oral) or instrument.
"CONVERSION AGREEMENT" means the Conversion and Exercise
Agreement, dated as of the date of this Agreement, by and among the Company and
the Investors.
"DGCL" means the General Corporation Law of the State of
Delaware, as from time to time amended.
"DISTRIBUTION" means the distribution by Lucent to its
stockholders of Common Stock on September 30, 2000, and the related
Contribution, as defined in the Distribution Agreement.
"DISTRIBUTION AGREEMENT" means the Contribution and
Distribution Agreement, by and between the Company and Lucent, dated as of
September 30, 2000.
"EQUITY ISSUANCES" means any sales of Common Stock by the
Company effected in conjunction with the transactions contemplated by this
Agreement and the Conversion Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
from time to time amended, and the rules and regulations of the Commission
promulgated thereunder.
"GAAP" means United States generally accepted accounting
principles, consistently applied.
"GOVERNMENTAL AUTHORITY" means (a) any foreign, Federal, state
or local court or governmental or regulatory agency or authority, (b) any
arbitration board, tribunal or mediator and (c) any national stock exchange or
Commission recognized trading market on which securities issued by the Company
or any of the Subsidiaries are listed or quoted.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and applicable rules and regulations and any similar
state acts.
"LIEN" means any mortgage, pledge, lien, security interest,
claim, restriction, charge or encumbrance of any kind.
"LUCENT" means Lucent Technologies Inc., a Delaware
corporation.
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"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the business, condition (financial or otherwise), operations, performance or
properties of the Company and the Subsidiaries, taken as a whole, or (b) the
ability of the Company to timely perform any of its obligations under this
Agreement.
"ORIGINAL PURCHASE AGREEMENT" means the Preferred Stock and
Warrant Purchase Agreement, dated as of August 8, 2000, by and among the Company
and the Investors, as amended by Amendment No. 1 thereto, dated as of September
29, 2000.
"PERMITTED TRANSFEREE" means, with respect to any Investor or
any Permitted Transferee of any Investor, any member of the Warburg Group,
Warburg or any subsidiary of Warburg (but excluding any portfolio company of any
member of the Warburg Group); PROVIDED, HOWEVER, that each Permitted Transferee
must agree in writing to be bound by the terms of this Agreement to the same
extent, and in the same manner, as the transferring Investor prior to the
transfer of any Preferred Shares, Warrants or Common Stock to such Permitted
Transferee; and PROVIDED FURTHER, HOWEVER, that the transfer of Preferred
Shares, Warrants or Common Stock to such Permitted Transferee is in compliance
with all applicable securities laws.
"PERSON" means any individual, partnership, corporation,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or agency or political
subdivision thereof, or other entity.
"PER SHARE PURCHASE PRICE" means the Purchase Price divided by
14,383,953.
"PRIVATE LETTER RULING" means the private letter ruling, dated
August 3, 2000, from the Internal Revenue Service that the Distribution
qualifies as a tax-free distribution under Section 355.
"PURCHASE PRICE" means $90,043,545.78.
"REPRESENTATIVES" means, collectively, with respect to any
Person, such Person's directors, partners, officers, employees, financial
advisors, lenders, accountants, attorneys, agents, equity investors, controlled
Affiliates and controlling persons of such Person or its controlled Affiliates.
"RIGHTS AGREEMENT" means the Rights Agreement dated as of
September 29, 2000 between the Company and The Bank of New York, as Rights
Agent, as amended by Amendment No. 1 to such Rights Agreement dated as of
February 28, 2002.
"SECTION 355" means Section 355 of the Internal Revenue Code
of 1986, as amended.
"SECURITIES ACT" means the Securities Act of 1933, as from
time to time amended, and the rules and regulations of the Commission
promulgated thereunder.
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"SUBSIDIARY" means, with respect to any Person (a) a
corporation a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by a subsidiary of such Person, or by such Person and one or
more subsidiaries of such Person, (b) a partnership in which such Person or a
subsidiary of such Person is, at the date of determination, a general partner of
such partnership and has the power to direct the policies and management of such
partnership, or (c) any other Person (other than a corporation) in which such
Person, a subsidiary of such Person or such Person and one or more subsidiaries
of such Person, directly or indirectly, at the date of determination thereof,
has (i) at least a majority ownership interest or (ii) the power to elect or
direct the election of a majority of the directors or other governing body of
such Person.
"SUBSIDIARY" means a subsidiary of the Company.
"TRANSACTIONS" means the Stock Purchase and the other
transactions contemplated by this Agreement.
"WARBURG" means the general partner of Warburg, Pincus Equity
Partners, L.P.
"WARBURG GROUP" means, collectively, any investment fund that
is an Affiliate of Warburg.
SECTION 1.02. As used in this Agreement, the following terms
shall have the meanings given thereto in the Sections set forth opposite such
terms:
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TERM SECTION
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Claim 8.18(a)
Closing 2.02
Closing Date 2.02
Company Preamble
Company Commission Filings 3.05(a)
Damages 8.18(a)
Indemnified Party 8.18(a)
Investor; Investors Preamble
Material Contract 3.07
Notices 8.03
Registrable Securities 5.08
Registration Rights Provisions 5.08
Registration Statement 5.08
Shares Recitals
Stock Purchase Recitals
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ARTICLE II
PURCHASE AND SALE
SECTION 2.01. PURCHASE AND SALE. Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing, the Company shall
sell to each Investor, and each Investor shall purchase from the Company, that
number of Shares set forth on Schedule 1. The aggregate purchase price for the
Shares shall be the Purchase Price and the purchase price per Share shall be the
Per Share Purchase Price. The Purchase Price shall be paid as provided in
Section 2.02.
SECTION 2.02. CLOSING. The Stock Purchase shall occur as soon
as practicable, but in any event within three business days following the
satisfaction of the conditions to the Closing set forth in Article VII hereof
(other than those conditions that by their nature are to be satisfied at such
Closing), or at such other time and date as the parties hereto shall agree in
writing (consummation of the Stock Purchase is referred to as the "CLOSING" and
such date and time is referred to as the "CLOSING DATE"), at the offices of
Weil, Gotshal & Manges LLP, located at 767 Fifth Avenue, New York, New York
10153 or at such other place as the parties hereto shall agree in writing.
SECTION 2.03. CLOSING DELIVERIES. At the Closing:
(a) Each Investor shall deliver to the Company:
(i) the officer's certificate of such Investor
contemplated by Section 7.01(c); and
(ii) an amount equal to the Purchase Price for the
Shares being purchased by such Investor (as set forth in Schedule 1)
pursuant to Section 2.01 via wire transfer of immediately available
funds to such bank account as the Company shall designate not later
than two Business Days prior to the Closing Date.
(b) The Company shall deliver to each Investor:
(i) an opinion of Weil, Gotshal & Manges LLP, dated
the Closing Date, in the form attached hereto as Exhibit A;
(ii) the officer's certificate of the Company
contemplated by Section 7.02(c); and
(iii) a certificate or certificates for the whole
number of Shares purchased by such Investor (as set forth in Schedule
1) pursuant to Section 2.01, which shall be in definitive form and
registered in the name of such Investor or its nominee or designee and
in such denominations as such Investor shall request not later than two
Business Days prior to the Closing Date.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Investor on
the date hereof and on and as of the Closing Date as follows:
SECTION 3.01. ORGANIZATION AND STANDING. (a) The Company is
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own its
properties and assets and to carry on its business as it is now being conducted.
The Company has provided to the Investors true and correct copies of the
Company's certificate of incorporation and by-laws as amended through the date
of this Agreement.
(b) Each direct and indirect material Subsidiary is duly
incorporated, validly existing and, where applicable, in good standing under the
laws of its jurisdiction of incorporation and has all requisite power and
authority to own its properties and assets and to carry on its business as it is
currently conducted, and each such material Subsidiary is qualified to transact
business, and in good standing, in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary; except in all cases as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(c) The Shares have been duly and validly authorized, and,
when issued and delivered in accordance with the terms of this Agreement, will
have been validly issued and will be fully paid and nonassessable, and the
issuance thereof will not have been subject to any preemptive rights or made in
violation of any Applicable Law.
SECTION 3.02. CAPITAL STOCK. (a) The authorized Capital Stock
of the Company consists solely of (i) 1,500,000,000 shares of Common Stock, of
which, as of the date hereof, 287,679,085 shares were issued and outstanding,
and (ii) 200,000,000 shares of preferred stock, par value $1.00 per share, of
which 15,000,000 shares have been designated as Series A Junior Participating
Preferred Stock and 4,000,000 shares have been designated as Series B Preferred
Stock. As of the date hereof, no shares of Series A Junior Participating
Preferred Stock, and 4,000,000 shares of Series B Preferred Stock, are issued or
outstanding. Each share of Capital Stock of the Company that is issued and
outstanding is duly authorized and validly issued and fully paid and
nonassessable, and the issuance thereof was not subject to any preemptive rights
or made in violation of any Applicable Law.
(b) Except pursuant to, or as addressed in, the Original
Purchase Agreement, the Conversion Agreement or this Agreement, there are (i) as
of the date hereof, no outstanding options, warrants, agreements, conversion
rights, exchange rights, preemptive rights or other rights (whether contingent
or not) to subscribe for, purchase or acquire any issued or unissued shares of
Capital Stock of the Company (other than pursuant to employee benefit plans or
the Company's Liquid Yield Option-TM- Notes, due
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2021), and (ii) no restrictions upon, or Contracts or understandings of the
Company with respect to, the voting or transfer of any shares of Capital Stock
of the Company.
SECTION 3.03. AUTHORIZATION; ENFORCEABILITY. The Company has
the power and authority to execute, deliver and perform the terms and provisions
of this Agreement and has taken all action necessary to authorize the execution,
delivery and performance by it of this Agreement and to consummate the
Transactions. No other corporate proceeding on the part of the Company or any of
its stockholders is necessary for such authorization, execution and delivery of
this Agreement or for the consummation of the Transactions under any provision
of the certificate of incorporation or bylaws or other governing documents of
the Company or under any Applicable Law. The Company has duly executed and
delivered this Agreement. This Agreement constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
SECTION 3.04. NO VIOLATION; CONSENTS. (a) Subject to the
governmental filings and other matters referred to in Section 3.04(b), the
execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the Transactions do not and will not contravene
any Applicable Law, except for any such contravention that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The execution, delivery and performance by the Company of this
Agreement and the consummation of the Transactions (i) will not (A) violate,
result in a breach of or constitute (with or without due notice or lapse of time
or both) a default (or give rise to any right of termination, cancellation or
acceleration) under any Contract, or (B) result in the creation or imposition of
any Lien upon any of the assets of the Company or any Subsidiary, except for any
such violations, breaches, defaults or Liens that would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect; and
(ii) will not conflict with or violate any provision of the certificate of
incorporation or bylaws or other governing documents of the Company or any
Subsidiary. The Company has provided to the Investors true and complete copies
of all correspondence with the New York Stock Exchange Inc. relating to the
Transactions.
(b) Except for (i) the filings by the Company, if any,
required by the HSR Act and the expiration or termination of the applicable
waiting period with respect thereto, (ii) applicable filings, if any, with the
Commission pursuant to the Exchange Act or with the New York Stock Exchange in
connection with the listing of the Shares, (iii) filings under state securities
or "blue sky" laws, and (iv) such customary items as may be required in
connection with the registration of securities for public offer and sale
pursuant to the Registration Rights Provisions, no consent, authorization or
order of, or filing or registration with, any Governmental Authority or other
Person is required to be obtained or made by the Company or any Subsidiary for
the execution, delivery and performance of this Agreement or the consummation of
the Transactions, except where the failure to obtain such consents,
authorizations or orders, or to make such filings or registrations, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
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SECTION 3.05. COMMISSION FILINGS; FINANCIAL STATEMENTS. (a)
The Company has timely filed all registration statements, prospectuses, forms,
reports and documents required to be filed by it under the Securities Act or the
Exchange Act, as the case may be, since September 30, 2000 (those filings that
have been made prior to the date hereof, collectively, the "COMPANY COMMISSION
FILINGS"). The Company Commission Filings (i) as of their respective dates, were
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time they were filed
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 made
therein, in the light of the circumstances under which they were made, not
misleading. As of the date of this Agreement, no Subsidiary is subject to the
periodic reporting requirements of the Exchange Act.
(b) Each of the historical financial statements of the Company
and its Subsidiaries (including, in each case, any related notes or schedules)
contained in the Company Commission Filings was prepared in accordance with GAAP
(except in the case of unaudited quarterly financial statements as permitted by
Form 10-Q under the Exchange Act) on a consistent basis throughout the periods
indicated, and each fairly presented the consolidated financial position of the
Company and its consolidated subsidiaries as of the respective dates thereof and
the results of operations, cash flows and changes in invested equity of the
Company and its consolidated subsidiaries for the respective periods indicated
therein (subject, in the case of unaudited statements, to normal year-end
adjustments that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect).
SECTION 3.06. NO MATERIAL ADVERSE EFFECT. Since December 31,
2001, except as specifically contemplated or permitted by this Agreement, the
Conversion Agreement or as set forth in the Company Commission Filings, there
has not been any Material Adverse Effect or an event or development that would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, excluding to the extent such effect results from (i) changes in
general economic conditions, (ii) changes in the industry of providing
communications systems and software for enterprises, including businesses,
government agencies and other organizations, and (iii) accounting charges
resulting from the execution of this Agreement and the Conversion Agreement and
the consummation of the transactions contemplated hereby and thereby, except, in
the cases of clauses (i) and (ii) for such changes as have a materially
disproportionate effect on the Company.
SECTION 3.07. CONTRACTS; DEBT INSTRUMENTS. Except as set forth
on Schedule 3.07 or in the Company Commission Filings, neither the Company nor
any of the Subsidiaries is a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral), that is a "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
Commission). Each contract, arrangement, commitment or understanding of the type
described in this Section 3.07, is referred to herein as a "MATERIAL CONTRACT."
Each Material Contract is valid and binding on the Company or a Subsidiary, as
applicable, and in full force and effect, and the Company and any Subsidiary
that is a party thereto have in all material respects
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performed all obligations required to be performed by them to the date hereof
under each Material Contract, except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any Subsidiary knows of, or has received notice of, any violation or
default under (or any condition that with the passage of time or the giving of
notice would cause such a violation of or default under) any Material Contract
or any other loan or credit agreement, note, bond, mortgage or indenture to
which it is a party or by which it or any of its properties or assets is bound,
except for violations or defaults that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
SECTION 3.08. COMPLIANCE WITH LAWS. The Company and the
Subsidiaries are in compliance in all material respects with all Applicable
Laws, except for instances of noncompliance that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
SECTION 3.09. COMPLIANCE WITH CONSTITUENT DOCUMENTS. None of
the Company or any material Subsidiary is in breach or violation of or in
default in the performance or observance of any term or provision of, and no
event has occurred which, with lapse of time or action by a third party, would
result in a default under the respective articles or certificate of
incorporation, bylaws or similar organizational instruments of such entities.
SECTION 3.10. OPINION OF FINANCIAL ADVISOR. Bear, Stearns &
Co. Inc. has delivered to the Board of Directors its written opinion that, as of
the date hereof, the Transactions and the transactions contemplated by the
Conversion Agreement are fair from a financial point of view to the Company.
SECTION 3.11. SECTION 355. Neither the execution and delivery
of this Agreement or the Conversion Agreement, nor the consummation of the
transactions contemplated hereby or thereby or the Equity Issuances are
reasonably likely to have the effect of causing (a) the Distribution to be
taxable in any respect to Lucent or its stockholders, or (b) the Private Letter
Ruling to be inapplicable in any respect.
SECTION 3.12. DGCL SECTION 203. The Company has taken all
necessary actions such that the provisions of DGCL Section 203 do not and will
not apply to this Agreement or the Conversion Agreement or to any of the
transactions contemplated hereby or thereby.
SECTION 3.13. RIGHTS AGREEMENT. The entering into of this
Agreement or the Conversion Agreement, and the consummation of the transactions
contemplated hereby and thereby do not and will not result in the ability of any
Person to exercise any rights under the Rights Agreement or enable or require
the rights to separate from the shares of Common Stock to which they are
attached or to become triggered or exercisable. No "Distribution Date" or
"Shares Acquisition Date" (as such terms are defined in the Rights Agreement)
has occurred as a result of entering into this Agreement or the Conversion
Agreement, or will occur as a result of the consummation of the transactions
contemplated hereby or thereby.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor severally as to itself only, and not jointly,
hereby represents and warrants to the Company on the date hereof and as of the
Closing Date, as follows:
SECTION 4.01. ORGANIZATION; AUTHORIZATION; ENFORCEABILITY.
Such Investor is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has all requisite power and
authority to own its properties and assets and to carry on its business as it is
now being conducted and as currently proposed to be conducted. Such Investor has
the power to execute, deliver and perform its obligations under this Agreement
and has taken all necessary action to authorize the execution, delivery and
performance by it of this Agreement and to consummate the Transactions. No other
proceedings on the part of such Investor are necessary for such authorization,
execution, delivery and consummation. Such Investor has duly executed and
delivered this Agreement. This Agreement constitutes a legal, valid and binding
obligation of such Investor, enforceable against such Investor in accordance
with its terms.
SECTION 4.02. PRIVATE PLACEMENT. (a) Such Investor understands
that the offering and sale of the Shares by the Company is intended to be exempt
from registration under the Securities Act pursuant to Section 4(2) thereof.
(b) Such Investor (i) is a "qualified institutional buyer", as
such term is defined in Rule 144A under the Securities Act or (ii) is an
institutional "accredited investor", as such term is defined in Rule 501(a) of
Regulation D under the Securities Act.
(c) Such Investor is acquiring the Shares for its own account
(or for accounts over which it exercises investment authority), for investment
and not with a view to the resale or distribution thereof in violation of any
securities law.
(d) Such Investor understands that the Shares will be issued
in Transactions exempt from the registration or qualification requirements of
the Securities Act and applicable state securities laws, and that such
securities must be held indefinitely unless a subsequent disposition thereof is
registered or qualified under the Securities Act and such laws or is exempt from
such registration or qualification.
(e) Such Investor (i) has been furnished with or has had full
access to all the information that it considers necessary or appropriate to make
an informed investment decision with respect to the Shares and that it has
requested from the Company, (ii) has had an opportunity to discuss with
management of the Company the intended business and financial affairs of the
Company and to obtain information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to it or to which it had access,
and (iii) can bear the economic risk of (A) an investment in the Shares
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indefinitely and (B) a total loss in respect of such investment, has such
knowledge and experience in business and financial matters so as to enable it to
understand and evaluate the risks of and form an investment decision with
respect to its investment in the Shares and to protect its own interest in
connection with such investment. Such Investor has made the decision to make
such investment based on its review of all information it deems relevant and has
not relied on any advice, recommendation or information provided by the
Company's financial advisor.
SECTION 4.03. NO VIOLATION; CONSENTS. (a) Subject to the
governmental filings and other matters referred to in Section 4.03(b), the
execution, delivery and performance by such Investor of this Agreement and the
consummation by such Investor of the Transactions do not and will not contravene
any Applicable Law, except for any such contravention that would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Investor to timely perform its obligations
under this Agreement. The execution, delivery and performance by such Investor
of this Agreement and the consummation of the Transactions (i) will not (A)
violate, result in a breach of or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under any Contract to which such Investor is party
or by which such Investor is bound or to which any of its assets is subject, or
(B) result in the creation or imposition of any Lien upon any of the assets of
such Investor, except for any such violations, breaches, defaults or Liens that
would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the ability of such Investor to timely perform its
obligations under this Agreement; and (ii) will not conflict with or violate any
provision of the certificate of incorporation or bylaws or other governing
documents of such Investor.
(b) Except for (i) the filings by such Investor, if any,
required by the HSR Act and the expiration or termination of the applicable
waiting period with respect thereto and (ii) applicable filings, if any, with
the Commission pursuant to the Exchange Act, no consent, authorization or order
of, or filing or registration with, any Governmental Authority or other Person
is required to be obtained or made by such Investor for the execution, delivery
and performance of this Agreement or the consummation of any of the
Transactions, except where the failure to obtain such consents, authorizations
or orders, or make such filings or registrations, would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of such Investor to timely perform its obligations under this Agreement.
SECTION 4.04. FINANCING. Such Investor has on call and will
have on the Closing Date available funds to consummate the Transactions on the
Closing Date.
SECTION 4.05. OWNERSHIP OF SECURITIES. Such Investor does not
own, directly or indirectly, or have any option or right to acquire, any
securities of the Company other than (a) the Preferred Shares and the Warrants
issued to it pursuant to the Original Purchase Agreement, (b) shares of Common
Stock issuable upon conversion or exercise of such securities, (c) an aggregate
of 50,000 additional shares of Common Stock owned by the Warburg Group, (d) the
Shares being purchased by it hereunder, (e)
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any options to purchase Common Stock issued to any Warburg Group Director (as
such term is defined in Section 5.09(a) of the Original Purchase Agreement or
the Conversion Agreement, as may be in effect) and (f) pursuant to the
Conversion Agreement.
SECTION 4.06. FUTURE ACQUISITIONS. Such Investor has no
present plan or intention to acquire, directly or indirectly, 50% or more of the
total voting power or total fair market value (as such terms are interpreted for
purposes of Section 355) of all shares of outstanding Capital Stock of the
Company.
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.01. CONDUCT OF BUSINESS PENDING THE CLOSING. The
Company agrees that, between the date of this Agreement and the Closing Date (or
earlier termination of this Agreement), except as specifically permitted or
contemplated by any other provision of this Agreement, unless the Investors
shall otherwise agree in writing, the business of the Company and the
Subsidiaries shall be conducted in the ordinary course of business. Except as
specifically permitted or contemplated by any other provision of this Agreement,
the Company shall not, between the date of this Agreement and the Closing Date,
directly or indirectly, do, or agree to do, any of the following without the
prior written consent of the Investors: (a) amend or otherwise change its
certificate of incorporation or by-laws; (b) declare, set aside, make or pay any
dividend or other distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock (other than dividends paid by
wholly-owned Subsidiaries to the Company or to other wholly-owned Subsidiaries),
except as may be required by the Rights Agreement; (c) reclassify, combine,
split, subdivide or redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock; (d) take any action that is intended or
would reasonably be expected to result in any of the conditions set forth in
Article VII not being satisfied; or (e) authorize or enter into any agreement or
otherwise make any commitment to do any of the foregoing.
SECTION 5.02. ACCESS TO BOOKS AND RECORDS. The Company shall
afford to each of the Investors and the Investors' accountants, counsel and
representatives full access during normal business hours throughout the period
prior to the Closing Date (or the earlier termination of this Agreement pursuant
to Section 8.04) to all properties, books, Contracts, commitments and records of
the Company and, during such period, shall, upon request, furnish promptly to
each of the Investors all other information concerning the Company or the
Subsidiaries as the Investors may reasonably request, provided that no
investigation or receipt of information pursuant to this Section 5.02 shall
affect any representation or warranty of the Company or the conditions to the
obligations of the Investors. All requests pursuant to this Section 5.02 shall
be made to the persons designated from time to time by the Company for this
purpose.
SECTION 5.03. COMPLIANCE WITH CONDITIONS; COMMERCIALLY
REASONABLE EFFORTS. The Company shall use all commercially reasonable efforts to
cause all conditions precedent to the obligations of the Company and the
Investors to be
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satisfied. Upon the terms and subject to the conditions of this Agreement, the
Company will use all commercially reasonable efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable consistent with Applicable Law to consummate and make effective in
the most expeditious manner practicable the Transactions.
SECTION 5.04. HSR ACT NOTIFICATION. To the extent required by
the HSR Act, the Company shall (a) use all commercially reasonable efforts to
file or cause to be filed, as promptly as practicable after the execution and
delivery of this Agreement (and, in any event, within two Business Days of such
execution and delivery), with the United States Federal Trade Commission and the
Antitrust Division of the United States Department of Justice, all reports and
other documents required to be filed by it under the HSR Act concerning the
Transactions and (b) use all commercially reasonable efforts to promptly comply
with or cause to be complied with any requests by the United States Federal
Trade Commission or the Antitrust Division of the United States Department of
Justice for additional information concerning the Transactions, in each case so
that the waiting period applicable to this Agreement and the Transactions under
the HSR Act shall expire as soon as practicable after the execution and delivery
of this Agreement. The Company agrees to request, and to cooperate with the
Investors in requesting, early termination of any applicable waiting period
under the HSR Act.
SECTION 5.05. CONSENTS AND APPROVALS. The Company (a) shall
use all commercially reasonable efforts to obtain all necessary consents,
waivers, authorizations and approvals of all Governmental Authorities (other
than as expressly set forth in Section 5.04 regarding the HSR Act) and of all
other Persons required in connection with the execution, delivery and
performance of this Agreement or the consummation of the Transactions and (b)
shall diligently assist and cooperate with the Investors in preparing and filing
all documents required to be submitted by the Investors to any Governmental
Authority in connection with the Transactions (which assistance and cooperation
shall include, without limitation, timely furnishing to the Investors all
information concerning the Company and its Subsidiaries that counsel to the
Investors reasonably determines is required to be included in such documents or
would be helpful in obtaining any such required consent, waiver, authorization
or approval).
SECTION 5.06. LISTING OF SHARES. The Company shall use all
commercially reasonable efforts to cause the Shares to be listed or otherwise
eligible for trading on the New York Stock Exchange prior to the Closing Date.
SECTION 5.07. USE OF PROCEEDS. The Company shall use the
proceeds from the Transactions for general corporate purposes, including
repayment of bank debt.
SECTION 5.08. REGISTRATION RIGHTS. The Company shall use all
commercially reasonable efforts to file a registration statement covering, or
cause an existing effective registration statement to cover (such new or amended
registration statement, the "REGISTRATION STATEMENT"), the Registrable
Securities on behalf of the Investors and any Permitted Transferees with the
Commission as soon as reasonably
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practicable after the date hereof, but in no event later than May 31, 2002. The
expenses of the preparation and filing of such Registration Statement shall be
borne by the Company. Upon filing the Registration Statement, the Company will
use its commercially reasonable efforts to cause the Registration Statement to
be declared effective by the Commission and to keep the Registration Statement
effective with the Commission so long as any Registrable Securities remain
outstanding. Provisions relating to the registration rights set forth in this
Section 5.08 are included in Exhibit B hereto (the "REGISTRATION RIGHTS
PROVISIONS"). "REGISTRABLE SECURITIES" means the Shares and any other securities
issued in respect thereof. As to any particular Registrable Securities, such
Registrable Securities shall cease to be Registrable Securities as soon as they
(a) have been sold or otherwise disposed of pursuant to the Registration
Statement or any other registration statement that was filed with the Commission
and declared effective under the Securities Act, (b) are eligible for sale
pursuant to Rule 144 without being subject to the volume and manner of sale
limitations thereunder, (c) have been otherwise sold, transferred or disposed of
by an Investor to any Person that is not a Permitted Transferee, or (d) have
ceased to be outstanding. All communications with the Company by the Investors
and the Permitted Transferees with respect to the registration rights granted
pursuant to this Section 5.08 shall be made by and through Warburg.
SECTION 5.09. NO INTENDED DISTRIBUTIONS. The Company has no
present plan or intention to make any distribution to its stockholders in cash
or property within the meaning of Section 1.305-3(b)(4) of the Treasury
Regulations promulgated under the Internal Revenue Code of 1986, as amended. As
of the date hereof, the Company is prohibited from paying cash dividends
pursuant to the Company's existing credit facility.
SECTION 5.10. OBSERVER RIGHT. The Company agrees that, from
and after the Closing Date, (a) the Warburg Group shall have the right, from
time to time and upon notice to the Company, to change the identity of the
Warburg Group Observer, as such term is defined in and subject to the terms of
Section 5.09(b) of the Original Purchase Agreement or Section 5.09(b) of the
Conversion Agreement, as may be in effect, and (b) notwithstanding the
limitations set forth in such section, such Warburg Group Observer shall have
the right to attend meetings of committees of the Board of Directors. The
Company agrees that it shall not object to the designation of either Jeffrey
Harris or Dr. Henry Kressel as such Warburg Group Observer.
SECTION 5.11. DIRECTOR'S INSURANCE. The individual that has
previously served as the Warburg Group Director (as such term is defined in
Section 5.09(a) of the Original Purchase Agreement) is covered by the Company's
current director's and officer's liability insurance policy. Such liability
insurance policy provides coverage (subject to the terms and limits thereof and
exclusions thereunder) on a "claims made" basis through September 30, 2002. Upon
and following the expiration or termination of such policy, each individual that
has served as the Warburg Group Director will be covered by any director's and
officer's liability insurance policy maintained by the Company to the same
extent as any other director of the Company serving on the Board of Directors at
the same time as such individual.
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SECTION 5.12. RELATIONSHIP WITH LUCENT. Prior to the Closing
Date, the Company shall take all actions required to be taken by it under the
Distribution Agreement, relating to the issuance of the Shares and other actions
(including the consummation of the transactions contemplated by the Conversion
Agreement) insofar as they relate to the preservation of the tax-free status of
the Distribution to Lucent and its stockholders. Prior to the Closing, the
Company shall obtain the opinion of counsel contemplated by Section
10.3(a)(ii)(2) of the Distribution Agreement, and provide to the Investors a
copy thereof.
ARTICLE VI
COVENANTS OF THE INVESTORS
SECTION 6.01. COMPLIANCE WITH CONDITIONS; COMMERCIALLY
REASONABLE EFFORTS. Each Investor will use all commercially reasonable efforts
to cause all conditions precedent to the obligations of the Company and the
Investors to be satisfied. Upon the terms and subject to the conditions of this
Agreement, each Investor will use all commercially reasonable efforts to take,
or cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable consistent with applicable law to consummate and
make effective in the most expeditious manner practicable the Transactions to
such Investor in accordance with the terms of this Agreement.
SECTION 6.02. HSR ACT NOTIFICATION. To the extent required by
the HSR Act, each Investor shall, (a) use all commercially reasonable efforts to
file or cause to be filed, as promptly as practicable after the execution and
delivery of this Agreement (and, in any event, within two Business Days of such
execution and delivery), with the United States Federal Trade Commission and the
Antitrust Division of the United States Department of Justice, all reports and
other documents required to be filed by it under the HSR Act concerning the
Transactions and (b) use all commercially reasonable efforts to promptly comply
with or cause to be complied with any requests by the United States Federal
Trade Commission or the Antitrust Division of the United States Department of
Justice for additional information concerning the Transactions, in each case, so
that the waiting period applicable to this Agreement and the Transactions under
the HSR Act shall expire as soon as practicable after the execution and delivery
of this Agreement. Each Investor agrees to request, and to cooperate with the
Company in requesting, early termination of any applicable waiting period under
the HSR Act.
SECTION 6.03. CONSENTS AND APPROVALS. Each Investor (a) shall
use all commercially reasonable efforts to obtain all necessary consents,
waivers, authorizations and approvals of all Governmental Authorities (other
than as expressly set forth in Section 6.02 regarding the HSR Act) and of all
other Persons required in connection with the execution, delivery and
performance of this Agreement or the consummation of the Transactions and (b)
shall diligently assist and cooperate with the Company in preparing and filing
all documents required to be submitted by the Company to any Governmental
Authority in connection with the Transactions (which assistance and cooperation
shall include, without limitation, timely furnishing to the Company all
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information concerning such Investor that counsel to the Company reasonably
determines is required to be included in such documents or would be helpful in
obtaining any such required consent, waiver, authorization or approval).
SECTION 6.04. STANDSTILL. (a) Effective as of the Closing
Date, other than as contemplated by the Conversion Agreement, each Investor
agrees that, prior to August 8, 2005, it will not and will not permit any member
of the Warburg Group or any other controlled Affiliate to, in any manner,
whether publicly or otherwise, directly or indirectly, without the prior written
consent of the Company, (i) acquire, agree to acquire or make any public
proposal to acquire, directly or indirectly, beneficial ownership of any voting
securities or assets of the Company or any Subsidiary, (ii) enter into or
publicly propose to enter into, directly or indirectly, any merger or other
business combination or similar transaction or change of control involving the
Company or any Subsidiary, (iii) make, or in any way participate, directly or
indirectly, in any "solicitation" of "proxies" (as such terms are used in the
proxy rules of the Commission) to vote, or seek to advise or influence any
Person with respect to the voting of, any securities of the Company or any
Subsidiary, (iv) call, or seek to call, a meeting of the Company's stockholders
or initiate any stockholder proposal for action by stockholders of the Company,
(v) bring any action or otherwise act to contest the validity of this Section
6.04 or seek a release of the restrictions contained herein, (vi) form, join or
in any way participate in a "group" (within the meaning of Sections 13(d)(3) of
the Exchange Act) with respect to any securities of the Company or any
Subsidiary, (vii) other than any seat on the Board of Directors expressly
granted to the Warburg Group in Section 5.09 of the Original Purchase Agreement
or the Conversion Agreement, as may be in effect, seek representation on the
Board of Directors, the removal of any directors from the Board of Directors of
the Company or a change in the size or composition of the Board of Directors of
the Company (including, without limitation, voting for any directors not
nominated by the Board of Directors), (viii) enter into any discussions,
negotiations, arrangements, understandings or agreements (whether written or
oral) with any other Person regarding any possible purchase or sale of any
securities or assets of the Company or any Subsidiary, (ix) disclose any
intention, plan or arrangement inconsistent with the foregoing, (x) take, or
solicit, propose to or agree with any other Person to take, any similar actions
designed to influence the management or control of the Company or (xi) advise,
assist or encourage any other persons in connection with any of the foregoing.
(b) Nothing in this Section 6.04 shall (i) limit any action
taken by a Warburg Group Director in his or her capacity as a member of the
Board of Directors, (ii) prohibit or restrict any Investor, any member of the
Warburg Group or any other controlled Affiliate of any Investor from responding
to any inquiries from any stockholders of the Company as to such Person's
intention with respect to the voting of shares of Common Stock or any other
voting securities of the Company beneficially owned by such Investor, any member
of the Warburg Group or any other controlled Affiliate of any Investor so long
as such response is consistent with the terms of this Agreement, (iii) prohibit
or restrict a purchase, sale, merger, consolidation or other business
combination transaction involving any portfolio company of any Investor, any
member of the Warburg Group or any controlled Affiliate of any Investor so long
as the purpose of such transaction is not the acquisition of voting securities
or assets of the
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Company or any Subsidiary, (iv) prohibit the ownership, purchase or other
acquisition of beneficial ownership of (A) (I) any shares of Series B
Convertible Participating Preferred Stock, par value $1.00 per share, of the
Company acquired by the Investors in the Original Purchase Agreement, or any
shares of Common Stock issued in conversion thereof whether pursuant to the
terms of the Conversion Agreement or otherwise, or (II) the Series A Warrants or
the Series B Warrants of the Company acquired by the Investors in the Original
Purchase Agreement, or any shares of Common Stock acquired upon exercise thereof
whether pursuant to the terms of the Conversion Agreement or otherwise, or (B)
any other securities in an amount that, when taken together with the number of
shares of Common Stock beneficially owned by the Investors, the Warburg Group
and the Investors' controlled Affiliates would not exceed 19.5% of the then
outstanding Common Stock, (v) prohibit or restrict any agreement, arrangement,
understanding, negotiation, discussion, disclosure or other action exclusively
involving Warburg, its controlled Affiliates (other than any portfolio
companies), the Investors, any member of the Warburg Group, and any employee,
officer or director thereof, (vi) prohibit any notice to limited partners of a
Warburg Group member in respect of a proposed distribution of securities of the
Company to such limited partners, (vii) prohibit or restrain any sale or other
disposition by the Investors or any Permitted Transferees of any securities
owned by them, including any discussions or negotiations concerning such sale or
disposition between Warburg, any of its affiliates, the Investors, any member of
the Warburg Group, and any employee, officer or director thereof, on the one
hand, and any Person or group on the other hand, or (viii) prohibit or restrain
any discussions or negotiations between Warburg and the Company that was
initiated or invited by the Company (until the Company requests termination
thereof), or the effectuation of any transaction resulting from such discussions
or negotiations (unless the Company had previously requested termination of such
discussions or negotiations).
SECTION 6.05. WARBURG GROUP DIRECTOR. From and after the
Closing Date, the Warburg Group agrees that it shall not designate any
individual for election to the Board of Directors under Section 5.09(a) of the
Original Purchase Agreement or Section 5.09(a) of the Conversion Agreement, as
may be in effect, who is Affiliated with the Warburg Group.
SECTION 6.06. COMPLIANCE WITH SECTION 355. No Investor shall
take any action (other than as contemplated hereunder or pursuant to the
Original Purchase Agreement or the Conversion Agreement) or omit to take any
action reasonably available to it and not materially burdensome to it (it being
understood that no Investor shall be required to divest any of its holdings)
that could reasonably be expected to materially contribute to a determination
that the Distribution would result in the recognition of gain to Lucent or the
Company by virtue of the Distribution failing to qualify under Section 355.
SECTION 6.07. WAIVER OF PREEMPTIVE RIGHTS. The Investors
hereby waive any preemptive rights afforded to them under Section 5.11 of the
Original Purchase Agreement with respect to equity issuances described on
Schedule 3.07.
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ARTICLE VII
CONDITIONS PRECEDENT TO THE CLOSING
SECTION 7.01. CONDITIONS TO THE COMPANY'S OBLIGATIONS IN
RESPECT OF THE CLOSING. The obligations of the Company to effect the
Transactions and deliver the Shares hereunder shall be subject, at the election
of the Company, to the satisfaction or waiver, on the Closing Date, of the
following conditions:
(a) The representations and warranties of each Investor
contained in this Agreement shall have been true and correct when made and, in
addition, shall be repeated and true and correct in all material respects on and
as of the Closing Date with the same force and effect as though made on and as
of the Closing Date.
(b) Each Investor shall have performed in all material
respects all obligations and agreements, and complied in all material respects
with all covenants contained in this Agreement to be performed and complied with
by such Investor on the Closing Date prior to the Closing.
(c) Each Investor shall have delivered to the Company a
certificate executed by it or on its behalf by a duly authorized representative,
dated the Closing Date, to the effect that each of the conditions specified in
paragraphs (a) and (b) of this Section 7.01 has been satisfied.
SECTION 7.02. CONDITIONS TO EACH INVESTOR'S OBLIGATIONS IN
RESPECT OF THE CLOSING. The obligations of each Investor to effect the
Transactions hereunder shall be subject to the satisfaction or waiver, on the
Closing Date, of the following conditions:
(a) The representations and warranties of the Company
contained in this Agreement (i) shall have been true and correct when made and
(ii) shall be (A) in the case of representations and warranties that are
qualified as to materiality or Material Adverse Effect, true and correct and (B)
in all other cases, true and correct in all material respects, in the case of
clauses (A) and (B), as of the Closing Date with the same force and effect as
though made on and as of the Closing Date.
(b) The Company shall have performed in all material respects
all of its obligations, agreements and covenants contained in this Agreement to
be performed and complied with at or prior to the Closing Date prior to the
Closing.
(c) The Company shall have delivered to the Investors a
certificate executed by it or on its behalf by a duly authorized representative,
dated the Closing Date, to the effect that each of the conditions specified in
paragraphs (a) and (b) of this Section 7.02 has been satisfied.
(d) The Shares shall have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance.
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(e) The Investors shall have received the opinion of counsel
to the Company, dated the Closing Date, and addressed to the Investors,
substantially in the form attached hereto as Exhibit C.
(f) The Company shall have obtained and provided to the
Investors a copy of the opinion contemplated by Section 5.12.
SECTION 7.03. CONDITIONS TO EACH PARTY'S OBLIGATIONS IN
RESPECT OF THE CLOSING. The respective obligations of the Company and each
Investor hereunder required to be performed at the Closing shall be subject, to
the satisfaction or waiver, at the Closing Date, of the following additional
conditions:
(a) Any waiting period under the HSR Act applicable to the
Transactions shall have expired or been terminated.
(b) No provision of any Applicable Law, injunction, order or
decree of any Governmental Entity shall be in effect which has the effect of
making any of the Transactions or the ownership by any Investor (other than as a
result of such Investor not being a U.S. person) of the Shares illegal or shall
otherwise prohibit the consummation of the Transactions.
(c) There shall not be pending any suit, action, arbitration
or proceeding (i) challenging or seeking to restrain or prohibit the Closing or
any of the Transactions, (ii) seeking to prohibit or limit the ownership by any
Investor or any of its Affiliates of any Common Stock, or to compel any Investor
or any if its Affiliates to dispose of any Common Stock, (iii) seeking to impose
limitations on the ability of the Investor to acquire or hold, or exercise full
rights of ownership of, the Common Stock, including the right to vote the Common
Stock on all matters properly presented to the stockholders of the Company, or
(iv) relating to the relationship, or any proposed or pending transactions,
between the Company and any Investor.
(d) There has not occurred any revocation or material
modification of the Private Letter Ruling.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. SURVIVAL. Only those representations,
warranties, agreements and covenants of the parties contained in Sections 2.01
and 2.02, and Articles V, Article VI and Article VIII and requiring performance
after the Closing Date shall survive the Closing Date. All other
representations, warranties, agreements and covenants of the parties shall not
survive the Closing Date.
SECTION 8.02. LEGENDS. (a) So long as applicable, each
certificate representing any portion of the Shares shall be stamped or otherwise
imprinted with a
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legend in the following form (in addition to any legend required under
applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH SHARES MAY
NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION PURSUANT TO AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS AND DELIVERY TO THE
ISSUER OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT TO THE
EFFECT THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THOSE LAWS.
(b) The legend referred to in paragraph (b) of Section 8.02 of
the Original Purchase Agreement shall be removed from the Warrants held by any
of the Investors or their Permitted Transferees at or as soon as practicable
following the Closing Date.
SECTION 8.03. NOTICES. All notices, demands, requests,
consents, approvals or other communications (collectively, "NOTICES") required
or permitted to be given hereunder, or that are given with respect to this
Agreement, shall be in writing and shall be personally served, delivered by
reputable air courier service with charges prepaid, or transmitted by hand
delivery, telegram, telex or facsimile, addressed as set forth below, or to such
other address as such party shall have specified most recently by written
notice. Notice shall be deemed given on the date of service or transmission if
personally served or transmitted by telegram, telex or facsimile. Notice
otherwise sent as provided herein shall be deemed given on the next business day
following delivery of such notice to a reputable air courier service.
To the Company:
Avaya Inc.
211 Mount Airy Road
Basking Ridge, New Jersey 07920
Attn: Garry K. McGuire
Telephone: (908) 953-6000
Fax: (908) 953-9875
with copies to:
Avaya Inc.
211 Mount Airy Road
Basking Ridge, New Jersey 07920
Attn: Pamela F. Craven
Telephone: (908) 953-6000
Fax: (908) 953-5462
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and
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Akiko Mikumo
Malcolm Landau
Telephone: (212) 310-8000
Fax: (212) 310-8007
To the Investors:
To the address specified on Schedule 1 hereto, with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn: Andrew R. Brownstein
David M. Silk
Telephone: (212) 403-1000
Fax: (212) 403-2000
SECTION 8.04. TERMINATION. (a) This Agreement may be
terminated (i) at any time prior to the Closing by mutual written agreement of
the Company and the Investors, (ii) if the Closing shall not have occurred on or
prior to April 30, 2002, by either the Company or the Investors, at any time
after April 30, 2002, provided that the right to terminate this Agreement under
this Section 8.04(a)(ii) shall not be available to any party whose failure to
fulfill any obligation under this Agreement was the cause of or resulted in the
failure of the Closing to occur on or before such date, or (iii) if any
Governmental Authority shall have issued a nonappealable final order, decree or
ruling or taken any other action having the effect of permanently restraining,
enjoining or otherwise prohibiting the Transactions, by either the Company or
the Investors, provided that the right to terminate this Agreement pursuant to
this Section 8.04(iii) shall not be available to any party whose failure to
fulfill any obligation under this Agreement was the cause of, or resulted in,
such final order, decree or ruling.
(b) In the event of termination of this Agreement, written
notice thereof shall be given to the other parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement (except
for the provisions of this Section 8.04, and Sections 6.07, 8.03, 8.05, 8.06,
8.07, 8.08, 8.13, 8.14, 8.15 and 8.18, which shall survive such termination)
shall become null and void.
SECTION 8.05. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, INTERPRETED UNDER, 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 LAW THEREOF.
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SECTION 8.06. WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY. EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 8.06.
SECTION 8.07. ATTORNEY FEES. A party in breach of this
Agreement shall, on demand, indemnify and hold harmless the other party for and
against all reasonable out-of-pocket expenses, including legal fees, incurred by
such other party by reason of the enforcement and protection of its rights under
this Agreement. The payment of such expenses is in addition to any other relief
to which such other party may be entitled.
SECTION 8.08. ENTIRE AGREEMENT. This Agreement (including all
agreements entered into pursuant hereto and thereto and all certificates and
instruments delivered pursuant hereto and thereto) constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
all prior and contemporaneous agreements, representations, understandings,
negotiations and discussions between the parties, whether oral or written, with
respect to the subject matter hereof.
SECTION 8.09. MODIFICATIONS AND AMENDMENTS. No amendment,
modification or termination of this Agreement shall be binding upon any other
party unless executed in writing by the parties hereto intending to be bound
thereby.
SECTION 8.10. WAIVERS AND EXTENSIONS. Any party to this
Agreement may waive any condition, right, breach or default that such party has
the right to waive, provided that such waiver will not be effective against the
waiving party unless it is in writing, is signed by such party, and specifically
refers to this Agreement. Waivers may be made in advance or after the right
waived has arisen or the breach or default waived has occurred. Any waiver may
be conditional. No waiver of any breach of any agreement or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach thereof
nor of any other agreement or provision herein contained. No waiver or extension
of time for performance of any obligations or acts shall be deemed a waiver or
extension of the time for performance of any other obligations or acts.
SECTION 8.11. TITLES AND HEADINGS; RULES OF CONSTRUCTION.
Titles and headings of sections of this Agreement are for convenience only and
shall not affect the construction of any provision of this Agreement. Unless the
context otherwise requires:
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(a) a term has the meaning assigned to it;
(b) "or" is not exclusive;
(c) "including" means including without limitation; and
(d) words in the singular include the plural and words in the
plural include the singular.
SECTION 8.12. EXHIBITS AND SCHEDULES. Each of the exhibits and
schedules referred to herein and attached hereto is an integral part of this
Agreement and is incorporated herein by reference.
SECTION 8.13. EXPENSES; BROKERS. All costs and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such cost or expense. Other than the use of Bear, Stearns & Co. Inc. by the
Company, each of the parties represents to the others that neither it nor any of
its Affiliates has used a broker or other intermediary in connection with the
Transactions for whose fees or expenses any other party will be liable. Each
party agrees to indemnify and hold the other parties to this Agreement harmless
from and against any and all claims, liabilities or obligations with respect to
any such fees or expenses asserted by any Person on the basis of any act or
statement alleged to have been made by such party or any of its Affiliates.
SECTION 8.14. PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. All
public announcements or public disclosures relating to the Transactions shall be
made only if mutually agreed upon by the Company and the Investors, except to
the extent such disclosure is, in the opinion of counsel, required by law or by
stock exchange regulation, provided that (a) any such required disclosure shall
only be made, to the extent consistent with law and stock exchange regulation,
after consultation with the Investors, (b) no such announcement or disclosure
(except as required by law or by stock exchange regulation) shall identify any
Investor without such Investor's prior consent, and (c) the Company hereby
consents to the publication by Warburg, on one occasion following the
Transactions but in as many periodicals as Warburg may elect, of a customary
"tombstone" advertisement announcing the Transactions.
SECTION 8.15. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and the rights, duties and obligations hereunder may not be assigned
or delegated by the Company without the prior written consent of the Investors,
and may not be assigned or delegated by any Investor without the Company's prior
written consent, except that without such consent, prior to the Closing Date,
this Agreement may be assigned or delegated, in whole or in part, by any
Investor (or by any assignee referred to in this provision) to any Permitted
Transferee. Except as set forth above, any assignment or delegation of rights,
duties or obligations hereunder made without the prior written consent of the
Investors, shall be void and of no effect. This Agreement and the provisions
hereof shall be binding upon and shall inure to the benefit of each of the
parties and their respective successors and permitted assigns. This Agreement is
not
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intended to confer any rights or benefits on any Persons other than as expressly
set forth in this Section 8.15.
SECTION 8.16. SEVERABILITY. This Agreement shall be deemed
severable, and the invalidity or unenforceability of any term or provision
hereof shall not affect the validity or enforceability of this Agreement or of
any other term or provision hereof. Furthermore, in lieu of any such invalid or
unenforceable term or provision, the parties hereto intend that there shall be
added as a part of this Agreement a provision as similar in terms to such
invalid or unenforceable provision as may be possible and be valid and
enforceable.
SECTION 8.17. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
SECTION 8.18. REIMBURSEMENT OF CERTAIN EXPENSES. The Company
agrees to reimburse the Investors for the reasonable attorney's fees and
expenses incurred by the Investors or any of their Affiliates in excess of an
aggregate of $200,000 in connection with any claim, suit, arbitration or
proceeding ("CLAIM") brought or asserted by any third party (whether filed in
the name of a stockholder of the Company or other third party or derivatively in
the name of the Company, and including any Claim in which the Investors or any
of their Affiliates is made a witness by subpoena or otherwise) challenging, or
otherwise arising out of or relating to, the Transactions or the transactions
contemplated by the Conversion Agreement whether or not the Investors or any of
their Affiliates are made party to such claim, suit, arbitration or proceeding;
PROVIDED that the Investors shall notify the Company promptly upon becoming
aware of, keep the Company reasonably apprised of all material developments
relating to, and cooperate reasonably with the Company in connection with the
defense or any proposed settlement of, any such Claim; and PROVIDED, FURTHER,
that unless in the reasonable judgment of the Investors there exists an actual
or potential conflict of interest between the Investors and any of their
Affiliates, this Section 8.18 shall apply only to one counsel (plus local
counsel in each applicable jurisdiction). This Section 8.18 shall not apply to
any expenses incurred in connection with any Claim brought or asserted by any
Person in such Person's capacity as a limited partner or other investor in any
investment fund controlled or managed by the Warburg Group.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
AVAYA INC.
by: /s/ Garry K. McGuire
--------------------------------------
Name: Garry K. McGuire
Title: Chief Financial Officer
WARBURG, PINCUS NETHERLANDS EQUITY
PARTNERS I, C.V.
by: WARBURG, PINCUS & CO.,
its General Partner
by: /s/ Scott Arenare
-------------------------------------
Name: Scott A. Arenare
Title: Partner
WARBURG, PINCUS NETHERLANDS EQUITY
PARTNERS II, C.V.
by: WARBURG, PINCUS & CO.,
its General Partner
by: /s/ Scott Arenare
--------------------------------------
Name: Scott A. Arenare
Title: Partner
WARBURG, PINCUS NETHERLANDS EQUITY
PARTNERS III, C.V.
by: WARBURG, PINCUS & CO.,
its General Partner
by: /s/ Scott Arenare
--------------------------------------
Name: Scott A. Arenare
Title: Partner
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WARBURG, PINCUS EQUITY PARTNERS, L.P.
by: WARBURG, PINCUS & CO.,
its General Partner
by: /s/ Scott Arenare
--------------------------------------
Name: Scott A. Arenare
Title: Partner
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Schedule 1
INVESTORS
---------
WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS I, C.V.
Number of Shares to be Purchased: 431,519 shares
Address for Notice:
Warburg, Pincus & Co.
466 Lexington Avenue
New York, NY 10017-3147
Telephone: (212) 878-0638
Fax: (212) 878-6139
WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS II, C.V.
Number of Shares to be Purchased: 287,679 shares
Address for Notice:
Warburg, Pincus & Co.
466 Lexington Avenue
New York, NY 10017-3147
Telephone: (212) 878-0638
Fax: (212) 878-6139
WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS III, C.V.
Number of Shares to be Purchased: 71,920 shares
Address for Notice:
Warburg, Pincus & Co.
466 Lexington Avenue
New York, NY 10017-3147
Telephone: (212) 878-0638
Fax: (212) 878-6139
<Page>
WARBURG, PINCUS EQUITY PARTNERS, L.P.
Number of Shares to be Purchased: 13,592,835 shares
Address for Notice:
Warburg, Pincus & Co.
466 Lexington Avenue
New York, NY 10017-3147
Telephone: (212) 878-0638
Fax: (212) 878-6139
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EXHIBIT A
FORM OF OPINION OF WEIL, GOTSHAL & MANGES LLP
---------------------------------------------
1. Based solely on a certificate from the Secretary of State
of the State of Delaware, the Company is a corporation validly existing and in
good standing under the laws of the State of Delaware.
2. The Stock Purchase Agreement has been duly authorized,
executed and delivered by the Company, and constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws relating or affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether considered in
a proceeding in equity or at law). With respect to the foregoing opinion, (i)
insofar as provisions contained in the Registration Rights Provisions provide
for indemnification, the enforceability thereof may be limited by public policy
considerations, (ii) the availability of a decree for specific performance or an
injunction is subject to the discretion of the court requested to issue any such
decree or injunction and (iii) we express no opinion as to the enforceability of
Section 5.08 of the Purchase Agreement. For purposes of this paragraph 2, it may
be assumed that the contract law of the State of Delaware is identical to that
of the of the State of New York.
3. The Shares have been duly and validly authorized, and, when
issued and delivered to and paid for by the Investors pursuant to the Stock
Purchase Agreement, will be validly issued, fully paid, and nonassessable.
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EXHIBIT B
REGISTRATION RIGHTS PROVISIONS
------------------------------
1. SUSPENSION OF REGISTRATION STATEMENT. Anything in this
Agreement to the contrary notwithstanding, it is understood and agreed that the
Company shall not be required to keep any shelf registration effective or
useable for offers and sales of the Registrable Securities, file a post
effective amendment to a shelf registration statement or prospectus supplement
or to supplement or amend any registration statement, if (A) the Registration
Statement, any prospectus or prospectus supplement constituting a part thereof,
or any document incorporated by reference in any of the foregoing contains an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
in the light of the circumstances under which they are made; (B) the Company is
in possession of material information that it deems advisable not to disclose in
a Registration Statement; (C) the Company has determined to proceed with a
public offering of its equity securities and, in the judgment of the managing
underwriter thereof or the Company (if such offering is not underwritten), sales
under the Registration Statement would have a material adverse effect on such
offering; or (D) the Company is engaged in any program for the purchase of
shares of its own Common Stock, unless such repurchase program and the requested
sale may proceed concurrently pursuant to an exemption under the Commission's
Regulation M or any other applicable exemption (it being understood that, to the
extent consistent with any such program, the Company will use commercially
reasonable efforts to make an exemption available to the beneficiaries of these
registration rights (the "BENEFICIARIES") or to otherwise open up a sufficient
window period under Regulation M to enable the Beneficiary to obtain the
liquidity it desires hereunder). The Company shall provide notice of any such
suspension to the Warburg Group Director, or if there is then no Warburg Group
Director, to Warburg and each Beneficiary in accordance with Section 8.03 of
this Agreement. Upon receipt by a Beneficiary of notice of an event of the kind
described in this Section 1, such Beneficiary shall forthwith discontinue such
Beneficiary's disposition of Registrable Securities until the Company has
provided notice that such disposition may continue and of any supplemented or
amended prospectus indicated in such notice. The Company agrees that any period
in which sales, transfers or dispositions must be discontinued as a result of a
given occurrence of a circumstance referred to in the preceding sentence shall
not exceed 60 days, and shall not exceed 120 days in the aggregate over any
12-month period.
2. INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless each Beneficiary, its officers and directors, and
each person, if any, who controls such Beneficiary, within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred by such Beneficiary,
any of its officers or directors or any such controlling person in connection
with defending or investigating any such action or claim) caused by any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or any prospectus relating to Registrable Securities (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any
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omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
furnished by such Beneficiary or the plan of distribution furnished in writing
to the Company by or on behalf of such Beneficiary expressly for use therein;
provided, however, that the foregoing indemnity agreement with respect to any
prospectus shall not inure to the benefit of such Beneficiary if a copy of the
most current prospectus at the time of the delivery of the securities was made
available to such Beneficiary but was not provided by the Beneficiary or any
Underwriter to the buyer of such securities and such current prospectus would
have cured the defect giving rise to such loss, claim, damage or liability. The
Company also agrees to indemnify any Underwriters of any Registrable Securities,
their officers and directors and each person who controls such Underwriters on
substantially the same basis as that of the indemnification of Beneficiary
provided in this Section 2. As used throughout this Exhibit, "UNDERWRITER" means
a securities dealer who purchases any Registrable Securities as principal and
not as part of such dealer's market-making activities.
3. INDEMNIFICATION BY EACH BENEFICIARY. Each Beneficiary
agrees, severally and not jointly, to indemnify and hold harmless the Company,
its officers and directors, and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
to such Beneficiary, but only with reference to information furnished by such
Beneficiary or the plan of distribution furnished in writing by or on behalf of
such Beneficiary expressly for use in the Registration Statement or any
prospectus relating to the Registrable Securities, or any amendment or
supplement thereto or any preliminary prospectus. Each Beneficiary also agrees,
severally and not jointly, to indemnify and hold harmless any Underwriters of
the Registrable Securities, their officers and directors and each person who
controls such Underwriters on substantially the same basis as that of the
indemnification of the Company provided in this Section 3. Notwithstanding
anything to the contrary contained in this Exhibit, the obligations of any
Beneficiary pursuant to this Section 3 shall not exceed the amount of proceeds
received by such Beneficiary for the relevant Registrable Securities.
4. CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Section 2 or 3 of this Exhibit, such person (the "INDEMNIFIED PARTY") shall
promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the Indemnifying Party, upon the request of
the Indemnified Party, shall retain counsel reasonably satisfactory to such
Indemnified Party to represent such Indemnified Party and any others the
Indemnifying Party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own counsel
(which counsel shall be reasonably accountable to the Indemnifying Party), but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless (a) the Indemnifying
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Party and the Indemnified Party shall have mutually agreed in writing to the
retention of such counsel or (b) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnified Party and the
Indemnifying Party and, in the written opinion of counsel for the Indemnified
Party, representation of both parties by the same counsel would be inappropriate
due to actual or potential conflicts of interests between them. It is understood
that the Indemnifying Party shall not, in connection with any proceeding or
related proceedings involving one or more Indemnified Parties in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
of attorneys (in addition to any local counsel required under the circumstances)
at any time for all such Indemnified Parties, and that all such fees and
expenses shall be reimbursed as they are submitted in writing for payment. In
the case of any such separate firm for the Indemnified Parties, such firm shall
be designated in writing by the Indemnified Parties or, if the Indemnified
Parties are exclusively Beneficiaries, by Warburg. The Indemnifying Party shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent, or if there be a final judgment for
the plaintiff, the Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment.
5. CONTRIBUTION. If the indemnification provided for in this
Exhibit is unavailable to an Indemnified Party in respect of any losses, claims,
damages or liabilities referred to herein, then each such Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such losses, claims, damages
or liabilities (a) in such proportion as is appropriate to reflect the relative
benefits received by the Company, Beneficiary and the Underwriters from the
offering of the securities, or (b) if the allocation provided by clause (a)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (a) above but
also the relative fault of the Company, such Beneficiary and the Underwriters in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company, such Beneficiary
and the Underwriters shall be deemed to be in the same respective proportions as
the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by each of the Company and
such Beneficiary and the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page of
the prospectus, bear to the aggregate public offering price of the securities.
The relative fault of the Company, such Beneficiary and the Underwriters shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and each Beneficiary agrees that it would not be
just and equitable if contribution pursuant to this Section 5 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other
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method of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an Indemnified Party as a result of the losses, claims, damages or
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission, and each Beneficiary shall not be required to contribute
any amount in excess of the amount by which the net proceeds of the offering
(before deducting expenses) received by such Beneficiary exceeds the amount of
any damages which such Beneficiary has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
6. SURVIVAL. The indemnity and contribution agreements
contained in this Exhibit shall remain operative and in full force and effect
regardless of (a) any termination of this Agreement or any underwriting
agreement, (b) any investigation made by or on behalf of any Indemnified Person
or by or on behalf of the Company and (c) the consummation of the sale or
successive resales of the Registrable Securities.
7. REGISTRATION EXPENSES. In connection with the Registrable
Securities, the Company shall pay the following reasonable expenses incurred in
connection with such registration: (a) registration and filing fees with the
Commission, (b) fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Registrable Securities), (c) printing expenses, (d)
fees and expenses incurred in connection with the listing of the Registrable
Securities on the stock exchanges, if any, on which the applicable class of
Registrable Securities is then listed or, if such class of Registrable
Securities is not then listed, on the principal national stock exchange on which
the Common Stock is then listed, (e) fees and expenses of counsel and
independent certified public accountants for the Company (including the expenses
of any comfort letters reasonably required by any Underwriters), (f) the fees
and expenses of any additional experts retained by the Company in connection
with such registration and (g) fees and expenses in connection with any review
of underwriting arrangements by the National Association of Securities Dealers,
Inc. Each Beneficiary shall pay any underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities by it and any out-of-pocket
expenses of such Beneficiary, including its counsel fees, accountant fees and
expenses. The Company shall pay internal Company expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties).
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