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Exhibit 10.2
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CONVERSION AND EXERCISE 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
PAGE
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ARTICLE I
Definitions
ARTICLE II
Conversion Price Adjustment; Conversion; and Exercise
SECTION 2.01. Conversion Price Adjustment; Agreement to Convert............6
SECTION 2.02. Agreement to Exercise........................................6
SECTION 2.03. Closing......................................................6
SECTION 2.04. Closing Deliveries...........................................6
ARTICLE III
Representations and Warranties of the Company
SECTION 3.01. Organization and Standing....................................9
SECTION 3.02. Capital Stock................................................9
SECTION 3.03. Authorization; Enforceability................................9
SECTION 3.04. No Violation; Consents......................................10
SECTION 3.05. Commission Filings; Financial Statements....................10
SECTION 3.06. No Material Adverse Effect..................................11
SECTION 3.07. Contract....................................................11
SECTION 3.08. Compliance with Laws........................................11
SECTION 3.09. Compliance with Constituent Documents.......................12
SECTION 3.10. Opinion of Financial Advisor................................12
SECTION 3.11. Section 355.................................................12
SECTION 3.12. DGCL Section 203............................................12
SECTION 3.13. Rights Agreement............................................12
ARTICLE IV
Representations and Warranties of the Investors
SECTION 4.01. Organization; Authorization; Enforceability.................12
SECTION 4.02. Private Placement...........................................13
SECTION 4.03. No Violation; Consents......................................14
SECTION 4.04. Financing...................................................14
SECTION 4.05. Ownership of Securities.....................................14
SECTION 4.06. Future Acquisitions.........................................14
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ARTICLE V
Covenants of the Company
SECTION 5.01. Conduct of Business Pending the Closing.....................15
SECTION 5.02. Access to Books and Records.................................15
SECTION 5.03. Compliance with Conditions; Commercially Reasonable Efforts.15
SECTION 5.04. HSR Act Notification........................................16
SECTION 5.05. Consents and Approvals......................................16
SECTION 5.06. Certain Actions.............................................16
SECTION 5.07. Listing of Shares...........................................16
SECTION 5.08. Use of Proceeds.............................................16
SECTION 5.09. Warburg Group Director and Observer.........................17
SECTION 5.10. Registration Rights.........................................17
SECTION 5.11. Rights Agreement............................................18
SECTION 5.12. No Intended Distributions...................................18
SECTION 5.13. Director's Insurance........................................18
SECTION 5.14. Exemption from Liability under Section 16(b)................18
SECTION 5.15. Relationship with Lucent....................................19
ARTICLE VI
Covenants of the Investors
SECTION 6.01. Compliance with Conditions; Commercially Reasonable Efforts.19
SECTION 6.02. HSR Act Notification........................................19
SECTION 6.03. Consents and Approvals......................................19
SECTION 6.04. Standstill..................................................20
SECTION 6.05. No Conversion...............................................21
SECTION 6.06. IPO Lock-up.................................................21
SECTION 6.07. Compliance with Section 355.................................21
ARTICLE VII
Conditions Precedent to the Closing
SECTION 7.01. Conditions to the Company's Obligations in
Respect of the Closing......................................22
SECTION 7.02. Conditions to Each Investor's Obligations in
Respect of the Closing......................................22
SECTION 7.03. Conditions to Each Party's Obligations in
Respect of the Closing......................................23
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ARTICLE VIII
Miscellaneous
SECTION 8.01. Survival....................................................24
SECTION 8.02. Legends.....................................................24
SECTION 8.03. Notices.....................................................24
SECTION 8.04. Termination.................................................25
SECTION 8.05. GOVERNING LAW...............................................26
SECTION 8.06. WAIVER OF JURY TRIAL........................................26
SECTION 8.07. Attorney Fees...............................................26
SECTION 8.08. Entire Agreement............................................26
SECTION 8.09. Modifications and Amendments................................27
SECTION 8.10. Waivers and Extensions......................................27
SECTION 8.11. Titles and Headings; Rules of Construction..................27
SECTION 8.12. Exhibits and Schedules......................................27
SECTION 8.13. Expenses; Brokers...........................................27
SECTION 8.14. Press Releases and Public Announcements.....................27
SECTION 8.15. Assignment; No Third Party Beneficiaries....................28
SECTION 8.16. Severability................................................28
SECTION 8.17. Counterparts................................................28
SECTION 8.18. Reimbursement of Certain Expenses...........................28
SECTION 8.19. Original Purchase Agreement.................................29
Schedule 1 List of Investors
Exhibits
Exhibit A Form of Resolutions of Board of Directors
Exhibit B Form of Opinion of Weil, Gotshal & Manges LLP
Exhibit C Registration Rights Provisions
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CONVERSION AND EXCHANGE 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, on October 2, 2000, the Company issued and sold to
the Investors (a) 4,000,000 shares (the "PREFERRED SHARES") of its 6-1/2% Series
B Convertible Participating Preferred Stock, par value $1.00 per share (the
"SERIES B PREFERRED STOCK"), having an initial liquidation preference equal to
$100 per share and (b) the Warrants (as defined herein);
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 reduce the current Conversion Price (as
defined in the Certificate of Designations) of the Series B Preferred Stock (the
"CONVERSION PRICE ADJUSTMENT") to $11.31, so that the Preferred Shares will be
convertible immediately following such reduction into an aggregate of 38,329,365
shares of Common Stock; and
WHEREAS, following the Conversion Price Adjustment and subject
to the terms and conditions set forth herein, the Company and the Investors
desire that the Investors (a) convert all of the Preferred Shares into the
Conversion Shares (as defined herein) (the "CONVERSION"), and (b) exercise for
cash (i) a portion of the Series A Warrants to purchase an aggregate of 159,268
Warrant Shares at $34.73 per Warrant Share and (ii) a portion of the Series B
Warrants to purchase an aggregate of 127,414 Warrant Shares at $34.73 per
Warrant Share (collectively, the "EXERCISE").
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
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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.
"CERTIFICATE OF DESIGNATIONS" means the Certificate of
Designations of the Powers, Preferences and Relative, Participating, Optional
and Other Special Rights and Qualifications, Limitations and Restrictions
thereof relating to the Series B Preferred Stock, as on file on the date hereof
with the Secretary of State of the State of Delaware.
"COMMISSION" means the United States Securities and Exchange
Commission.
"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 SHARES" means the shares of Common Stock issuable
upon the conversion of the Series B Preferred Stock in accordance with the terms
of the Certificate of Designations, following the Conversion Price Adjustment.
"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 Stock Purchase Agreement.
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"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.
"EXERCISE PRICE" (a) with respect to the Series A Warrants,
has the meaning set forth in Section 2(A) of the Series A Warrants, and (b) with
respect to the Series B Warrants, has the meaning set forth in Section 2(A) of
the Series B Warrants.
"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.
"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.
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"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.
A "QUALIFYING OWNERSHIP INTEREST" shall be deemed to exist at
any time the Investors and the Permitted Transferees beneficially own in the
aggregate at least 26 million shares of Common Stock (as such number is adjusted
to reflect any stock split, stock dividend, combination or similar transaction).
"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.
"SERIES A WARRANTS" means the four-year warrants to purchase
6,883,933 shares of Common Stock issued pursuant to the Original Purchase
Agreement.
"SERIES B PREFERRED STOCK" has the meaning set forth in the
recitals to this Agreement, and has the designations, powers, preferences and
rights, and qualifications, limitations and restrictions thereof set forth in
the Certificate of Designations.
"SERIES B WARRANTS" means the five-year warrants to purchase
5,507,146 shares of Common Stock issued pursuant to the Original Purchase
Agreement.
"STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement,
dated as of the date of this Agreement, by and among the Company and the
Investors.
"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.
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"SUBSIDIARY" means a subsidiary of the Company.
"TRANSACTIONS" means the transactions contemplated by this
Agreement, including without limitation the Conversion Price Adjustment, the
Conversion and the Exercise.
"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.
"WARRANTS" means the Series A Warrants and the Series B
Warrants.
"WARRANT SHARES" means the shares of Common Stock issuable
upon exercise of the Warrants in accordance with the terms of the applicable
Warrants and with the terms of this Agreement.
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 2.03(a)
Closing Date 2.03(a)
Company Preamble
Company Commission Filings 3.05(a)
Conversion Recitals
Conversion Price Recitals
Conversion Price Adjustment Recitals
Damages 8.18(a)
Exercise Recitals
Indemnified Party 8.18(a)
Investor; Investors Preamble
Material Contract 3.07
Notices 8.03
Preferred Shares Recitals
Registrable Securities 5.10
Registration Rights Provisions 5.10
Registration Statement 5.10
Warburg Group Director 5.09(a)
Warburg Group Observer 5.09(b)
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ARTICLE II
CONVERSION PRICE ADJUSTMENT; CONVERSION; AND EXERCISE
SECTION 2.01. CONVERSION PRICE ADJUSTMENT; AGREEMENT TO
CONVERT. (a) Pursuant to Section 7(c)(ix) of the Certificate of Designations and
a resolution of the Board of Directors adopted on the date hereof (substantially
in the form attached hereto as Exhibit A) and in accordance with the terms of
Section 7 of the Certification of Designations, the Board of Directors has
reduced the Conversion Price of the Preferred Shares to $11.31 so that, as of
the date hereof, the Preferred Shares are convertible into an aggregate of
38,329,365 Conversion Shares. The Conversion Price, and the number of Conversion
Shares into which the Preferred Shares are convertible, shall continue to be
further adjusted if, as and when required by Section 7(c) of the Certificate of
Designations.
(b) At the Closing, and upon the terms and subject to the
conditions set forth in this Agreement, each Investor, severally and not
jointly, shall convert all of the Preferred Shares owned by it into that number
of shares of Common Stock indicated in Schedule 1 hereto (subject to further
adjustment if, as and when required by Section 7(c) of the Certificate of
Designations), and the Company shall issue such number of shares of Common Stock
upon such conversion to each such Investor. The Company shall not be required to
deliver any Conversion Shares under this Section 2.01(b) to any Investor unless
the conditions set forth in Article VII to the delivery of Conversion Shares to
all Investors shall have been satisfied or waived.
SECTION 2.02. AGREEMENT TO EXERCISE At the Closing, and upon
the terms and subject to the conditions set forth in this Agreement, each
Investor, severally and not jointly, shall exercise for cash that portion of the
Warrants owned by it to purchase that number of shares of Common Stock indicated
in Schedule 1 hereto (subject to further adjustment if, as and when required by
Section 13 of the Warrants), and the Company shall issue such number of shares
of Common Stock upon such exercise to each such Investor. No Investor shall be
required to exercise any Warrants under this Section 2.02 unless the conditions
set forth in Article VII to the exercise by the Investors of the Warrants shall
have been satisfied or waived.
SECTION 2.03. CLOSING. The Conversion and Exercise 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
(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 Conversion and the Exercise 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 2.04. CLOSING DELIVERIES. At the Closing, the
Preferred Shares shall be converted into Conversion Shares in accordance with
the terms of Section
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7 of the Certificate of Designations, and a portion of the
Warrants shall be exercised for Warrant Shares in accordance with the terms of
Sections 3(A)(i) and 4 of the Warrants. 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);
(ii) the certificate or certificates representing the
Preferred Shares to be converted in the Conversion by such Investor
pursuant to Section 2.01, together with a duly executed notice of
election to convert specifying the number of Preferred Shares to be
converted. Unless the Conversion Shares issuable upon conversion are to
be issued in the same name as the name in which such Preferred Shares
are registered, each Preferred Share surrendered for conversion shall
be accompanied by instruments of transfer, in form reasonably
satisfactory to the Company, duly executed by the holder or the
holder's duly authorized attorney and an amount sufficient to pay any
transfer or similar tax in accordance with Section 7(b)(vi) of the
Certificate of Designations;
(iii) the portion of the Warrants to be exercised by such
Investor pursuant to Section 2.02, together with a duly executed notice
of exercise specifying the number of Warrant Shares for which such
portion of the Warrants are being exercised for in accordance with
Section 3(A) of the Warrants. Unless the Warrant Shares issuable upon
exercise are to be issued in the same name as the name in which that
Warrant a portion of which is being exercised is registered, each
Warrant being partially exercised shall be accompanied by instruments
of transfer, in form reasonably satisfactory to the Company, duly
executed by the holder or the holder's duly authorized attorney and an
amount sufficient to pay any transfer or similar tax in accordance with
Section 7 of the Warrants; and
(iv) an amount equal to the aggregate Exercise Price of that
portion of the Warrants being exercised by such Investor pursuant to
Section 2.02 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 B;
(ii) the officer's certificate of the Company contemplated by
Section 7.02(d);
(iii) a certificate or certificates for the whole number of
shares of Common Stock issuable to such Investor upon the conversion of
the Preferred
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Shares (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, and a check payable in an amount corresponding to any fractional
interest in a share of Common Stock as provided in Section 7(b)(vii) of
the Certificate of Designations;
(iv) a certificate or certificates representing the Warrant
Shares for which a portion of Warrants have been exercised by such
Investor pursuant to Section 2.02, 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; and
(v) certificates representing that portion of the Warrants not
exercised by such Investor pursuant to Section 2.02, 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.
(c) Each of the Conversion and the Exercise shall be deemed to
have been effected immediately prior to the close of business on the Closing
Date. As of the Closing,
(i) the Person in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such
Conversion or Exercise shall be deemed to have become the holder of
record of the shares of Common Stock represented thereby at such time;
(ii) the Preferred Shares so converted shall no longer be
deemed to be outstanding, and all rights of a holder with respect to
such Preferred Shares surrendered for conversion shall immediately
terminate except the right to receive the Conversion Shares and other
amounts payable pursuant to this Section 2.03(c) and Section 7 of the
Certificate of Designations; and
(iii) all Conversion Shares and Warrant Shares shall, upon
delivery, be duly and validly authorized and issued, fully paid and
nonassessable, free from all preemptive rights and free from all taxes,
liens, security interests and charges (other than Liens or charges
created by or imposed upon the holder or taxes in respect of any
transfer occurring contemporaneously therewith), and shall not have
been issued in violation of any Applicable Law.
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:
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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.
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 Stock Purchase 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 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
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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 Conversion Shares and the Warrant 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.
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.
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(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
Stock Purchase 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 Stock Purchase
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 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
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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 Stock
Purchase 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 Stock Purchase 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 Stock Purchase Agreement or to any of the
transactions contemplated hereby or thereby.
SECTION 3.13. RIGHTS AGREEMENT. The entering into of this
Agreement or the Stock Purchase 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 Stock
Purchase Agreement, or will occur as a result of the consummation of the
transactions contemplated hereby or thereby.
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
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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 Warrant Shares by the Company upon exercise of
the Warrants is intended to be exempt from registration under the Securities Act
pursuant to Section 4(2), or, to the extent applicable 3(a)(9), 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 Conversion Shares and the
Warrant 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 Conversion Shares and
the Warrant 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 Conversion Shares and the
Warrant 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 Conversion Shares and the Warrant Shares 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
Conversion Shares and the Warrant 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.
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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 Exercise 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
Conversion Shares issuable following execution of this Agreement and
effectuation of the Conversion Price Adjustment, (e) the Warrant Shares for
which the Warrants are being exercised by it hereunder, (f) 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) and (g) pursuant
to the Stock Purchase 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
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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, by-laws or the Certificate of Designations or
rescind the Conversion Price Adjustment; (b) except as may be required by the
Rights Agreement, 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); (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 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
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practicable the Conversion Price Adjustment, the Conversion, and the Exercise in
accordance with the terms of this Agreement.
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. CERTAIN ACTIONS. As soon as practicable
following execution of this Agreement, and in any event prior to the Closing
Date, the Company shall take such actions as may be required under the
Certificate of Designations to effect the Conversion Price Adjustment. The
Investors hereby waive any notice required under the Certificate of Designations
with respect to the Conversion Price Adjustment.
SECTION 5.07. LISTING OF SHARES. The Company shall use all
commercially reasonable efforts to cause the Conversion Shares and the Warrant
Shares to be listed or otherwise eligible for trading on the New York Stock
Exchange prior to the Closing Date.
SECTION 5.08. USE OF PROCEEDS. The Company shall use the
proceeds from the Exercise for general corporate purposes, including repayment
of bank debt.
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SECTION 5.09. WARBURG GROUP DIRECTOR AND OBSERVER. (a) The
Warburg Group shall be entitled to designate for election to the Board of
Directors one person reasonably acceptable to the Board of Directors (the
"WARBURG GROUP DIRECTOR") for so long as the Investors and the Permitted
Transferees own a Qualifying Ownership Interest.
(b) In addition, during such time as the Warburg Group shall
have the right to designate for nomination a Warburg Group Director, the Company
shall permit an authorized representative of Warburg reasonably acceptable to
the Board of Directors (the "WARBURG GROUP OBSERVER") to attend all meetings of
the Board of Directors (but not (i) meetings of any committees of the Board of
Directors or (ii) executive sessions of the Board of Directors) as an observer,
without authority to vote. The Company and the Investors agree that the initial
Warburg Group Observer shall be Dr. Henry Kressel.
(c) Immediately following the Closing, the initial Warburg
Group Director shall be appointed to the Board of Directors to a class of
directors whose term expires not earlier than 2003. If a vacancy shall exist in
the office of a Warburg Group Director, the Warburg Group shall be entitled to
designate a successor and the Board of Directors shall elect such successor and,
in connection with the meeting of shareholders of the Company next following
such election, nominate such successor for election as director by the
shareholders and use its commercially reasonable efforts to cause the successor
to be elected. Each Investor agrees that Warburg shall identify the individuals
proposed to serve as Warburg Group Director and Warburg Group Observer, and that
the Company shall be entitled to rely solely and exclusively on information
provided by Warburg in connection with the exercise of the Investors' rights
pursuant to this Section 5.09.
(d) At any time the Investors and the Permitted Transferees
cease to have the right to appoint a Warburg Group Director, any Warburg Group
Director shall resign promptly and the Warburg Group Observer shall no longer be
permitted to attend meetings of the Board of Directors.
(e) Any Warburg Group Director shall be entitled to such
compensation as is customarily paid by the Company to the Company's outside
directors. The compensation and expenses of any Warburg Group Observer shall be
solely the responsibility of the Investors.
SECTION 5.10. 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 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
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Commission so long as any Registrable Securities remain outstanding. Provisions
relating to the registration rights set forth in this Section 5.10 are included
in Exhibit C hereto (the "REGISTRATION RIGHTS PROVISIONS"). "REGISTRABLE
SECURITIES" means the Conversion Shares and the Warrant Shares, and any
securities that may be 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 5.10 shall be made by and
through Warburg.
SECTION 5.11. RIGHTS AGREEMENT. The Company shall cooperate
with the Investors to segregate the Warrant Shares and the Conversion Shares
from any other shares of Common Stock beneficially owned by the Warburg Group,
and shall take all actions as may be necessary to ensure that the Conversion
Shares and the Warrant Shares continue to be deemed to be not beneficially owned
by the Investors for purposes of the Rights Agreement.
SECTION 5.12. 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' existing credit facility.
SECTION 5.13. 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.
SECTION 5.14. EXEMPTION FROM LIABILITY UNDER SECTION 16(B).
Prior to the Closing Date, the Board of Directors, or a committee of
non-employee directors thereof (as such term is defined for purposes of Rule
16b-3 under the Exchange Act), shall adopt a resolution providing that the
receipt by the Investors and by any individual who is serving as or who has
served as the Warburg Group Director who has any beneficial ownership in any
Investor, of Common Stock pursuant to this Agreement or the Stock Purchase
Agreement, are approved by the Board of Directors or by such
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committee thereof (for purposes of Rule 16b-3), and are intended to be exempt
from liability pursuant to Section 16(b) of the Exchange Act (to the extent such
Section 16(b) may be applicable), such that any such receipt shall be so exempt.
SECTION 5.15. 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 Conversion Shares and
the Warrant Shares and other actions (including the consummation of the
transactions contemplated by the Stock Purchase 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
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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 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 Stock Purchase 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, 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
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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 Company or any Subsidiary, (iv) prohibit the
ownership, purchase or other acquisition of beneficial ownership of (A) any of
the Conversion Shares or the Warrant Shares, 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. NO CONVERSION . The Investors agree that after
such time as the Conversion Price Adjustment is effective, and except as
contemplated by Article II, unless and until this Agreement in terminated in
accordance with Section 8.04, the Investors shall not convert any Preferred
Shares pursuant to the terms of Section 7 of the Certificate of Designations.
SECTION 6.06. IPO LOCK-UP. In connection with any initial
public offering of the Common Stock, so long as (a) the Investors beneficially
own in the aggregate at least 5% of the Common Stock (calculated in accordance
with Rule 13d-3 under the Exchange Act), (b) the Investors are requested by the
managing underwriter of such initial public offering and (c) each other director
who beneficially owns Common Stock enters into a "lock-up" agreement of at least
90 days, each Investor agrees to enter into a similar "lock-up" agreement with
the underwriters of such offering containing customary terms and conditions and
restricting sales of Common Stock and other securities convertible into or
exercisable for Common Stock and certain other transactions having an equivalent
economic effect for a period of up to 90 days following the date of such
offering.
SECTION 6.07. COMPLIANCE WITH SECTION 355. No Investor shall
take any action (other than as contemplated hereunder or pursuant to the
Original Purchase Agreement or the Stock Purchase 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
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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.
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 Conversion
and the Exercise and deliver the Conversion Shares and the Warrant 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
Conversion and Exercise 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 taken such actions as may be
necessary or appropriate to effect the Conversion Price Adjustment.
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(d) 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) through (c) of this Section 7.02 has been satisfied.
(e) The Shares shall have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance.
(f) 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 B.
(g) The Company shall have obtained and provided to the
Investors a copy of the opinion contemplated by Section 5.15.
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 either
the Conversion or the Exercise 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 Conversion Shares or the
Warrant Shares illegal or shall otherwise prohibit the consummation of the
Transactions.
(c) There has not occurred any revocation or material
modification of the Private Letter Ruling.
(d) 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.
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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 Conversion Shares or the Warrant
Shares shall be stamped or otherwise imprinted with a 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.
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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
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
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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 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. The parties agree that following any termination of this
Agreement pursuant to this Section 8.04, the conversion price of the Preferred
Shares shall automatically be adjusted to that level that the conversion price
would have been had this Agreement never been entered into.
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.
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.
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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:
(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,
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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 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 Stock Purchase 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
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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 in each applicable jurisdiction (if more than
one jurisdiction is involved). 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.
SECTION 8.19. ORIGINAL PURCHASE AGREEMENT. Effective as of the
Closing Date, Sections 5.09, 5.10, 5.11, 6.04, 6.05, 6.07 and 6.08 shall be
terminated and shall be without further force or effect, with the other
provisions of the Original Purchase Agreement to survive in accordance with
their terms. This provision shall be without force or effect if this Agreement
is terminated pursuant Section 8.04.
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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 Series B Preferred Shares owned: 120,000 shares
Number of Conversion Shares to be Issued Upon Conversion of Series B Preferred
Shares: 1,149,881 shares
Number of Warrant Shares for which Series A Warrants are to be exercised: 4,778
shares
Number of Warrant Shares for which Series B Warrants are to be exercised: 3,822
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 Series B Preferred Shares owned: 80,000 shares
Number of Conversion Shares to be Issued Upon Conversion of Series B Preferred
Shares: 766,587 shares
Number of Warrant Shares for which Series A Warrants are to be exercised: 3,186
shares
Number of Warrant Shares for which Series B Warrants are to be exercised: 2,557
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 Series B Preferred Shares owned: 20,000 shares
Number of Conversion Shares to be Issued Upon Conversion of Series B Preferred
Shares: 191,647 shares
<Page>
Number of Warrant Shares for which Series A Warrants are to be exercised: 796
shares
Number of Warrant Shares for which Series B Warrants are to be exercised: 637
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 EQUITY PARTNERS, L.P.
Number of Series B Preferred Shares owned: 3,780,000 shares
Number of Conversion Shares to be Issued Upon Conversion of Series B Preferred
Shares: 36,221,250 shares
Number of Warrant Shares for which Series A Warrants are to be exercised:
150,508 shares
Number of Warrant Shares for which Series B Warrants are to be exercised:
120,407 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 B
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 Conversion 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 5.09 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 Conversion Shares and the Warrant Shares have been duly
and validly authorized, and, when issued and delivered to and paid for by the
Investors pursuant to the Conversion Agreement, will be validly issued, fully
paid, and nonassessable.
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EXHIBIT C
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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