STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of August 24,
1999, is entered into by and among ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (each a "Stockholder Party") and
Nortel Networks Corporation, a corporation organized under the laws of Canada
("Nortel").
WHEREAS, simultaneously with the execution of this Agreement, Nortel, North
Subsidiary, Inc., a wholly owned subsidiary of Nortel ("Sub"), and Periphonics
Corporation, a corporation organized under the laws of Delaware (the "Company"),
are entering into an Agreement and Plan of Merger, dated as of the date hereof
(as the same may be amended or supplemented, the "Merger Agreement") providing,
among other things, for either the Merger of Sub with and into the Company or
the Merger of the Company with and into Sub (the "Merger"); and
WHEREAS, as of the date hereof, each Stockholder Party is the Beneficial
Owner (as defined below) of, and has the sole right to vote and dispose of, the
shares of common stock, par value $0.01 per share of the Company ("Common
Stock"), set forth in Schedule A (the "Owned Shares"); and
WHEREAS, as an inducement and a condition to their entering into the Merger
Agreement and incurring the obligations set forth therein, Nortel has required
that each Stockholder Party enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein and in
the Merger Agreement, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Certain Definitions. Capitalized terms used but not defined in this
Agreement are used in this Agreement with the meanings given to such terms in
the Merger Agreement. In addition, for purposes of this Agreement:
"Affiliate" means, with respect to any specified Person, any Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified. For
purposes of this Agreement, with respect to any Stockholder Party, "Affiliate"
shall not include the Company and the Persons that directly, or indirectly
through one or more intermediaries, are controlled by the Company.
"Alternative Transaction" has the meaning set forth in Section 2(b) hereof.
"Beneficially Owned" or "Beneficial Ownership" with respect to any
securities means having beneficial ownership of such securities (as determined
pursuant to Rule 13d-3 under the Exchange Act, disregarding the phrase "within
60 days" in paragraph (d)(1)(i) thereof), including pursuant to any agreement,
arrangement or understanding, whether or not in writing. Without duplicative
counting of the same securities by the same holder, securities Beneficially
Owned by a Person shall include securities Beneficially Owned by all Affiliates
of such Person and all other Persons with whom such Person would constitute a
"Group" within the meaning of Section 13(d) of the Exchange Act and the rules
promulgated thereunder.
"Beneficial Owner" with respect to any securities means a Person who has
Beneficial Ownership of such securities.
"Company Meeting" has the meaning set forth in Section 3 hereof.
"Proposed Business Combination" means the transactions contemplated by the
Merger Agreement.
"Transfer" means, with respect to a security, the sale, transfer, pledge,
hypothecation, encumbrance, assignment or disposition of such security or the
Beneficial Ownership thereof, the offer to make such a sale, transfer or other
disposition, and each option, agreement, arrangement or understanding, whether
or not in writing, to effect any of the foregoing. As a verb, "Transfer" shall
have a correlative meaning.
2. No Disposition or Solicitation.
(a) Each Stockholder Party agrees that from and after the date hereof,
except as contemplated by this Agreement, he will not Transfer or agree to
Transfer any Common Stock Beneficially Owned by him other than with Nortel's
prior written consent, or grant any proxy or power-of-attorney with respect to
any such Common Stock other than pursuant to this Agreement; provided, that
nothing in this Section 2(a) shall prohibit any Stockholder Party from effecting
any Transfer of Common Stock Beneficially Owned by him (i) by will or applicable
laws of descent and distribution or (ii) to any member of the immediate family
of such Stockholder Party, or any trust, limited partnership or other similar
entity the Beneficial Ownership of which is held by the Stockholder Party or
such family members (each a "Permitted Transferee"), so long as such Permitted
Transferee agrees in writing, in form and substance reasonably satisfactory to
Nortel, to be bound by the terms of this Agreement to the same extent as such
Stockholder Party is bound.
(b) Each Stockholder Party agrees that from and after the date hereof,
except as contemplated by this Agreement or, solely in his capacity as an
officer or director of the Company, as permitted by the Merger Agreement, he and
his Affiliates and representatives, will not directly or indirectly solicit,
initiate, or encourage any inquiries or proposals from, discuss or negotiate
with, or provide any non-public information to, any Person relating to, or
otherwise facilitate any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving the Company or any of its
subsidiaries or any proposal or offer to acquire in any manner a substantial
equity interest in, or a substantial portion of the assets of, the Company or
any of its subsidiaries other than the Proposed Business Combination (an
"Alternative Transaction").
(c) Each Stockholder Party agrees that unless required by applicable law,
neither he nor any of his Affiliates shall make any press release, public
announcement or other communication with respect to Nortel or the business or
affairs of the Company, including this Agreement and the Merger Agreement and
the transactions contemplated hereby and thereby, without the prior written
consent of Nortel.
3. Stockholder Vote; Offer. Each Stockholder Party agrees that (i) at such
time as the Company conducts a meeting of or otherwise seeks a vote or consent
of its stockholders for the purpose of approving the Merger Agreement and the
Merger (such meeting or any adjournment thereof, or such consent process, the
"Company Meeting"), he will vote, or provide a consent with respect to, all
Common Stock (including the Owned Shares) then Beneficially Owned by him over
which he has voting power ("Voting Shares") in favor of the Merger Agreement and
the Merger, provided that he shall not be required to vote for, or provide a
consent with respect to, any action that would reduce the number of Nortel
Common Shares to be received by him in respect of his Common Stock in the
Merger, and (ii) he will (at any meeting of stockholders) vote his Voting Shares
against, and he will not consent to, any Alternative Transaction or any action
that would delay, prevent or frustrate the transactions contemplated by the
Merger Agreement.
Without limiting the foregoing, it is understood that the obligations under
clause (i) above shall remain applicable in respect of each meeting of
stockholders of the Company duly called for the purpose of approving the Merger
Agreement and the Merger regardless of the position of the Company Board as to
the Merger at the time of such meeting, and that the obligations under clause
(ii) above shall continue to the extent set forth in Section 10.
4. Reasonable Efforts to Cooperate. Each Stockholder Party will (a) use all
reasonable efforts to cooperate with the Company, Nortel and Sub in connection
with the transactions contemplated by the Merger Agreement, (b) promptly take
such actions as are necessary or appropriate to consummate such transactions and
(c) provide any information reasonably requested by the Company, Nortel or Sub
for any regulatory application or filing made or approval sought for such
transactions (including filings with the SEC).
5. Additional Stock. Each Stockholder Party agrees that any additional
shares of Common Stock acquired by him or over which he acquires Beneficial
Ownership, whether pursuant to existing stock option agreements, warrants or
otherwise, shall be subject to the provisions of this Agreement.
6. Irrevocable Proxy. (i) In furtherance of the agreements contained in
Section 3 of this Agreement, each Stockholder Party hereby irrevocably grants
to, and appoints, Nortel and ▇.▇. ▇▇▇▇, Vice Chairman and Chief Executive
Officer of Nortel, ▇.▇. ▇▇▇▇, Senior Vice President and Chief Financial Officer
of Nortel, and ▇.▇. ▇▇▇▇, Senior Vice President, Finance and Business
Development, of Nortel, in their respective capacities as officers of Nortel,
and any individual who shall hereafter succeed to any such office of Nortel, and
each of them individually, such Stockholder Party's proxy and attorney-if-fact
(with full power of substitution), for and in the name, place and stead of such
Stockholder Party, to vote all Voting Shares Beneficially Owned by such
Stockholder Party, or grant a consent or approval in respect of such Voting
Shares, or execute and deliver a proxy to vote such Voting Shares, (x) subject
to the proviso set forth in clause (i) of the first paragraph of Section 3, in
favor of the Merger and the Merger Agreement and approval of the terms thereof
and each of the other transactions contemplated by the Merger Agreement and (y)
against any Alternative Transaction or any other matter referred to in clause
(ii) of the first sentence of Section 3 hereof.
(ii) Each Stockholder Party represents and warrants to Nortel that any
proxies heretofore given in respect of his Voting Shares are not irrevocable,
and hereby revokes any such proxies.
(iii) Each Stockholder Party hereby affirms that the irrevocable proxy set
forth in this Section 6 is given in connection with, and in consideration of,
the execution of the Merger Agreement by Nortel and Sub, and that such
irrevocable proxy is given to secure the performance of the duties of such
Stockholder Party under this Agreement. Each Stockholder Party hereby further
affirms that the irrevocable proxy is coupled with an interest and may under no
circumstances be revoked. Such Stockholder Party hereby ratifies and confirms
all that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 218 of the Delaware General
Corporation Law. The proxy granted in this Section 6 shall remain valid until
terminated pursuant to Section 10 hereof or until earlier terminated with
respect to shares of Common Stock that are Transferred in accordance with this
Agreement.
7. Covenant of Stockholder Parties. Each Stockholder Party agrees that he
will take all action necessary to (i) permit (a) his Owned Shares to be acquired
in the Merger and (b) the voting of his Voting Shares in accordance with the
terms of this Agreement and (ii) prevent creditors in respect of any pledge of
his Owned Shares from exercising their rights under such pledge.
8. Representations, Warranties and Covenants of Stockholder Parties. Each
Stockholder Party hereby represents and warrants to, and agrees with, Nortel as
follows:
(a) Such Stockholder Party has all necessary power and authority and legal
capacity to execute and deliver this Agreement and perform his obligations
hereunder.
(b) This Agreement has been duly and validly executed and delivered by such
Stockholder Party and constitutes the valid and binding agreement of such
Stockholder Party, enforceable against such Stockholder Party in accordance with
its terms except to the extent limited by (i) applicable bankruptcy, insolvency
or similar laws affecting creditors' rights or (ii) general equity principles,
whether considered at law or in equity.
(c) Each Stockholder Party is the sole Beneficial Owner of his Owned
Shares. Each Stockholder Party has good and marketable title (which may include
holding in nominee or "street" name) to all of his Owned Shares, free and clear
of all liens, claims, options, proxies, voting agreements and security interests
(other than as created by this Agreement and restrictions on Transfer under
applicable securities laws). Except as set forth in Schedule A, the Owned Shares
constitute all of the capital stock of the Company Beneficially Owned by such
Stockholder Party and neither such Stockholder Party nor his Affiliates is the
Beneficial Owner of, or has any right to acquire (whether currently upon lapse
of time, following the satisfaction of any conditions, upon the occurrence of
any event or any combination of the foregoing) any Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock.
(d) Neither the execution and delivery of this Agreement by each
Stockholder Party nor the consummation of the transactions contemplated hereby
will (i) conflict with, result in any violation of, require any consent under or
constitute a default (whether with notice or lapse of time or both) by such
Stockholder Party under any mortgage, bond, indenture, agreement, instrument or
obligation to which such Stockholder Party is a party or by which such
Stockholder Party or any of the Voting Shares is bound; (ii) violate any
judgment, order, injunction, decree or award of any court, administrative agency
or governmental body that is binding on such Stockholder Party; or (iii)
constitute a violation by such Stockholder Party of any law or regulation of any
jurisdiction.
(e) Each Stockholder Party understands and acknowledges that Nortel and Sub
are entering into the Merger Agreement in reliance upon such Stockholder Party's
execution, delivery and performance of this Agreement. Each Stockholder Party
acknowledges that his irrevocable proxy set forth in Section 6 is granted in
consideration of the execution and delivery of the Merger Agreement by Nortel.
9. Representations and Warranties of Nortel. Nortel represents and warrants
to the Stockholder Parties that Nortel has full corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder. The
execution, delivery and performance of this Agreement by Nortel will not
constitute a violation of, conflict with or result in a default under, (i) any
contract, understanding or arrangement to which Nortel is a party or by which it
is bound or requires the consent of any other Person or any party pursuant
thereto, (ii) any judgment, decree or order applicable to Nortel, or (iii) any
law, rule or regulation of any governmental body, in each case except for
violations, conflicts or defaults that would not have a material adverse effect
on the ability of the Nortel to perform its obligations under this Agreement;
and this Agreement constitutes a legal, valid and binding agreement on the part
of Nortel, enforceable against Nortel in accordance with its terms, except as
such enforceability may be limited by principles applicable to creditors' rights
generally or governing the availability of equitable relief. The execution and
delivery by Nortel of this Agreement and the consummation by Nortel of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Nortel and no other corporate proceedings on the part of
Nortel are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Nortel.
10. Termination. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate on the earlier of (a) the Effective Time; (b)
the date upon which the Merger Agreement is terminated by the Company pursuant
to Section 8.01(b) thereof (unless at such time Nortel would be entitled to
terminate, or following the giving of notice and lapse of time would be entitled
to terminate, the Merger Agreement); and (c) 30 days following the termination
of the Merger Agreement other than as set forth in (b) above; provided, however,
that the term of this Agreement shall be extended by a period of days equal to
the duration of any temporary or permanent order, writ or injuction issued by a
court of competent jurisdiction that invalidates, impedes or enjoins the
operation or enforcement of this Agreement, the Merger Agreement or any
agreement contemplated hereby or thereby or entered into in connection herewith
or therewith.
11. Miscellaneous.
(a) This Agreement represents the entire understanding of the parties
hereto with reference to the subject matter hereof and supersedes any and all
other oral or written agreements and understandings among the parties heretofore
made.
(b) Each Stockholder Party agrees that this Agreement and the respective
rights and obligations of such Stockholder Party hereunder shall attach to any
Common Stock, and any securities convertible into such shares, that may become
Beneficially Owned by such Stockholder Party.
(c) Except as otherwise provided in this Agreement, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses.
(d) This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties and their respective successors,
personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any party (whether by operation of law or otherwise) without the
prior written consent of the other parties; provided, that Nortel may assign any
or all rights under this Agreement to Sub or any other Subsidiary. Nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other Person any rights, benefits or remedies of any nature whatsoever under or
by reason of this Agreement.
(e) This Agreement may not be amended, changed, supplemented, or otherwise
modified or terminated, except upon the execution and delivery of a written
agreement executed by the parties hereto; provided, that Nortel may waive
compliance by any other party with any representation, agreement or condition
otherwise required to be complied with by any other party under this Agreement
or release any other party from its obligations under this Agreement, but any
such waiver or release shall be effective only if in writing executed by Nortel.
(f) All notices and other communications hereunder shall be in writing and
shall be deemed given upon (a) transmitter's confirmation of a receipt of a
facsimile transmission, (b) confirmed delivery by a standard overnight carrier
or when delivered by hand or (c) the expiration of five business days after the
day when mailed by certified or registered mail, postage prepaid, addressed at
the address for such party set forth below.
(i) If to a Stockholder Party, to such Stockholder Party at the address set
forth beside its name on Schedule A hereto with a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
and another copy to:
Ruskin, Moscou, ▇▇▇▇▇ & Faltischek, P.C.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
If to Nortel, to:
Nortel Networks Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Corporate Secretary
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or facsimile number as the Person to whom notice is
given shall have previously furnished to the others in writing in the manner set
forth above.
(g) If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated.
(h) Each Stockholder Party acknowledges and agrees that in the event of any
breach of this Agreement, Nortel would be irreparably and immediately harmed and
could not be made whole by monetary damages. It is accordingly agreed that (a)
each Stockholder Party will waive, in any action for specific performance, the
defense of adequacy of a remedy at law, and (b) Nortel shall be entitled, in
addition to any other remedy to which it may be entitled at law or in equity, to
compel specific performance of this Agreement.
(i) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) This Agreement shall be governed by, and interpreted in accordance
with, the laws of the State of New York.
(k) The section and paragraph captions herein are for convenience of
reference only, do not constitute part of this Agreement and shall not be deemed
to limit or otherwise affect any of the provisions hereof.
(l) This Agreement may be executed in one or more counterparts, each of
which shall be deemed to constitute an original.
12. Stockholder Capacity. No Stockholder Party executing this Agreement who
is or becomes during the term hereof a director or officer of the Company makes
any agreement or understanding herein in his capacity as such director or
officer. Each Stockholder Party signs solely in his capacity as the record
holder and/or beneficial owner of the Owned Shares and Voting Shares, and
nothing herein shall limit or affect any actions taken or omitted to be taken by
a Stockholder Party in his capacity as an officer of director of the Company to
the extent specifically permitted by the Merger Agreement.
13. Further Assurances. From time to time, at Nortel's reasonable request
and without further consideration, each Stockholder Party shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/
--------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/
--------------------------
▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
/s/
--------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/
--------------------------
NORTEL NETWORKS CORPORATION
By: /s/
----------------------------
Name:
Title:
By: /s/
----------------------------
Name:
Title:
Schedule A
STOCKHOLDER PARTIES
NAME SHARES ADDRESS
▇▇▇▇▇ ▇. ▇▇▇▇▇ Owned Shares: 394,9861 c/o Periphonics Corporation
Other Voting Shares: 0 4000 Veterans Memorial Highway
Total: 394,986 ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇ Owned Shares: 345,528 c/o Periphonics Corporation
Other Voting Shares: 0 4000 Veterans Memorial Highway
Total: 345,528 ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Owned Shares: 0 c/o Periphonics Corporation
Other Voting Shares: 399,4982 4000 Veterans Memorial Highway
Total: 399,498 ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ Owned Shares: 230,352 c/o Periphonics Corporation
Other Voting Shares: 0 4000 Veterans Memorial Highway
Total: ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Owned Shares: 421,444 c/o Periphonics Corporation
Other Voting Shares: 0 4000 Veterans Memorial Highway
Total: 421,444 ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Aggregate Owned Shares: 1,392,310
Aggregate Other Voting Shares: 399,498
Aggregate Total: 1,791,808
--------
1 130,160 shares owned jointly with wife.
2 66,500 shares held in grant for brother.
332,998 shares held in grant for
children.